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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
Commission File No. 0-26071
EDGAR ONLINE, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1447017
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
50 Washington Street, Norwalk CT 06854
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (203) 852-5666
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant as required to file such reports) and (2) has been subject
to such filing requirements for the past 90 days. YES X NO: ____
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant' s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
As of March 20, 2000, the aggregate market value of voting stock held
by non-affiliates of the registrant, based on the closing sales price for the
registrant's common stock, as reported by the Nasdaq National Market was
approximately $88,925,124 (calculated by excluding shares owned beneficially by
directors and officers).
As of March 20, 2000 there were 12,458,478 shares of the
registrant's common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
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INDEX TO FORM 10-K
FOR
EDGAR ONLINE, INC.
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Item 1. Business ......................................................... 1
Item 2. Properties ....................................................... 23
Item 3. Legal Proceedings ................................................ 24
Item 4. Submission of Matters to a Vote of Security Holders .............. 24
PART II.
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters .............................................. 25
Item 6. Selected Consolidated Financial Data ............................. 25
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations ........................................ 27
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk ............................................................. 32
Item 8. Financial Statements and Supplementary Data ...................... 32
Item 9. Change in and Disagreements with Accountants on Accounting
and Financial Disclosure ......................................... 33
PART III.
Item 10. Directors and Executive Officers of the Registrant ............... 34
Item 11. Executive Compensation ........................................... 37
Item 12. Security Ownership of Certain Beneficial Owners and
Management ....................................................... 43
Item 13. Certain Relationships and Related Transactions ................... 46
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K .............................................................. 47
Signatures .................................................................. 50
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PART I
ITEM 1. BUSINESS
Certain statements contained in this Annual Report on Form 10-K ("Form
10-K") constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements involve known and
unknown risks, uncertainties and other factors that may cause our actual
results, levels of activity, performance or achievements to be materially
different than any expressed or implied by these forward-looking statements. In
some cases, you can identify forward-looking statements by terminology such as
"may," "will," "should," "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential," "continue," or the negative of these terms
or other comparable terminology.
Although we believe that the expectations in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements.
THE COMPANY
Overview
We are an Internet-based provider of business, financial and
competitive information about public companies. We derive this information
primarily from the SEC's EDGAR (Electronic Data Gathering Analysis and
Retrieval) filing system and provide it to corporations, Web sites and
individuals on a real-time basis. We enhance raw SEC filings by organizing and
processing them into an easily accessible and searchable format and use
proprietary software to extract specific information requested by our customers.
Our three primary sources of revenue are contracts with corporate customers,
subscribers to our Web site services and advertising revenues.
Corporate Sales
Sales to corporate customers is one of the fastest growing segments of
our business. These customers purchase our data for use on corporate intranets,
private networks and Web sites. Our proprietary data mining technology allows us
to provide specific information tailored to their particular needs. Our
corporate customers include companies in a broad range of industries including
financial service organizations, such as Merrill Lynch and Zurich Reinsurance,
and news service providers, such as Reuters and Standard & Poors. Within these
organizations, we tailor our services to various departments including
marketing, sales, human resources, financial and legal.
Subscriptions
We believe that EDGAR Online is the preeminent brand for EDGAR-based
business, financial and competitive information over the Internet. As of
February 29, 2000, we had more than 325,000 registered users, of which 14,500
were paying subscribers. We offer these services through
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our Web sites, located at www.edgar-online.com, www.ipo-express.com and
www.freeedgar.com. Revenues from these sites are generated through
the sale of subscriptions and other premium services.
Advertising
We also generate advertising revenues through the sale of banners and
sponsorship buttons on our Web sites and sponsored e-mail alerts to our
registered users. In the first quarter of 2000, our three Web sites delivered in
excess of 80 million ad impressions. We have contracts to deliver content to
more than 195 widely used Web sites including Yahoo!, Lycos, AltaVista,
Infoseek's GO Network, CNET's SNAP, Go2Net, Infospace, CBS MarketWatch,
SmartMoney.com, Business Wire and Track Data. These content distribution
agreements increase traffic to our Web sites and promote our brand name.
INDUSTRY BACKGROUND AND OPPORTUNITY
The EDGAR System
The SEC began to require electronic filings of compliance documents
such as prospectuses and annual and quarterly reports in 1994 and, since May
1996, all U.S. public companies have been required to make their SEC filings in
an electronic format through the EDGAR system. Certain foreign issuers have also
chosen to make their filings with the SEC through the EDGAR system. The SEC
established this system to perform automated collection and acceptance of
submissions by companies and others who are required to file disclosure
documents with the SEC. Prior to the introduction of the EDGAR system, SEC
filings were only available on a delayed basis in costly paper or CD-ROM format
from a limited number of document providers or SEC public reference rooms.
Business Information Market
Today's business environment is characterized by a rapidly growing
demand for fast and easy access to corporate and financial information. As a
result of the rapid growth of the Internet, corporate and financial information
can now be delivered in a more efficient and less expensive manner. Businesses
are using their intranets, private networks and Web sites to deliver competitive
and financial information to employees, customers and shareholders. SEC filings
are a primary source of this information. According to Simba Information,
revenues from the sale of business information delivered online in the U.S. are
projected to grow from approximately $40 billion in 1999 to approximately $53
billion in 2003. Simba Information also reports that paid online subscriptions
for business and professional information grew almost 47% in 1998 to 5.2 million
subscribers and increased in the first two quarters of 1999 to an estimated 6.1
million subscribers. We believe that our proprietary data mining technology and
brand name recognition will enable us to take advantage of the growth in this
market.
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STRATEGY
Our goal is to become the leading provider of EDGAR-based business,
financial and competitive information. We aim to meet the increasing market
demand for this information on a real-time, value-added and cost-effective
basis, by providing our customers with sophisticated methods of mining data from
EDGAR filings and other sources. We strive to maintain EDGAR Online as the most
reliable and trusted source of EDGAR-based information for corporate customers
and users of our Web services.
Increase Corporate Sales
Our objective is to continue to increase the number of corporate
customers purchasing our services and the amount of revenue generated by each
customer. We will use our proprietary technology to extract information for our
corporate customers and tailor this information to their specific needs. We
intend to offer our services to a broad range of business and professional
customers who have a variety of needs for the types of services we provide. We
are continuing to expand our sales force to target this market.
Expand Beyond the Internet to Reach New Customers
We believe that we have established EDGAR Online as a leading Internet
provider of EDGAR-based information. We intend to maintain this leadership
position on the Internet and are now beginning to target other existing and
emerging technologies to reach new customers. For example, we are developing
products and services for use in wireless network applications and are expanding
our sales efforts to news services and data vendors that are using proprietary
private networks.
Expand Internationally
Approximately eight percent of our current registered users are located
outside the United States. We intend to market our services more aggressively in
international markets. We intend to expand our database to include filings made
outside of the United States and provide our users with access to corporate and
financial information from these filings. This will enable us to meet both
foreign and domestic demand for information on non-U.S. based companies.
Expand Functionality and Content Offerings
We intend to introduce new value-added services to increase revenues
from our existing customer base and to attract new customers. We have
sophisticated search technology under development to further mine the data in
EDGAR filings and plan to market tailored products to specific end users. We are
also incorporating additional sources of business and financial information into
the services we offer to our clients.
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Enhance Brand Recognition
We have established strong brand identity in the EDGAR-based retrieval
market, in large part due to the high quality of our services and the extensive
availability of our branded information on the Internet. We intend to continue
to encourage our brand recognition by implementing an aggressive sales and
advertising campaign and by entering into additional strategic distribution
relationships.
Pursue Additional Strategic Alliances and Acquisitions
We will seek additional distribution relationships to ensure that we
remain the leading provider of EDGAR-based information on the Internet. We will
also seek additional strategic alliances or acquisitions that will enable us to
offer additional services, strengthen our selling efforts, improve technology
and gain access to complementary services or information that will be of
interest to our customer base.
PRODUCTS AND SERVICES
Corporate Sales
As of February 29, 2000, we had over 150 corporate customers
representing a broad range of industry sectors. These corporate customers pay
for having the content of SEC filings processed and delivered to them in ways
that best meet their internal needs. We believe that our corporate contract
services are attractive to professional firms and large corporations who benefit
from using our services to generate valuable business, financial and competitive
information to help them conduct their businesses more effectively. Through our
corporate contracts, we supply our information to customers for use on their
corporate intranets and extranets, subscription Web sites, corporate Web sites
and wireless and private networks.
Corporate intranets and extranets
We provide EDGAR content to corporate customers for their
internal use, including on their intranets and extranets. Each of these
corporate customers receives a tailored application for their internal use at a
price based on content and degree of customization. These services include
real-time delivery of selected types of filings or specific elements of filings
that contain information for such purposes as sales leads, tracking competitor
activity or comparing executive compensation levels. In addition, we offer bulk
sales of subscriptions to our Web site services to firms for use by their
employees.
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Subscription Web sites
We deliver EDGAR content to other subscription Web sites, such
as Multex.com, Newstraders, Scotttrade Securities and StreetFusion, that bundle
our content into their service offerings to the business and investment
community. These Web sites either integrate our services into their
comprehensive offerings or offer our services as higher cost options. We provide
Quote.com and Track Data with a digital feed of real-time header information
from all EDGAR filings. These Web sites offer this information to their paying
subscribers who can download real-time and historical full-text filings from our
Web sites.
Corporate Web sites
Many public companies maintain Web sites that contain
information about their businesses, management, press releases and other public
information. For a monthly fee, we supply a broad range of companies with their
company-specific EDGAR filings for display on their Web sites. This content is
typically part of the investor relations section of these companies' Web sites.
For example, many of these Web sites provide links to these companies' Form 10-K
and Form 10-Q filings, which we provide from our database of EDGAR filings. By
contracting with us, these companies are assured that their Web sites contain
their most recent EDGAR filings.
Wireless and Private Networks
We deliver EDGAR content to other information vendors such as
Reuters, ILX and Perfect Information, who make EDGAR Online information
available to their private network customers. These information vendors either
integrate our service into their comprehensive offerings or offer our services
for an additional fee. We are also seeking to extend these services to wireless
applications.
Our Web Sites
We operate three Web sites, each catering to the specific needs of a
different target audience. Together, these sites provide services that appeal to
both casual users of EDGAR information and to business professionals who require
a broader range of value-added services.
We seek to capture the fast-growing market of users of business and
financial information by offering low cost, value-added services to our paying
subscribers. We offer basic free content that encourages repetitive usage by
visitors to our Web sites. As of February 29, 2000, we had over 325,000
registered users, of which approximately 14,500 were paying subscribers. Based
on information from @plan., Inc., an Internet-focused market research provider,
we believe our individual users represent a demographic group characterized by
levels of education and personal income that are well above the average profile
of an Internet user. According to the registration data we collect, these
individuals are typically executives, research analysts, bankers, journalists,
attorneys, accountants, sales representatives, recruiters, business development
and marketing
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professionals. We provide them with cost-effective and flexible tools to obtain
information about companies' financial performance, competitive position,
strategic plans, products, expenditure plans, management changes, shareholder
changes, capital raising and other information reported in SEC filings.
The EDGAR Online Web site, located at www.edgar-online.com is our
premium value-added content service site. This site features up-to-the-second
listing of new EDGAR filings received by the SEC which can be sorted by company
name, form type or filing date. Users to the site are offered advanced searching
and filtering capabilities that allow users to combine multiple criteria to
search EDGAR filings using a company's name, ticker symbol, central index key
(CIK) code, industry, city, state, SEC form type and filing date range. Our
proprietary software also adds navigation features which makes it easier to find
specific information within the EDGAR filings. The site also allows users to
search the EDGAR database for information about individuals named in SEC
filings. Individual users who wish to access these full range of services pay a
monthly fee starting at $9.95. Our highest standard subscription rate of $99.95
per month entitles a user to unlimited access to real-time filings and Form 144
filings. Selected services are also available to non-paying registered and
non-registered users of our Web site. Our service also allows users to store
queries and sends e-mail or Web-based alerts immediately when new filings come
in that match the user's search criteria. Our software enables users the option
of viewing filings in either Hypertext Markup Language, Rich Text Format or on
Excel(r) Spreadsheet Format. For an additional fee, users can obtain a hard copy
of any filing by overnight delivery.
The FreeEDGAR Web site, located at www.freeedgar.com is our
value brand site. This site offers free access to all EDGAR filings as well as
limited navigation tools to help users find specific sections of the EDGAR
filing. The Web site also offers certain searching, display and alerting
features which are generally less comprehensive then the features on our premium
Web site. This Web site appeals to users of EDGAR information who are willing to
forego certain value-added features in exchange for free access to the EDGAR
filings. This site is supported by advertising revenues and provides an
opportunity to market the value-added services of our premium Web sites.
The EDGAR Online IPO Express Web site, located at
www.ipo-express.com is a specialized site which displays new public offerings as
they are filed, priced, postponed or withdrawn and provides daily and weekly
summaries of all companies filing IPO prospectuses with the SEC. Users can
quickly and easily access key sections of the prospectus, including competition,
risk factors, management and financial data, as well as key details such as
underwriters and ticker symbols. Users subscribing to our IPO Alert services can
also obtain e-mail or web-based alerts when IPO filings are made and when
specific IPO stocks begin trading.
Advertising
We have a contract with DoubleClick, an Internet advertising services
provider, to sell advertising on our Web sites. In February 2000, DoubleClick
sold advertising on our sites to over 225 companies. Our advertisers represent a
broad cross section of industries that are attracted by the
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subject matter of our Web sites and by the demographics of the users of our Web
sites. These advertisers include companies such as Datek Online Brokerage
Services, Fidelity Investments, Korn Ferry, GTE, Nortel Power and IBM.
KEY CONTENT DISTRIBUTION RELATIONSHIPS
In order to enhance our brand recognition and audience reach, we have
entered into, and are pursuing additional, content distribution contracts. We
provide EDGAR content to these partners in order to build traffic to our Web
sites. We have more than 195 of these content distribution contracts. These
contracts are typically for a one-year term, with automatic renewal, unless
either party cancels the agreement within 60 days of the then current term or at
any time in the event cause exists. We provide these sites with limited content
which they display on their sites using the EDGAR Online brand name. In return,
EDGAR Online sites benefit from increased traffic and resulting advertising
revenues, which occurs when users of these sites seek additional EDGAR-related
information.
Portal or search engine Web sites
We provide selected EDGAR content to portal and search engine sites,
including Yahoo!, Lycos, AltaVista, Infoseek's GO Network, CNET's SNAP, Go2Net
and Infospace. For example, we provide the Yahoo! Finance Web site with headline
information about SEC filings and the extracted Management's Discussion and
Analysis section of Forms 10-K and 10-Q on a real-time basis. We deliver
selected free information for display on other Web sites, such as Infoseek's GO
Network and Infospace. We also support co-branded pages, which provide links to
our Web sites where we have the opportunity to sell subscriptions. Our
agreements with these entities provide us with the right to sell advertising on
these co-branded pages. While we typically retain 100% of these advertising
revenues, under some of these arrangements, we share up to 20% with our
co-branded partners.
News, financial information and investment sites
We provide selected EDGAR content to news, financial information and
investing sites such as CBS MarketWatch, SmartMoney.com, Track Data, Business
Wire and Big Charts. These Web sites offer this information to their paying
subscribers who can download real-time and historical full text filings from our
Web sites. We support co-branded links to CBS MarketWatch, SmartMoney.com and
Business Wire.
MARKETING AND SALES
Historically, we have focused our business on building content
distribution relationships with major search engines and financially-oriented
and general information Web sites to build our brand recognition. These
co-branded relationships and our well-known presence on the Internet have
allowed us to attract individual subscribers and corporate customers.
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Since April 1999, we have hired a staff of seven professionals to
support our sales and marketing efforts. The exclusive focus of our sales staff
is to market our services to corporate customers. We believe that corporate
customers will represent an important source of revenue growth in the next few
years, as we continue to introduce value-added search and extraction products
and customized fee-based services to corporate purchasers of sophisticated
financial information. We intend to continue to increase the number of sales
professionals dedicated to marketing our services exclusively to corporate
accounts.
We have also undertaken expanded advertising campaigns to support our
sales efforts. We promote our services through print, on-line and broadcast
advertising, direct mail, trade shows and telemarketing. We also use free-trial
offers on our Web sites to encourage registered users and visitors to subscribe
to our services and to encourage existing subscribers to purchase additional
value-added services.
The open architecture of the Internet allows Web sites to link without
permission to Web pages they believe will benefit their users. We estimate that
more than 3,700 different Web sites provide links to our Web sites, thereby
generating extensive traffic to our sites and increasing our brand awareness.
PROPRIETARY DATA MINING SOFTWARE
We use database technology designed for us by iXL. This proprietary
technology integrates software that was developed exclusively for us by iXL with
software systems obtained commercially. The software developed for us by iXL
includes our database of EDGAR filings, Web-based customer interfaces, data
mining capabilities and customer support and billing systems. The software
systems obtained commercially include the Great Plains Accounting System, The
Verity Search Engine, DR-LINK natural language search engine, and NetOwl
Extractor. The nature of our proprietary system allows us to enhance our service
offerings by rapidly integrating new technology developed by third parties.
Over the last four years we have accumulated a large set of unique
software programs that enable us to perform the many complex data mining
functions necessary to deliver our services on a real-time and cost-effective
basis to both our Web and corporate customers. We believe these proprietary
programs, and the way we integrate them into a scalable system, give us a
significant advantage over any competitors who might attempt to match our speed
and accuracy in extracting data from the EDGAR database and delivering that data
to a large number of customers in a variety of formats.
INFRASTRUCTURE, OPERATIONS AND TECHNOLOGY
Much of our development programming is performed by iXL Enterprises,
Inc. iXL also manages www.edgar-online.com and www.ipo-express.com Web sites.
iXL has been our software developer since our inception. We own all the programs
that run our Web sites, including those
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developed by iXL. Our EDGAR Online and IPO Express Web sites are hosted at
facilities located at Globix Corporation in New York City. Globix maintains
multiple Web servers owned by us which run Microsoft NT operating systems and
use Microsoft Internet Information Server. The system is maintained on a 24
hours-a-day, 7 days-a-week basis remotely by iXL technicians with the exception
of our networking communications which are managed by Globix.
We also have a team of development and IT professionals located in
Kirkland, Washington. These professionals are responsible for hosting the
FreeEDGAR.com Web site and supporting the services being provided to a number of
our major corporate customers. They work closely with iXL and our operations and
development people in Norwalk, Connecticut, to create and support new service
offerings which can be deployed on each of our Web sites and offered to our
business-to-business customers.
All our systems, including our accounting system, user database and
database of EDGAR filings, and all proprietary software are backed up on a daily
basis and stored offsite. Our software and database are replicated across
multiple servers, using the clustering facilities of Microsoft Windows NT
Server, Enterprise edition. This provides us with both resilience against
hardware failure and with scalability to handle our increasing traffic loads.
The flow of information in and out of our sites operate as follows:
- the live feed of EDGAR filings comes from the SEC's
dissemination agent, TRW, which sends this feed both to Globix
in New York City and to our office in Kirkland, Washington via
a private high speed T-1 connection; and
- the raw EDGAR filings are processed independently by our
proprietary software and posted to our sites and distributed
to third parties with which we have distribution contracts via
production servers located at Globix's facilities and in
Kirkland, Washington.
Our services are available to users 24 hours-a-day, 7
days-a-week. Customer service is available weekdays 9:00 AM to 7:30 PM (ET).
Inquiries come in through our Web sites and via e-mail and telephone. At
February 29, 2000, we had 14 employees engaged in customer service and network
support.
COMPETITION
The market for Internet information services and products is relatively
new, has no substantial barriers to entry and is intensely competitive and
rapidly changing. The number of Web sites competing for consumers' and
advertisers' attention and spending has proliferated, and we expect that
competition will continue to intensify. We currently compete, directly and
indirectly, for corporate customers with vendors of financial information such
as Bloomberg and Disclosure and
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for subscribers, viewers and advertisers with Web-based providers of free EDGAR
information, such as 10KWizard.com and Global Security Information's LIVEDGAR
offering.
Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical and marketing
resources than we do. This may allow them to devote greater resources than we
can to the development and promotion of their services. These competitors may
also engage in more extensive research and development, undertake more
far-reaching marketing campaigns, adopt more aggressive pricing policies and
make more attractive offers to existing and potential employees, content
distribution partners and advertisers. Our competitors may offer EDGAR content
that achieves greater market acceptance than ours. It is also possible that new
competitors may emerge and rapidly acquire significant market share. While we
have good relationships with our growing list of customers, we may not be able
to retain these customers. Increased competition could result in price
reductions, reduced margins or loss of market share, any of which could
materially adversely affect our business, results of operations and financial
condition.
We also compete with other Web sites, television, radio and print media
for a share of advertisers' total advertising budgets. If advertisers perceive
the Internet in general or our Web sites in particular to be a limited or an
ineffective advertising medium, they may be reluctant to devote a portion of
their advertising budget to Internet advertising or to advertising on our Web
sites.
INTELLECTUAL PROPERTY
Our success depends significantly upon our proprietary technology. We
currently rely on a combination of copyright and trademark laws, trade secrets,
confidentiality procedures and contractual provisions to protect our proprietary
rights. All of our employees have executed confidentiality and non-use
agreements which provide that any rights they may have in copyrightable works or
patentable technologies belong to us. In addition, prior to entering into
discussions with third parties regarding our proprietary technologies, we
typically require that such parties enter into a confidentiality agreement. If
these discussions result in a license or other business relationship, we
typically also require that the agreement setting forth the parties' respective
rights and obligations include provisions for the protection of our intellectual
property rights.
The SEC has granted us a non-exclusive, royalty-free license to use the
name EDGAR in our logo and corporate name initially through 2008. We have
received notification from the U.S. Patent and Trademark Office that our
application to register our EDGAR Online trademark has proceeded to the
publication stage. Our trademark filing was the subject of an objection
proceeding by the owner of www.edgaronline.com. We have resolved this objection
proceeding via a court proceeding we brought against the owner of this Web site.
The court proceeding was settled in our favor resulting in our obtaining all
ownership rights to www.edgaronline.com. We are now in the process of having the
objection to our trademark application withdrawn and we expect the mark to be
registered within the next six months.
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GOVERNMENT REGULATION
We are subject, both directly and indirectly, to various laws and
governmental regulations relating to our business. There are currently few laws
or regulations directly applicable to online services of the Internet. However,
due to the increasing popularity and use of commercial online services and the
Internet, it is possible that a number of laws and regulations relating to
commercial online services and the Internet may be adopted. Such laws and
regulations may cover issues such as user privacy, pricing and characteristics
and quality of products and services. Moreover, the applicability to commercial
online services and the Internet of existing laws governing issues such as
property ownership, libel and personal privacy is uncertain and could expose us
to substantial liability. Any such new legislation or regulation or the
application of existing laws and regulations to the Internet could have a
material adverse effect on our business, results of operations and financial
condition.
Tax authorities in a number of states are currently reviewing the
appropriate tax treatment of companies engaged in Internet commerce. New state
tax regulations may subject us to additional state sales and income taxes. As
our service is available over the Internet anywhere in the world, multiple
jurisdictions may claim that we are required to qualify to do business as a
foreign corporation in each such jurisdiction. The failure by us to qualify as a
foreign corporation in a jurisdiction where we are required to do so could
subject us to taxes and penalties for the failure to qualify. It is also
possible that state and foreign governments might attempt to regulate our
transmissions of content on our Web sites.
EMPLOYEES
As of February 29, 2000, we had 45 full-time employees. We believe that
we have good relations with our employees.
CORPORATE HISTORY
We are a Delaware corporation and were formed in November 1995 under
the name Cybernet Data Systems, Inc. In January 1999, we changed our name to
EDGAR Online, Inc. Our executive offices are located at 50 Washington Street,
Norwalk, Connecticut 06854 and our telephone number is (203) 852-5666.
RISK FACTORS THAT MAY AFFECT FUTURE RESULTS
The following risk factors and other information included in this Form
10-K should be carefully considered. The risks and uncertainties described below
are not the only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial also may impair our business
operations. If any of the following risks actually occurs, our business,
financial condition and operating results could be materially adversely
affected.
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WE HAVE A LIMITED OPERATING HISTORY AND OUR FUTURE SUCCESS WILL DEPEND ON OUR
ABILITY TO INCREASE REVENUES.
As an early stage company in the new and rapidly evolving market for
the delivery of financial and business information over the Internet, we face
numerous risks and uncertainties in achieving increased revenues. We were
incorporated in November 1995 and launched our EDGAR Online Web site, located at
http://www.edgar-online.com, in January 1996. Accordingly, we have a limited
operating history on which you can evaluate our business and prospects. During
this period, we have invested heavily in our proprietary technologies to enable
us to carry out our business plan. These expenditures, in advance of revenues,
have resulted in operating losses in each of the last three years. In order to
be successful, we must increase our revenues from the sale of our services to
corporate customers, individual subscription fees and advertising sales. In
order to increase our revenues, we must successfully:
- create and successfully implement a marketing plan to (1)
attract more individual online users to our services, (2)
convert visitors to paying subscribers and (3) increase
corporate sales;
- continue to improve our market position as a commercial
provider of information services based on EDGAR filings;
- maintain our current, and develop new, content distribution
relationships with popular Web sites and providers of business
and financial information;
- maintain our current, and continue to increase, advertising
revenues by increasing traffic to our Web sites and by
increasing the number of advertisers;
- respond effectively to competitive pressures from other
Internet providers of EDGAR content;
- continue to develop and upgrade our technology; and
- attract, retain and motivate qualified personnel with Internet
experience to serve in various capacities, including sales and
marketing positions.
If we are not successful in addressing these uncertainties through the
execution of our business strategy, our business, results of operations and
financial condition will be materially adversely affected.
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WE HAVE A HISTORY OF LOSSES AND ANTICIPATE THAT LOSSES WILL CONTINUE.
As of December 31, 1999, we had an accumulated deficit of $8,909,321.
We may not ever generate sufficient revenues to achieve profitability. We
incurred net losses of $835,853 for the year ended December 31, 1996, $1,497,899
for the year ended December 31, 1997, $2,221,474 for the year ended December 31,
1998 and $4,162,861 for the year ended December 31, 1999. We expect operating
losses to continue for the foreseeable future as we continue to incur
significant operating costs and capital expenditures. As a result, we will need
to generate significant additional revenues to achieve and maintain
profitability. Even if we do achieve profitability, we cannot assure you that we
can sustain or increase profitability on a quarterly or annual basis in the
future. In addition, if revenues grow slower than we anticipate, or if operating
expenses exceed our expectations or cannot be adjusted accordingly, our
business, results of operations and financial condition will be materially
adversely affected.
FUTURE ENHANCEMENTS TO THE SEC'S EDGAR SYSTEM MAY ERODE DEMAND FOR OUR SERVICES.
Our future success will depend on our ability to continue to provide
value-added services that distinguish our Web sites from the type of
EDGAR-information available from the SEC on its Web site. Through its Web site,
the SEC provides free access to EDGAR filings on a time-delayed basis of 24 to
72 hours. If the SEC, which has recently announced that it intends to modernize
the EDGAR system, were to make changes to its Web site such as providing (1)
free real-time access to EDGAR filings or (2) value-added services comparable to
those provided on our Web sites, our business, results of operations and
financial condition would be materially adversely affected.
WE FACE INTENSE COMPETITION FROM OTHER PROVIDERS OF BUSINESS AND FINANCIAL
INFORMATION.
We compete with many providers of business and financial information,
including other Internet companies, for consumers' and advertisers' attention
and spending. Because our market poses no substantial barriers to entry, we
expect this competition to continue to intensify. The types of companies with
which we compete for users and advertisers include:
- traditional vendors of financial information, such as
Disclosure;
- proprietary information services and Web sites targeted to
business, finance and investing needs, including those
providing EDGAR content, such as Bloomberg, and LIVEDGAR; and
- Web-based providers of free EDGAR information such as
10K Wizard.com.
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<PAGE> 16
Our future success will depend on our ability to maintain and enhance
our market position by: (1) using technology to add value to raw EDGAR
information, (2) keeping our pricing models below those of our competitors and
(3) signing high-traffic Web sites to distribution contracts.
Our potential commercial competitors include entities that currently
license our content, but which may elect to purchase a real-time EDGAR database
feed (called a Level I EDGAR feed) directly from the SEC and use it to create
value-added services, similar to services provided by us, for their own use or
for sale to others. This risk is particularly serious in light of the fact that
the SEC has, as part of the modernization of the EDGAR system, introduced a new
dissemination system effective November 1, 1998 that reduced the annual
subscription cost of a Level I feed by approximately 73%. Effective January 1,
2000, the annual subscription costs were lowered by an additional 42%.
Many of our existing competitors, as well as a number of potential
competitors, have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical and marketing
resources than we do. This may enable them to respond more quickly to new or
emerging technologies and changes in the types of services sought by users of
EDGAR-based information, or to devote greater resources to the development,
promotion and sale of their services than we can. These competitors and
potential competitors may be able to undertake more extensive marketing
campaigns, adopt more aggressive pricing policies and make more attractive
offers to potential employees, subscribers and content distribution partners.
Our competitors may also develop services that are equal or superior to the
services offered by us or that achieve greater market acceptance than our
services. In addition, current and prospective competitors may establish
cooperative relationships among themselves or with third parties to improve
their ability to address the needs of our existing and prospective customers. If
these events occur, they could have a materially adverse effect on our revenue.
Increased competition could also result in price reductions, reduced margins or
loss of market share, any of which would adversely affect our business, results
of operations and financial condition.
WE MAY NOT BE SUCCESSFUL IN INCREASING BRAND AWARENESS.
Our future success will depend, in part, on our ability to increase the
brand awareness of our EDGAR Online, FreeEDGAR and IPOExpress Web sites. If our
marketing efforts are unsuccessful or if we cannot increase our brand awareness,
our business, financial condition and results of operations would be materially
adversely affected. In order to build our brand awareness, we must succeed in
our marketing efforts, provide high quality services and increase traffic to our
Web sites. We have devoted significant funds to expand our sales and marketing
efforts as part of our brand-building efforts. These efforts may not be
successful.
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<PAGE> 17
WE MAY NOT BE SUCCESSFUL IN DEVELOPING NEW AND ENHANCED SERVICES AND FEATURES
FOR OUR WEB SITES.
Our market is characterized by rapidly changing technologies, evolving
industry standards, frequent new product and service introductions and changing
customer demands. To be successful, we must adapt to our rapidly changing market
by continually enhancing our existing services and adding new services to
address our customers' changing demands. We could incur substantial costs if we
need to modify our services or infrastructure to adapt to these changes. Our
business could be adversely affected if we were to incur significant costs
without generating related revenues or if we cannot adapt rapidly to these
changes.
Our business could also be adversely affected if we experience
difficulties in introducing new or enhanced services or if these services are
not favorably received by users. We may experience technical or other
difficulties that could delay or prevent us from introducing new or enhanced
services. Furthermore, after these services are introduced, we may discover
errors in these services which may require us to significantly modify our
software or hardware infrastructure to correct these errors.
WE ARE DEPENDENT ON THE CONTINUED GROWTH OF THE EMERGING MARKET FOR ONLINE
BUSINESS AND FINANCIAL INFORMATION.
The success of our business will depend on the growing use of the
Internet for the dissemination of business and financial information. The number
of individuals and institutions that use the Internet as a primary source of
business and financial information may not continue to grow. The market for the
distribution of business and financial information, including EDGAR-based
content, over the Internet has only recently begun to develop, is rapidly
evolving and is characterized by an increasing number of market entrants who
have introduced or developed electronic distribution services over the Internet
and private networks. As is typical of a rapidly evolving industry, demand and
market acceptance for new services are subject to a high level of uncertainty.
Because the market for our products and services is new and rapidly
evolving, it is difficult to predict with any certainty what the growth rate, if
any, and the ultimate size of this market will be. We cannot be certain that the
market for our services will continue to develop or that our services will ever
achieve a significant level of market acceptance. If the market fails to
continue to develop, develops more slowly than expected or becomes saturated
with competitors, or if our services do not achieve significant market
acceptance, or if pricing becomes subject to considerable competitive pressures,
our business, results of operations and financial condition would be materially
adversely affected.
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<PAGE> 18
MAINTAINING EXISTING AND ESTABLISHING NEW CONTENT DISTRIBUTION RELATIONSHIPS
WITH HIGH-TRAFFIC WEB sitesS IS CRUCIAL TO OUR FUTURE SUCCESS.
Because our advertising revenues, which form a significant component of
our total revenues, depend to a great extent on the traffic to our Web sites,
our business could be adversely affected if we do not maintain our current, and
establish additional, content distribution relationships on commercially
reasonable terms or if a significant number of our content distribution
relationships do not result in increased use of our Web sites. We rely on
establishing and maintaining content distribution relationships with
high-traffic Web sites for a significant portion of the traffic on our Web
sites. There is intense competition for placements on high-traffic Web sites,
and we may not be able to maintain our present contractual relationships or
enter into any additional relationships on commercially reasonable terms, if at
all. Even if we maintain our existing relationships or enter into new content
distribution relationships with other Web sites, they themselves may not
continue to attract significant numbers of users. Therefore, our Web sites may
not continue to receive significant traffic or receive additional new users
from these relationships.
OUR BUSINESS COULD BE ADVERSELY AFFECTED BY A DOWNTURN IN THE FINANCIAL SERVICES
INDUSTRY.
We are dependent upon the continued demand for the distribution of
business and financial information over the Internet, making our business
susceptible to a downturn in the financial services industry. For example, a
decrease in the number of individuals investing their money in the equity
markets could result in a decrease in the number of subscribers utilizing our
Web sites for real-time access to EDGAR filings. This downturn could have a
material adverse effect on our business, results of operations and financial
condition.
WE DEPEND ON DOUBLECLICK FOR ADVERTISING REVENUES.
We anticipate that our results of operations in any given period will
continue to depend to a significant extent upon advertising revenues generated
through our relationship with DoubleClick, Inc., which has provided us with a
full range of advertising services for the last two years. DoubleClick's failure
to enter into a sufficient number of advertising contracts during a particular
period could have a material adverse effect on our business, financial condition
and results of operations. Historically, a limited number of customers, all
represented by DoubleClick, have accounted for a significant percentage of our
paid advertising revenues. For the twelve months ended December 31, 1999, our
DoubleClick-related paid advertising revenue was 30% of our total 1999 revenues.
Our existing agreement with DoubleClick can be canceled by either party
on 90 days notice. In addition, this agreement does not prohibit DoubleClick
from selling the same type of service that we currently receive from them to Web
sites that compete with our site. If DoubleClick is unable or unwilling to
provide these advertising services to us in the future, we would be required to
obtain
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<PAGE> 19
them from another provider or perform them ourselves. We would likely lose
significant advertising revenues while we are in the process of replacing
DoubleClick's services.
WE FACE INTENSE COMPETITION FOR ADVERTISING REVENUES AND THE VIABILITY OF THE
INTERNET AS AN ADVERTISING MEDIUM IS UNCERTAIN.
We compete with both traditional advertising media, such as print,
radio and television, and other Web sites for a share of advertisers' total
advertising budgets. Paid advertising revenues represented 24% and 30% of our
total revenues for the years ended December 31, 1998 and December 30, 1999,
respectively. If advertisers do not perceive the Internet to be an effective
advertising medium, companies like ours will be unable to compete successfully
with traditional media for advertising revenues. In addition, if we are unable
to generate sufficient traffic on our Web sites, we could potentially lose
advertising revenues to other Web sites that generate higher user traffic.
Because advertising sales make up a significant component of our revenues,
either of these developments could have a significant adverse impact on our
business, results of operations or financial condition.
WE MAY NOT BE ABLE TO CREATE AND DEVELOP AN EFFECTIVE DIRECT SALES FORCE.
Because a significant component of our growth strategy relates to
increasing our revenues from sales of our corporate services, our business would
be adversely affected if we were unable to develop and maintain an effective
sales force to market our services to this customer group. Until recently, we
had not employed any sales executives to sell our corporate services. During the
period March 1, 1999 through December 31, 1999, we hired seven corporate
salesmen whose task is to market and sell our services to the corporate market.
These efforts may not be successful.
WE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE OUR GROWTH.
We have experienced and are currently experiencing a period of
significant growth. If we are unable to manage our growth effectively, our
business will be adversely affected. This growth has placed, and our anticipated
future growth will continue to place, a significant strain on our technical,
financial and managerial resources. As part of this growth, we may have to
implement new operational and financial systems and procedures and controls to
expand, train and manage our employees, especially in the areas of sales and
product development.
WE FACE RISKS IN CONNECTION WITH OUR RECENT ACQUISITION AND OTHER ACQUISITIONS
AND BUSINESS COMBINATIONS THAT WE MAY CONSUMMATE.
We plan to continue to expand our operations and market presence by
making acquisitions, such as our recent FreeEDGAR acquisition and entering into
business combinations, investments, joint ventures or other strategic alliances
with other companies. These transactions create risks such as:
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<PAGE> 20
- difficulty assimilating the operations, technology and
personnel of the combined companies;
- disruption of our ongoing business;
- problems retaining key technical and managerial personnel;
- expenses associated with amortization of goodwill and other
purchased intangible assets;
- additional operating losses and expenses of acquired
businesses; and
- impairment of relationships with existing employees, customers
and business partners.
We may not succeed in addressing these risks. In addition, the business
we have acquired, and in the future may acquire, may continue to incur operating
losses.
WE DEPEND ON KEY PERSONNEL.
Our future success will depend to a significant extent on the continued
services of our senior management and other key personnel, particularly Susan
Strausberg, Chief Executive Officer, Marc Strausberg, Chairman and Chief
Information Officer, Tom Vos, President and Chief Operating Officer and Greg
Adams, Chief Financial Officer, each of whom are parties to written employment
agreements. The loss of the services of these, or certain other key employees,
would likely have a material adverse effect on our business. We do not maintain
"key person" life insurance for any of our personnel. Our future success will
also depend on our continuing to attract, retain and motivate other highly
skilled employees. Competition for personnel in our industry is intense. We may
not be able to retain our key employees or attract, assimilate or retain other
highly qualified employees in the future. If we do not succeed in attracting new
personnel or retaining and motivating our current personnel, our business will
be adversely affected. In addition, the employment agreements with our key
employees contain restrictive covenants that restrict their ability to compete
against us or solicit our customers. These restrictive covenants, or some
portion of these restrictive covenants, may be deemed to be against public
policy and may not be fully enforceable. If these provisions are not
enforceable, these employees may be in a position to leave us and work for our
competitors or start their own competing businesses.
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<PAGE> 21
WE DEPEND ON THIRD PARTIES FOR IMPORTANT ASPECTS OF OUR BUSINESS OPERATIONS.
We depend on third parties to develop and maintain the software and
hardware we use to operate our Web sites. iXL Enterprises, Inc., an Internet
strategy consulting company, develops, maintains and upgrades our proprietary
software, which includes those features which enable users to locate and
retrieve data, as well as our database of EDGAR filings, Web-based customer
interfaces and customer support and billing systems. While our contract with iXL
is currently on a month-to-month basis, we are in negotiations with iXL to amend
our agreement to provide for a more definitive term. If iXL were unable or
unwilling to provide these services, we would need to find a suitable
replacement. The failure to find a suitable replacement or to come to an
agreement with an acceptable alternate provider on terms acceptable to us could
materially adversely affect our business, results of operations and financial
condition.
We also have a hosting contract with Globix Corporation, a provider of
Internet services, pursuant to which Globix operates and maintains the Web
servers owned by us in their New York City data center. Our hosting contract
with Globix expires in July 2003. If Globix were unable or unwilling to provide
these services, we would have to find a suitable replacement. Our operations
could be disrupted while we were in the process of finding a replacement for
Globix and the failure to find a suitable replacement or to reach an agreement
with an alternate provider on terms acceptable to us could materially adversely
affect our business, results of operations and financial condition.
WE FACE A RISK OF SYSTEM FAILURE.
Our ability to provide EDGAR content on a real-time basis depends on
the efficient and uninterrupted operation of our computer and communications
hardware and software systems. Similarly, our ability to track, measure and
report the delivery of advertisements on our site depends on the efficient and
uninterrupted operation of a third-party system provided by DoubleClick. These
systems and operations are vulnerable to damage or interruption from human
error, natural disasters, telecommunication failures, break-ins, sabotage,
computer viruses, intentional acts of vandalism and similar events. Any system
failure, including network, software or hardware failure, that causes an
interruption in our service or a decrease in responsiveness of our Web sites
could result in reduced traffic, reduced revenue and harm to our reputation,
brand and relations with advertisers.
Our operations depend on Globix's ability to protect its and our
systems in its data center against damage from fire, power loss, water damage,
telecommunications failure, vandalism and similar unexpected adverse events.
Although Globix provides comprehensive facilities management services, including
human and technical monitoring of all production servers 24 hours-per-day, seven
days-per-week, Globix does not guarantee that our Internet access will be
uninterrupted, error-free or secure. Any disruption in the Internet access to
our Web sites provided by Globix could materially adversely affect our business,
results of operations and financial condition. Our insurance policies may not
adequately compensate us for any losses that we may incur because of any
failures
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<PAGE> 22
in our system or interruptions in the delivery of our services. Our business,
results of operations and financial condition could be materially adversely
affected by any event, damage or failure that interrupts or delays our
operations.
THERE ARE RISKS OF INCREASED USERS STRAINING OUR SYSTEMS AND OTHER SYSTEM
MALFUNCTIONS.
In the past, our Web sites have experienced significant increases in
traffic when there have been important business or financial news stories and
during the seasonal periods of peak SEC filing activity. In addition, the number
of our users has continued to increase over time and we are seeking to further
increase the size of our user base and the frequency with which they use our
services. Therefore, our Web sites must accommodate an increasingly high volume
of traffic and deliver frequently updated information. Our Web sites have in the
past, and may in the future, experience slower response times or other problems
for a variety of reasons, including hardware capacity restraints and software
failures. These strains on our system could cause customer dissatisfaction and
could discourage visitors from becoming paying subscribers. We also depend on
the Level I EDGAR feed we purchase in order to provide SEC filings on a
real-time basis. Our Web sites could experience disruptions or interruptions in
service due to the failure or delay in the transmission or receipt of this
information.
These types of occurrences could cause users to perceive our Web sites
as not functioning properly and cause them to use other methods, including the
SEC's Web site or those of our competitors, to obtain EDGAR-based information.
WE LICENSE THE TERM EDGAR FROM THE SEC AND DEPEND ON OTHER INTELLECTUAL
PROPERTY.
Trademarks and other proprietary rights, principally our proprietary
database technology, are important to our success and our competitive position.
The SEC is the owner of a United States trademark registration covering the use
of the term EDGAR. We have obtained a non-exclusive, royalty-free license from
the SEC to use the term EDGAR in our trademarks, service marks and corporate
name. This license is due to expire in September 2008. Since we have built
significant brand recognition through the use of the term EDGAR in our service
offerings, company name and Web sites, our business, results of operations and
financial condition could be adversely affected if we were to lose the right to
use the term EDGAR in the conduct of our business.
We seek to protect our trademarks and other proprietary rights by
entering into confidentiality agreements with our employees, consultants and
content distribution partners, and attempting to control access to and
distribution of our proprietary information. Despite our efforts to protect our
proprietary rights from unauthorized use or disclosure, third parties may
attempt to disclose, obtain or use our proprietary information. The precautions
we take may not prevent this type of misappropriation. In addition, our
proprietary rights may not be viable or of value in the
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future since the validity, enforceability and scope of protection of proprietary
rights in Internet-related industries is uncertain and still evolving.
Finally, third parties could claim that our database technology
infringes their proprietary rights. Although we have not been subjected to
litigation relating to these types of claims, such claims and any resultant
litigation, should it occur, could subject us to significant liability for
damages and could result in the invalidation of our proprietary rights. Even if
we prevail, such litigation could be time-consuming and expensive, and could
result in the diversion of our time and attention, any of which could materially
adversely affect our business, results of operations and financial condition.
Any claims or litigation could also result in limitations on our ability to use
our trademarks and other intellectual property unless we enter into license or
royalty agreements, which agreements may not be available on commercially
reasonable terms, if at all.
WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL FINANCING.
We currently anticipate that our available cash resources combined with
cash generated from operations will be sufficient to meet our anticipated
working capital and capital expenditure requirements for at least the next 12
months. We may need to raise additional funds, however, to fund potential
acquisitions, more rapid expansion, to develop new or enhance existing services,
or to respond to competitive pressures. We cannot assure you that additional
financing will be available on terms favorable to us, or at all. If adequate
funds are not available or are not available on acceptable terms, our ability to
fund our expansion, take advantage of unanticipated opportunities, develop or
enhance services or products or otherwise respond to competitive pressures would
be significantly limited. Our business, results of operations and financial
condition could be materially adversely affected by these financing limitations.
WE COULD BE LIABLE FOR OR ADVERSELY AFFECTED BY UNDETECTED YEAR 2000 PROBLEMS.
Our business may suffer as a result of defects relating to year 2000
compliance issues that have not yet been detected. Since our products run in
conjunction with the systems of our customers, our products could fail to
function properly if our customers' systems encounter year 2000 compliance
problems. If this happens, it could result in liability to us or adversely
affect our results of operations.
WE ARE DEPENDENT ON THE INTERNET INFRASTRUCTURE.
Our future success will depend, in significant part, upon the
maintenance of the various components of the Internet infrastructure, such as a
reliable backbone network with the necessary speed, data capacity and security,
and the timely development of enabling products, such as high-speed modems,
which provide reliable and timely Internet access and services. To the extent
that the Internet continues to experience increased numbers of users, frequency
of use or increased user bandwidth requirements, we cannot be sure that the
Internet infrastructure will continue to be able to
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<PAGE> 24
support the demands placed on it or that the performance or reliability of the
Internet will not be adversely affected. Furthermore, the Internet has
experienced a variety of outages and other delays as a result of damage to
portions of its infrastructure or otherwise, and such outages or delays could
adversely affect our Web sites and the Web sites of our co-branded partners, as
well as the Internet service providers and online service providers our
customers use to access our services. In addition, the Internet could lose its
viability as a commercial medium due to delays in the development or adoption of
new standards and protocols that can handle increased levels of activity. We
cannot predict whether the infrastructure and complementary products and
services necessary to maintain the Internet as a viable commercial medium will
be developed or maintained.
WE ARE SUBJECT TO UNCERTAIN GOVERNMENT REGULATION AND OTHER LEGAL UNCERTAINTIES
RELATING TO THE INTERNET.
There are currently few laws or regulations that specifically regulate
communications or commerce on the Internet. Any new laws or regulations relating
to the Internet could adversely affect our business. In addition, current laws
and regulations may be applied and new laws and regulations may be adopted in
the future that address issues such as user privacy, pricing, taxation and the
characteristics and quality of products and services offered over the Internet.
For example, several telecommunications companies have petitioned the Federal
Communications Commission to regulate Internet service providers and online
service providers in a manner similar to long distance telephone carriers and to
impose access fees on these companies. This could increase the cost of
transmitting data over the Internet, which could increase our expenses and
discourage people from using the Internet to obtain business and financial
information. Moreover, it may take years to determine the extent to which
existing laws relating to issues such as property ownership, libel and personal
privacy are applicable to the Internet.
WE FACE WEB SECURITY CONCERNS THAT COULD HINDER INTERNET COMMERCE.
Any well-publicized compromise of Internet security could deter more
people from using the Internet or from using it to conduct transactions that
involve transmitting confidential information, such as stock trades or purchases
of goods or services. Because a portion of our revenue is based on individuals
using credit cards to purchase subscriptions over the Internet and a portion
from advertisers who seek to encourage people to use the Internet to purchase
goods or services, our business could be adversely affected by this type of
development. We may also incur significant costs to protect against the threat
of security breaches or to alleviate problems, including potential private and
governmental legal actions, caused by such breaches.
WE COULD FACE LIABILITY AND OTHER COSTS RELATING TO OUR STORAGE AND USE OF
PERSONAL INFORMATION ABOUT OUR USERS.
Our policy is not to willfully disclose any individually identifiable
information about any user to a third party without the user's consent. This
policy statement is available to users of our
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subscription services when they initially register. Despite this policy,
however, if third persons were able to penetrate our network security or
otherwise misappropriate our users' personal or credit card information, we
could be subject to liability. These could include claims for unauthorized
purchases with credit card information, impersonation or other similar fraud
claims. They could also include claims for other misuses of personal information
such as for unauthorized marketing purposes. These claims could result in
litigation. In addition, the Federal Trade Commission and several states have
been investigating certain Internet companies regarding their use of personal
information. We could incur additional expenses if new regulations regarding the
use of personal information are introduced or if these regulators chose to
investigate our privacy practices.
WE MAY BE LIABLE FOR INFORMATION DISPLAYED ON OUR WEB SITES.
We may be subjected to claims for defamation, negligence, copyright or
trademark infringement, violation of the securities laws or other claims
relating to the information that we publish on our Web sites, which may
materially adversely affect our business. These types of claims have been
brought, sometimes successfully, against online services as well as other print
publications in the past. We could also be subjected to claims based upon the
content that is accessible from our Web sites through links to other Web sites.
Our general liability insurance may not cover these claims and may not be
adequate to protect us against all liabilities that may be imposed.
ITEM 2. PROPERTIES
Our principal executive offices are located in Norwalk, Connecticut,
where we lease 7,500 square feet of office space. The term of this lease expires
June 2006.
We also lease approximately 4,900 square feet of office space at 122
East 42nd Street, New York, New York. This facility houses sales and
administrative personnel. The term of this lease expires April 2007.
We also lease an aggregate of approximately 7,200 square feet of office
in Linbrook Office Park located at 10628 NE 37th Circle and 10635 NE 38th Place,
Kirkland, Washington, pursuant to two separate lease agreements. These
facilities house our West Coast development and operations personnel, the
computer and communications equipment needed to operate our FreeEDGAR.com Web
site and supports certain corporate offerings. The terms of these leases expire
in January 2003.
We believe that, in general, our physical properties are well
maintained, in good operating condition and adequate for their intended
purposes.
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ITEM 3. LEGAL PROCEEDINGS
We are not party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to security holders through the solicitation
of proxies or otherwise during the fourth quarter of our fiscal year ended
December 31, 1999.
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<PAGE> 27
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET PRICE FOR COMMON STOCK
Our common stock has been quoted on the Nasdaq National Market under
the symbol "EDGR" since our initial public offering on May 26, 1999. The
following table sets forth, for the periods indicated, the high and low sales
prices per share of common stock as reported on the Nasdaq National Market:
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
FISCAL YEAR ENDED DECEMBER 31, 1999
Second Quarter (from May 26, 1999) $ 8.8125 $ 6.2500
Third Quarter $19.0625 $ 7.3125
Fourth Quarter $ 9.5000 $ 6.7500
FISCAL YEAR ENDED DECEMBER 31, 2000
First Quarter (through March 20, 2000) $ 15.1250 $ 7.0938
</TABLE>
On March 20, 2000, the last reported sales price of the common stock
on the Nasdaq National Market was $12.00. As of March 20, 2000, there were
approximately 107 holders of record of our common stock.
DIVIDEND POLICY
We have not declared or paid any cash dividends on our capital stock
since inception. We intend to retain any future earnings to finance the
operation and expansion of our business and do not anticipate paying any cash
dividends in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA
The selected data presented below for, and as of the end of, each of
the years in the four-year period ended December 31, 1999, and for the period
from November 3, 1995 (inception) to December 31, 1995, are derived from our
audited financial statements. The financial statements for, and as of the end
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<PAGE> 28
of, each of the years in the three-year period ended December 31, 1999 have been
audited by KPMG LLP, independent certified public accountants, and those
financial statements and the report thereon are included elsewhere in this Form
10-K. The data set forth below should be read in connection with, and are
qualified by reference to, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our financial statements and the
related notes included elsewhere in this Form 10-K.
<TABLE>
<CAPTION>
PERIOD FROM
NOVEMBER 3, 1995 YEAR ENDED DECEMBER 31,
(INCEPTION) TO ----------------------------------------------------------------
DECEMBER 31, 1995 1996 1997 1998 1999
----------------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues ............................ $ -- $ 169,822 $ 1,044,138 $ 2,003,117 $ 5,249,358
Cost of revenues .................... -- 226,514 448,890 619,475 1,489,585
----------------- ---------- ----------- ----------- -----------
Gross profit ........................ -- (56,692) 595,248 1,383,642 3,759,773
Operating expenses:
Selling, general and administrative . 191,234 706,364 1,794,336 2,339,575 8,087,634
Amortization expense ................ -- -- -- -- 581,183
Stock compensation expense .......... -- -- -- 1,133,000 7,665
----------------- ---------- ----------- ----------- -----------
Loss from operations ................ (191,234) (763,056) (1,199,088) (2,088,933) (4,916,709)
Interest income and other, net ..... -- 72,547 298,561 132,291 754,098
----------------- ---------- ----------- ----------- -----------
Loss before income taxes ............ (191,234) (835,603) (1,497,649) (2,221,224) (4,162,611)
Income tax expense .................. -- 250 250 250 250
----------------- ---------- ----------- ----------- -----------
Net loss ............................ $ (191,234) $ (835,853) $(1,497,899) $(2,221,474) (4,162,861)
================= ========== =========== =========== ===========
Basic and diluted net loss per
share(1) .......................... $ (0.05) $ (0.19) $ (0.26) $ (0.36) $ (0.42)
================= ========== =========== =========== ===========
Basic and diluted weighted average
shares outstanding(1) ............. 4,000,000 4,302,466 5,655,151 6,129,116 9,805,456
================= ========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------------------------------
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents ....... $ -- $ 17,086 $ 16,809 $ 148,380 $10,108,656
Available-for-sale investments... -- -- -- -- 14,755,955
Working capital (deficit) ....... (8,735) (481,091) (1,339,280) (440,754) 23,529,849
Total assets .................... 41,751 200,368 366,254 784,943 37,739,114
Long-term debt .................. -- -- -- 1,473,858 --
Stockholders' equity (deficit)... (51,984) (356,837) (1,588,811) (2,220,946) 35,086,383
</TABLE>
(1) Diluted loss per share has not been presented separately, as the outstanding
stock options, warrants and convertible debenture are anti-dilutive for each of
the periods presented. Anti-dilutive potential common shares outstanding were 0,
1,489,099, 829,545, 653,400 and 1,047,207 for the period ended December 31,
1995, and the years ended December 31, 1996, 1997,1998, and 1999 respectively.
-26-
<PAGE> 29
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion of our financial condition and results of
operations contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Our actual results and timing of certain events could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including, but not limited to, those set forth under "Risk
Factors that May Affect Future Results" and elsewhere in this Form 10-K.
OVERVIEW
We are an Internet-based provider of business, financial and
competitive information about public companies. We derive this information
primarily from the SEC's EDGAR filing system and provide it to corporations, Web
sites and individuals on a real-time basis. We were founded in November 1995 as
Cybernet Data Systems, Inc. In January 1999, we changed our corporate name to
EDGAR Online, Inc.
We had no revenue in 1995. Our primary activities in 1995 related to
beginning development of our proprietary systems. In January 1996, we launched
our Web site and began selling our subscription services and establishing
contractual relationships with large Web portal and business and financial
information sites to supply EDGAR content for display on these sites. We started
selling advertising banners and sponsorships on our site in February 1997. We
have a limited operating history and are still in the early stages of
development.
We derive revenues from three primary sources: individual
subscriptions, corporate contracts and advertising. Revenue from individual
subscriptions and corporate contracts is deferred and recognized as income over
the subscription period. Revenue from advertising is recognized as the services
are provided. Individual subscriptions are typically billed in advance to
subscribers' credit cards and are collected, net of credit card transaction fees
deducted by the credit card processing institution, within one week of the sale.
Services related to corporate contracts are typically billed quarterly in
advance. Advertising revenue is paid to us by DoubleClick, net of advertising
placed and commission fees.
In addition, a portion of our revenues is derived from barter
transactions. Barter advertising revenue is a non-cash item and relates to
advertising placed on our Web sites by other Internet companies in exchange for
our advertising placed on their Web sites. Barter advertising revenue is
recorded in the month that banners are exchanged. The amount of barter
advertising revenue and expense is recorded at the fair market value of the
services received or provided, whichever is more objectively determinable. Other
barter revenue is also non-cash and relates to corporate contract sales for
which we received computer equipment or other non-cash consideration for
services provided. The amount of such revenues are recorded at the fair market
value of the equipment or services received or services provided, whichever is
more objectively determinable. Barter expenses reflect the expense offset to
barter revenue.
We intend to increase our operating expenses to fund increased
marketing and advertising, to enhance our
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<PAGE> 30
Web sites and to continue to establish relationships critical to our success.
In May 1999, we sold 3,600,000 shares of our common stock at a price of
$9.50 per share resulting in net proceeds of approximately $30.4 million. After
the application of a portion of the proceeds as described in our prospectus, we
have invested the remaining funds in short term, interest bearing investment
grade securities.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998
Revenues
Revenues increased 162% to $5.2 million for the year ended December 31,
1999, from $2.0 million for the year ended December 31, 1998. The growth in
revenues is primarily attributable to a $552,000 or 63%, increase in individual
subscription revenues, to $1.4 million in 1999 from $876,000 in 1998, a $805,000
or 258% increase in corporate contract revenues to $1.1 million in 1999 from
$311,000 in 1998, a $1.1 million or 234%, increase in advertising revenues to
$1.6 million in 1999 from $473,000 in 1998, and an increase of $783,000 or 229%
in barter revenues to $1.1 million in 1999 from $342,000 in 1998. The number of
individual subscriptions increased to approximately 13,000 subscriptions at
December 31, 1999 from approximately 6,000 subscriptions at December 31, 1998,
offset by a decrease in average revenue per subscriber due to a larger
percentage of new subscribers joining at our lowest subscription rate of $9.95
per month. The increase in corporate contract revenue resulted from an increase
in the number of corporate contracts in excess of $500 per month to
approximately 47 at December 31, 1999 from approximately 13 at December 31, 1998
and from the addition of corporate contracts obtained in connection with the
FreeEDGAR.com acquisition. The increase in advertising revenues is primarily due
to the purchase of FreeEDGAR.com, the increase in the number of advertisers and
ad impressions delivered, offset by a decrease in advertising rates. Revenue
increases were primarily due to increased marketing and corporate sales efforts,
which resulted in an expanded customer base of individual subscribers, a larger
number of corporate contracts and additional content distribution agreements
with other Web sites. All of these increases contributed to increased traffic on
our Web sites. The increase in barter advertising revenue is a result of
additional exchange of advertising with other Web sites, offset by the decrease
in advertising rates noted above.
Cost of Revenues
Cost of revenues consist primarily of fees paid to acquire the Level I
EDGAR database feed from the SEC, Web site maintenance charges and the costs
associated with our computer equipment and communications lines used in
conjunction with our Web sites. In addition, for each period, online barter
advertising expense is recorded equal to the online barter advertising revenue
for that period. Total cost of revenues increased 140% to $1.5 million for the
year ended December 31, 1999, from $619,000 for the year ended December 31,
1998. The increase in cost of revenues is primarily attributable to increases in
software and Web site maintenance and communications lines needed to handle
increased traffic. Gross margins increased to 72% for the year ended December
31, 1999 from 69% for the year ended December 31, 1998. In connection with the
preparation of the 1999 financial statements, the Company reclassified product
development expenses from cost of revenues to operating expenses in order to
better conform with industry presentation.
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<PAGE> 31
Operating Expenses
Sales and Marketing. Sales and marketing expenses consist primarily of
salaries and benefits, advertising commissions, advertising expenses, public
relations, and costs of marketing materials. Sales and marketing expenses
increased 672% to $2.8 million for the year ended December 31, 1999 from
$368,000 for the year ended December 31, 1998. As a percentage of revenues,
sales and marketing expenses increased to 54% for year ended December 31, 1999
from 18% for the year ended December 31, 1998. The increase in sales and
marketing expenses in dollar terms was due to an expansion of our sales force,
higher advertising commissions due to increased advertising volume, increased
marketing activities, including the development of our marketing materials and
expenditures to increase the EDGAR brand awareness. We expect sales and
marketing expenses to increase as we expand our marketing campaign and hire
additional sales and marketing personnel.
General and Administrative. General and administrative expenses consist
primarily of salaries and benefits, fees for professional services, general
corporate expenses and facility expenses, including depreciation of assets.
General and administrative expenses increased 185% to $4.4 million for the year
ended December 31, 1999 from $1.5 million for the year ended December 31, 1998.
As a percentage of revenues, general and administrative expenses increased to
84% for the year ended December 31, 1999 from 77% for the year ended December
31, 1998. The increase in general and administrative expenses in dollar terms
was primarily due to increased personnel, professional service fees and general
corporate expenses necessary to support our growth. We expect that general and
administrative expenses will increase in future periods as we hire additional
personnel and incur additional costs related to the growth of our business and
our operations as a public company.
Development. Development expenses increased 97% to $842,000 for the
year ended December 31, 1999 from $427,000 for the year ended December 31, 1998.
As a percentage of revenues, development expenses decreased to 16% for the year
ended December 31, 1999 from 21% for the year ended December 31, 1998. The
increase in development expenses in dollar terms is primarily due to the
expansion of content on our Web sites, and development of corporate products.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
Revenues
Revenues increased 92% to $2.0 million for the year ended December 31,
1998, from $1.0 million for the year ended December 31, 1997. The growth in
revenues is primarily attributable to a $424,000 or 94%, increase in individual
subscription revenues, to $876,000 in 1998 from $452,000 in 1997, a $93,000 or
42%, increase in corporate contract revenues to $312,000 in 1998 from $219,000
in 1997, a $306,000 or 184%, increase in advertising revenues to $473,000 in
1998 from $167,000 in 1997, and an increase of $136,000 or 66% in barter
revenues to $342,000 in 1998 from $207,000 in 1997. The number of individual
subscriptions increased to approximately 6,000 subscriptions at December 31,
1998 from approximately 2,700 subscriptions at December 31, 1997. The increase
in corporate contract revenue resulted from an increase in the number of
corporate contracts in excess of $500 per month to approximately 13 at December
31, 1998 from approximately 7 at December 31, 1997. The increase in advertising
revenues is primarily due to the increase in the number of advertisers and ads
-29-
<PAGE> 32
delivered, offset by a decrease in advertising rates. Revenue increases were
primarily due to increased marketing efforts, which resulted in an expanded
customer base of individual subscribers, a larger number of corporate contracts
and additional content distribution agreements with other Web sites. All of
these increases contributed to increased traffic on our Web site. The increase
in barter advertising revenue is a result of additional exchange of advertising
with other Web sites, offset by the decrease in advertising rates.
Cost of Revenues
Cost of revenues consist primarily of fees paid to acquire the Level I
EDGAR database feed from the SEC, Web site maintenance charges and the costs
associated with our computer equipment and communications lines used in
conjunction with our Web sites. In addition, for each period, online barter
advertising expense is recorded equal to the online barter advertising revenue
for that period. Total cost of revenues increased 38% to $619,000 for the year
ended December 31, 1998, from $449,000 for the year ended December 31, 1997. The
increase in cost of revenues is primarily attributable to increases in software
and Web site maintenance and communications lines needed to handle increased
traffic. Gross margins increased to 69% for the year ended December 31, 1998
from 57% for the year ended December 31, 1997.
Operating Expenses
Selling and Marketing. Sales and marketing expenses consist primarily
of salaries and benefits, advertising commissions, advertising expenses, public
relations, and costs of marketing materials. Sales and marketing expenses
increased 120% to $368,000 for the year ended December 31, 1998 from $167,000
for the year ended December 31, 1997. As a percentage of revenues, sales and
marketing expenses increased to 18% for year ended December 31, 1998 from 16%
for the year ended December 31, 1997. The increase in sales and marketing
expenses in dollar terms was due to an expansion of our sales force, higher
advertising commissions due to increased advertising volume, increased marketing
activities, including the development of our marketing materials and
expenditures to increase the EDGAR brand awareness.
General and Administrative. General and administrative expenses consist
primarily of salaries and benefits, fees for professional services, general
corporate expenses and facility expenses, including depreciation of assets.
General and administrative expenses increased 30% to $1.5 million for the year
ended December 31, 1998 from $1.2 million for the year ended December 31, 1997.
As a percentage of revenues, general and administrative expenses decreased to
77% for the year ended December 31, 1998 from 114% for the year ended December
31, 1997. The increase in general and administrative expenses in dollar terms
was primarily due to increased personnel, professional service fees and general
corporate expenses necessary to support our growth.
Development. Development expenses decreased 2% to $427,000 for the year
ended December 31, 1998 from $434,000 for the year ended December 31, 1997. As a
percentage of revenues, development expenses decreased to 21% for the year ended
December 31, 1998 from 42% for the year ended December 31, 1997.
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<PAGE> 33
SELECTED QUARTERLY REVENUE RESULTS
The following table sets forth unaudited revenue results for each of
our last eight fiscal quarters. In the opinion of management, this unaudited
quarterly information has been prepared on a basis consistent with our audited
consolidated financial statements and includes all adjustments (consisting of
normal and recurring adjustments) that management considers necessary for a fair
presentation of the data. These quarterly revenue results are not necessarily
indicative of future quarterly patterns or revenue results. This information
should be read in conjunction with our financial statements and the related
notes included elsewhere in this Form 10-K.
THREE MONTHS ENDED
<TABLE>
<CAPTION>
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30 SEPT. 30 DEC. 31
1998 1998 1998 1998 1999 1999 1999 1999
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUE SOURCES:
Individual
subscriptions .......... $184,345 $216,017 $245,963 $248,626 $273,603 $ 331,314 $ 387,083 $ 435,834
Corporate contracts ..... 24,972 74,436 77,171 116,325 151,844 159,503 271,652 533,359
Advertising ............. 80,118 122,133 118,932 151,739 83,734 269,846 481,420 744,446
Barter advertising ...... 82,626 66,652 50,224 63,937 96,775 242,875 346,350 297,611
Other barter ............ 12,500 18,750 18,750 29,000 35,501 34,500 32,999 39,109
-------- -------- -------- -------- -------- ---------- ---------- ----------
Total ................ $384,461 $497,988 $511,040 $609,627 $641,457 $1,038,038 $1,519,504 $2,050,359
======== ======== ======== ======== ======== ========== ========== ==========
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
In May 1999 we completed an IPO of 3,600,000 shares of our common stock
resulting in net proceeds of approximately $30.4 million.
Net cash used in operating activities was $4.0 million and $867,000 for
the years ended December 31, 1999 and 1998, respectively. We have historically
financed these activities through private debt placements and the sale of equity
instruments to investors. Net cash provided by financing activities was $31.0
million for the year ended December 31, 1999.
Capital expenditures, primarily for computers, office and
communications equipment, totaled $1.0 million for the year ended December 31,
1999 and $78,000 for the year ended December 31, 1998. The purchases were
required to support our expansion and increased infrastructure.
At December 31, 1999, we had cash and cash equivalents on hand of $10.1
million and available-for-sale investments and marketable securities of $14.8
million. We believe that our existing capital resources and cash generated from
operations, will be sufficient to meet our anticipated cash needs for working
capital and capital expenditures for at least the next 12 months. Thereafter, if
cash generated from operations is insufficient to satisfy our liquidity
requirements, we may need to raise additional funds through public or private
financings, strategic relationships or other
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<PAGE> 34
arrangements. There can be no assurance that such additional funding, if needed,
will be available on terms attractive to us, or at all. The failure to raise
capital when needed could materially adversely affect our business, results of
operations and financial condition. If additional funds are raised through the
issuance of equity securities, the percentage ownership of our then-current
stockholders would be reduced.
YEAR 2000 ISSUE
We did not experience any significant problems as a result of the Year 2000. At
January 1, 2000, our proprietary software, information technology ("IT") systems
and non-IT systems recognized the 2000 date and processed information related to
the operation of our Web sites and provided the value-added services to our
customers. We also have not experienced any problems related to our suppliers or
other parties on whom we rely in managing our Web sites or providing the
value-added services to our customers.
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Fluctuations
We are exposed to market risk primarily through investments in
available-for-sale investments. Our policy calls for investment in short-term
low risk investments. As of December 31, 1999, available-for-sale investments
were $14.8 million. Due to the short-term maturity of these investments,
any decrease in interest rates would not have a material effect on our financial
statements.
Currency Rate Fluctuations
Our results of operations, financial position and cash flows are not
materially affected by changes in the relative values of non-U.S. currencies to
the U.S. dollar. We do not use derivative financial instruments to limit our
foreign currency risk exposure.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this Item 8 are set forth in Item
14 of this Form 10-K. All information which has been omitted is either
inapplicable or not required.
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<PAGE> 35
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
During fiscal year 1999 there were no changes in or disagreements with
our independent accountant on accounting or financial disclosure.
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<PAGE> 36
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
As of March 20, 2000, the directors and executive officers of EDGAR
Online, Inc. were as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Susan Strausberg (1) .................. 60 Chief Executive Officer, Secretary and Director
Marc Strausberg (1) ................... 65 Chairman of the Board, Chief Information Officer and
Director
Tom Vos (1) ........................... 52 President, Chief Operating Officer and Director
Greg D. Adams ......................... 38 Chief Financial Officer
Brian Fitzpatrick ..................... 43 Vice President of Corporate Sales
Jay Sears ............................. 33 Vice President of Marketing and Business Development
David Trenck .......................... 26 Vice President of Operation
Celine Duffy .......................... 34 Vice President of Internet Marketing
Marc H. Bell (2) (3) .................. 31 Director
Bruce Bezpa (3) ....................... 43 Director
Stefan Chopin (2) ..................... 40 Director and Chief Technology Consultant
Mark Maged (2) ........................ 65 Director
</TABLE>
- -------------------------
(1) Member of the Outside Directors Compensation Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
Susan Strausberg, a co-founder of EDGAR Online, has served as Chief
Executive Officer and Secretary since EDGAR Online was formed in November 1995.
From December 1994 until the formation of EDGAR Online, Ms. Strausberg was a
consultant to Internet Financial Network. In her capacity as Chief Executive
Officer, Ms. Strausberg oversees strategic planning and development and is
responsible for the production of the EDGAR Online Web site. Ms. Strausberg has
served on the Board of Directors of RKO Pictures since December 1998. Ms.
Strausberg, the wife of Mr. Strausberg, EDGAR Online's Chairman, has a B.A.
degree from Sarah Lawrence College.
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<PAGE> 37
Marc Strausberg, a co-founder of EDGAR Online, has served as Chairman
of the Board of Directors and President since EDGAR Online was formed in
November 1995. Mr. Strausberg resigned as President upon the election of Tom Vos
to this position in March 1999. In December 1994, Mr. Strausberg co-founded
Internet Financial Network, a financial information vendor and served as IFN's
co-chairman until founding EDGAR Online. From 1992 to 1994, Mr. Strausberg was
the publisher of the Livermore Report, a newsletter that focused on the
valuation of initial public offerings. From August 1987 to December 1994, Mr.
Strausberg served as Chairman and President of Sindex Inc., which provided
computer-based trading operations to individuals, hedge funds and brokerage
firms. Mr. Strausberg oversees product development for EDGAR Online. Mr.
Strausberg, the husband of Ms. Strausberg, EDGAR Online's Chief Executive
Officer, has a B.A. degree from Muhlenberg College.
Tom Vos joined EDGAR Online as a Director in August 1996 and was
elected Chief Operating Officer in March 1998. Mr. Vos was elected President in
March 1999. Mr. Vos is responsible for EDGAR Online's day-to-day operations.
From September 1986 until March 1998, Mr. Vos was Vice President of Marketing at
Bowne & Co., Inc. In that capacity, Mr. Vos was responsible for strategic
planning, acquisitions and new product development. While at Bowne, Mr. Vos was
also responsible for advertising and public relations and for the development of
both Bowne's Web site and its EDGAR services department. Mr. Vos has a B.S.
degree in Physics from Notre Dame University, an M.S. degree in Electrical
Engineering from Ohio State University and an M.B.A. degree from Pace
University.
Greg D. Adams joined EDGAR Online as Chief Financial Officer in March
1999. Mr. Adams is a Certified Public Accountant with diversified business
experience in both the public and private sectors. From November 1997 to March
1999, Mr. Adams served as the Senior Vice President -- Finance and
Administration of PRT Group Inc., a technology solutions and services company.
Mr. Adams served as Chief Financial Officer of PRT Group Inc. from May 1996 to
October 1997. From June 1994 to May 1996, Mr. Adams was the Chief Financial
Officer of the Blenheim Group Inc., a publicly held UK information technology
exposition and conference management company. From August 1983 to June 1994, Mr.
Adams served as Senior Manager in the areas of audit and business advisory
services with KPMG Peat Marwick. He is a member of the New York State Society of
Certified Public Accountants and the American Institute of Certified Public
Accountants. Mr. Adams has a B.B.A. degree in Accounting from the College of
William & Mary.
Brian Fitzpatrick joined EDGAR Online as Vice President of Corporate
Sales in March 1999. From August 1998 to March 1999, he was Regional Vice
President, Sales and Marketing for Iverson Financial Systems, Inc., a business
information provider, and from April 1993 to August 1998, he was Vice President,
Sales and Marketing of Newsware, Inc, a financial news service. From August 1991
to March 1993 he was the National Accounts Manager of Desktop Data, a real-time
news and information filtering business. From 1986 to 1991, he was Key Accounts
Manager of Walsh Greenwood Information Systems, a provider of PC-based
intelligent market data systems for the financial services industry. Mr.
Fitzpatrick has a B.A. degree from Boston University.
Jay Sears joined EDGAR Online as Vice President of Marketing and
Business Development in May 1997. Mr. Sears is responsible for strategic
alliances, content syndication, content sales, advertising sales, membership and
direct marketing, public relations and general marketing for EDGAR Online. From
September 1995 to April 1997, Mr. Sears was Vice President of Marketing for
Wolff New Media, a publisher of Internet and printed guides to the Internet.
From July 1991 to August 1995, Mr. Sears was a Senior Account Supervisor at
Creamer Dickson
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<PAGE> 38
Basford, an international marketing, communications and public relations firm.
Mr. Sears has a B.A. degree from Kenyon College.
David Trenck joined EDGAR Online in December 1995 as its first employee
and was responsible for data entry and customer support. In May 1998, he became
Vice President of Operations. Mr. Trenck is in charge of product implementation
and liaison with iXL, EDGAR Online's primary service offering developer.
Celine Duffy joined EDGAR Online as the Director of Member Acquisition
in October 1998, and was promoted to Vice President of Internet Marketing in
November 1999. She is responsible for building and retaining the retail
subscriber base for EDGAR Online. Prior to joining EDGAR Online, Ms. Duffy was
the Manager of Special Projects for the flagship club of the Book of the Month
Club division of Time, Inc. From 1995 to 1996, she was the Director of Marketing
for Equinox Fitness, a health and fitness company with multiple locations in New
York City and Westchester County. From 1989 to 1995, Ms. Duffy held a variety of
positions at CUC International (now Cendant), a leading direct marketer of
membership services. Ms. Duffy has a B.A. from the University of Connecticut.
Marc H. Bell joined EDGAR Online as a member of the Board of Directors
in August 1998. Mr. Bell has been the President and Chief Executive Officer of
Globix Corporation since its inception in 1989. Mr. Bell has a B.S. degree from
Babson College and an M.S. degree from New York University.
Bruce Bezpa joined EDGAR Online as a member of the Board of Directors
in March 1999. He has worked for Bowne & Co., Inc., a leading financial printer
and provider of Internet, localization and outsourcing services, for 15 years in
various capacities including as Vice President-Strategic Development (since July
1996), Director-Mutual Funds Services from August 1994 to June 1996 and
Director-Marketing from April 1989 to July 1994. Mr. Bezpa holds B.A. and M.B.A.
degrees from Rutgers University.
Stefan Chopin joined EDGAR Online as a member of the Board of Directors
in 1996. As the Chief Technology Consultant to EDGAR Online, Mr. Chopin is
responsible for software interface development and systems integration and
maintenance. Mr. Chopin is the founder and President of Pequot Systems, a
software development and consulting firm. In October 1998, Pequot was acquired
by iXL Enterprises, Inc. and began operating as iXL Financial Services. Prior to
founding Pequot. Systems in November 1995, Mr. Chopin served as the Vice
President of Engineering for Micrognosis, Inc., a leading provider of trading
room systems.
Mark Maged joined EDGAR Online as a member of the Board of Directors in
March 1999. He has been Chairman since 1995 and Chief Executive Officer since
January 1997, of Internet Tradeline, Inc., an operator of electronic shopping
malls on the Internet. During the eight years prior to becoming Chief Executive
Officer of Internet Tradeline, Mr. Maged, either individually or as Chairman of
MJM Associates, LLC, engaged in various private investment banking activities in
the United States and internationally. From 1975 through 1983, he served as
President and Chief Executive Officer of Schroder's Incorporated, which operated
banking, investment banking and investment management businesses as the United
States arm of Schroders PLC, an international merchant bank. He is currently a
member of the Board of Directors of Commodore Holdings Limited. He holds a
bachelor's degree from the City College of New York and both a master's degree
and a law degree from Harvard University.
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<PAGE> 39
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued
for the fiscal years ended December 31, 1999 and 1998 by our Chief Executive
Officer and our five most highly compensated executive officers (other than our
Chief Executive Officer) (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------------------------------------- ------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER OPTIONS (#)
- --------------------------- ---- ------ ----- ----- -----------
<S> <C> <C> <C> <C> <C>
Susan Strausberg........................... 1999 $150,000 $70,000 (4) ---
Chief Executive Officer 1998 $150,000(1) --- --- ---
Marc Strausberg............................ 1999 $150,000 $70,000 (4) ---
Chairman and Chief Information 1998 $150,000(1) --- --- ---
Officer (2)
Tom Vos.................................... 1999 $125,000 $70,000 (4) --- 100,000
President and Chief Operating 1998 $ 93,750(3) --- --- 200,000
Officer
Greg Adams................................. 1999 $ 93,269(5) $62,500 $ 3,254 125,000
Chief Financial Officer
Brian Fitzpatrick.......................... 1999 $ 91,346 $100,000 --- 60,000
Vice President of
Corporate Sales
Jay Sears.................................. 1999 $115,096 $70,000 $11,760 25,000
Senior Vice President of Marketing 1998 $ 97,400 $10,000 --- 65,000
and Business Development
</TABLE>
(1) In 1998, $92,788 of this amount was deferred and not paid.
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<PAGE> 40
(2) Mr. Strausberg served as President during 1998.
(3) Mr. Vos joined EDGAR Online as Chief Operating Officer on March 31,
1998 and earns salary at the rate of $125,000 per annum. He was elected
by the Board of Directors to the additional position of President in
March 1999.
(4) These bonuses have been awarded as deferred compensation.
(5) Mr. Adams joined EDGAR Online as Chief Financial Officer in May 1999
and earns salary at the rate of $125,000 per annum.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding stock options
granted to the Named Executive Officers during 1999. We have never granted any
stock appreciation rights.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
-------------------------------- POTENTIAL REALIZABLE
NUMBER OF PERCENT OF VALUE AT ASSUMED
SECURITIES TOTAL OPTIONS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION FOR
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION OPTION TERM (3)
-----------------------
NAME GRANTED 1999 (2) SHARE ($) DATE 5% 10%
- ---- ------- -------- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Susan Strausberg............... - - - - - -
Marc Strausberg................ - - - - - -
Tom Vos........................ 100,000 16.76% $4.50 March 25, 2009 $751,310 $1,462,885
Greg Adams..................... 109,000 18.26% $4.50 March 25, 2009 $818,928 $1,594,545
16,000 2.68% $9.50 May 25, 2009 $40,210 $154,062
Brian Fitzpatrick.............. 60,000 10.05% $4.00 March 25, 2009 $200,327 $378,221
Jay Sears...................... 25,000 4.19% $4.50 March 25, 2009 $450,786 $877,731
</TABLE>
- -------------------------
(1) Each option represents the right to purchase one share of common stock.
The options shown in this table were all granted under our 1996 Stock
Option Plan, except for the 16,000 options granted to Greg Adams, which
were granted under our 1999 Stock Option Plan.
(2) In the year ended December 31, 1999, we granted options to employees to
purchase an aggregate of 596,790 shares of common stock.
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<PAGE> 41
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The 5%
and 10% assumed annual rates of compounded stock price appreciation are
mandated by the rules of the SEC and do not represent our estimate or
projection of future common stock price growth. These amounts represent
certain assumed rates of appreciation in the value of our common stock
from the fair market value on the date of grant. Actual gains, if any,
on stock option exercises are dependent on the future performance of
the common stock and overall stock market conditions. The amounts
reflected in the table may not necessarily be achieved.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information concerning the exercise of
stock options during the fiscal year ended December 31, 1999 by each of the
Named Executive Officers and the fiscal year-end value of unexercised options.
No options were exercised by any of the Named Executive Officers during this
period.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1999 DECEMBER 31, 1999 (1)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Susan Strausberg.................. -- -- -- --
Marc Strausberg................... -- -- -- --
Tom Vos............................ 200,000 100,000 $1,425,000 $287,500
Greg Adams......................... -- 125,000 -- $313,375
Brian Fitzpatrick................. -- 60,000 -- $202,500
Jay Sears.......................... 65,000 25,000 $463,125 $71,875
</TABLE>
- -----------------------
(1) The fair market value of the common stock as of December 31, 1999 was
$7.375.
EMPLOYMENT AGREEMENTS
We entered into a five year amended and restated employment agreement
dated as of May 6, 1999 with Susan Strausberg. The agreement extends
automatically for an additional year at the end of the initial term and each
anniversary thereafter unless 30-day prior notice of termination is provided by
either Ms.
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<PAGE> 42
Strausberg or EDGAR Online. The agreement provides for an annual salary of
$150,000, and an annual bonus at the discretion of the Board. In the event there
is a change of control (as defined in the agreement) and Ms. Strausberg's
employment is terminated (either by her or the employer) within one year
thereafter, Ms. Strausberg will receive a severance benefit equal to the product
of 2.99 times the sum of (1) her then applicable annual base salary and (2) the
average of her last two annual cash bonuses. Additionally, the agreement
contains non-compete and non-solicitation provisions effective during the term
of her employment and for one year thereafter.
We entered into a five year amended and restated employment agreement
dated as of May 6, 1999 with Marc Strausberg. The agreement extends
automatically for an additional year at the end of the initial term and each
anniversary thereafter unless 30-day prior notice of termination is provided by
either Mr. Strausberg or EDGAR Online. The agreement provides for an annual
salary of $150,000, and an annual bonus at the discretion of the Board. In the
event there is a change of control (as defined in the agreement) and Mr.
Strausberg's employment is terminated (either by him or the employer) within one
year thereafter, Mr. Strausberg will receive a severance benefit equal to the
product of 2.99 times the sum of (1) his then applicable annual base salary and
(2) the average of his last two annual cash bonuses. Additionally, the agreement
contains non-compete and non-solicitation provisions effective during the term
of his employment and for one year thereafter.
We have entered into a two year employment agreement dated April 23,
1999 with Tom Vos to serve as President and Chief Operating Officer. The
agreement extends automatically for an additional year at the end of the initial
term and each anniversary thereafter unless 30-day prior notice of termination
is provided by either Mr. Vos or EDGAR Online. The agreement provides Mr. Vos
with an annual salary of $125,000 and an annual bonus at the discretion of the
Board. In addition, if Mr. Vos remains employed by us at the end of the initial
term, he will be entitled to receive a retention bonus equal to two years of his
then applicable base salary, plus the average of his last two annual cash
bonuses. Mr. Vos will also receive a severance payment identical to the
retention bonus described above in the event there is a change of control (as
defined in the agreement) and Mr. Vos' employment is terminated (either by him
or the employer) within one year thereafter. Additionally, the agreement
contains a non-compete and non-solicitation provision effective during the term
of his employment and for one year thereafter.
We have entered into a three year amended and restated employment
agreement dated May 3, 1999 with Greg Adams to serve as Chief Financial Officer.
The agreement extends automatically for an additional year at the end of the
initial term and each anniversary thereafter unless 30-day prior notice of
termination is provided by either Mr. Adams or EDGAR Online. The agreement
provides Mr. Adams with (1) an annual salary of $125,000, (2) an annual bonus at
the discretion of the Board, provided that Mr. Adams will be entitled to a
minimum bonus of $62,500 for the first year of his employment and (3) a $500
monthly car allowance. Mr. Adams also received options to purchase (a)
109,000 shares of common stock at an exercise price of $4.50 per share, which
will vest 25% in year one and 75% in year two and (b) 16,000 shares of common
stock at the initial public offering price per share, which will vest equally
over a three-year period. In addition, the agreement contains a severance
arrangement whereby Mr. Adams is entitled to receive a payment determined as
follows in the event he is terminated without cause: (a) six months salary if
the termination occurs within the first six months of his employment, (b) twelve
months salary if the termination occurs between the seventh and eighteenth month
of his employment and (c) eighteen months salary if the termination occurs at
anytime following the eighteenth month of his employment. Additionally, the
agreement
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<PAGE> 43
contains a non-compete and non-solicitation provision effective during the term
of his employment and for one year thereafter.
We have entered into a three year employment agreement dated March 11,
1999 with Brian Fitzpatrick to serve as Vice President of Corporate Sales. The
agreement provides Mr. Fitzpatrick with (1) an annual salary of $125,000 and (2)
an annual bonus at the discretion of the Board, provided that Mr. Fitzpatrick
will be entitled to a minimum annual bonuses of (a) $100,000 for 1999, (b)
$125,000 for 2000 and (c) $150,000 for 2001. Mr. Fitzpatrick received a signing
bonus of $85,000 when he joined us. Mr. Fitzpatrick also received options to
purchase 60,000 shares of common stock at an exercise price of $4.00 per share,
which will vest equally over a three-year period. Additionally, the agreement
contains a non-compete and non-solicitation provision effective during the term
of his employment and for nine months thereafter in the case of the non-compete
provision and one year thereafter in the case of the non solicitation provision.
We have entered into an employment agreement dated May 19, 1997 with
Jay Sears, which may be terminated by either party upon 30-days prior notice.
The agreement provides Mr. Sears with an annual salary of $80,000 and an annual
bonus at the discretion of the Board. Mr. Sears' annual salary was increased to
$100,000 effective August 1998. If Mr. Sears' employment is terminated without
cause, we will pay him six months of his total annual compensation.
Additionally, the agreement contains non-compete and non-solicitation provisions
effective during the term of his employment and for six months thereafter in the
case of the non-compete provision and one year thereafter in the case of the
non-solicitation provision.
STOCK OPTION PLANS
EDGAR Online's currently active stock option plans include our 1996
Stock Option Plan, 1999 Stock Option Plan and 1999 Outside Directors Stock
Option Plan. Each of the plans, except for the 1999 Outside Directors Stock
Option Plan, provide for:
- the grant of incentive stock options and non-qualified stock
options; and
- the current administration of the plans by the Compensation
Committee.
The exercise price of options granted under each plan are determined by
the Compensation Committee, except that the exercise price of incentive stock
options must be at least as equal to the fair market value of EDGAR Online's
common stock on the date of grant. Each of the plans authorizes the Board to
provide for option vesting to accelerate and become fully vested in the event of
certain significant corporate transactions if the options are not assumed or
substituted by a successor corporation.
The 1996 Stock Option Plan (the "1996 Plan"), which provides for the
granting of options to purchase up to an aggregate of 800,000 shares of our
authorized but unissued common stock (subject to adjustment in certain cases,
including stock splits, recapitalization and reorganizations) to our officers,
directors, employees and consultants, was ratified and confirmed in November
1998. The 1999 Stock Option Plan (the "1999 Plan"), which provides for the
granting of options to purchase up to an aggregate of 600,000 shares of our
authorized but unissued common stock (subject to adjustment in certain cases,
including stock splits, recapitalization and reorganizations) to our officers,
directors, employees and consultants, was adopted in March 1999. The 1996 and
1999 Stock Option Plans are intended as an incentive to encourage stock
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<PAGE> 44
ownership by officers and certain of our other employees in order to increase
their proprietary interest in our continued growth and success and to encourage
such employees to remain in the employ of EDGAR Online.
No incentive stock option may be granted to an individual who, at the
time the option is granted, owns, directly or indirectly, stock possessing more
than 10% of the total combined voting power of all classes of our common stock,
unless (1) such option has an exercise price of at least 110% of the fair market
value of the common stock on the date of the grant of such option and (2) such
option cannot be exercised more than five years after the date it is granted.
Under the 1999 Outside Directors Stock Option Plan, there are up to
100,000 shares authorized for issuance. Each new non-employee director will be
granted, at the time of his or her appointment and on each third anniversary
thereafter, a nonstatutory option to purchase 7,500 shares of common stock. The
exercise price of each of these options will be equal to the fair market value
of our common stock on the date of grant. These options will vest equally over a
three-year period. Under the 1999 Outside Directors Stock Option Plan, our
existing non-employee directors will not be eligible for options grants until
the date of our annual stockholders' meeting to be held in 2002.
As of March 20, 2000, 800,000 options were authorized under the 1996
Plan and options to purchase 768,500 shares were outstanding and 21,500 options
were available for future grants. As of March 20, 2000 600,000 options were
authorized under the 1999 Plan, options to purchase 409,000 shares were
outstanding and 191,000 options were available for future grants. As of March
20, 2000, 100,000 options were authorized under the 1999 Outside Directors Stock
Option Plan, no options to purchase shares had been granted and 100,000 options
were available for future grants. As of March 20, 2000, 48,900 options were
authorized under the FreeEDGAR Stock Option Plan and 28,852 shares were
available for future grant under the FreeEDGAR Stock Option Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No interlocking relationships exist between any members of EDGAR
Online's Board of Directors or Compensation Committee and the board of directors
or compensation committee of any other company, nor has any such interlocking
relationship existed in the past. The Company has business and financial
relationships with Globix Corporation and iXL Enterprises, Inc. Marc Bell is the
President and Chief Executive Officer of Globix Corporation. Stefan Chopin is a
Vice President of iXL Enterprises, Inc. Our relationships with Globix and iXL
are described below.
Globix
In July 1998, we issued a 10% convertible debenture in the principal
amount of $1,000,000 to Globix Corporation along with warrants to purchase
666,667 shares of common stock at an exercise price of $1.50 per share. The
terms of the transaction were determined as the result of arm's length
bargaining between the parties. As part of this transaction, our agreement with
Bowne was amended to modify certain of Bowne's rights and to include Globix as a
party, thereby providing Globix with the same anti-dilution rights, tag-along
rights and Board participation rights as Bowne. In May 1999, Globix converted
its debenture and exercised its warrants, thereby acquiring 1,336,667 shares of
our common stock. In July 1998, we also entered into a five-year hosting
contract with Globix that requires us to co-locate our Internet servers at the
Globix facility in New York City. During 1999 and 1998, we paid Globix a total
of $546,111 and $6,513, respectively under
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<PAGE> 45
this contract. We believe that the terms of our agreements with Globix are
beneficial to EDGAR Online and no less favorable to EDGAR Online than terms
which might be available to us from unaffiliated third parties.
Pequot Systems (iXL)
EDGAR Online and Pequot Systems ("Pequot") shared equally the costs of
a single lease on 6,600 square feet of space. We occupy half of this space and
were jointly obligated with Pequot on the lease. This arrangement with Pequot
ended in June 1999, when we entered into a separate lease for our facilities in
Norwalk, Connecticut. Since our inception, we have outsourced our technology
development to Pequot. During 1995, in partial payment for services rendered,
Pequot received warrants to purchase shares of common stock at an exercise price
of $.05 per share. The warrants were exercised in May 1997. In March 1998,
Pequot agreed to accept shares of our common stock valued at $1.25 per share in
partial payment for services rendered. As a result of these two transactions,
Pequot received 359,384 shares of common stock. In 1999 and 1998, we paid Pequot
a total of $989,368 and $610,073, respectively, for services provided. As a
result of the acquisition of Pequot by iXL, an unrelated company, in 1998, the
shares owned by Pequot were transferred to Pequot's founders, including Stefan
Chopin, the founder and President of Pequot. Mr. Chopin has been a member of our
Board of Directors since 1996. We believe that the terms of our agreements with
Pequot are beneficial to EDGAR Online and no less favorable to EDGAR Online than
terms which might be available to us from unaffiliated third parties.
DIRECTOR COMPENSATION
No cash compensation has ever been paid to any of the directors of
EDGAR Online for service in such capacity. However, directors are currently
eligible to receive stock options every three years under EDGAR Online's 1999
Stock Option Plan. In March 1999, each of our non-employee directors was granted
options to purchase 10,000 shares of common stock at an exercise price of $4.50
per share. Non-employee directors of EDGAR Online will be eligible to receive
non-discretionary, automatic grants of options to purchase common stock as part
of our 1999 Outside Directors Stock Option Plan.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of March 20, 2000 by (1) each of our
directors, including our Chief Executive Officer, (2) our five most highly
compensated executive officers, other than our Chief Executive Officer, who were
serving as executive officers at the end of 1999, (3) all our executive officers
and directors as a group and (4) each person who we know owns beneficially more
than 5% of our common stock. Unless otherwise indicated, the address of each
beneficial owner listed below is c/o EDGAR Online, Inc., 50 Washington Street,
Norwalk, CT 06854.
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<PAGE> 46
<TABLE>
<CAPTION>
NUMBER PERCENT
OF OF
NAME OF BENEFICIAL OWNER SHARES (1) CLASS
- ------------------------ ---------- -----
<S> <C> <C>
Executive Officers and Directors:
Susan Strausberg (2)................... 3,312,000 26.58%
Marc Strausberg (3).................... 3,312,000 26.58%
Tom Vos (4)............................ 290,000 2.28%
Greg Adams (5) ........................ 54,500 *
Brian Fitzpatrick (6) ................. 40,000 *
Jay Sears (7).......................... 80,000 *
Stefan Chopin (8)(9)................... 342,717 2.75%
c/o iXL Enterprises, Inc.
50 Washington Street
Norwalk, CT 06854
Bruce Bezpa(9)......................... 3,333 * 0
405 Patton Avenue
Piscataway, NJ 08854
Marc Bell(9)(10)....................... 1,340,000 10.75%
c/o Globix Corporation
295 Lafayette Street
New York, NY 10012 (9)
Mark Maged (9)......................... 3,333 *
c/o Internet Tradeline, Inc.
111 West 40th Street
New York, NY 10018
All executive officers and directors 5,521,883 42.70%
as a group (12 persons) ..............
Other 5% Stockholders:
Globix Corporation..................... 1,336,667 10.73%
295 Lafayette Street
New York, NY 10012
</TABLE>
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<PAGE> 47
<TABLE>
<CAPTION>
<S> <C> <C>
Bowne & Co., Inc....................... 1,000,000 8.03%
345 Hudson Street
New York, NY 10014
Track Data Corporation................. 810,572 6.51%
56 Pine Street
New York, NY 10005
</TABLE>
- ---------------------------
* Represents beneficial ownership of less than 1%.
(1) Shares of common stock subject to options currently exercisable or
exercisable within 60 days of March 20, 2000 are deemed outstanding for
the purpose of computing the percentage ownership of the person holding
such options but are not deemed outstanding for computing the
percentage ownership of any other person. Unless otherwise indicated
below, the persons and entities named in this table have sole voting
and sole investment power with respect to all shares beneficially
owned, subject to community property laws where applicable.
(2) Includes 156,000 shares owned by Ms. Strausberg's husband, Marc
Strausberg, EDGAR Online's Chairman of the Board and 3,000,000 shares
owned by TheBean LLC. Ms. Strausberg is a managing member of TheBean
LLC and as such she may be deemed to be the beneficial owner of all the
shares held by TheBean LLC. Ms. Strausberg disclaims beneficial
ownership of the shares owned by her husband.
(3) Includes 156,000 owned by Mr. Strausberg's wife, Susan Strausberg,
EDGAR Online's Chief Executive Officer and 3,000,000 shares owned by
TheBean LLC. Mr. Strausberg is a managing member of TheBean LLC and as
such he may be deemed to be the beneficial owner of all the shares held
by TheBean LLC. Mr. Strausberg disclaims beneficial ownership of the
shares owned by his wife.
(4) Includes 250,000 shares issuable upon exercise of options exercisable
within 60 days of March 20, 2000.
(5) Includes 54,500 shares issuable upon exercise of options exercisable
within 60 days of March 20, 2000.
(6) Includes 20,000 shares issuable upon exercise of options exercisable
within 60 days of March 20, 2000.
(7) Includes 80,000 shares issuable upon exercise of options exercisable
within 60 days of March 20, 2000.
(8) Includes shares owned jointly with Barbara Chopin, his wife.
(9) Includes 3,333 shares issuable upon exercise of options exercisable
within 60 days of March 20, 2000.
(10) Includes 1,336,667 shares owned by Globix Corporation. Mr. Bell is the
President and Chief Executive Officer of Globix Corporation. In such
capacities, Mr. Bell may be deemed to be the beneficial owner of such
shares, although he disclaims beneficial ownership except to the extent
of his pecuniary interest, if any.
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<PAGE> 48
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Bowne & Co., Inc.
In 1997, we borrowed $500,000 pursuant to a line-of-credit extended to
us by Bowne & Co., Inc. These loans were evidenced by promissory notes which
were originally due on December 30, 1997, each at an interest rate of 12% prior
to the maturity date and 18% thereafter. EDGAR Online and Bowne have
subsequently agreed to two extensions on the repayment of these notes, which
were due on February 28, 2000. These loans were guaranteed by Marc Strausberg.
The principal and accrued interest on the loans were repaid to Bowne on May 31,
1999 with a portion of the proceeds of our IPO.
EDGAR Online sells certain EDGAR content to Bowne and provides Bowne
with EDGAR Online services in its offices. Bowne also pays EDGAR Online for
advertising it places on the EDGAR Online Web site. In 1999, EDGAR Online
charged Bowne a total of $ 98,000 for these services. We believe that the terms
of our agreements with Bowne are beneficial to EDGAR Online and no less
favorable to EDGAR Online than terms which might be available to us from
unaffiliated third parties.
Globix Corporation
For information regarding our relationship with Globix, see "Item 11.
Executive Compensation -- Compensation Committee Interlocks and Insider
Participation."
Track Data Corporation
In conjunction with our formation, Track Data Corporation, a business
information company and one of our principal stockholders, extended a $100,000
loan to EDGAR Online at an interest rate of prime plus 2% and received and
subsequently exercised warrants to purchase 810,572 shares of common stock.
Track Data purchases EDGAR content which it uses in conjunction with the
services that it offers. These services were paid for through reductions in the
principal amount of this loan. During 1999 and 1998, the loan was reduced by
$59,448 and $42,250 in this fashion. We believe that our agreements with Track
Data are beneficial to EDGAR Online and no less favorable to EDGAR Online than
terms which may be available to us from unaffiliated third parties.
Pequot Systems (iXL)
For information regarding our relationship with iXL, see "Item 11.
Executive Compensation - Compensation Committee Interlocks and Insider
Participation."
Susan Strausberg And Marc Strausberg
From time to time, we have received cash loans from and have made cash
advances to Susan Strausberg and Marc Strausberg, our founders. These loans bear
interest at the prime rate applied to the net outstanding balance. The net
amounts owed to EDGAR Online at December 31, 1997 and 1998 were $51,114
and $141,554, respectively. During this same period, Susan Strausberg and
Marc Strausberg agreed to defer all or most of their annual salaries of $150,000
each. The aggregate amount of deferred
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<PAGE> 49
compensation for the two of them combined at December 31, 1997 and 1998 was
$600,000 and $785,577, respectively. These deferred salaries, net of the loans
outstanding to them, were repaid to Susan and Marc Strausberg upon consummation
of our IPO.
PART IV
Item. 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
3.01 Certificate of Incorporation(1)
3.02 Amended and Restated Certificate of Incorporation(2)
3.03 Bylaws (2)
4.01 Form of Specimen Stock Certificate for Registrant's Common
Stock(2)
4.02 10% Convertible Subordinated Debenture due 2001(1)
4.03 Warrant to Purchase Common Stock (1)
10.01 Form of Indemnity Agreement to be entered into between the
Registrant with each of its directors and executive
officers(2)
10.02 1996 Stock Option Plan(1)
10.03 1999 Stock Option Plan(2)
10.04 1999 Outside Directors Stock Option Plan(2)
10.05 Amended and Restated Employment Agreement dated as of May 6,
1999 between the Registrant and Marc Strausberg(2)
10.06 Amended and Restated Employment Agreement dated as of May 6,
1999 between the Registrant and Susan Strausberg(2)
10.07 Employment Agreement, dated as of April 23, 1999, between
the Registrant and Tom Vos(2)
10.08 Employment Agreement, dated as of May 3, 1999, between the
Registrant and Greg Adams(2)
10.09 Employment Agreement, dated as of March 11, 1997, between
the Registrant and Brian Fitzpatrick(2)
10.10 Employment Agreement, dated as of May 19, 1997, between the
Registrant and Jay Sears(2)
10.11 Employment Agreement, dated as of May 3, 1999, between
Registrant and David Trenck(2)
10.12 Securities Purchase Agreement, dated as of July 23, 1998 by
and between the Registrant and Globix Corporation(1)
10.13 Form of Registration Rights Agreement for December 1998
Investors(2)
10.14 Form of Subscription Agreement, including registration
rights, for March 1999 Investors(2)
</TABLE>
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<PAGE> 50
<TABLE>
<CAPTION>
<S> <C>
10.15 Lease Agreement, dated April 4, 1997 by and between 50
Washington Street Realty Corp., Pequot Systems, Inc. and the
Registrant (1)
10.16 Dissemination Services Agreement dated September 11, 1998 by
and between TRW, Inc. and the Registrant (1)
10.17 Trademark License Agreement dated March 26, 1999 between the
U.S. Securities and Exchange Commission and the Registrant
(2)
10.18 Agreement dated March 1, 1998 by and between the Registrant
and Pequot Systems, Inc. (2)
10.19 Form of Content License Agreement (2)
10.20 Restated Equity Purchase Agreement by and among the
Registrant, Bowne & Co., Inc., Globix Corporation, Marc
Strausberg, Susan Strausberg and Michael Horowitz (2)
10.21 Procurement and Trafficking Agreement dated August 29, 1997
by and between the Registrant and DoubleClick Inc. (3)
10.22 Agreement dated July 23, 1998 by and between the Registrant
and Globix Corporation with annexed Co-location Service
Agreement (3)
10.23 Agreement of Lease, dated June 7, 1999, by and between Sono
Equities LLC and 1122 Associates LLC, as Owner, and the
Registrant, as Tenant.
10.24 Office Lease Agreement, dated January 28, 2000, by and
between Yett Family Partnership, L.P. and the Registrant,
regarding 10628 NE 37th Circle, Kirkland, Washington.
10.25 Office Lease Agreement, dated January 28, 2000, by and
between Yett Family Partnership, L.P. and the Registrant,
regarding 10635 NE 38th Place, Kirkland, Washington.
27 Financial Data Schedule (EDGAR Version Only)
</TABLE>
- ------------
(1) Incorporated by reference to exhibit with corresponding number
filed with the registrant's Registration Statement on Form S-1
(the "Registration Statement"), as filed with the Commission
on March 30, 1999.
(2) Incorporated by reference to exhibit with corresponding number
filed with Amendment No.1 to the Registration Statement, as
filed with the Commission on May 7, 1999.
(3) Incorporated by reference to exhibit with corresponding number
filed with Amendment No.2 to the Registration Statement, as
filed with the Commission on May 19, 1999.
(b) Reports on Form 8-K --
Report on Form 8-K, dated September 24, 1999, and Report on Form 8-KA,
dated November 22, 1999, filed with the Securities and Exchange
Commission reporting our acquisition of FreeEDGAR.com, Inc. pursuant to
the terms and conditions of an Agreement and Plan of Merger.
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<PAGE> 51
(c) Financial Statements and Financial Statement Schedules
The consolidated financial statements of the Company filed as part of this Form
10-K are filed on pages F-1 to F-23 to this Form 10-K. The financial statement
schedule required by Regulation S-X follows.
Schedule II - Valuation and Qualifying Accounts
EDGAR Online, Inc.
Financial Statement Schedule
Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
Charged
Balance at to Costs Charged Balance at
Beginning and to Other End of
Description of Period Expenses Accounts Deductions(1) Period
<S> <C> <C> <C> <C> <C>
Allowance for Doubtful Accounts Receivable
Year ended December 31, 1997 $ - - 22,500 - - - - 22,500
Year ended December 31, 1998 $22,500 62,207 - - (53,165) 31,542
Year ended December 31, 1999 $31,542 84,000 154,661 (82,311) 187,892
(1) Write-offs of receivables.
</TABLE>
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted because
they are not required under the related instructions or are inapplicable, or
because the information has been provided in the Financial Statement or the
Notes thereto.
-49-
<PAGE> 52
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
EDGAR Online, Inc.
By: /s/ SUSAN STRAUSBERG
Susan Strausberg
Chief Executive Officer
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ---- ----- ----
<S> <C> <C>
/s/ SUSAN STRAUSBERG Chief Executive Officer, March 30, 2000
- ----------------------------- and Director
Susan Strausberg
/s/ GREG D. ADAMS Chief Financial Officer March 30, 2000
- -----------------------------
Greg D. Adams
DIRECTORS:
/s/ MARC STRAUSBERG Chairman of the Board March 30, 2000
- -----------------------------
Marc Strausberg
/s/ TOM VOS President, Director March 30, 2000
- -----------------------------
Tom Vos
/s/ MARC BELL Director March 30, 2000
- -----------------------------
Marc Bell
</TABLE>
-50-
<PAGE> 53
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ STEFAN CHOPIN Director March 30, 2000
- -----------------------------
Stefan Chopin
/s/ MARK MAGED Director March 30, 2000
- -----------------------------
Mark Maged
/s/ BRUCE BEZPA Director March 30, 2000
- -----------------------------
Bruce Bezpa
</TABLE>
-51-
<PAGE> 54
EDGAR ONLINE, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditor's Report F-2
Balance Sheets as of December 31, 1999 and 1998 F-3
Statements of Operations for the Years ended December 31, 1999, 1998, and 1997 F-4
Statements of Changes in Stockholders' Equity (Deficit) for the Years ended
December 31, 1999, 1998, and 1997 F-5
Statements of Cash Flows for the Years ended December 31, 1999, 1998, and 1997 F-6
Notes to Financial Statements F-7
</TABLE>
<PAGE> 55
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Stockholders
EDGAR Online, Inc.:
We have audited the accompanying balance sheets of EDGAR Online, Inc. as of
December 31, 1999 and 1998 and the related statements of operations, changes in
stockholders' equity (deficit), and cash flows for each of the years in the
three-year period ended December 31, 1999. In connection with our audits of the
financial statements, we also have audited the financial statement schedule
listed under Item 14(c). These financial statements and financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of EDGAR Online, Inc. as of
December 31, 1999 and 1998 and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 1999, in
conformity with generally accepted accounting principles. Also in our opinion,
the related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents, fairly, in all material
respects, the information set forth therein.
KPMG LLP
Stamford, CT
February 1, 2000
F-2
<PAGE> 56
EDGAR ONLINE, INC.
Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31,
ASSETS 1999 1998
------------ ----------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 10,108,656 148,380
Available-for-sale investments 14,755,955 ---
Accounts receivable, less allowance for
doubtful accounts of $187,892 and $31,542, respectively 1,117,636 134,815
Other current assets 128,746 6,710
------------ ----------
Total current assets 26,110,993 289,905
Property and equipment, net 2,024,431 411,720
Intangible assets 9,303,948 ---
Deferred financing costs --- 77,018
Other assets 299,742 6,300
------------ ----------
Total assets $ 37,739,114 784,943
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accrued expenses $ 1,426,568 66,944
Accounts payable 722,436 328,764
Deferred revenues 353,905 208,451
Capital lease payable, current portion 78,235 52,477
Current portion of notes payable --- 59,448
Due to employee --- 14,575
------------ ----------
Total current liabilities 2,581,144 730,659
Notes payable, long-term --- 1,414,410
Capital lease obligation, long-term 71,587 82,993
Accrued interest payable --- 133,804
Due to officers, net --- 644,023
------------ ----------
Total liabilities 2,652,731 3,005,889
Stockholders' equity (deficit):
Common stock, $.01 par value, 30,000,000 shares
authorized, 12,457,989 and 6,331,290 shares issued
and outstanding at December 31, 1999 and 1998,
respectively 124,580 63,313
Preferred stock, $0.01 par value, 1,000,000 shares
authorized, no shares issued or outstanding --- ---
Additional paid-in capital 43,915,642 2,462,201
Unrealized holding losses (44,518) ---
Accumulated deficit (8,909,321) (4,746,460)
------------ ----------
Total stockholders' equity (deficit) 35,086,383 (2,220,946)
------------ ----------
Total liabilities and stockholders' equity (deficit) $ 37,739,114 784,943
============ ==========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 57
EDGAR ONLINE, INC.
Statements of Operations
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1999 1998 1997
---------------------- --------------------- ---------------------
Revenues:
<S> <C> <C> <C>
Individual subscription revenue $ 1,427,834 876,146 451,939
Corporate contract revenue 1,116,358 311,609 218,847
Advertising revenue 1,579,446 472,922 166,671
Barter advertising revenue 983,611 263,440 206,681
Other barter revenue 142,109 79,000 ---
---------------------- --------------------- ---------------------
5,249,358 2,003,117 1,044,138
---------------------- --------------------- ---------------------
Cost of revenues:
Software and Web site development 505,974 356,035 242,209
Barter advertising expense 983,611 263,440 206,681
---------------------- --------------------- ---------------------
1,489,585 619,475 448,890
---------------------- --------------------- ---------------------
Gross profit 3,759,773 1,383,642 595,248
Operating expenses:
Selling and marketing 2,839,192 367,733 167,009
General and administrative 4,406,852 1,544,988 1,193,014
Product development 841,590 426,854 434,313
Amortization expense 581,183 --- ---
Stock compensation expense 7,665 1,133,000 ---
---------------------- --------------------- ---------------------
8,676,482 3,472,575 1,794,336
---------------------- --------------------- ---------------------
Loss from operations (4,916,709) (2,088,933) (1,199,088)
Interest income 903,256 5,618 ---
Interest expense and other, net (149,158) (137,909) (298,561)
---------------------- --------------------- ---------------------
Loss before income taxes (4,162,611) (2,221,224) (1,497,649)
Income tax expense 250 250 250
---------------------- --------------------- ---------------------
Net loss $ (4,162,861) (2,221,474) (1,497,899)
====================== ===================== =====================
Basic and diluted net loss per share $ (0.42) (0.36) (0.26)
====================== ===================== =====================
Basic and diluted weighted average shares outstanding 9,805,456 6,129,116 5,655,151
====================== ===================== =====================
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 58
EDGAR ONLINE, INC.
Statements of Changes in Stockholders' Equity (Deficit)
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------------
PAID-IN- ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT
----------------- -------------- ----------------- -------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1996 4,800,000 $ 48,000 622,250 (1,027,087)
Exercise of warrants 1,274,000 12,740 3,185 ---
Debt issuance with beneficial conversion feature --- --- 250,000 ---
Net loss --- --- --- (1,497,899)
----------------- -------------- ----------------- -------------------
Balance at December 31, 1997 6,074,000 60,740 875,435 (2,524,986)
Exercise of warrants 53,957 540 49,461 ---
Issuance of common stock 103,333 1,033 143,967 ---
Issuance of common stock in satisfaction
of trade payables 100,000 1,000 124,000 ---
Stock compensation --- --- 1,133,000 ---
Issuance of warrants for services provided and
debt financing --- --- 136,338 ---
Net loss --- --- --- (2,221,474)
----------------- -------------- ----------------- -------------------
Balance at December 31, 1998 6,331,290 63,313 2,462,201 (4,746,460)
Comprehensive loss:
Net loss --- --- --- (4,162,861)
Other comprehensive loss:
Unrealized loss on investments --- --- --- ---
Total comprehensive loss
Issuance of common stock 240,000 2,400 1,052,850 ---
Initial Public Offering, net of
issuance costs 3,600,000 36,000 30,362,794 ---
Issuance of common stock in satisfaction of
notes payable 670,000 6,700 935,488 ---
Exercise of stock options and warrants 707,822 7,078 1,013,379 ---
Issuance of common stock in connection with
purchase business combination 908,877 9,089 7,795,892 ---
Issuance of stock options and warrants in
connection with purchase business
combination --- --- 259,176 ---
Issuance of warrants for services provided --- --- 26,197 ---
Compensation expense --- --- 7,665 ---
----------------- -------------- ----------------- -------------------
Balance at December 31, 1999 12,457,989 $ 124,580 43,915,642 (8,909,321)
================= ============== ================= ===================
</TABLE>
<TABLE>
<CAPTION>
UNREALIZED
HOLDING
LOSS TOTAL
------------------ --------------------
<S> <C> <C>
Balance at December 31, 1996 --- (356,837)
Exercise of warrants --- 15,925
Debt issuance with beneficial conversion feature --- 250,000
Net loss --- (1,497,899)
------------------ --------------------
Balance at December 31, 1997 --- (1,588,811)
Exercise of warrants --- 50,001
Issuance of common stock --- 145,000
Issuance of common stock in satisfaction
of trade payables --- 125,000
Stock compensation --- 1,133,000
Issuance of warrants for services provided and
debt financing --- 136,338
Net loss --- (2,221,474)
------------------ --------------------
Balance at December 31, 1998 --- (2,220,946)
Comprehensive loss:
Net loss --- (4,162,861)
Other comprehensive loss:
Unrealized loss on investments (44,518) (44,518)
--------------------
Total comprehensive loss (4,207,379)
--------------------
Issuance of common stock --- 1,055,250
Initial Public Offering, net of
issuance costs --- 30,398,794
Issuance of common stock in satisfaction of
notes payable --- 942,188
Exercise of stock options and warrants --- 1,020,457
Issuance of common stock in connection with
purchase business combination --- 7,804,981
Issuance of stock options and warrants in
connection with purchase business
combination --- 259,176
Issuance of warrants for services provided --- 26,197
Compensation expense --- 7,665
------------------ --------------------
Balance at December 31, 1999 (44,518) 35,086,383
================== ====================
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 59
EDGAR ONLINE, INC.
Statements of Cash Flows
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (4,162,861) (2,221,474) (1,497,899)
------------ ------------ ------------
Adjustments to reconcile net loss
to net cash used in operating activities:
Stock compensation expense 7,665 1,133,000 ---
Depreciation 312,431 116,767 55,334
Accretion and amortization of debt discount 14,000 17,118 250,000
Amortization of intangibles 581,183 --- ---
Provisions for bad debts 146,428 62,207 22,500
Non-cash service revenue, net (33,251) (8,620) (12,000)
Changes in assets and liabilities:
Accounts receivable (1,077,684) (147,932) (37,422)
Other, net (46,013) 13,096 (875)
Accounts payable and accrued expenses 973,865 (205,419) 589,809
Accrued interest (133,804) 133,804 ---
Due to employee (14,575) 14,575 ---
Due to officers, net (644,023) 95,137 266,318
Deferred revenues 84,504 130,096 47,165
------------ ------------ ------------
Total adjustments 170,726 1,353,829 1,180,829
------------ ------------ ------------
Net cash used in
operating activities (3,992,135) (867,645) (317,070)
------------ ------------ ------------
Cash flows from investing activities:
Purchase of available-for-sale investments (16,300,473) --- ---
Sale of available-for-sale investments 1,500,000 --- ---
Purchase of other investments (283,000) --- ---
Capital expenditures (1,023,419) (78,127) (224,132)
Cash portion of purchase price of business combination (968,355) --- ---
Net cash acquired in business combination 41,346 --- ---
------------ ------------ ------------
Net cash used in investing activities (17,033,901) (78,127) (224,132)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock 35,280,333 155,000 15,925
Proceeds upon exercise of stock options and warrants 1,020,457 50,001 ---
Proceeds from issuance of notes payable and warrants --- 1,000,000 545,000
Costs incurred in connection with the sale of common stock (3,826,289) (10,000) ---
Principal payments on notes payable (1,419,879) --- (20,000)
Payments on capital lease obligations (68,310) (28,218) ---
Costs incurred in connection with debt financing --- (89,440) ---
------------ ------------ ------------
Net cash provided by financing activities 30,986,312 1,077,343 540,925
------------ ------------ ------------
Net increase (decrease) in cash and cash
equivalents 9,960,276 131,571 (277)
Cash and cash equivalents at beginning of year 148,380 16,809 17,086
------------ ------------ ------------
Cash and cash equivalents at end of year $ 10,108,656 148,380 16,809
============ ============ ============
Supplemental disclosure of cash flow information:
Cash paid for:
Taxes $ 250 250 250
Interest $ 21,689 7,751 ---
Securities issued in connection with purchase business combination $ 8,064,157 --- ---
Accounts payable settled upon issuance of common stock $ --- 125,000 ---
Notes payable settled in exchange for services provided $ 59,448 42,250 12,000
Stock warrants issued in exchange for services provided $ 26,197 33,630 ---
Equipment acquired under capital leases $ 82,662 163,688 ---
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE> 60
EDGAR ONLINE, INC.
Notes to Financial Statements
December 31, 1999 and 1998
(1) DESCRIPTION OF BUSINESS
EDGAR Online, Inc. (the Company), formerly Cybernet Data Systems, Inc.,
was incorporated in the State of Delaware in November 1995 and launched
its "EDGAR Online" Internet Web site in January 1996. The Company is a
Web-based provider of business, financial, and competitive information
derived from the EDGAR (Electronic Data Gathering, Analysis, and
Retrieval) document filing system maintained by the U.S. Securities and
Exchange Commission (SEC). The Company has entered into several
arrangements with other Internet service providers to market financial
information services.
Inherent in the Company's mission are various risks and uncertainties,
including its limited operating history, unproven business model and the
limited history of commerce on the Internet. The Company's success may
depend in part upon the emergence and acceptance of the Internet as a
communication and information medium, prospective project development
efforts and the acceptance by the market place of the Company's products
and services.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) REVENUE RECOGNITION
Revenue from subscriptions and corporate contracts are recognized
over the subscription period, which is typically one, three, six
or twelve months. Revenue from advertising is recognized as the
services are provided.
(b) BARTER TRANSACTIONS
Barter advertising revenue is non-cash and relates to advertising
placed on the Company's Web site by other Internet service
providers. Barter advertising expense is non-cash and relates to
Company advertising placed on the Web sites of other Internet
service providers. The amount of barter advertising revenue and
expense is recorded at the estimated fair value of the services
received or the services provided, whichever is more objectively
determinable.
During 1999 and 1998, the Company also received computer equipment
and publication advertisements in exchange for use of the
Company's Web site services. The Company accounts for such barter
transactions at the estimated fair value of goods or services
received or services provided, whichever is more objectively
determinable. Barter revenues related to the computer equipment
barter transaction and the publication advertisements are
recognized ratably over the term of the contract. Barter expense
related to the publications advertisements transaction is
recognized ratably over the year, which approximates the timing of
the publications printing. Expense for the computer equipment
exchange is recognized as depreciation expense over the useful
lives of the assets.
F-7
<PAGE> 61
EDGAR ONLINE, INC.
Notes to Financial Statements
December 31, 1999 and 1998
The Company expects that barter transactions will represent a
increasing smaller percentage of total activity in the future.
(c) WEB SITE DEVELOPMENT COSTS
In March 1998, the American Institute of Certified Public
Accountants issued Statement of Position 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use"
(SOP 98-1). SOP 98-1 provides guidance for determining whether
computer software is internal-use software and on accounting for
the proceeds of computer software originally developed or obtained
for internal use and then subsequently sold to the public. It also
provides guidance on capitalization of the costs incurred for
computer software developed or obtained for internal use. The
Company adopted SOP 98-1 in 1999. Capitalized software development
costs totaled $85,525 at December 31, 1999 and are being amortized
over their estimated useful life of three years.
Prior to January 1, 1999, substantially all Web site development
costs were expensed as incurred.
(d) CASH AND CASH EQUIVALENTS
The Company considers cash and all highly liquid investments with
original maturities of ninety days or less to be cash and cash
equivalents.
(e) AVAILABLE-FOR-SALE INVESTMENTS
The Company's investments comprise government and corporate
obligations and foreign and domestic marketable securities. At
December 31, 1999, all of the Company's investments were
classified as available-for-sale and, accordingly, unrealized
gains and losses are included as a separate component of
shareholders' equity, net of any related tax effect.
(f) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost or at estimated fair
value if part of a barter transaction. Depreciation is computed
using the straight-line method over the estimated useful lives of
the related assets, generally three to seven years. Leasehold
improvements are amortized using the straight-line method over the
estimated useful lives of the assets or the term of the leases,
whichever is shorter.
(g) LONG-LIVED ASSETS
The Company accounts for long-lived assets in accordance with the
provisions of SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
This Statement requires that long-lived assets and certain
intangibles assets, including goodwill, be reviewed for impairment
whenever events or
(Continued)
F-8
<PAGE> 62
EDGAR ONLINE, INC.
Notes to Financial Statements
December 31, 1999 and 1998
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Recoverability of assets to be held
and used is measured by a comparison of the carrying amount of an
asset to future cash flows expected to be generated by the asset.
If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount
of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or
fair value less costs to sell.
(h) INTANGIBLE ASSETS
In connection with the acquisition of Partes Corporation on
September 10, 1999 (see note 3), the excess of the purchase price
over the estimated fair value of the net tangible assets acquired
was $9,880,298. The Company is in the process of finalizing
valuations that will be used in the assignment of the excess
purchase price to certain intangible assets acquired and to
goodwill. At December 31, 1999, this valuation was not completed,
and the excess purchase price has been included as intangible
assets in the accompanying balance sheet. The asset has been
amortized using a useful life of five years, the estimated blended
useful life of the excess purchase price.
(i) ADVERTISING EXPENSES
The Company expenses advertising costs as incurred.
(j) INCOME TAXES
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases, and for operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date. Deferred tax assets
are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized.
(k) DEFERRED FINANCING COSTS
Deferred financing costs relate to the issuance of the Convertible
Debenture (see note 7) and was being amortized over the term of
the related debt, using the effective interest method.
Amortization expense was $12,422 and $77,018 for the years ended
December 31, 1998 and 1999, respectively.
(Continued)
F-9
<PAGE> 63
EDGAR ONLINE, INC.
Notes to Financial Statements
December 31, 1999 and 1998
(l) STOCK-BASED TRANSACTIONS
The Company accounts for stock-based transactions in accordance
with Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123). In
accordance with SFAS 123, the Company has elected to measure
stock-based employee compensation arrangements in accordance with
the provisions of APB No. 25, "Accounting for Stock Issued to
Employees," (APB 25) and comply with the disclosure provisions of
SFAS No. 123. Under APB 25, compensation cost is recognized based
on the difference, if any, on the date of grant between the fair
value of the Company's common stock and the exercise price.
The Company accounts for the issuance of equity instruments to
non-employees in exchange for services at either the fair value of
the equity instrument given or the fair value of the services
rendered, whichever is more reliably measurable.
(m) CONCENTRATION OF RISK AND FINANCIAL INSTRUMENTS
Financial instruments that potentially subject the Company to
significant concentration of credit risk consist of accounts
receivable. The most significant concentration of credit risk
relates to Doubleclick, which comprised 52.8% and 21.1% of the
Company's total gross receivable balance at December 31, 1999 and
1998, respectively. No other customer accounted for more than 10%
of accounts receivable at December 31, 1999 or 1998.
The Company's other customers are geographically dispersed
throughout the United States with no one customer accounting for
more than 10% of sales during 1999, 1998 or 1997. In addition, the
Company has not experienced any significant credit losses to date
from any one customer.
The fair value of the Company's cash and cash equivalents,
accounts receivable, accounts payable and accrued liabilities at
December 31, 1999 and 1998, approximate their financial statement
carrying value because of the short-term maturity of these
instruments. The fair values of the Company's long-term
obligations, as discussed in note 7, are determined based on the
amount of future cash flows associated with the instrument,
discounted at an appropriate discount rate.
(n) LOSS PER SHARE
Loss per share is presented in accordance with the provisions of
SFAS No. 128, "Earnings Per Share", (SFAS 128) and the Securities
and Exchange Commission (SEC) Staff Accounting Bulletin No 98.
Under SFAS 128, Basic EPS excludes dilution for common stock
equivalents and is computed by dividing income or loss available
to common shareholders by the weighted average number of common
shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted and
resulted in the issuance of common stock.
(Continued)
F-10
<PAGE> 64
EDGAR ONLINE, INC.
Notes to Financial Statements
December 31, 1999 and 1998
Basic earnings per share are computed using the weighted average
number of common shares outstanding during the period. Pursuant to
SEC Staff Accounting Bulletin No. 98, common stock and convertible
preferred stock issued for nominal consideration, prior to the
anticipated effective date of an IPO, are required to be included
in the calculation of basic and diluted earnings per share, as if
they were outstanding for all periods presented. To date, the
Company has not had any issuances or grants for nominal
consideration.
Diluted loss per share has not been presented separately, as the
outstanding stock options, warrants and convertible debentures are
anti-dilutive for each of the periods presented.
Anti-dilutive potential common shares outstanding were 1,047,207,
653,400, and 829,545 for the years ended December 31, 1999, 1998,
and 1997, respectively.
(o) BUSINESS SEGMENTS
In June 1997, the Financial Accounting Standard Board (FASB)
issued SFAS No. 131, "Disclosure about Segments of an Enterprise
and Related Information" (SFAS 131). SFAS 131 establishes
standards for the way that public business enterprises report
information about operating segments. It also establishes
standards for related disclosures about products and services,
geographic areas and major customers. SFAS 131 is effective for
fiscal years beginning after December 15, 1997. The Company has
determined that it does not have any separately reportable
business segments.
(p) COMPREHENSIVE INCOME
The Company adopted the provisions of SFAS No. 130, "Reporting
Comprehensive Income" (SFAS 130) during 1998. SFAS 130 requires
the Company to report in its financial statements, in addition to
its net income (loss), comprehensive income (loss), which includes
all changes in equity during a period from non-owner sources
including, as applicable, foreign currency items, minimum pension
liability adjustments and unrealized gains and losses on certain
investments in debt and equity securities. Comprehensive income
(loss) is presented within the statement of changes in
stockholders' equity (deficit).
(q) USE OF ESTIMATES IN FINANCIAL STATEMENTS
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
(Continued)
F-11
<PAGE> 65
EDGAR ONLINE, INC.
Notes to Financial Statements
December 31, 1999 and 1998
(r) RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," (SFAS 133) which
establishes accounting and reporting standards for derivative
instruments, including derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133 is effective
for all fiscal quarters of fiscal years beginning after June 15,
2000, as amended by SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective
Date of FASB No. 133". This statement is not expected to have a
material impact on the Company's results of operations or
financial position.
(s) RECLASSIFICATIONS
Certain reclassifications have been made to 1998 and 1997
financial statements to conform to the 1999 presentation.
(3) ACQUISITION
On September 10, 1999, the Company acquired Partes Corporation
("Partes"), owner of the FreeEDGAR.com Web site. Under the terms of the
agreement, the Company purchased all of the outstanding equity of Partes
for $9,880,298. The purchase price included (1) the issuance of 908,877
shares of EDGAR Online common stock valued at $7,804,981, (2) the
issuance of 75,039 EDGAR Online stock options and warrants, with a fair
value of $259,176, in exchange for all outstanding Partes stock
options,(3) the assumption of net liabilities totaling $847,786 and (4)
$968,355 in fees and acquisition related expenses.
The acquisition was accounted for under the purchase method of accounting
and accordingly the estimated fair value of Partes' assets and
liabilities and the operating results of Partes from the effective date
of the acquisition have been included in the accompanying financial
statements. Subsequent to the acquisition, the Company repaid Partes bank
indebtedness of $919,879.
The following unaudited pro forma results of operations assume the
acquisition occurred as of January 1, 1999. The pro forma financial
information is not necessarily indicative of operating results that would
have occurred had the acquisition been consummated as of January 1, 1999,
nor of future operating results.
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
RESULTS FOR RESULTS FOR
THE YEAR ENDED THE YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
----------------------------- ------------------------
<S> <C> <C>
Revenues $ 5,618,000 2,141,000
Loss from operations $ (9,100,000) (6,480,000)
Net loss $ (8,346,000) (7,130,000)
Basic and diluted loss per share $ (0.80) (1.01)
Basic and diluted weighted average shares 10,437,000 7,038,000
</TABLE>
(Continued)
F-12
<PAGE> 66
EDGAR ONLINE, INC.
Notes to Financial Statements
December 31, 1999 and 1998
outstanding
(Continued)
F-13
<PAGE> 67
EDGAR ONLINE, INC.
Notes to Financial Statements
December 31, 1999 and 1998
The Company is in the process of finalizing valuations that will be used
in the assignment of the excess purchase price to certain intangible
assets acquired and to goodwill. At December 31, 1999, this valuation was
not completed, and the excess purchase price has been included as
intangible assets in the accompanying balance sheet. The asset has been
amortized using a useful life of five years, the estimated blended useful
life of the excess purchase price.
A one year difference in the estimated useful life of the excess purchase
would increase or decrease the annual amortization expense by $494,000 or
$329,000, respectively. Amortization expense for the period from
September 10, 1999 to December 31, 1999 was $576,350.
(4) AVAILABLE-FOR-SALE INVESTMENTS
The following table summarizes the Company's investment in
available-for-sale investments at December 31, 1999:
<TABLE>
<CAPTION>
FAIR
COST VALUE
<S> <C> <C>
Money market and certificates of deposit $ 2,575,580 $ 2,630,214
U.S. government and agency obligations 2,569,050 2,556,795
Corporate bonds and commercial paper 19,209,776 19,177,053
----------- -----------
Total $24,354,406 $24,364,062
=========== ===========
Reported as:
Cash and cash equivalents $ 9,608,106
Available-for-sale investments 14,755,956
-----------
Total $24,364,062
===========
</TABLE>
Substantially all investments with maturity dates mature within the year
ended December 31, 2000. Individual unrealized gains and unrealized losses were
not significant at December 31, 1999.
(5) PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1999 and 1998 is summarized as
follows:
<TABLE>
<CAPTION> 1999 1998
--------------- ---------------
<S> <C> <C>
Equipment, and furniture and fixtures $ 1,728,300 $ 482,438
Purchased software 492,678 109,849
Software development costs 85,525 ---
Leasehold improvements 60,318 7,673
--------------- ---------------
Subtotal 2,366,821 599,960
Less accumulated depreciation (342,390) (188,240)
--------------- ---------------
$ 2,024,431 $ 411,720
=============== ===============
</TABLE>
(Continued)
F-14
<PAGE> 68
EDGAR ONLINE, INC.
Notes to Financial Statements
December 31, 1999 and 1998
Depreciation expense for the years ended December 31, 1999, 1998 and 1997
was $312,431, $116,767 and $55,334, respectively.
(6) ACCRUED EXPENSES
Accrued expenses consist of the following at December 31, 1999 and 1998.
<TABLE>
<CAPTION>
1999 1998
-------------------- ----------------
<S> <C> <C>
Professional fees $ 127,000 --
Web site development and support 280,798
Licensing fees 111,438 --
Compensation and related benefits 739,215 17,240
Interest 16,906 27,304
Other 151,211 22,400
-------------------- ---------------
$ 1,426,568 66,944
==================== ===============
</TABLE>
(7) NOTES PAYABLE
Notes payable consist of the following at December 31, 1998:
<TABLE>
<CAPTION>
1998
----------------
<S> <C>
Convertible Debenture (a) $ 914,410
Promissory notes - related party (b) 500,000
Promissory notes (c) 59,448
----------------
Total notes payable 1,473,858
Less:
Current portion (59,448)
Notes payable, long-term $ 1,414,410
================
</TABLE>
(a) In July 1998, the Company received $1,000,000 in exchange for a
$1,000,000 Convertible Debenture due July 2001 with interest
accruing at 10% in years two and three. The terms of this
financing enabled the lender to convert the debenture into 670,000
shares of the Company's common stock. The lender also received a
warrant, expiring July 23, 1999, to purchase an additional 666,667
shares of the Company's common stock at $1.50 per share.
(Continued)
F-15
<PAGE> 69
EDGAR ONLINE, INC.
Notes to Financial Statements
December 31, 1999 and 1998
The Company estimated the fair value of the warrant at the date of
issue and recorded $102,708 of the consideration received as a
credit to additional paid-in capital. Interest expense for 1999
and 1998 includes $27,778 and $17,118, respectively, of accretion
of the debt discount resulting from the fair value of the warrants
and $33,333 relating to the year one interest holiday.
As part of the agreement, the Company has agreed to obtain hosting
and other Internet services at market prices for a period of five
years from the investor.
At December 31, 1998 the fair value of the Convertible Debenture
was estimated to approximate its carrying value as the debt was
recorded at fair value in July 1998 and there was no significant
change in the underlying market rate or credit worthiness of the
Company between July 1998 and December 31, 1998.
On May 11, 1999, in connection with the Company's IPO, the holder
of the Company's $1,000,000 face amount Convertible Debenture
exercised its right to convert the Convertible Debenture into
670,000 shares of Company common stock. In addition, the holder
exercised their warrant to purchase 666,667 shares of Company
common stock at $1.50 per share.
(b) In January 1997, the Company entered into an agreement with a
stockholder for a $500,000 line of credit which was originally due
on December 31, 1997, but was extended to February 28, 2000.
Interest accrues at 12% of the face amount annually. All
borrowings were guaranteed by a principal stockholder of the
Company.
The agreement originally provided that the outstanding borrowings
could be converted at the sole discretion of the lending
stockholder into common stock at a conversion rate of $1.50 worth
of common stock for each $1.00 of borrowings converted. The
favorable conversion rate represented a beneficial conversion
feature and, accordingly, $250,000 was recorded as a credit to
additional paid-in capital at the issue date. Additional interest
expense of $250,000 has been included in 1997, as the original
maturity of the borrowing was December 31, 1997. In July 1998, the
conversion feature was deleted in connection with the issuance of
the Convertible Debenture.
The fair value of the note at December 31, 1998 was estimated at
approximately $452,000 based on the amount of future cash flows
associated with the investment, discounted using an appropriate
interest rate. The note was repaid using proceeds from the initial
public offering in June, 1999.
(c) In connection with a $100,000 loan under a line of credit
established in December 1995, the Company has arranged with the
lender to apply a portion of the proceeds of credit card payments
processed by the lender for the Company to the loan balance. The
loan is further reduced by the offsetting of balances due from the
lender for its monthly subscription charge for use of the
Company's Internet service. Interest accrues at 2% over the prime
established by a financial institution (10.25% at December 31,
1998).
The loan was guaranteed by one of the principal stockholders and
certain Company common stock owned by the stockholder was pledged
as collateral. The loan was repaid during 1999. The balance
outstanding at December 31, 1998 was $59,448.
(Continued)
F-16
<PAGE> 70
EDGAR ONLINE, INC.
Notes to Financial Statements
December 31, 1999 and 1998
In 1997, the Company issued a noninterest bearing $25,000 note and
in 1998 issued 40,001 warrants exercisable at $1.25 per share.
The note was repaid with services during the year ended December
31, 1998. The estimated value of the warrants at the date of
issuance is deemed insignificant.
At December 31, 1999 and 1998, the fair value of these notes
payable approximates their carrying value based on the amount of
future cash flows associated with the instrument, discounted using
an appropriate interest rate.
Interest expense and other financing charges for the years ended December
31, 1999, 1998, and 1997 totaled $149,436, $137,909, and $298,561,
respectively.
(8) INCOME TAXES
Since its inception, the Company has incurred net operating losses and
has incurred no federal or state income tax expense. The provision for
income taxes for the years ended December 31, 1999, 1998 and 1997
consists entirely of the State of Connecticut minimum tax. At December
31, 1999, the Company has approximately $6.6 million in federal and state
operating loss carryforwards, which are available to offset future
taxable income, through 2019.
The Company's tax provision differed from the amount computed using the
federal statutory rate of 34% as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
1999 1998 1997
--------------------- -------------------- ----------------
<S> <C> <C> <C>
Expected federal income tax
benefit at 34% $ (1,415,288) (765,650) (509,201)
State taxes, net of federal expense (247,834) (134,280) (73,749)
Non-deductible interest expense -- 85,000
Other permanent differences 44,261 3,882 5,610
Valuation allowance 1,619,111 896,298 492,590
------------------- -------------------- -------------
$ 250 250 250
=================== ==================== =============
</TABLE>
(Continued)
F-17
<PAGE> 71
EDGAR ONLINE, INC.
Notes to Financial Statements
December 31, 1999 and 1998
The Company's deferred tax assets and liabilities and related
valuation allowance as December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
---------------------- -------------------
Deferred tax assets (liabilities):
<S> <C> <C>
Net operating loss carryforwards $ 2,742,435 1,003,915
Deferred compensation -- 314,231
Accruals and other, net 171,163 7,924
Stock compensation expense 484,783 453,200
Valuation allowance (3,398,381) (1,779,270)
-------------------- ------------------
$ -- --
===================== ==================
</TABLE>
Realization of the net operating loss carryforward benefit is
dependent on the Company being able to generate sufficient taxable
income prior to the expiration of the operating loss
carryforwards. Due to the Company's short operating history, a
valuation allowance has been recorded for the entire amount of the
net deferred tax asset as the Company has concluded that it is not
more likely than not that there will be future taxable income
sufficient to realize the future taxable temporary differences and
operating loss carryforwards prior to their expiration.
Under Section 382 of the Internal Revenue Code of 1986, as
amended, the utilization of net operating loss carryforwards may
be limited under the change in stock ownership rules. The Company
has not yet determined whether such an ownership change has
occurred.
(9) DUE TO OFFICERS
The Company entered into compensation agreements with its two
founding stockholders that provide for combined annual
compensation of $300,000 commencing in January 1996, payment of
which is dependent upon the availability of cash and other
factors. Compensation expense of $300,000 has been recorded in
each of the years ended December 31, 1999, 1998 and 1997.
Due to officers represents deferred compensation of $185,577 for
1998 offset by other amounts due from the officers of $141,554 at
December 31, 1998. The entire liability was classified as
long-term as the founding stockholders had waived payment of these
amounts until after December 31, 1999. These amounts were paid
using proceeds of the initial public offering in June, 1999.
(10) STOCKHOLDERS' EQUITY
COMMON STOCK
On March 24, 1997, the Board of Directors of the Company declared
and approved a 4 for 1 stock split on its common shares. All share
and per share data has been retroactively adjusted to reflect this
common stock split.
(Continued)
F-18
<PAGE> 72
EDGAR ONLINE, INC.
Notes to Financial Statements
December 31, 1999 and 1998
Upon the formation of the Company, the founders were issued
4,000,000 shares of the Company's common stock. In 1996, the
Company sold 400,000 shares of its common stock to an investor for
$462,500 and issued an additional 400,000 shares of its common
stock for $5,000 in connection with the exercise of previously
issued warrants. In 1997, the Company issued 1,274,000 shares of
its common stock for $15,925 in connection with the exercise of
previously issued warrants. In 1998, the Company sold an
additional 103,333 shares of common stock for $145,000 in cash,
net of related offering expenses, and issued 100,000 shares of
common stock in satisfaction of $125,000 of indebtedness.
On March 25, 1999, the Board of Directors of the Company declared
and approved an increase in the number of authorized shares of
common stock to 30,000,000, par value $0.01 per share, and
authorized 1,000,000 shares of preferred stock, par value $0.01
per share. There are no preferred shares issued or outstanding at
December 31, 1999.
On March 30, 1999, the Company completed the sale of an aggregate
of 240,000 shares of its common stock to three investors at $4.50
per share resulting in net proceeds of $1,055,250.
On May 26, 1999, the Company sold 3,600,000 shares of its common
stock to the public (IPO) at $9.50 per share for net proceeds of
$30,448,815. In connection with this offering, the Company, its
underwriters and the holder of the Convertible Debenture agreed
that such holders would convert the Convertible Debenture into
670,000 shares of the Company's common stock prior to the close of
the IPO. In addition, certain holders of warrants to purchase
Company common stock also agreed to exercise the warrants into an
aggregate of 696,667 shares of common stock prior to the close of
the IPO.
STOCK WARRANTS
Since its inception, the Company has issued warrants to purchase
Company common stock in return for various services rendered or in
connection with certain debt and equity financings.
Warrants issued in exchange for services totaled 23,167 and 63,333
for the years ended December 31, 1999 and 1998, respectively.
There were no warrants issued in exchange for services in 1997.
Based on estimated fair values at the respective dates of issuance
the Company has recorded professional services expense and
additional paid-in capital of $26,197 in 1999 and $33,630 in 1998.
Warrants issued in connection with debt financings totalled 0 and
706,668 in 1999 and 1998, respectively and have also been fair
valued at their date of issuance. Additional interest expense has
been recorded for the years ended December 31, 1999 and 1998 of
$27,778 and $17,118, respectively. The credit to additional
paid-in-capital relating to the fair value of warrants issued in
connection with the debt financing during 1998 was $102,708.
During 1999, the Company issued 11,299 warrants in connection with
the Partes acquisition and 523,500 warrants in connection with
equity financing, including the company's IPO.
(Continued)
F-19
<PAGE> 73
EDGAR ONLINE, INC.
Notes to Financial Statements
December 31, 1999 and 1998
Warrant activity during the periods indicated is as follows:
<TABLE>
<CAPTION>
WEIGHTED
NUMBER AVERAGE
OF EXERCISE
WARRANTS PRICE
--------------------- --------------
<S> <C> <C>
Outstanding at December 31, 1996 1,287,956 0.01
Issued --
Exercised (1,274,000) 0.01
Canceled -- --
---------------------
Outstanding at December 31, 1997 13,956 0.00
Issued 770,001 1.45
Exercised (53,957) 0.93
Canceled --
---------------------
Outstanding at December 31, 1998 730,000 $ 1.46
Issued 557,966 7.31
Exercised (696,667) 1.46
Canceled (240,000) 4.50
---------------------
Balance at December 31, 1999 351,299 8.68
=====================
</TABLE>
Included in the above table are 13,956 warrants outstanding at
December 31, 1997 that were granted pursuant to certain
anti-dilution provisions of the original warrant grant and
accordingly have a $0.00 exercise price.
The weighted average contractual life of warrants outstanding at
December 31, 1999 and 1998 was 4.42 and .81 years, respectively.
(11) STOCK OPTION PLANS
In November, 1998, the Company adopted the 1996 Stock Option Plan
(the 1996 Plan) whereby the Company's Board of Directors may grant
stock options to officers, employees, directors and consultants.
The 1996 Plan authorizes the issuance of options to purchase up to
800,000 shares of the Company's common stock. Options granted may
be either incentive stock options (ISOs) or non-qualified stock
options. The exercise price and vesting schedule of the options
will be established on the grant date. However, the established
exercise price for ISOs may not be less than the fair market value
of the Company's common stock on the grant date. The 1996 Plan
also provides that no options will have a term of longer than ten
years.
On March 25, 1999, the Company adopted the 1999 Stock Option Plan
(the 1999 Plan) and the 1999 Outside Directors Stock Option Plan
(the 1999 Directors Plan). The 1999 Plan authorizes the issuance
of options to purchase up to 600,000 shares of the Company's
common stock
(Continued)
F-20
<PAGE> 74
EDGAR ONLINE, INC.
Notes to Financial Statements
December 31, 1999 and 1998
under the same provisions as the 1996 Plan. The 1999 Directors
Plan authorizes the issuance of options to purchase up to 100,000
shares of the Company's common stock.
Option activity during the periods indicated is as follows:
<TABLE>
<CAPTION>
NUMBER WEIGHTED
OF AVERAGE
OPTIONS OPTION PRICE
-------------------- ------------
<S> <C> <C>
Outstanding at December 31, 1996 -- $ --
Granted -- --
Exercised -- --
Canceled -- --
---------------------
Outstanding at December 31, 1997 -- --
Granted 400,000 $ 0.29
Exercised
Canceled -- --
---------------------
Outstanding at December 31, 1998 400,000 $ 0.29
Granted 596,790 5.47
Exercised (11,155) 0.49
Canceled (42,314) 6.35
---------------------
Balance at December 31, 1999 943,321 $ 3.66
=====================
</TABLE>
The Company recorded $7,665 and $1,133,000 of compensation expense
in 1999 and 1998, respectively, calculated as the difference
between the exercise price and the estimated fair value of stock
options at the grant date, as allocated over the vesting periods
of the options.
Options outstanding and exercisable at December 31, 1999 are as
follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
--------------------------------------------------------------
WEIGHTED
AVERAGE WEIGHTED
REMAINING AVERAGE
RANGE OF NUMBER CONTRACTUAL EXERCISE
EXERCISE PRICE OUTSTANDING LIFE PRICE
-------------------------- ----------------- ------------------ ---------------
<S> <C> <C> <C> <C>
$ 0.25 to 5.00 792,908 8.33 $ 0.25
5.01 to 10.00 139,500 9.50 8.32
10.01 to 15.00 8,753 6.00 10.23
15.01 to 20.00 -- -- --
20.01 to 25.00 1,212 7.16 20.99
25.01 to 30.00 -- -- --
30.01 to 35.00 948 6.92 34.05
--------- ---------- ----------------- ------------------ ---------------
$ 0.25 35.00 943,321 8.49 $ 1.60
========= ========== ================= ================== ===============
</TABLE>
<TABLE>
<CAPTION>
OPTIONS EXERCISABLE
--------------------------------------
WEIGHTED
AVERAGE
RANGE OF NUMBER EXERCISE
EXERCISE PRICE EXERCISABLE PRICE
-------------------------- ----------------- ----------------
<S> <C> <C> <C>
$ 0.25 to 5.00 391,095 $ 0.25
5.01 to 10.00 --
10.01 to 15.00 6,746 10.23
15.01 to 20.00 -- --
20.01 to 25.00 633 20.85
25.01 to 30.00 --
30.01 to 35.00 389 34.05
--------- ---------- ----------------- ----------------
$ 0.25 35.00 398,863 $ 0.48
========= ========== ================= ================
</TABLE>
At December 31, 1999, 494,424 options are available for grant.
(Continued)
F-21
<PAGE> 75
EDGAR ONLINE, INC.
Notes to Financial Statements
December 31, 1999 and 1998
As discussed in note 2, the Company has elected to continue to use
APB 25 to measure compensation expense related to employee stock
options and has recorded compensation expense where the exercise
price of the option was less than the fair value of the stock on
the date of grant. Had the Company determined compensation expense
based on the fair value of the option on the grant date under SFAS
123, the Company's results of operations for 1999 and 1998 would
have been as follows:
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
Net loss - as reported $ (4,162,861) (2,221,474)
Net loss - pro forma $ (4,992,836) (3,004,873)
Basic and diluted net loss per share - as reported $ (0.42) (0.36)
Basic and diluted net loss per share - pro forma $ (0.51) (0.49)
</TABLE>
The fair value of the options granted to employees in 1999 and
1998, as calculated under SFAS 123, ranged from $0.12 to $9.40 and
$1.57 to $2.45, respectively, with a weighted average fair value
of $2.35 and $1.96, respectively. For grants made through the date
of the Company's IPO in May 1999, the fair value of the options
was calculated using risk free interest rates of 6.51% or 6.52%,
expected life of 10 years and no expected dividend yield or
volatility. For options granted after the Company's IPO in May
1999, the fair value of the options was calculated using risk free
interest rates of 6.5% to 6.52%, expected life of 10 years, no
expected dividend yield and an actual volatility which averaged
153% from the date of the Company's IPO to December 31, 1999.
(12) COMMITMENTS AND CONTINGENCIES
The Company leases space in Norwalk, Connecticut for its primary
offices. Rent expense totaled $149,308, $57,983 and $44,086 for
the years ended December 31, 1999, 1998 and 1997, respectively.
(Continued)
F-22
<PAGE> 76
EDGAR ONLINE, INC.
Notes to Financial Statements
December 31, 1999 and 1998
Future minimum lease payments under noncancelable operating leases
and capital leases (with initial or remaining lease terms in
excess of one year) as of December 31, 1999 are as follows:
<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
--------------------- --------------
Year ending December 31,:
<S> <C> <C> <C>
2000 $ 520,137 99,206
2001 551,851 72,876
2002 562,566 9,003
2003 397,570 --
1,175,118 --
--------------------- --------------
Total $ 3,207,242 181,085
===================
Amount representing interest (31,263)
--------------
Net capital leases obligation $ 149,822
==============
</TABLE>
The amount currently payable under the capital lease at December
31, 1999 is $78,235.
(13) RELATED PARTY TRANSACTIONS
The Company provides services to three shareholders. Revenues from
these related parties totaled $383,000, $69,600 and $38,000 in
1999, 1998 and 1997, respectively. Of the revenues received,
$75,000, $17,250, and $12,000 were used to satisfy a note payable
and related accrued interest to one shareholder. The Company also
purchased services from a shareholder, which totaled $1,535,479,
$610,073, and $423,836 in 1999, 1998 and 1997, respectively.
(14) SUBSEQUENT EVENTS (UNAUDITED)
On January 26, 2000, the Company granted 288,000 options at $9.00
under the 1999 Plan. The exercise price represents the market
price on the date of the grant.
(15) SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following is a summary of the quarterly results of operations
for the years ended December 31, 1999 and 1998 (in thousands,
except for per share data):
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999
Net revenues $ 641 1,038 1,520 2,050
Loss from operations $ (548) (847) (1,240) (2,282)
Net loss $ (586) (807) (864) (1,906)
Basic and diluted net loss
per share(1) $(0.08) (0.09) (0.07) (0.15)
Basic and diluted weighted
average shares outstanding 6,367 8,662 11,736 12,457
YEAR ENDED DECEMBER 31, 1998
Net revenues $ 384 498 511 610
Loss from operations $ (171) (157) (228) (1,533)
Net loss $ (188) (175) (266) (1,592)
Basic and diluted net loss
per share $ (0.03) (0.03) (0.04) (0.26)
Basic and diluted weighted
average shares outstanding 6,074 6,074 6,121 6,219
</TABLE>
Loss per share data are computed independently for each of the
periods presented; therefore the sum of the loss per share amounts
for the quarters may not equal the total for the year.
F-23
<PAGE> 77
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
3.01 Certificate of Incorporation(1)
3.02 Amended and Restated Certificate of Incorporation(2)
3.03 Bylaws (2)
4.01 Form of Specimen Stock Certificate for Registrant's Common
Stock(2)
4.02 10% Convertible Subordinated Debenture due 2001(1)
4.03 Warrant to Purchase Common Stock (1)
10.01 Form of Indemnity Agreement to be entered into between the
Registrant with each of its directors and executive
officers(2)
10.02 1996 Stock Option Plan(1)
10.03 1999 Stock Option Plan(2)
10.04 1999 Outside Directors Stock Option Plan(2)
10.05 Amended and Restated Employment Agreement dated as of May 6,
1999 between the Registrant and Marc Strausberg(2)
10.06 Amended and Restated Employment Agreement dated as of May 6,
1999 between the Registrant and Susan Strausberg(2)
10.07 Employment Agreement, dated as of April 23, 1999, between
the Registrant and Tom Vos(2)
10.08 Employment Agreement, dated as of May 3, 1999, between the
Registrant and Greg Adams(2)
10.09 Employment Agreement, dated as of March 11, 1997, between
the Registrant and Brian Fitzpatrick(2)
10.10 Employment Agreement, dated as of May 19, 1997, between the
Registrant and Jay Sears(2)
10.11 Employment Agreement, dated as of May 3, 1999, between
Registrant and David Trenck(2)
10.12 Securities Purchase Agreement, dated as of July 23, 1998 by
and between the Registrant and Globix Corporation(1)
10.13 Form of Registration Rights Agreement for December 1998
Investors(2)
10.14 Form of Subscription Agreement, including registration
rights, for March 1999 Investors(2)
</TABLE>
<PAGE> 1
Exhibit 10.23
AGREEMENT OF LEASE
BY AND BETWEEN
SONO EQUITIES, LLC. AND 1122 ASSOCIATES, LLC, AS OWNER
AND
EDGAR ONLINE, INC., AS TENANT
COVERING THE NINTH FLOOR, EAST
AT PREMISES 50 WASHINGTON STREET, SOUTH NORWALK, CONNECTICUT
<PAGE> 2
AGREEMENT OF LEASE
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE: PAGE NUMBER
<S> <C>
1. Rent During Term................................................................................ 4
2. Occupancy....................................................................................... 4
3. Tenant's Work and Alterations................................................................... 5
4. Signs........................................................................................... 7
5. Maintenance and Repairs......................................................................... 7
6. Mechanic's Liens................................................................................ 8
7. Compliance with Law, Fire Insurance, Floor Load Requirements.................................... 8
8. Indemnity and Waiver of Subrogation............................................................. 9
9. Exculpation..................................................................................... 9
10. Property Loss, Damage Reimbursement Indemnity.................................................. 9
11. Destruction, Fire and Other Casualty........................................................... 10
12. Tenant's Insurance............................................................................. 11
13. Subordination, Attornment, Notice to Owner, Lease Modifications................................ 12
14. Eminent Domain................................................................................. 13
15. Subleasing and Assignment...................................................................... 13
16. Electric Current............................................................................... 15
17. Access to Premises............................................................................. 16
18. Condition of Premises.......................................................................... 17
19. Bankruptcy..................................................................................... 17
20. Default........................................................................................ 17
21. Remedies and Waiver of Redemption.............................................................. 18
22. Fees and Expenses.............................................................................. 19
23. Building, Alterations and Management........................................................... 19
24. No Representations by Owner.................................................................... 20
25. End of Term.................................................................................... 20
26. Quiet Enjoyment................................................................................ 20
27. Failure to Give Possession..................................................................... 21
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE: PAGE NUMBER
<S> <C>
28. No Waiver...................................................................................... 21
29. Waiver of Trial by Jury........................................................................ 21
30. Inability to Perform........................................................................... 21
31. Bills and Notices.............................................................................. 22
32. Services Provided by Owners.................................................................... 22
33. Captions....................................................................................... 23
34. Additional Definitions......................................................................... 23
35. Adjacent Excavation-Shoring.................................................................... 24
36. Rules and Regulations.......................................................................... 24
37. Security....................................................................................... 25
38. Estoppel Certificate........................................................................... 25
39. Successor and Assigns.......................................................................... 26
40. Execution and Delivery......................................................................... 26
41. Additional Rent. ........................................................................... 26
42. General........................................................................................ 26
Rider Provisions
43. Rider to Prevail. ............................................................................. 28
44. Operating Expenses............................................................................. 28
45. Real Estate Taxes ............................................................................. 31
46. Directory Listing ............................................................................. 31
47. Broker......................................................................................... 32
48. Owner's Work................................................................................... 32
49. Relocation and Substitution of Premises. - Intentionally Deleted .............................. 32
50. Hazardous Waste................................................................................ 32
51. Parking........................................................................................ 34
52. Option to Renew................................................................................ 34
53. Cancellation of Existing Lease................................................................. 33
54. Termination Option............................................................................. 34
</TABLE>
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Exhibit A Floor Plan
Exhibit B Rules and Regulations
Exhibit C Cleaning Schedule
<PAGE> 5
AGREEMENT OF LEASE, made as of this 7th day of June 1999, between Sono Equities,
LLC and 1122 Associates, LLC, c/o Prime Location, Inc., 50 Washington Street,
South Norwalk, Connecticut 06854 party of the first part, hereinafter referred
to as Owner, and EDGAR Online, Inc., a Connecticut corporation, 50 Washington
Street, South Norwalk, Connecticut 06854 party of the second part, hereinafter
referred to as Tenant,
WITNESSETH:
Owner hereby leases to Tenant and Tenant hereby hires from Owner a
portion of the ninth (9th) floor as more fully shown on the floor plan annexed
hereto as Schedule A (the "DEMISED PREMISES") in the building known as 50
Washington Street, in the City of Norwalk, Connecticut (the "BUILDING"), for a
term of seven (7) years (or until such term shall sooner cease and expire as
hereinafter provided) to commence on the 1st day of July, 1999 ("LEASE
COMMENCEMENT DATE"), and to end on the 30th day of June, 2006, ("LEASE
EXPIRATION DATE") both dates inclusive, at an annual rental rate as set forth in
Article 1 herein, 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 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:
1. Rent During the Term.
(a) Tenant shall pay to Landlord annual rent (the "BASE RENT")
as set forth on the schedule below in equal monthly installments on the 1st day
of each and every month, without counterclaim, setoff or deduction. Annual Base
Rent shall be due and payable as follows:
<TABLE>
<CAPTION>
PERIOD ANNUAL RENT MONTHLY RENT
------ ----------- ------------
<S> <C> <C>
7/1/1999 - 6/30/2000 $131,250.00 $10,937.50
7/1/2000 - 6/30/2001 $132,750.00 $11,562.50
7/1/2001 - 6/30/2002 $146,250.00 $12,187.50
7/1/2002 - 6/30/2003 $153,750.00 $12,812.50
7/1/2003 - 6/30/2004 $161,250.00 $13,437.50
7/1/2004 - 6/30/2005 $168,750.00 $14,062.50
7/1/2005 - 6/30/2006 $176,250.00 $14,687.50
</TABLE>
(b) Notwithstanding section (a), the lease commencement date
shall be the date that Owner's Initial Work has been substantially completed and
the Demised Premises are ready for occupancy by Tenant (the "LEASE COMMENCEMENT
DATE"). Notwithstanding subsection (a), Tenant shall not be obligated to
commence paying rent until the date that is one (1) month after the Lease
Commencement Date (the "RENT COMMENCEMENT DATE"). If the Lease Commencement Date
is not the first day of a month, rent for the balance of the month in which the
Rent Commencement Date occurs shall be prorated equitably.
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<PAGE> 6
Date occurs shall be prorated equitably.
2. Occupancy.
(a) Tenant shall use and occupy Demised Premises for general
office space and for no other purposes.
(b) Tenant represents that it shall not disturb the occupancy
of other Tenants of the building by reason of odors, noise or vibration
emanating from the Demised Premises.
(c) 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.
3. Tenant's Work and Alterations.
(a) Preparation of Premises, Tenant's Work. Tenant, at
Tenant's sole cost and expense, may make future alterations, decorations,
installations or improvements in or to the Demised Premises (collectively
referred to herein as "Tenant's Work"), all subject to the Owner's prior
approval and the other requirements and conditions of this Lease, except that
Tenant may make minor decorative alterations without Owner's prior consent.
Owner agrees to not unreasonably withhold its consent to any Tenant's Work,
provided:
(i) It is non-structural in nature;
(ii) It is performed only by such contractors or
mechanics reasonably approved by Owner;
(iii) In the opinion of the Owner, the Tenant's Work
will not adversely affect the functioning of the Building's mechanical,
electrical, sanitary, plumbing and heating systems or any other utility or
service systems;
(iv) The Tenant's Work will not result in a violation
of, or require a change in, the certificate of occupancy applicable to the
Demised Premises or the Building;
(v) The character, outside appearance, usefulness or
rentability of the Building, either in the course of the making of such Tenant's
Work or upon completion, will not be adversely affected;
(vi) No part of the Building outside of the Demised
Premises will by physically affected;
(vii) Tenant shall submit to Owner detailed plans and
specifications of Tenant's Work prepared by Tenant at Tenant's sole cost and
expense for Owner's review;
(viii) No such Tenant's Work shall be undertaken
until Tenant shall have procured and paid for, so far as the same may be
required from time to time, all permits and authorizations of any federal, state
or municipal government or department, or subdivision of same, having
jurisdiction, and furnished the same to Owner along with a certificate
evidencing that Tenant and Tenant's contractors have procured and paid for
Workmen's Compensation Insurance covering all persons employed in connection
with Tenant's Work and with respect to whom death or bodily injury claims could
be asserted against Owner and Tenant, and general liability insurance, including
as the insured, Owner and Tenant with limits of not less than those fixed for
such insurance in this Lease, shall be maintained by Tenant at Tenant's sole
cost and expense at all times when any Tenant's Work is in progress;
(ix) Tenant shall promptly reimburse Owner for all
reasonable out-of-pocket expenses, not to exceed $500.00, incurred by Owner in
connection with: (a) its decision and if required, (b) the decision of any
superior mortgagee and underlying owner as to whether to approve any Tenant's
Work, and (c) the inspection of the Tenant's Work to determine whether the same
are being or have been performed in accordance with the approved plans and
specifications therefor and with all legal requirements and insurance
requirements, including the fees and expenses
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<PAGE> 7
of any attorney, architect or engineer employed for such purpose. Owner shall
exercise its good faith efforts to obtain any required consents from any
superior mortgagee and underlying owner but in no event shall Owner be required
to initiate any action in connection therewith. If such Tenant's Work requires
consent by or notice to the superior mortgagee or underlying owner, Tenant,
notwithstanding anything to the contrary contained in this Article, shall not
proceed with the same until such consent has been received, or such notice has
been given, as the case may be, and all applicable conditions and provisions of
the superior mortgagee or underlying owner with respect to the proposed Tenant's
Work have been met or complied with at Tenant's sole expenses. Any Tenant's Work
for which consent has been received shall be performed in accordance with
approved plans and specifications therefor, and no changes other than minor
field changes thereto shall be made without the prior consent of Owner;
(x) Except for minor decorative alterations and the
installation of personal property, business fixtures, furniture and inventory,
no alterations and/or additions shall be undertaken except under the supervision
of a licensed architect or licensed professional engineer reasonably
satisfactory to Owner;
(xi) All Tenant's Work shall be performed in a good
and first class workmanlike manner, using new materials and equipment at least
equal in quality to the then standards for the Building established by the
Owner. All Tenant's Work shall be promptly commenced and completed and shall be
performed in such manner so as not to interfere with the occupancy of any other
tenant nor delay or impose any additional expense upon Owner in the maintenance,
cleaning, repair, safety, management, or security of the Building or the
Building's equipment. If any additional expense is incurred, Owner may collect
the same from Tenant and Tenant's failure to promptly pay the same when billed
shall entitle Owner to treat such nonpayment as a nonpayment of rent under this
Lease. Upon the completion of Tenant's Work, Tenant shall deliver a complete set
of "As Built" drawings and plans to Owner. No improvement shall involve the
removal of any fixtures, equipment or other property in the Demised Premises
which are not the Tenant's sole and exclusive property without the Owner's prior
written consent which shall not be withheld if they shall be promptly replaced,
at Tenant's expense, with fixtures, equipment or other property of like utility
and at least equal value (which thereupon shall become the property of the
Owner);
(xii) No approval of any plans or specifications made
by Owner or consent by Owner allowing Tenant to make any improvements or any
inspection of improvements made by or for Owner shall in any way be deemed to be
an agreement by Owner that the contemplated improvements comply with any legal
requirements or insurance requirements or the certificate of occupancy of the
Building, nor shall it be deemed to be a waiver by Owner of the compliance of
Tenant with any such legal or insurance requirements;
(xiii) All fixtures and fixture-type equipment
installed or used by Tenant in the Premises shall be fully paid for by Tenant
and shall not be subject to conditional bills of sale, chattel mortgages or
other title retention agreements; 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 the
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.
7
<PAGE> 8
(xiv) On the completion date of Tenant's Work, Tenant
shall deliver to Owner a Certificate of Occupancy or an equivalent permit or
certificate which may be required by any governmental authority having
jurisdiction thereof.
(b) Exterior Alterations. Tenant may not make any changes or
installations to the exterior of the Demised Premises, or intended to be visible
from the exterior of the Demised Premises. No window-type air conditioner may be
installed in the building or through any of its exterior walls and no equipment
may be installed on the roof of the building. No openings may be cut in the
roof, floors, or the exterior walls of the building.
4. Signs.
Any sign or other installation intended to be visible from
outside the Demised Premises installed by Tenant must be approved by Owner for
content, color, construction, and method of installation in Owner's sole
discretion. The sign, as installed, shall comply with all municipal requirements
and shall comply with Owner's standard for the building. Owner will not
unreasonably withhold consent to an identification sign on Tenant's door at the
entrance to its space.
5. Maintenance and Repairs.
(a) Tenant shall, throughout the term of this lease, at its
own cost and expense, take good care of the Demised Premises and the fixtures
and appurtenances therein. Tenant shall be responsible for all damage or injury
to the Demised Premises or any other part of the building and the systems and
equipment thereof, 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, such liability to be
apportioned among such other tortfeasors as may be liable for such damage(s) or
injury(ies). 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 contractors
approved by Owner which approval shall not be unreasonably withheld. If any
replacements become necessary or advisable, Tenant shall make replacements of
equal quality, value and design, as reasonably determined by the Owner. If, in
the Owner's reasonable opinion, any repairs or maintenance are not made in a
timely manner, then in addition to any other remedies Owners may have, Owner may
perform the obligation of Tenant and charge the Tenant the cost of same as
Additional Rent. Tenant shall have the right to contract with a security
company of Tenant's choice except that any installations relating to security
shall be subject to landlord's reasonable approval.
(b) Owner shall maintain in good working order and repair the
exterior and the structural portions of the building, including the structural
portions of the Demised Premises, and the public portions of the building
interior and the building plumbing, electrical, heating, air conditioning 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, provided the premises are
reasonably tenantable if such repairs, alterations, additions or improvements
continue for more than two business days. 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 5 shall not apply in the case of fire or other casualty which are
dealt with elsewhere in this Lease.
(c) Tenant, at Tenant's expense, shall cause all portions of
the Demised Premises
8
<PAGE> 9
used for storage, preparation, service or consumption of food or beverages to be
exterminated against infestation by vermin, rodents or roaches regularly by
persons approved in writing in advance by Owner.
(d) Tenant will not clean nor require, permit, suffer or allow
any window in the Demised Premises to be cleaned from the outside in violation
of any applicable law.
6. Mechanics Liens.
If any mechanics or other liens or orders for the payment of
money shall be filed against the Demised Premises or any building or improvement
thereon by reason of or arising out of any labor or materials furnished or
alleged to have been furnished or to be furnished to, or for the Tenant at the
leased premises or for or by reason of any change, alteration or addition or the
cost or expense thereof, or any contract relating thereto, or against the Owner
thereof, the Tenant shall within sixty (60) days cause the same to be canceled
and discharged of record, by bond or otherwise at the election and expense of
the Tenant, and shall also defend on behalf of the Owner at the Tenant's sole
cost and expense, any action, suit or proceeding which may be brought thereon or
for the enforcement of such lien(s), or orders. If the Tenant shall fail to take
such action as shall cause such lien to be discharged within sixty (60) days
after notice to the Tenant of the filling of such lien, the Owner may pay the
amount of such lien or discharge the same by deposit or by bonding proceedings,
and in that event, Owner may require the lienor to prosecute an appropriate
action to enforce the lienor's claim. In such case, the Owner may pay any
judgment recovered on such claim. Any amount paid or expense incurred by the
Owner, as herein provided, shall be deemed to be Additional Rent for the Demised
Premises and shall be due and payable by the Tenant to the Owner on demand on
the first day of the next following month.
7. Compliance with Law, Fire Insurance, Floor Loads Requirements.
Prior to the commencement of the lease term, if Tenant is then
in possession, and at all times thereafter, Tenant, at Tenant's sole cost and
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 any state Board of Fire Underwriters,
Insurance Service 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, (excluding 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 from 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 any fire department, Board of Fire Underwriters, fire
insurance rating organization, or other authority having jurisdiction over the
Demised Premises, and then only in such 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
9
<PAGE> 10
with the provisions 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 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 a 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 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 judgment, to
absorb and prevent vibration, noise and annoyance. Owner acknowledges that the
Tenant's current use of the Demised Premises does not exceed the floor load per
square foot of area which it was designed to carry and which is permitted by
law. To the best knowledge of Owner, the Building does not violate any
environmental laws or the Americans with Disabilities Act.
8. Indemnity and Waiver of Subrogation.
(a) Tenant covenants and agrees to indemnify and save harmless
Owner and any managing agent, fee owner and any mortgagee and any lessor under
any ground or underlying lease, and their respective contractors, agents,
officers and employees, licensees and invitees, from and against any and all
loss or liability (statutory or otherwise), claims, suits, demands, damages,
judgments, costs, interest and expenses (including, but not limited to, counsel
fees, witness fees and disbursements incurred in the defense of any action or
proceeding), to which they may be subject or which they may suffer, by reason of
any claim for, any injury to, or death of, any person or persons (including,
without limitation, Owner, its agents, contractors, employees, licensees and
invitees) or damage to property (including any loss of use thereof) or otherwise
arising from or in connection with the occupancy or use of or from any work,
installation or thing whatsoever done in, at or about the Demised Premises
arising from and after the execution of this Lease, or resulting from any
default by Tenant in the performance of Tenant's obligations under this Lease or
from any act, omission or negligence of Tenant or any of Tenant's officers,
directors, agents, contractors, employees, Subtenants, licensees or invitees
(individually and collectively, "CLAIMS"). Tenant shall pay, satisfy and
discharge any judgments, orders and decrees which may be recovered against
Landlord, any lessor, or mortgagee in connection with a Claim within thirty days
after the rendering thereof. This indemnity shall be construed so that Tenant
shall defend and indemnify Owner at Tenant's expense, using counsel satisfactory
to Owner, in each instance in which a Claim is made. Tenant shall be responsible
for the protection of Owner under this clause as soon as a Claim is made. Tenant
shall not be responsible for any damage or injury arising from or in connection
with the occupancy of the premises to the extent that such damage or injury is
caused by Landlord's action or inaction, or the action or inaction of any of
Landlord's officers, directors, agents, contractors, employees, licensees or
invitees.
(b) Owner's Indemnity: Owner covenants and agrees to indemnify
and save and hold harmless Tenant and their respective contractors, agents,
officers and employees, licensees and invitees, from and against any and all
loss or liability (statutory or otherwise), claims, suits, demands, damages,
judgements, costs, interest and reasonable expenses (including but not limited
to counsel fees, witness fees and disbursements incurred in the defense of any
action or proceeding), to which they may be subject or which they may suffer by
reason of any claim for, any injury to, or death of, any persons (including
without limitation, Tenant, its agents, contractors, employees, licensees and
invitees) or damage to property (including any loss of use thereof) or otherwise
arising from or in connection with the common areas of the Building of which the
Demised Premises forms a part or to the extent resulting from any default by
Owner and/or Owner's Agents in the performance of Owner's obligations under this
Lease or from any act, omission or gross negligence of Owner or any of Owner's
office, directors, agents, contractors, employees, licensees or invitees
(individually and collectively "Claims"). Owner shall pay, satisfy and discharge
any judgments, orders, and decrees which may be recovered against Tenant, in
connection with a Claim within 90 days after rendering thereof. Upon
10
<PAGE> 11
written notice from Tenant Owner shall be responsible for the protection of
Tenant under this clause as soon as a claim is made.
(c) Owner shall not be responsible or liable to Tenant for any
loss or damage resulting to Tenant or its property, or property under Tenant's
care and custody, for any reason, including (but not limited to) damage caused
by water, steam, leakage, fire, theft, vandalism or the bursting, stoppage or
overflow of any drain, water or sewer pipe, or sprinkler pipe or for any other
cause whatsoever other than Owner's negligence.
(d) Notwithstanding the foregoing, 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. Owner and
Tenant each hereby releases and waives all right of recovery against the other
or any one claiming through or under each of them by way of subrogation or
otherwise. 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. Tenant hereby waives the
provisions of any law to the contrary and agrees that the provisions of this
article shall govern and control in lieu thereof.
9. Exculpation
Tenant shall look only to Owner's equity in the Building for
the satisfaction of Tenant's remedies for the collection of a judgment (or other
judicial process) requiring the payment of money by Owner in the event of any
default or liability by Owner hereunder, and no other property or assets of
Owner and no property of any officer, employee, director, shareholder, partner
or principal of Owner 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 or
occupancy of the Demised Premises. Owner represents that it maintains commercial
general liability insurance with limits of liability in excess of $20,000,000.
10. Property Loss, Damage Reimbursement Indemnity.
Owner or its agents shall not be liable for any damage to
property of Tenant or of others entrusted to employees of the building, nor for
loss 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 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 unless such closing or darkening of windows materially adversely
affects Tenant's business operations for a period exceeding 10 business days.
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 subtenant,
and any agent, contractor, employee, invitee or licensee of any subtenant. 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.
11. Destruction, Fire and Other Casualty.
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(a) If the Demised Premises or any part thereof shall be damaged by fire or
other casualty, Tenant shall give immediate notice therefor to Owner and this
lease shall continue in full and 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 Base 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 Base 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; or (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 60 days after such fire or
casualty, specifying a date for the expiration of the lease, which date shall
not be more than 60 days after the giving of such notice, and upon the date
specified in such notice the term of this lease shall expire as fully and
completely as if such date were the date set forth above for the termination of
this lease and Tenant shall forthwith quit, surrender and vacate the premises
without prejudice however, to 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 herein, Owner
shall make the repairs and restorations under the conditions of (b) and (c)
hereof, within 180 days, subject to delays due to adjustment of insurance
claims, labor troubles and causes beyond Owner's control but no event later 210
days. 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 for rent shall resume five (5) days after written
notice from Owner that the premises are substantially ready for Tenant's
occupancy. (e) Nothing contained hereinabove shall 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. Notwithstanding anything to the
contrary herein, 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.
12. Tenant's Insurance
(a) Tenant shall obtain at its own expense and keep in full
force and effect during the Term, a policy of commercial general liability
insurance (including, without limitation, insurance covering Tenant's
contractual liability under the Lease), under which Tenant is named as the
insured, and Landlord, Landlord's managing agent, the present and any future
mortgagee of the Real Property or the Building and/or such other designees
specified by Landlord from time to time, are named as additional insured. Such
policy shall contain a provision that no act or omission of Tenant shall affect
or limit the obligation of the insurance company to pay the amount of any loss
sustained. Such policy shall also contain a provision which provides the
insurance company will not cancel or refuse to renew the policy, or change in
any material way the nature or extent of the coverage provided by such policy,
without first giving Landlord at least thirty (30) days written notice by
certified mail, return receipt requested, which notice shall contain the policy
number and the names of the insured and policy holder. The minimum limits of
liability shall be a combined single limit with respect to each occurrence in an
amount of not less than $1,000,000 for injury (or death) and damage to property
or such greater amounts and other coverages as Landlord may, from time to time,
reasonably require. Tenant shall also maintain at its own expense during the
Term a policy of
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workers' compensation insurance providing statutory benefits for Tenant's
employer's liability. Tenant shall provide to Landlord upon execution of this
Lease and at least thirty (30) days prior to the termination of any existing
policy, a certificate evidencing the effectiveness of the insurance policies
required to be maintained hereunder which shall include the named insured,
additional insured, carrier, policy number, limits of liability, effective date,
the name of the insurance agent and its telephone number. Tenant shall provide
Landlord with a complete copy of any such policy upon written request of
Landlord. Tenant shall have no right to obtain any of the insurance required
hereunder pursuant to a blanket policy covering other properties unless the
blanket policy contains an endorsement that names Landlord, Landlord's managing
agent and/or designees specified by Landlord from time to time, as additional
insured, references the Demised Premises, and guarantees a minimum limit
available for the Demised Premises equal to the amount of insurance required to
be maintained hereunder. Each policy required hereunder shall contain a clause
that the policy and the coverage evidenced thereby shall be primary with respect
to any policies carried by Landlord, and that any coverage carried by Landlord
shall be excess insurance. The limits of the insurance required under this
subsection shall not limit the liability of Tenant under this Lease. All
insurance required to be carried by Tenant pursuant to the terms of this Lease
shall be effected under valid and enforceable policies issued by reputable and
independent insurers permitted to do business in the State where the Building
containing the Demised Premises is located, and rated in Bests Insurance Guide,
or any successor thereto (or if there be none, an organization having a national
reputation) as having a general policyholder rating of "A" and a financial
rating of at least "13". In the event that Tenant fails to continuously maintain
insurance as required by this subsection, Landlord may, at its option and
without relieving Tenant of any obligation hereunder, order such insurance and
pay for the same at the expense of Tenant. In such event, Tenant shall repay the
amount expended by Landlord, with interest thereon, immediately upon Landlord's
written demand therefor.
(b) Tenant shall also maintain at its own expense during the
Term a policy against fire and other casualty on an "all risk" form covering all
alterations, construction and other improvements installed within the Demised
Premises, whether existing in the Demised Premises on the date hereof or
hereinafter installed by or on behalf of Landlord or Tenant, and on all
furniture, fixtures equipment, personal property and inventory of Tenant located
in the Demised Premises and any property in he care, custody and control of
Tenant (fixed or otherwise) sufficient to provide 100% full replacement value of
such items, which policy shall otherwise comply with the provisions of sections
(a) and (c) of this Article 10. On any such policy Tenant shall name landlord as
a loss payee, as its interest may appear. If the payment of an additional
premium is required for the inclusion of such waiver of subrogation provision,
Tenant shall advise Landlord of the amount thereof and Landlord shall pay the
same or be deemed to have waived the benefit thereof.
(c) To the extent reasonably possible, the parties hereto
shall procure an appropriate clause in, or endorsement on, any "all-risk"
property insurance covering the Demised Premises and the Building, including its
respective alterations, construction and other improvements as well as personal
property, fixtures, furniture, inventory and equipment located thereon or
therein, pursuant to which the insurance companies waive subrogation or consent
to a waiver of right of recovery against the other party, and each party hereby
agrees that it will not make any claim against or seek to recover from the other
or the partners, directors, officers, shareholders or employees of such party
for any loss or damage to its property or the property of others resulting from
fire or other hazards covered by such "all-risk" property insurance policies to
the extent that such loss or damage is actually recoverable under such policies
exclusive of any deductibles. Such waiver will not apply should any loss or
damage result from one of the parties' gross negligence or willful misconduct.
If the payment of an additional premium is required for the inclusion or such
waiver of subrogation provision, each party shall advise the other of the amount
of any such additional premiums and the other party shall pay the same.
(d) It is expressly understood and agreed that Owner will not
be obligated to repair or replace or carry insurance on the alterations,
construction and other improvements presently existing or hereafter installed
within the Demised Premises or on Tenants's fixtures, furnishings, equipment,
personal property or inventory located in the Demised Premises or insurance
against interruption of Tenant's business.
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(e) Owner shall maintain casualty insurance in an amount
necessary to cover the full replacement value of the Building and commercial
general liability insurance with minimum limits of liability in an amount not
less than $2,000,000.
13. Subordination, Attornment, Notice to Owner, Lease Modification
(a) 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.
(b) If at any time or times during the term of this Lease, (i)
the Owner of the Demised Premises shall be the holder of a Leasehold estate
covering premises of which the Demised Premises forms a part, and if such
Leasehold estate shall expire or terminate for any reason, or (ii) if the
Building, Land or the Owner's aforesaid Leasehold estate shall now or hereafter
be affected by a mortgage, then the Tenant shall, at the election and upon the
demand of any owner of the premises of which the Demised Premises are a part, or
of any mortgagee in possession thereof, attorn to any such owner or mortgagee
upon the terms and conditions set forth herein for the remainder of the term of
this Lease. The foregoing provisions shall inure to the benefit of any such
owner or mortgagee and shall, in the event of any such election and demand, be
self-operative without the necessity of the execution of any further
instruments; but the Tenant agrees upon the demand of any such owner or
mortgagee to execute, acknowledge and deliver any instrument or instruments
confirming such attornment. The foregoing provision shall not be construed to
limit or preclude any other rights such owner or mortgagee may then have under
the law or otherwise.
(c) In the event of an act or omission or alleged act or
omission by Owner which would give Tenant the right to terminate this Lease or
to abate the payment of rent or to claim a partial or total eviction, Tenant
shall not exercise any such right unless (i) Tenant shall first have given
written notice of such act or omission to Owner and to the holder of any
mortgage on the Building (whose name and address shall previously have been
furnished to Tenant) and (ii) neither Owner nor any mortgagee shall have
commenced to cure such act or omission within a reasonable period of time
following the giving of such notice (which reasonable period shall in no event
be less than the period to which Owner would be entitled under this Lease or
otherwise, after similar notice, to effect such remedy).
(d) If, in connection with the procurement, continuation or
renewal of any financing for which the Land or the Building represents
collateral in whole or in part, an institutional lender shall request reasonable
modifications of the Lease as a condition of such financing, Tenant will not
withhold its consent thereto; provided that such modification does not
materially affect any rights of Tenant under this Lease.
(e) Owner shall provide a non-disturbance agreement in favor
of Tenant from Owner's current lender. In addition, Owner shall use reasonable
efforts to provide a non-disturbance agreement from any further lender.
14. Eminent Domain.
If the whole or any part of the Demised Premises shall be
acquired or condemned by Eminent Domain for any public or quasi public use or
purpose, then and in that event, the term of this lease shall cease and
terminate from the date of title vesting in such proceeding and Tenant shall
have no claim for the value of any unexpired term of said lease and assigns to
Owner, Tenant's entire interest in any such award. Tenant shall have the right
to make an independent claim to the condemned 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
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property, trade fixture and equipment at the end of the term and provided
further such claim does not reduce Owner's award.
15. Subleasing and Assignment.
(a) Leaseback by Owner.
(i) If Tenant shall desire to sublet or assign this
Lease, Tenant shall submit a Tenant's Notice to Owner. Tenant's Notice shall be
deemed an offer from Tenant to Owner whereby Owner (or Owner's designee) may, at
its option, terminate this Lease (as to any assignment) or remove the portion of
the premises sought to be sublet from the scope of the Lease (the "Sublet
Premises"). Owner's option may be exercised by Owner by notice to Tenant at any
time within thirty (30) days after receipt of Tenant's Notice to Owner; and
during such thirty (30) day period Tenant shall not assign this Lease or sublet
the premises to any person.
(ii) If Owner exercises its option to terminate this
Lease, this Lease shall end and expire (as to such portion) on the date that
such assignment was to be effective, and the Annual Rent and Additional Rent due
hereunder shall be paid and apportioned to such date. If Owner exercises its
option to remove the Subleased Premises from this Lease, Tenant's rent shall be
reduced by a fraction, the numerator of which is the square footage of the
Subleased Premises, and the denominator of which is the square footage of the
Demised Premises and Tenant shall have no further liability for the Subleased
Premises under this Lease.
(iii) If Owner exercises its option to terminate this
Lease or to remove the Subleased Premises from this Lease, Owner shall be free
to and shall have no liability to Tenant if Owner should lease the Demised
Premises (or any part thereof) to Tenant's prospective subtenant or assignee.
(iv) If the Subleased Premises are removed from this
Lease, Tenant grants to Owner the right to enter onto the Demised Premises and
to construct such demising walls or other facilities as may be needed to
physically separate the Subleased Premises from the Demised Premises, or (at
Tenant's option) to effect whatever lesser or additional degree of separation
may have been agreed to between Tenant and the prospective subtenant.
(v) If (1) Owner fails to exercise its option under
this subsection (a) and consents to a proposed assignment under subsection (b),
and (2) Tenant fails to execute and deliver the assignment or sublease to which
Owner consented within one hundred twenty (120) days after the giving of such
consent, then Tenant shall again be required to comply with all of the
provisions of this subsection (a) before assigning this Lease or subletting the
premises.
(b) Conditions for Consent to Assignment or Sublease. If Owner
does not exercise its option under subsection (a), Owner will not unreasonably
withhold or delay consent to an assignment of the Lease or a Sublease, subject
to the following conditions precedent:
(i) Tenant shall deliver to Owner, not less than
thirty (30) days prior to its proposed effective date, a duplicate original of
the written instrument of assignment or Sublease, in recordable form, containing
the name and address of the proposed assignee or subtenant and an assumption by
the assignee of the Lease (with respect to an assignment) of all obligations to
be performed by the Tenant thereunder directly enforceable by Owner, together
with sufficient information (certified by an independent accountant) to enable
Owner to evaluate the financial strength, business experience, and
creditworthiness of the assignee or subtenant. Owner may require other
information with respect thereto in connection with Tenant's request.
(ii) The proposed assignee or subtenant shall have a
net worth at least equal to the net worth of Tenant on the date thereof. In
addition, the Tenant, the proposed assignee or subtenant shall be of such
financial strength, creditworthiness and business experience at the time of the
assignment (of which Owner shall be the sole judge) as to give reasonable
assurance of the successful operation of the business and the payment of all
rents and other amounts reserved in this Lease and
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compliance with all of the terms covenants, provisions and conditions of this
Lease.
(iii) No assignment or Sublease shall relieve Tenant
from any liability hereunder. The assignment and assumption agreement shall
contain a covenant by which each permitted assignee or transferee shall assume
and be deemed to have assumed this Lease and shall be and remain liable jointly
and severally with Tenant for the payment of the rent and Additional Rent and
for the due performance of all the terms, covenants, conditions and agreements
herein contained on Tenant's part to be performed for the term of this Lease.
(iv) An assignment or Sublease in violation of this
section shall be void and of no force and effect, except that until any Tenant's
default is cured, the proposed assignee or subtenant will be deemed to be
guaranteeing Tenant's obligations hereunder.
(c) Substituted Guaranties. Notwithstanding part (b)(iii)
above, if Tenant is a corporation, limited liability company, or partnership and
the principals of Tenant have executed guaranties in the form attached, Owner
shall release those principals from liability under their guaranties after an
assignment or sublease of this Lease, provided the principals of the assignee
execute replacement guaranties in substantially the same form, and such
principals have a net worth substantially equal to the net worth of existing
principals on the date of this Lease or the date of the assignment, whichever is
greater.
(e) Fees. Tenant shall pay any fees incurred by the Owner,
including reasonable attorneys fees, a reasonable administrative fee for a
credit check and architectural or engineering review fees, in connection with a
proposed sublease or assignment.
(f) Collection not Waiver or Consent. 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, under-Tenant or occupant as Tenant, or a release of Tenant from the
further performance by Tenant of covenants on the part of Tenant herein
contained. The consent by Owner to an assignment or underletting shall not in
any wise be construed to relieve Tenant from obtaining the express consent in
writing of Owner to any further assignment or underletting.
(g) Effect of Transfer of Control. A sublet of a portion or
all of the Demised Premises to an affiliate of Tenant, or of up to 40% of the
Demised Premises in the aggregate to a client or clients of Tenant shall not be
a sublet which requires the consent of Owner. An assignment or sublet in
conjunction with a corporate restructuring of Tenant or the merger of Tenant
into or the acquisition by Tenant by another corporation shall not require the
consent of Owner.
(h) Owner hereby consents to the sublease of the portions of
the Demised Premises indicated on Schedule A to CFN and Wall Street Voice
respectively.
16. Electric Current.
(a) Tenant agrees that Owner may furnish electricity to Tenant
on a "submetering" basis in accordance with subsection (c) or on a "rent
inclusion" basis in accordance with subsection (b). Owner reserves the right, at
any time upon thirty (30) days written notice, to change the way it furnishes
electricity to Tenant from a rent inclusion basis to a submetering basis or
direct service basis, or vice versa.
(b) Rent Inclusion. (i) Unless Owner elects to supply
electricity to the Demised Premises in accordance with subsection (c) or to have
Tenant obtain electricity from the public utility furnishing electricity to the
Building pursuant to the provisions of subsection (d) hereof, Owner shall
furnish electric current to the Demised Premises for the use of Tenant for the
operation of the
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lighting fixtures and the electrical receptacles for ordinary office equipment
in the Demised Premises on a "rent inclusion" basis, that is, there shall be no
separate charge to Tenant for such electric current by way of measuring such
electricity service on any meter. The annual Base Rent set forth in this Lease
includes an annual charge in the amount of $11,250.00 (such amount being
referred to as the "ELECTRICITY INCLUSION FACTOR").
(ii) The Electricity Inclusion Factor shall be
collectible by Owner in the same manner as annual Base Rent.
(iii) If Owner discontinues furnishing electricity to
Tenant in accordance with this Article, the annual Base Rent shall be decreased
by the Electricity Inclusion Factor effective as of the date Owner discontinues
the provision of electricity in such manner.
(c) Metered Electrical Current. (i) Owner shall have the
right, on thirty (30) days notice, to furnish electricity to the Demised
Premises, and Tenant shall pay Owner for Tenant's demand and consumption of
electricity, as determined by meters or submeters (installed by Owner, at
Tenant's cost, for the purpose of measuring such consumption) at charges, terms
and rates set, from time to time, during the term of this Lease by Owner but no
more than those specified in the service classification in effect on January 1,
1998 pursuant to which Owner then purchased electric current from the public
utility corporation serving the part of the city where the Building is located;
provided, however, said charges shall be increased in the same percentage as any
percentage increase in the billing to Owner for electricity for the entire
building, by reason of increase in Owner's electric rates, charges, fuel
adjustment or service classifications, or by taxes or charges of any kind
imposed thereon, of for any other such reason, subsequent to January 1, 1998.
Any such percentage increase in Owner's billing for electricity shall be
computed by the application of the average consumption (energy and demand) of
electricity for the entire building for the twelve (12) full months immediately
prior to the rate change, other change, or any changed methods of or rules on
billing for same, on a consistent basis to the new rate and to the service
classification in effect on January 1, 1998. If the average consumption of
electricity for the entire building for said prior twelve (12) months cannot
reasonably be applied and used with respect to changed methods of or rules on
billing, then the percentage increase shall be computed by the use of the
average consumption (energy and demand) for the entire building for the first
three (3) months after such change, projected to a full twelve (12) months; and
that same consumption, so projected, shall be applied to the service
classification in effect on January 1, 1998. Amounts required to be paid by
Tenant to Owner under this Article shall be referred to as "ELECTRICITY
ADDITIONAL RENT".
(ii) Where more than one meter measures the
electricity supplied to Tenant, the electricity rendered through each meter may
be computed and billed separately in accordance with the provisions hereinabove
set forth. Bills for the Electricity Additional Rent shall be rendered to Tenant
at such time as Owner may elect, and Tenant shall pay the amount shown thereon
to Owner as Additional Rent within thirty (30) days after receipt of such bill.
(d) If Owner elects to discontinue furnishing electricity to
Tenant, this Lease shall continue in full force and effect and shall be
unaffected thereby, except only that from and after the effective date of such
discontinuance, Owner shall not be obligated to furnish electricity to Tenant
and Tenant shall not be obligated to pay the Electricity Additional Rent. If
Owner so discontinues furnishing electricity to Tenant, Tenant shall use
diligent efforts to obtain electric energy directly from the public utility
furnishing electric service to the Building. The costs of such service shall be
paid by Tenant directly to such public utility. Such electricity may be
furnished to Tenant by means of the existing electrical facilities serving the
Demised Premises, at no additional charge, to the extent the same are available,
suitable and safe for such purposes as determined by Owner. All meters and all
additional panel boards, feeders, risers, wiring and other conductors and
equipment which may be required to obtain electricity shall be installed by
Owner at Tenant's expense. Provided Tenant shall use and continue to use
diligent efforts to obtain electric energy directly from the public utility,
Owner, shall not discontinue furnishing electricity to the Demised Premises
until such installations have been made and Tenant shall be able to obtain
electricity directly from the public utility. In the event that Tenant is unable
to obtain electrical service at a reasonable cost when compared to the cost of
such service to other spaces of comparable size and
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configuration in Norwalk, CT, Tenant shall not have any further obligation to
expend diligent efforts to obtain such service and Owner shall continue to
provide electric service either on a rent inclusion basis or by submeter.
(e) Tenant shall at all times comply with the rules,
regulations, terms and conditions applicable to service, equipment, wiring and
requirements of the public utility supplying electricity to the building. Tenant
shall not use any electrical equipment which, in Owner's reasonable judgment,
would exceed the capacity of any of the electrical conductors or equipment in or
otherwise servicing the Demised Premises or interfere with the electrical
service to other Tenants of the building. Owner agrees that Tenant's current use
of the Demised Premises does not exceed the permitted capacity or interfere with
the electrical service to other tenants. In the event that, Tenant's future
electrical requirements necessitate installation of an additional riser, risers
or other proper and necessary conductors or equipment, Owner shall so notify
Tenant of same. Within ten (10) business days after receipt of such notice,
Tenant shall either cease use of electrical equipment or shall request that
additional electricity capacity (specifying the amount requested) be made
available to Tenant. Owner, in Owner's sole judgment, shall determine whether to
make available such additional electrical capacity to Tenant and the amount of
such additional electrical capacity to be made available. If Owner shall agree
to make available additional electrical capacity and the same necessitates
installation of an additional riser, risers or other proper and necessary
conductors or equipment, including, without limitation, any switchgear, the same
shall be installed by Owner. Any such installation shall be made at Tenant's
sole cost and expense, and shall be chargeable and collectible as Additional
Rent and paid within thirty (30) days after the rendition of a bill to Tenant
therefor. Owner shall not be liable in any way to Tenant for any failure or
defect in the supply or character of electric service furnished to the Demised
Premises by reason of any requirement, act or omission of the utility company
serving the building or for any other reason not attributable to the gross
negligence of Owner, whether electricity is provided by public or private
utility or by any electricity generation system owned and operated by Owner.
(f) 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 installments 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.
17. Access to Premises.
Owner or Owner's agent shall have the right (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 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 provided that such work
does not materially adversely affect Tenant's business operations for a period
exceeding ten (10) business days. Throughout the term hereof Owner shall have
the right to enter the demised premised 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
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no effect on this lease or Tenant's obligations hereunder. Owner shall provide
twenty-four (24) hours advance notice of its intent to enter the premises,
except in the case of emergency.
18. Condition of Premises.
Tenant has inspected the Demised Premises and accepts them as
is, subject to the riders annexed hereto with respect to Owner's Work, if any
and subject to the other provisions of this Lease. Tenant agrees to accept the
Demised Premises and the Building subject to violations not of record, if any.
Notwithstanding the foregoing, Owner represents that the Building is in
compliance with all applicable laws in all material respects.
19. Bankruptcy.
(a) Anything elsewhere in this lease to the contrary
notwithstanding, this lease may be canceled 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 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 of 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 statute or rule of law in effect at the time when, and
governing the proceedings in which, such damages are to be proved, whether or
not such amount be greater, equal to, or less than the amount of the difference
referred to above.
20. Default.
(a) If Tenant defaults in fulfilling any of the covenants of
this lease other than the covenants for the payment of Base 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 Section 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
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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.
(b) If the notice provided for in (a) 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 if such events Owner may without notice, re-enter the demised
premised 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.
(c) If Owner does not receive any part of the Base Rent or
Additional Rent herein reserved or any other sum required to be paid by Tenant
within ten (10) days after the due date thereof, Tenant shall pay Owner, as
Additional Rent, a late charge of $25.00. If Owner does not receive any part of
the Base Rent or Additional Rent reserved or any other sum required to be paid
by Tenant within 30 days after the due date thereof Tenant shall pay over as
Additional Rent a late charge of 5% of the overdue amount to pay Owner's
increased costs of collection and administration.
21. Remedies of Owner and Waiver of Redemption.
(a) In case of any default by Tenant, re-entry, expiration
and/or dispossess by summary proceedings or otherwise, (i) the rent shall become
due thereupon and be paid up to the time of such re-entry, dispossess and/or
expiration, (ii) 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 this lease and may grant concessions or
free rent or charge a higher rental than that in this lease, and/or (iii) 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 to 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
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<PAGE> 21
and all rights of redemption granted by or under any present or future laws in
the event of Tenant being evicted or dispossessed for any cause, or in the event
of 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.
(b) If Tenant shall fail to perform any obligation hereunder,
Owner, after notice to Tenant, in addition to any other remedy hereunder, may
perform the obligation on behalf of and for the account of Tenant, and the cost
of performing such obligation of the cost to Owner of performing the obligation
for the account of Tenant, together with interest at the maximum legal rate,
shall be deemed Additional Rent.
(c) Any remedy of Owner provided for hereunder shall be in
addition to, and not in exclusion of, any other remedy available to Owner.
(d) In no event shall Tenant be entitled to make, nor shall
Tenant make, any claim, and Tenant hereby waives any claim, for money damages
(nor shall Tenant claim any money damages by way of off-set, counterclaim or
defense) based upon any claim or assertion by Tenant that Owner has unreasonably
withheld or delayed its consent or approval in those instances, if any under
this Lease wherein Owner is required not to unreasonably withhold its approval
or consent. Tenant's sole remedy shall be an action or proceeding to enforce any
such provision, or for specific performance, injunction or declaratory judgment.
22. Fees and Expenses.
(a) Tenant shall be responsible for all of Owner's costs and
expenses of enforcing this Lease or defending any claim or action brought by
Tenant arising under or in connection with this Lease. If Owner is required to
send any notice of default, demand, or engage in any action or other proceeding
for which Owner deems it advisable to retain an attorney, then Tenant shall pay
Owner Owner's reasonable attorney's fees incurred in connection with such notice
demand, action or proceeding together with Owner's fees and disbursements.
(b) The costs and 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. If Owner shall default under this Lease, and
Tenant shall prevail in any action or proceeding to enforce this Lease against
Owner, Owner shall pay Tenant for reasonable attorney's fees and other
reasonable costs and expenses incurred in connection with such action or
proceeding.
23. Building, Alterations and Management.
Owner shall have the right at any time without the same
constituting an eviction and without incurring liability to Tenant therefor to
change the arrangement and/or location of public entrances, passageways, doors,
doorways, corridors, elevators, stairs, toilets or other public parts of the
building and to change the name, number or designation by which the building may
be known. There shall be no allowance to Tenant for diminution of rental value
and no liability on the part of Owner by reason of inconvenience, annoyance or
injury to business arising from Owner or other Tenants making any repairs in the
building or any such alterations, additions and improvements provided that
Tenant's business operations are not materially adversely affected for more than
ten (10) business days. 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.
24. No Representations by Owner.
Except as specifically set forth in this Lease, neither Owner
nor Owner's agents have
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made any representations or promises with respect to the physical condition of
the building, the land upon which it is erected or the Demised Premises, the
rents, leases, expenses of operation or any other matter or thing affecting or
related to the premises except as herein expressly set forth and no rights,
easements or licenses are acquired by Tenant by implication or otherwise except
as expressly set forth in the provisions of this lease. Tenant has inspected the
Building and the Demised Premises and is thoroughly acquainted with their
condition and agrees to take the same "as is" 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 understanding and agreements heretofore made between
the parties hereto are merged in this contract, which alone fully 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.
25. End of Term.
(a) Surrender of Premises. Upon the expiration or other
termination of the term of the 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 any damage due to casualty 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.
(b) Holdover. Should the Tenant hold over in possession after
the expiration or an earlier termination of the original term or of any extended
term of this Lease, such holding over --shall not be deemed to extend the term
or renew the Lease, nor to establish a month-to-month tenancy (but such holding
over thereafter shall continue upon the covenants and conditions set forth in
this Lease), except that the charge for use and occupancy of such holding over
("USE FEE") for each calendar month or part thereof (even if such part shall be
a small fraction of a calendar month) shall be the sum of:
(i) 1/12 of the highest annual Base Rent set forth in
this Lease, times 1-1/2; plus
(ii) 1/12 of all other items of annual Additional
Rent, which annual Additional Rent would have been payable pursuant to this
Lease, had this Lease not expired; plus
(iii) Those other items of Additional Rent (not
annual Additional Rent) which should have been payable pursuant to this Lease,
had this Lease not expired.
Tenant agrees to pay to Owner the Use Fee on the first day of each month for
which the Use Fee is due upon demand in full without setoff. Tenant agrees that
said Use Fee is commercially reasonable.
26. Quiet Enjoyment.
Owner covenants and agrees with Tenant that upon Tenant paying
the Base Rent and Additional Rent and observing and performing all the terms,
covenants and conditions, on Tenant's part to be observed and performed, Tenant
may peaceably and quietly enjoy the premises hereby demised, subject,
nevertheless, to the terms and conditions of this lease and to the ground
leases, underlying leases and mortgages mentioned herein.
27. Failure to Give Possession.
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If Owner is unable to give possession of the Demised Premises
on the date of the commencement of the term hereof, because of the holding-over
or retention of possession of any Tenant, 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 for any other reason. Owner shall be subject to liability in an amount
equal to $100 per day for each day after August 1, 1999 until Owner gives
possession of the Demised Premises to Tenant. The validity of the lease shall
not be impaired under such circumstances, nor shall the same be construed in any
wise to extend the term of this Lease, and 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 Demised Premises or to occupy premises other than the Demised
Premises prior to the date specified as the commencement of the term of this
lease, Tenant covenants and agrees that such 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 amount of fixed annual Base Rent set
forth in this Lease, but if the Demised Premises are occupied prior to the Rent
Commencement Date, Tenant shall pay the amount of the Electricity Inclusion
Factor, prorated for the period so occupied.
28. No Waiver.
The failure to seek redress for violation of, or to insist
upon the strict performance of any covenant or condition of this lease or of any
of the Rules or Regulations, set forth or hereafter adopted by Owner, shall not
prevent a subsequent act which would have originally constituted a violation
from having all the force and effect of an original violation. The receipt by
Owner of Base 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.
29. Waiver of Trial by Jury.
It is mutually agreed by and between Owner and Tenant that the
respective parties hereto shall and they hereby do waive trial by jury in any
action proceeding or counterclaim brought by either of the parties hereto
against the other (except for personal injury or property damage) on any matters
whatsoever arising out of or in any way connected with this lease, the
relationship of Owner and Tenant, Tenant's use or of 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 relating to the maintenance and repair
of the Demised Premises except for statutory mandatory counterclaims.
30. Inability to Perform.
This Lease and the obligation of Tenant to pay rent hereunder
and perform all of the other covenants and agreements hereunder on part of
Tenant to be performed shall in no wise be affected, impaired or excused because
Owner is unable to fulfill any of its obligations under this
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lease or to supply or is unable to make, or is delayed in making any repair,
additions, alterations or decorations or is unable to supply or is delaying 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.
31. Bills and Notices.
A bill, statement or communication other than formal notices
required or permitted to be given hereunder, which Owner may desire to give to
Tenant, shall be deemed sufficiently given or rendered if, in writing, delivered
to Tenant personally or sent by regular mail addressed to Tenant at the building
of which the Demised Premises form a part or left at the Demised Premises
addressed to Tenant at the time of rendition of such bill or statement or
communication shall be deemed to be the time when the same is delivered, mailed
or left at the Demised Premises as hereinabove provided.
Any notice required or permitted under this Lease shall be
deemed sufficiently given or served if sent by United States certified mail,
return receipt requested, addressed as follows:
If to Owner to:
Sono Equities, LLC and 1122 Associates, LLC
c/o Prime Locations, Inc.
50 Washington Street
South Norwalk, Connecticut 06854
Attention: Lloyd Amster
If to Tenant to:
EDGAR Online, Inc.
50 Washington Street
South Norwalk, Connecticut 06854
Attention: Thomas Vos
Landlord and Tenant shall each have the right from time to
time to change the place notice is to be given under this Article by giving
written notice thereof to the other party.
32. Services Provided by Owners.
(a) As long as Tenant is not in default under any of the
material covenants of this lease beyond the applicable grace period provided in
this lease for the curing of such defaults, Owner shall provide: (i) necessary
elevator facilities on business days from 8 a.m. to 6 p.m. and have one elevator
subject to call at all other times; (ii) heat to the Demised Premises when and
as required by law, on business days from 8 a.m. to 6 p.m. and Saturday from
8:00 a.m. to 3:00 p.m.; (iii) water for ordinary lavatory and office kitchen
purposes, but if Tenant uses or consumes water for any other purposes or in
unusual quantities, 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; (iv) cleaning service for the Demised Premises as described in Exhibit
C appended to this Lease, on business days at Owner's expense provided that the
same are kept in order by Tenant. If Tenant desires to obtain supplementary
cleaning services, Tenant agrees that only persons approved by Owner shall be
permitted to enter the Demised Premises or the Building for such purpose; (v)
air-conditioning/cooling will be furnished to Tenant from May 15th through
September 30th on business days (Monday through Fridays, holidays excepted) from
8:00 a.m. to 6:00 p.m. and Saturdays from 8:00 a.m. to 3:00 p.m. and ventilation
will be furnished during the aforesaid
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hours except when air-conditioning/cooling is being furnished as aforesaid.
Owner shall maintain the common areas of the Building including replacing light
bulbs when necessary.
Owner shall provide a lobby attendant Monday through Friday between 8:00
A.M. and 11:00 P.M. and Saturdays from 8:00 A.M. to 3:00 P.M. Owner shall
maintain a 24 hour card access system at the front and rear entrance to the
building, with a Central Station Monitoring system and 24 hour surveillance by
video camera.
(b) After Hours and Additional Services. The Base Rent does
not include any charge to Tenant for the furnishing of heat, air-conditioning or
mechanical ventilation to the Demised Premises during periods other than the
hours and days set forth in section (a) of this Article for the furnishing of
such services (referred to as "Overtime Periods"). Accordingly, if Owner shall
furnish any heat, air-conditioning or ventilation to the Demised Premises during
Overtime Periods, then Tenant shall pay Owner additional rent for such services
at the standard rates then fixed by the Owner or, if no such rates are then
fixed, at reasonable rates. The services referred to in this Article shall be
furnished to Tenant upon reasonable advance request by Tenant. Alternatively,
Owner shall, at Owner's election, install controls which permit Tenant to
regulate when such overtime services are furnished. All of the services referred
to in this Article are conveniences and are not and shall not be deemed to be
appurtenances to the Demised Premises, and the failure of Owner to furnish any
of such services shall not constitute or give rise to any claim of an actual or
constructive eviction, in whole or in part, or entitle Tenant to any abatement
or diminution of Rent, or relieve Tenant from any of its obligations under this
Lease, or impose any liability upon Owner or its agents by reason of
inconvenience or annoyance to Tenant, or injury to or interruption of Tenant's
business or otherwise.
(c) Owner reserves the right to suspend operation of the
heating system, the air conditioning system, the ventilation system, elevator
service, the plumbing system, electric power systems, cleaning or other services
(collectively the Building Systems) when Owner in its judgment deems it
necessary by reason of accident or emergency, or the making the necessary
repairs, and such suspension may continue until such repairs have been
completed, and Tenant agrees that Owner shall not thereby be responsible in any
way to Tenant or be subject to any claim by Tenant therefor and that the same
shall not entitle Tenant to any compensation or to any abatement or diminution
of rent, or relieve Tenant from any of its obligations under this Lease or
impose any liability upon Owner or its agents by reason of any inconvenience or
annoyance to Tenant, or injury to or interruption of Tenant's business or
otherwise provided that such interruption of service does not materially
adversely affect Tenant's business operations for a period exceeding ten (10)
business days. Tenant further agrees that Owner shall have no responsibility to
Tenant or liability for failure to operate the Building Systems when the
operation is prevented by force majeure or failure of equipment or electric
current, steam or water or other suitable power supply. Owner agrees, however,
that it will use reasonable efforts to remove or eliminate the cause of any such
failure. Owner shall give reasonable prior notice to Tenant when Owner must
suspend operation of the Building Systems for routine planned maintenance.
33. Captions.
The Captions are inserted only as a matter of convenience and
for reference and in no way define, limit or describe the scope of this Lease
nor the intent of any provisions thereof.
34. Additional Definitions.
(a) As used in this Lease, the following terms shall be
construed as follows:
(i) The term "including": means "including but
not limited to".
(ii) The term "may": means "may but is not
obligated to".
(iii) The term "or": means "and/or".
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(iv) The term "at any time" shall be construed as
"at any time or from time to time".
(v) The term "any" shall be construed as "any
and all".
(vi) The term "tenant": includes Tenant, agents,
employees, contractors, concessionaires, and
licensees of Tenant.
(vii) The term "repair": means "repair, maintain
or replace".
(viii) 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
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.
(ix) 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 (of
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 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, provided that the Purchaser or
Lessee assumes the obligations of Owner
under this Lease 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.
(x) The words "re-enter" and "re-entry" as used
in this lease are not restricted to their
technical legal meaning.
(xi) 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.
(xii) Wherever it is expressly provided in this
lease that consent shall not be unreasonably
withheld, such consent shall not be
unreasonably delayed.
35. Adjacent Excavation-Shoring.
If an excavation shall be made upon land adjacent to the
Demised Premises, or shall be authorized 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
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damages or indemnity against Owner, or diminution or abatement of rent.
36. Rules and Regulations.
Tenant and Tenant's servants, employees, agents, visitors, and licensees shall
observe faithfully, and comply strictly with, the Rules and Regulations set
forth in Exhibit B 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 Fairfield County office of the American Arbitration Association,
whose determination shall be final and conclusive upon 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, licensees, but
the Owner shall enforce the Rules and Regulations in a consistent manner.
37. Security.
(a) Tenant has deposited with Owner the sum of $21,875.00 (the
"Security Deposit") 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 or Base
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 Base
Rent and Additional Rent or any other sum as to which Tenant is in default or
for any such 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 upon
the new Owner's acknowledgment of receipt thereof, 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 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.
(b) The Security Deposit shall be increased by Tenant whenever
Owner requests Tenant to do so so that Owner will always maintain on deposit an
amount equal to two (2) months Base Rent at then current rates.
(c) If at any time during the terms hereof Owner shall apply
all or a portion of Tenant's Security Deposit to cure a default of Tenant
hereunder, Tenant shall promptly and without further demand, deposit with Owner
an amount equal to the portion of the Security Deposit so applied by Owner so
that Owner shall at all times have the total amount of security required
hereunder.
(d) No holder of a mortgage or deed of trust or a lessor under
a ground lease to
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which this Lease is or may become subordinate shall be responsible for the
Security Deposit, unless such mortgagee or holder of such deed of trust or
lessor shall have actually received such Security Deposit.
38. Estoppel Certificate.
At any time from time to time, within ten (10) days after
Owner shall request the same, Tenant will execute, acknowledge and deliver to
Owner and to such Mortgagee or other party as may be designated by Owner, a
certificate in form reasonably acceptable to Owner certifying that this Lease is
unmodified and in full force and effect (or that same is in full force and
effect as modified, listing the instruments of modification), the dates to which
the Base Rent, Additional Rent and other charges have been paid, and whether or
not to the best knowledge of Tenant, Owner is in default hereunder (and if so,
specifying the notice of the default), it being intended that any such statement
being delivered pursuant to this Section may be relied on by a prospective
purchaser or mortgagee of Owner's interest. In the event that Tenant fails to
provide such certificate within ten (10) days after request therefor by Owner,
Tenant shall be deemed to have authorized Owner to respond to Owner's request as
Tenant's attorney-in-fact on Tenant's behalf and Owner is hereby authorized to
so certify and deliver such certificate. Owner shall also furnish a similar
estoppel certificate to Tenant upon ten (10) days prior notice.
39. Successor and Assigns.
The covenants, conditions and agreements contained in this
Lease shall bind and insure 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.
40. Execution and Delivery.
(a) Submission by the Owner of this Lease for execution by
Tenant shall confer no rights nor impose any obligations on either party unless
and until both Owner and Tenant shall have executed this Lease and duplicate
originals thereof shall have been delivered to the respective parties.
(b) This Lease shall be void and of no force and effect if the
check given hereunder for the Security Deposit is not honored on first deposit,
and Tenant will be liable for any costs of Owner (including attorney's fees)
incurred in connection with the execution of this Lease and enforcement of
Owner's rights hereunder.
41. Additional Rent.
Any sum that Tenant is obligated to pay hereunder, or which
Owner pays on behalf of or for the account of Tenant, including taxes,
insurance, operating expenses, late charges, and costs of enforcement of this
Lease (including legal fees, witness fees and disbursements), shall be deemed
Additional Rent. Owner shall have the same rights and remedies with respect to
collection of Additional Rent as any other item of rent under the Lease.
Tenant's obligation to pay any item of Additional Rent that accrues during the
term shall survive the expiration of the term.
42. General.
(a) Any restriction on any acts of Tenant shall also restrict
Tenant from permitting such act to be performed.
(b) Wherever a requirement is imposed on any party, it shall
be deemed that the party shall be required to perform the requirement at its own
expense unless it is specifically otherwise provided.
(c) This Lease is intended by the parties as a final
expression of their agreement
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and as a complete and exclusive statement of the terms thereof, all
negotiations, considerations and representations between the parties having been
incorporated herein. No course of prior dealings between the parties or their
officers, employees, agents or affiliates shall be relevant or admissible to
supplement, explain or vary any of the terms of this Lease. Acceptance of, or
acquiescence in, a course of performance rendered under this or any prior
agreement between the parties or their affiliates shall not be relevant or
admissible to determine the meaning of any of the terms of this Lease. No
representations, understandings or agreements have been made or relied upon in
the making of this Lease other than those specifically set forth herein. This
Lease can be modified only by a writing signed by the party against whom the
modification is enforceable.
(d) If any term or provision, or any portion thereof, of this
Lease, or the application thereof to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such term or provision to persons or circumstances, other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Lease shall be valid and be
enforced to the fullest extent permitted by law.
(e) Nothing contained in this Lease shall be construed so as
to confer upon any other party the rights of a third party beneficiary except
rights contained herein for the benefit of a Mortgagee.
(f) If Tenant is a corporation, the persons executing this
Lease on behalf of Tenant hereby covenant and warrant that: Tenant is a duly
constituted corporation qualified to do business in Connecticut; all Tenant's
franchise and corporate taxes have been paid to date; all future forms, reports,
fees and other documents necessary for Tenant to comply with applicable laws
will be filed by Tenant when due; and such persons are duly authorized by the
board of directors of such corporation to execute and deliver this Lease on
behalf of the corporation.
(g) This Lease and the rights and obligations of the parties
hereunder shall be construed in accordance with the laws of the State of
Connecticut. Tenant consents to personal jurisdiction and venue in the State of
Connecticut, Fairfield County.
IN WITNESS WHEREOF, Owner and Tenant have respectively signed this
lease as of the day and year first above written.
Witness for Owner: SONO EQUITIES, LLC AND 1122 ASSOCIATES,
LLC
/s/ Illegible By: Prime Locations, Inc. - Agent
- -------------------------------
By: /s/ Lloyd Amster
-------------------------------
Lloyd Amster, President
Witness for Tenant:
EDGAR Online, Inc.
/s/ Illegible By: /s/ Thomas Voss
- ------------------------------- -------------------------------
Thomas Voss, President
RIDER TO LEASE
BETWEEN SONO EQUITIES, LLC AND 1122 ASSOCIATES, LLC, OWNER
AND EDGAR ONLINE, INC., TENANT
43. Rider to Prevail.
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In case of any conflict between this Rider and the printed
portion of this Lease, this Rider shall control.
44. Operating Expenses.
(a) Definitions: For the purposes of this Article 44, the
following definitions shall apply:
(i) "OPERATING YEAR" shall mean the twelve (12)
consecutive months which constitute the calendar year during
which the term of this Lease commences and each subsequent
period of twelve (12) months during which occurs any portion
of the term of this Lease.
(ii) "LEGAL REQUIREMENTS" shall mean laws, statutes
and ordinances (including building codes and zoning
regulations and ordinances) and the orders, rules,
regulations, directives and requirements of all federal,
state, county, city and borough departments, bureaus, boards,
agencies, offices, commissions and other subdivisions
thereof, or of any official thereof, or any other
governmental public or quasi-public authority, whether now or
hereafter in force, including without limitation, The
Americans with Disabilities Act of 1990, Public Law 101-336
42 U.S.C.A. (section) 12101 et. seq., as amended, which may
be applicable to the land or building or the Demised Premises
or any part thereof, or the sidewalks, curbs or areas
adjacent thereto and all requirements, obligations and
conditions of all instruments of record on the date of this
lease.
(iii) The term "OPERATING EXPENSES" shall mean the
total of all the costs and expenses incurred or borne by Owner
in connection with the operation and maintenance of the
Building (and parking areas), and the services provided
Tenants therein, including all expenses incurred as a result
of Owner's compliance with any of its obligations hereunder.
Operating Expenses shall include, without being limited
thereto, the following: (1) salaries, wages, medical, surgical
and general welfare benefits (including group life insurance)
and pension payments of employees of Owner engaged in the
operation and maintenance of the Building; (2) payroll taxes,
worker's compensation, uniforms and dry cleaning for the
employees referred to in subparagraph (1); (3) the cost of all
charges for steam, gas, heat, ventilation, air-conditioning
and water (including water and sewer rentals) furnished to the
Building, (including the Building common areas thereof),
together with any taxes on any such utilities; (4) the cost of
all charges for rent, casualty, war risk (if obtainable from
the United States Government), liability and other types of
insurance; (5) the cost of all building and cleaning supplies
and cleaning charges for the Building, including common areas;
(6) the cost of all charges for management to the extent that
any such fees are normal and customary for a building of this
nature in Fairfield County; (7) the cost of cleaning and
service contracts for any areas of the Building; (8) the cost
of Building electric current for common areas including,
without limitation, parking areas (for the purpose of this
clause (9), the cost of Building electric current shall be
deemed to mean the cost of all electricity purchased,
including any taxes thereon or fuel or other adjustments in
connection therewith, for use in the Building and the parking
areas other than that which is furnished to the demised space
of other Tenants in the Building); if electricity is provided
by Owner on a rent inclusion basis the parties agree that
fifty percent (50%) of the Building's payment to the public
utility for the purchase of electricity shall be deemed to be
payment for Building electric current; (10) the cost relating
to the elevators and escalators for the Building; (11) the
cost relating to protection and security of the Building; (12)
the cost relating to lobby decorations and interior and
exterior landscape maintenance; (13) repairs, replacements and
improvements performed after calendar year 1999 which are
appropriate for the continued operation of an office building
in Fairfield County comparable to the Building; (14) painting
of non-tenanted areas; (15) professional and consulting fees
for normal and customary services related to the operation of
the
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Building; (16) association fees or dues and (17) the cost of
capital expenditures made to the Building by reason of the
laws and requirements of any public authorities or the
requirements of insurance bodies which are incurred after the
Base Year. The term "Operating Expenses", as used and defined
under this subsection (a)(iii), shall not, however, include
the following items: (1) interest on and amortization of any
mortgages encumbering the Land or the Building; (2) the cost
of Tenant improvements made for new Tenant(s) or existing
Tenants of the Building in connection with the modification
and/or extension of such Tenant's lease; (3) brokerage
commissions; (4) financing or refinancing costs; (5) taxes;
and (6) salaries and fringe benefits for officers, employees
and executives above the grade of building manager.
If Owner shall purchase any item of capital equipment
or make any capital expenditure other than those referred to
in subparagraph (xvi) above, then the cost thereof shall be
included in Operating Expenses. The costs of such capital
equipment or capital expenditures are to be included in
Operating Expenses for the Operating Year in which the costs
are incurred and subsequent Operating Years, on a straight
line basis, based on their useful life but in no event longer
than ten (10) years with an interest factor (the "INTEREST
RATE") equal to the prime interest rate published by Chase
Manhattan Bank, N.A. (or its successor) plus one (1%) in
effect at the time of Owner's having incurred said costs. If
Owner shall lease any such item of capital equipment, the
rentals and other costs paid or incurred in connection with
such leasing shall be included in Operating Expenses for the
Operating Year in which they were incurred.
If during all or part of any Operating Year, Owner
shall not furnish any particular items(s) of work or service
(which would constitute an Operating Expense hereunder) to
portions of the Building (including without limitation the
Demised Premises) due to the fact that such portions are not
occupied or leased, or because such item of work or service is
not required or desired by a Tenant (including, without
limitation, Tenant), or such Tenant is itself obtaining and
providing such item of work of service, or for any other
reasons, then, for the purposes of computing the Additional
Rent payable hereunder pursuant to subsections (i) and (ii) of
Section (b) of this Article, the amount of the expenses for
such item(s) for such period shall be deemed to be increased
by an amount equal to the additional operating and maintenance
expenses which would reasonably have been incurred during such
period by Owner if it had at its own expense furnished such
item(s) of work or services to such portion of the Building.
(iv) "BASE OPERATING EXPENSES" shall mean the
Operating Expenses as defined in subsection a (iii) of this
Article for the calendar year 1999.
(v) "TENANT'S PROPORTIONATE SHARE" shall mean 4.3%
percent.
(vi) "TENANT'S PROPORTIONATE SHARE OF INCREASE" shall
mean Tenant's Proportionate Share multiplied by the increase
in Operating Expenses for an Operating Year over the Base
Operating Expenses, but in no event more than the sum of
Sixteen Thousand and One Hundred Seventy ($16,170.00) Dollars
for any Operating Year.
(vii) "TENANT'S PROJECTED SHARE OF INCREASE" shall
mean: (1) for the year 2000, Owner's reasonably estimated
increase in costs for the year 2000 over the Base Operating
Expenses divided by 12 and payable monthly by Tenant to Owner
as additional rent; and (2) for each operating year after the
year 2000, tenant's Proportionate Share of Increase for the
prior Operating Year and the reasonably estimated increase in
costs for the current Operating Year divided by twelve (12)
but in no event shall Tenant's Projected Share of Increase in
any month during such
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Operating Year exceed the sum of One Thousand Three Hundred
Forty Seven Dollars and fifty cents ($1,347.50).
(viii) The Term "ESCALATION STATEMENT" shall mean a
statement setting forth the amount payable by Tenant for a
specified Operating Year pursuant to this Article.
(b) Additional Rent Payable for Increase in Operating Expenses
(i) On the first day of the first month of each Operating Year, commencing in
the year 2000 and monthly thereafter throughout the term of this Lease, Tenant
shall pay to Tenant's Projected Share of increase. If, however, Owner shall
furnish any such estimate for an Operating Year subsequent to the commencement
thereof, then (a) until the first day of the month following the month in which
such estimate is furnished to Tenant, Tenant shall pay to Owner on the first day
of each month an amount equal to the monthly sum payable by Tenant to Owner
under this Section in respect of the last month of the preceding Operating Year;
(b) promptly after such estimate is furnished to Tenant, shall give notice to
Tenant stating whether the installments of Tenant's Projected Share of Increase
previously made for such Operating Year were greater or less than the
installments of Tenant's Projected Share of Increase to be made for such
Operating Year in accordance with such estimate, and (1) if there shall be a
deficiency, Tenant shall pay the amount thereof within 30 days after demand
therefor, or (2) if there shall have been an overpayment, Owner shall promptly
either refund to Tenant the amount thereof or permit Tenant to credit the amount
thereof against subsequent payments under this Article; and (c) on the first day
of the month following the month in which such estimate is furnished to Tenant,
and monthly thereafter throughout the remainder of such Operating Year, Tenant
shall pay to Owner an amount equal to Tenant's Projected Share of Increase as
shown on such estimate.
(ii) Within 180 days after the expiration of any
Operating Year, Owner shall furnish Tenant an Escalation
Statement setting forth Tenant's Proportionate Share of
Increase, with respect to the Operating Expenses incurred for
such Operating Year. Upon request of Tenant, Owner shall make
available to Tenant or its agent all information from which
entries on the Escalation Statement were taken
(iii) If the Escalation Statement furnished by Owner
to Tenant pursuant to subsection (b)(ii) above at the end of
the then Operating Year shall indicate that Tenant's Projected
Share of Increase exceeds Tenant's Proportionate Share of
Increase, Owner shall forthwith either (1) pay the amount of
excess directly to Tenant concurrently with the notice or (2)
permit Tenant to credit the amount of such excess against the
subsequent payments of rent due hereunder; if such statement
furnished by Owner to Tenant hereunder shall indicate that
Tenant's Proportionate Share of Increase exceeds Tenant's
Projected Share of Increase for the then Operating Year,
Tenant shall forthwith pay the amount of such excess to Owner
within thirty (30) days after receipt of such Escalation
Statement for any Operating Year.
(c) In the event that the Commencement Date of the term of
this lease shall be other than the first day of an Operating Year or the date of
the expiration or other termination of this lease shall be a day other than the
last day of an Operating Year, then, in such event, in applying the provisions
of this Article with respect to any Operating Year in which such event shall
have occurred, appropriate adjustments shall be made to reflect the occurrence
of such event on a basis consistent with the principles underlying the
provisions of this Article taking into consideration the portion of such
Operating Year which shall have elapsed after the term hereof commences in the
case of the Commencement Date, and prior to the date of such expiration or
termination in the case of the Expiration Date or other termination.
(d) Payments shall be made pursuant to this Article
notwithstanding the fact that an Escalation Statement is furnished to Tenant
after the expiration of the term of this Lease.
(e) Owner's failure to render an Escalation Statement with
respect to any Operating Year shall not prejudice Owner's right to thereafter
render an Escalation Statement with respect thereto or with respect to any
subsequent Operating Year. Tenant's obligation to pay
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escalation charges for an Operating Year during the term of this Lease shall
survive the expiration or earlier termination of this lease.
(f) Tenant shall be entitled, at its own expense, to audit any
of Owner's financial records which relate to the preparation of the operating
expense escalation. Each Escalation Statement shall be conclusive and binding
upon Tenant unless within sixty (60) days after receipt of such Escalation
Statement, Tenant shall notify Owner that it disputes the correctness of such
Escalation Statement, specifying the particular respects in which such
Escalation Statement is claimed to be incorrect (an "EXPENSE DISPUTE NOTICE").
In the event that Owner and Tenant, and their agents, are unable to resolve any
dispute within thirty (30) days after receipt by Owner of an Expense Dispute
Notice, they shall submit the matter to arbitration with the American
Arbitration Association (the "AAA")(commercial real estate dispute rules) or
other dispute resolution medium they can agree upon, with the proceedings to
take place in Fairfield County, CT. The decision of the AAA or any such dispute
resolution medium shall be binding on Owner and Tenant.
45. Real Estate Taxes.
(a) "REAL ESTATE TAXES" shall mean all taxes and assessments,
and any bill for work done or services performed by a governmental agency other
than emergency repairs which may be levied, assessed or imposed at any time
during the term of this Lease by any governmental authority upon or against the
land or building of which the Demised Premises are a part or personal property
owned in conjunction therewith. In addition, if due to a future change in the
method of taxation, any franchise, income, profit or other tax or payment shall
be levied against the Owner which is in whole or part in substitution for or in
lieu of any tax which would otherwise constitute a Real Estate Tax, such tax or
payment shall be deemed to be a Real Estate Tax for the purposes hereof.
(b) Tenant agrees to pay as additional rent (Tenant's "REAL
ESTATE TAX CONTRIBUTION") 4.3% ("TENANT'S SHARE") of any increase in Real Estate
Taxes due and payable by Owner for each tax year above the Real Estate Taxes
paid by Owner for the tax year from July 1, 1999 through June 30, 2000 ("the
BASE TAX YEAR"). For the final year of the lease term, the Tenant shall be
obligated to pay only an equitable pro rata share of such percentage of any
increase in Real Estate Taxes over the Base Year based on the portion of the
term that falls within the applicable tax year. Tenant shall pay Tenant's Real
Estate Tax Contribution within thirty (30) days following Owner's demand.
(c) Commencing July 1, 2000 through the end of the term of
this Lease, Tenant shall pay monthly installments on account of its Real Estate
Tax Contribution during the term as follows: The initial installments shall be
determined by Owner based on one-twelfth (1/12) of the Tenant's proportionate
share of the increase in the Real Estate Taxes due from Owner for the tax year
from July 1, 2000 through June 30, 2001 over the Base Year. Thereafter, Tenant's
installments shall be one-twelfth (1/12) of the increase in Real Estate Taxes
for such tax year over the Base Year.
(d) If Owner should incur any expenses in connection with
Owner's successful endeavor to reduce the assessed valuation or to reduce any
bill for work done or services rendered, assessment or levy, water or sewer
charges, thereby reducing Tenant's share of increased Real Estate Taxes as set
out above in section (b) of this Article, Tenant shall pay as Additional Rent
Tenant's Share of such expenses of Owner, and such amount shall be paid by Owner
as additional rent within 10 days after Owner's demand.
(e) A copy of a Real Estate Tax bill, bill for assessment or
levy, bill from Owner for expenses of any proceeding to obtain a Real Estate Tax
reduction, or a letter from Owner's mortgagee attesting to any such amount shall
be conclusive evidence of the amount of any Real Estate Tax or expense of
obtaining a reduction.
(f) All payments required to be made under this Article shall
be deemed Additional Rent. Tenant's obligation to make all such payments shall
survive the expiration or other termination of this Lease.
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46. Directory Listing.
Tenant shall be entitled to one directory listing on the lobby
directory and on the directory on the landing outside the elevator on the floor.
47. Broker.
Owner and Tenant covenant, warrant and represent to each other
that they have not dealt with any broker except Prime Locations, Inc. (the
"BROKER") who brought about this Lease. The Broker's commission shall be paid by
Owner pursuant to a separate agreement. Tenant and Owner agree to indemnify and
hold each other harmless against and from and against any claims for any
brokerage commissions including, without limitation, attorney's fees and
expenses, arising out of any conversation or negotiation had by the indemnifying
party with any other broker or finder.
48. Owner's Work.
(a) Owner hereby covenants and agrees that Owner will, and in
a good and workmanlike manner, make and complete the following work and
installments, in and to the Demised Premises (Owner's Work) in such manner so
that the Demised Premises will be tasteful and dignified executive and general
offices: (i) replace damaged or discolored ceiling tiles with building standard
tiles; (ii) remove approximately 25 linear feet of demising wall as indicated on
Exhibit B-1 annexed hereto and made a part hereof; (iii) install new wiring for
data and phone transmission; (iv) scrape, tape, plaster where necessary and
paint throughout with building standard paint, Tenant's choice of color; (v)
install building standard carpeting throughout, Tenant's choice of color, price
not to exceed $15.00 per yard; (vi) redecorate the elevator landing; and (viii)
install a security lock out mechanism on the elevator.
(b) Owner shall obtain bids from no fewer than three (3)
contractors for the completion in and to the Demised Premises of the work and
installations specified in the final plan ("OWNER'S INITIAL WORK"). Tenant shall
be entitled to specify one or more contractors to bid on Owner's Initial Work
subject to Owner's approval which approval shall not be unreasonably withheld.
Owner shall hire the contractor who submits the lowest bid and who landlord
reasonably believes is best qualified to perform Owner's Initial Work.
(c) Landlord shall contribute $60,000 towards the Owner's
Initial Work (the "LANDLORD'S CONTRIBUTION"). To the extent the cost of Owner's
Initial Work will exceed $ 60,000 (such excess being "TENANT'S CONTRIBUTION")
then within ten (10) business days after Owner notifies Tenant that a bid for
completion of Owner's Initial Work has been accepted by Owner, Tenant shall
deposit with Owner the "TENANT'S CONTRIBUTION".
(d) At any and all times during the progress of Owner's
Initial Work, representatives of Owner and Tenant shall have the right of access
to the Demised Premises and inspection thereof (provided, however, that such
representatives use reasonable efforts to minimize interference with the
performance of Owner's Initial Work).
49. Relocation and Substitution of Premises. - Intentionally Deleted.
50. Hazardous Waste.
(a) Tenant covenants and agrees not to suffer, permit,
introduce or maintain in, on or about any portion of the Demised Premises, any
asbestos, polychlorinated biphenyls, petroleum products or any other hazardous
or toxic materials, wastes and substances which are defined, determined or
identified as such in any federal, state or local laws, rules or regulations
(whether now existing or hereinafter enacted or promulgated or any judicial or
administrative interpretation of any thereof, including any judicial or
administrative orders or judgments, herein
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collectively called "HAZARDOUS MATERIALS"). Tenant further covenants and agrees
to indemnify, protect and save Owner harmless against and from any and all
damages, losses, liabilities, obligations, penalties, claims, litigation,
demands, defenses, judgments, suits, proceedings, costs, disbursements or
expenses of any kind or of any nature whatsoever (including, without limitation,
attorneys' and experts' fees and disbursements) which may at any time be imposed
upon, incurred by or asserted or awarded against Owner and arising from or out
of any Hazardous Materials on, in, under or affecting all or any portion of the
building or the Demised Premises, which are introduced or permitted to be
introduced by Tenant at any time during the term of the Lease, including,
without limitation (i) the costs of removal of any and all Hazardous Materials
from all or any portion of the building or the Demised Premises or any other
affected area, (ii) additional costs required to take necessary precautions to
protect against the release of Hazardous Materials on, in, under or affecting
the building or the Demised Premises, into the air, any body of water, any other
public domain or any other surrounding areas and (iii) any costs incurred to
comply, in connection with all or any portion of the building or the Demised
Premises, with all applicable laws, orders, judgments and regulations with
respect to Hazardous Materials.
(b) Owner, at Owner's expense, shall have the right, from time
to time, upon ten (10) days prior notice, to cause the Demised Premises to be
inspected and tested for the presence of Hazardous Materials (other than any
Hazardous Material which may be permitted in accordance with subdivision (a)
above) or the correction of any condition existing at the Demised Premises as a
result of any such Hazardous Materials. Tenant covenants and agrees to cooperate
with Owner's representatives and agents in the making of such inspections and
tests by furnishing such information and access as may be necessary or required
to carry out the same. In the event that any such tests or inspections shall
reveal any Hazardous Materials or other condition existing in the Demised
Premises as a result of actions of Tenant, Tenant's employees, officers,
contractors, guests or invitees which requires corrective action or other
remediation, Tenant shall pay to Owner, as Additional Rent, within fifteen (15)
days after demand, the cost of such action or remediation, including the cost of
an independent, licensed environmental consultant to monitor such work and to
certify as to its full completion, and the cost of any filing fees and permit
fees in connection therewith. Tenant specifically agrees that Owner shall not be
liable to Tenant or any party claiming through or under Tenant for loss of
business or other consequential damages arising out of such inspections, testing
and work, nor shall Tenant or any other such party be entitled to any abatement
of Base Rent or Additional Rent during the period such inspections, testing and
work may be carried out.
(c) To the best of Owner's knowledge there are no hazardous
materials in violation of environmental laws in the Demised Premises.
51. Parking.
(a) At Owner's expense, Owner shall supply 22 non-reserved
parking permits to park in the municipal lot, subject to availability and 1
reserved parking permits, also subject to availability from the municipality.
Owner may charge $50.00 for providing a replacement permit in the event Tenant
loses a permit. All parking is at Tenant's sole risk. Owner takes no
responsibility for security in the lot or the physical condition of the lot.
52. Option to Renew. Provided Tenant is not in material default at the
time notice is given and Tenant is the Tenant originally named herein, Tenant
shall have one option (the "EXTENSION OPTION") to extend the term of this Lease
for an additional three (3) year term (the "EXTENSION PERIOD"). Notice to
exercise the Extension Option must be given on or before six (6) months prior to
the scheduled expiration date of the lease term. TIME IS OF THE ESSENCE WITH
RESPECT TO GIVING NOTICE. If the Tenant fails to exercise the Extension Option
in a timely manner, the Lease shall expire on the originally scheduled
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<PAGE> 36
expiration date on the scheduled expiration date of the First Extension Period.
If this Lease is timely extended beyond the initial term, this Lease shall
continue in full force and effect and the annual rent for the additional three
(3) years of the First Extension Period shall be as follows:
<TABLE>
<CAPTION>
PERIOD ANNUAL RENT MONTHLY RENT
------ ----------- ------------
<S> <C> <C>
7/1/2006 - 6/30/2007 $176,250.0 $14,687.50
7/1/2007 - 6/30/2008 $181,573.50 $15,165.30
7/1/2008 - 6/30/2009 $186,983.63 $15,581.97
</TABLE>
53. Cancellation of Existing Lease.
Tenant currently occupies the ninth floor west under an
existing Lease. Owner's and Tenant's execution of the within Lease shall serve
to cancel the existing lease as of the Lease Commencement Date date.
Notwithstanding the cancellation of the existing lease the parties shall remain
liable to each other for accrued obligations thereunder, but Owner shall be
permitted to retain Tenant's Security Deposit and apply it against the amount of
Security due from Tenant under this Lease.
54. Termination Option
If iXL New York, Inc., the Tenant under a lease of the 9th
floor west, in the Building exercises its option under such lease to relocate to
another floor in the Building and to assign the 9th floor west lease to Tenant,
Tenant shall have the right to terminate this Lease at any time thereafter
provided that:
(a) Tenant shall give Owner notice (hereafter called
the "Termination Notice") of its election to terminate this Lease on a date (the
"Accelerated Termination Date") not less than 3 months after the date of the
Termination Notice.
(b) If Tenant exercises its option to terminate this
Lease, then this Lease shall end and expire upon the Accelerated Termination
Date and the Base Rent and Additional Rent shall be paid and apportioned to such
date.
OWNER: TENANT:
SONO EQUITIES, LLC AND
1122 ASSOCIATES, LLC EDGAR Online, Inc.
By: Prime Locations, Inc. - Agent
By: /s/ Lloyd Amster By: /s/ Thomas Vos
------------------------------ --------------------------------
Lloyd Amster, President Thomas Vos, President
36
<PAGE> 37
EXHIBIT A
EDGAR Online, Inc.
[DIAGRAM OF THE FLOOR PLAN]
<PAGE> 38
EXHIBIT B
RULES AND REGULATIONS ATTACHED TO AND MADE A PART OF THIS
LEASE IN ACCORDANCE WITH ARTICLE 36.
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other for ingress or egress from the
Demised Premises and for delivery of merchandise and equipment in a prompt and
efficient manner using elevators and passageways designated for such delivery by
Owner. There shall not be used in any space, or in the public hall of the
building, either by any Tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and sideguards. If said premises are situated on the ground floor of the
building, Tenant thereof shall further, at Tenant's expense, keep the sidewalk
and curb in front of said premises clean and free from ice, snow, dirt and
rubbish.
2. The water and wash closets and plumbing fixtures shall not be used
for any purposes other than those for which they were designated or constructed
and no sweepings, rubbish, rags, acids or other substances shall be deposited
therein, and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any
window of the building and no Tenant shall sweep or throw or permit to be swept
or thrown from the Demised Premises any dirt or other substances into any of the
corridors or halls, elevators, or out of the doors or windows or stairways of
the building and Tenant shall not use, keep or permit to be used or kept any
foul or noxious gas or substance in the Demised Premises, or permit or suffer
the Demised Premises to be occupied or used in a manner offensive or
objectionable to Owner or other occupants of the building by reason of noise,
odors and/or vibrations, or interfere in any way with other Tenants or those
having business therein, nor shall any bicycles, vehicles, animals, fish, or
birds be kept in or about the building. Smoking or carrying lighted cigars or
cigarettes in the elevators of the building is prohibited.
4. No awnings or other projections shall be attached to the outside
walls of the building without the prior written consent.
5. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any Tenant on any part of the
outside of the Demised Premises or the building or on the inside of the demised
premise if the same is visible from the outside of the premises without the
prior written consent of Owner, except that the name of Tenant may appear on the
entrance door of the premises. In the event of the violation of the foregoing by
any Tenant, Owner may remove same without any liability, and may charge the
expense incurred by such removal to Tenant or Tenants violating this rule.
Interior signs on doors an directory tablet shall be inscribed, painted or
affixed for each Tenant by Owner at the expense of such Tenant, and shall be of
a size, color and style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any
part of the Demised Premises or the building of which they form a part. No
boring, cutting or stringing of wires shall be permitted, except with the prior
written consent of Owner, and as Owner may direct. No Tenant shall lay linoleum,
or other similar floor covering, so that the same shall come in direct contact
with the floor of the Demised Premises, and, if linoleum or other similar floor
covering is desired to be used an interlining of building's deadening felt shall
be first affixed to the floor, by a paste or other material, soluble in water,
the use of cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any Tenant, nor shall any changes be made in existing
locks or mechanism thereof. Each Tenant must, upon termination of his Tenancy,
restore to Owner all keys of stores, offices and toilet rooms, either furnished
to, or otherwise procured by, such Tenant, and in the event of the loss
37
<PAGE> 39
of any keys, so furnished, such Tenant shall pay to Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky
matter of any description shall be delivered to and removed from the premises
only on the freight elevators and through the service entrances and corridors,
and only during hours and in a manner approved by Owner. Owner reserves the
right to inspect all freight to be brought into the building and to exclude from
the building all freight which violates any of these Rules and Regulations of
the lease of which these Rules and Regulations are a part.
9. Canvassing, soliciting and peddling in the building is prohibited
and each Tenant shall cooperate to prevent the same.
10. Owner reserves the right to exclude the from the building all
persons who do not present a pass to the building signed by Owner. Owner will
furnish passes to persons for whom any Tenant requests same in writing. Each
Tenant shall be responsible for all persons for whom he requests such pass and
shall be liable to Owner for all acts of such persons. Tenant shall not have a
claim against Owner by reason of Owner excluding from the building any person
who does not present such pass.
11. Owner shall have the right to prohibit any advertising by any
Tenant which in Owner's opinion, tends to impair the reputation of the building
or its desirability as a building for offices, and upon written notice from
Owner, Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the
Demised Premises, any inflammable, combustible, explosive, or hazardous fluid,
material, chemical or substance, or cause or permit any odors of cooking or
other processes, or any unusual or other objectionable odors to permeate in or
emanate from the Demised Premises.
13. If the building contains central air-conditioning and ventilation,
Tenant agrees to keep all windows closed at all times and to abide by all rules
and regulations issued by Owner with respect to such services. If Tenant
requires air-conditioning or ventilation after the usual hours, Tenant shall
give notice in writing to the building superintendent prior to 3:00 p.m. in the
case of services required on week days, and prior to 3:00 p.m. on the day prior
in case of after hours service required on weekends or holidays. Tenant shall
cooperate with Owner in obtaining maximum effectiveness of the cooling system by
lowering and closing venetian blinds and/or drapes and curtains when the sun's
rays fall directly on the windows of the Demised Premises.
14. Tenant shall not move any safe, heavy machinery, heavy equipment,
bulky matter, or fixtures into or out of the building without Owner's prior
written consent. If such safe, machinery, equipment, bulky matter or fixtures
requires special handling, all work in connection therewith shall comply with
all laws and regulations applicable thereto and shall be done during such hours
as Owner may designate.
15. Refuse and Trash. (1) Compliance by Tenant. Tenant covenants and
agrees, at its sole cost and expense, to comply with all present and future
laws, orders, and regulations of all state, federal, municipal, and local
governments, departments, commissions and boards regarding the collection,
sorting, separation and recycling of waste products, garbage, refuse and trash.
Tenant shall sort and separate such waste products, garbage, refuse and trash
into such categories as provided by law. Each separately sorted category of
waste products, garbage, refuse and trash shall be placed in separate
receptacles reasonably approved by Owner. Such separate receptacles may, at
Owner's option, be removed from the Demised Premises in accordance with a
collection schedule prescribed by law. Tenant shall remove, or cause to be
removed by a contractor acceptable by Owner, at Owner's sole discretion, such
items as Owner may expressly designate. (2) Owner's Rights in Event of
Noncompliance. Owner has the option to refuse to collect or accept from Tenant
waste products, garbage, refuse or trash (a) that is not separated and sorted as
required by law or (b) which consists of such items as Owner may expressly
designate for Tenant's removal, and to require Tenant to arrange for such
collection at Tenant's sole cost and expense, fines, penalties, or damages
38
<PAGE> 40
that may be imposed on Owner or Tenant by reason of Tenant's failure to comply
with the provisions of this Building Rule 15, and, at Tenant's sole cost and
expense, shall indemnity, defend and hold Owner harmless (including reasonable
legal fees and expenses) from and against any actions, claims and suits arising
from such noncompliance, utilizing counsel reasonably satisfactory to Owner.
39
<PAGE> 41
50 WASHINGTON STREET
CLEANING SPECIFICATIONS
Exhibit C
CLEANING SCHEDULE
A. Office Areas - Nightly Monday - Friday
- Sweep all hard surface flooring
- Vacuum carpeting in elevator lobbies.
- Damp mop ceramic tile, marble and terrazzo flooring in entrance foyers
only.
- Vacuum all carpeted areas and rugs nightly.
- Empty all wastepaper baskets, provide and replace liners as necessary,
clean ashtrays, receptacles, etc., damp dust as necessary.
- Clean all cigarette urns, wipe all doorknobs and replace sand or water
as necessary.
- Remove wastepaper and waste materials (normally fitting into a
wastepaper basket) from designated premises to a designated area for
disposal and place waste into Owner's compacting unit.
- Remove from designated premises, for disposal in Owner's designated
recycling containers, the following recyclable materials: white paper
from designated container(s); bundled newspaper and corrugated
cardboard boxes, which have been broken down. Provide and replace
liners in tenant's designated white paper recycling container(s)
- Dust and wipe clean all furniture, fixtures and window sills including
telephones.
- Provide and utilize drop cloths or any material necessary to ensure
cleaning solvents or any staged refuse does not damage fabrics,
carpets and/or finished surfaces.
Upon completion of cleaning work, lights shall be turned off, doors locked and
the demised premises left in a neat and orderly condition, all by the
Supervisors.
B. Office Areas - Periodic Cleaning - Contractor to supply Annual Scheduling
- Damp mop all hard surfaced floors - weekly
- Wipe clean all interior metal - as necessary
- Remove all finger marks from metal partitions, light switches, brass
and other brightwork - as necessary.
- Do all high dusting (6'0" and above) quarterly.
C. Lavatories - Nightly Monday - Friday
- Sweep and wash all flooring using a proper disinfectant, rinse
and dry.
- Wash and clean all mirrors, powder shelves, brightwork, etc.,
including flushometers, piping and toilet seat hinges.
- Wash both sides of all toilet seats using a proper disinfectant. Seats
shall be left in an upright position.
- Wash all basins, bowls, and urinals using proper disinfectant.
- Dust all partitions: tile walls, dispensers and receptacles. All
partitions to be free from water splash stains and finger marks.
- Remove wastepaper and refuse
- Empty and clean paper towel and sanitary disposal receptacles.
- Fill toilet tissue holders, soap dispensers and towels dispensers: all
<PAGE> 1
OFFICE LEASE AGREEMENT
BETWEEN
YETT FAMILY PARTNERSHIP, L.P. (LANDLORD)
AND
EDGAR ONLINE, INC. (TENANT)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
1. Defined Terms; Lease Data; Exhibits ........................
1.1 Building and Premises .............................
1.2 Tenant's Pro Rata Share ...........................
1.3 Term, Commencement and Expiration .................
1.4 Rent ..............................................
1.5 Security Deposit ..................................
2. Premises ...................................................
3. Rent ...................................................
3.1 Tenant Payment ....................................
3.2 Basic Rent ........................................
4. Construction of Tenant Improvements ........................
5. Uses ...................................................
5.1 General Use .......................................
5.2 No Hazardous Materials ............................
6. Additional Rent ............................................
6.1 Tenant Payment ....................................
6.2 Definitions .......................................
6.3 Manner of Payment .................................
6.4 Proration .........................................
6.5 Landlord's Records ................................
6.6 Further Adjustments ...............................
7. Personal Property Taxes ....................................
8. Taxes on Rent ..............................................
9. Services by Landlord .......................................
10. Assignment and Subletting ..................................
11. Care of Premises ...........................................
12. Surrender of Premises; Removal of Property .................
13. Alterations ................................................
14. Entry and Inspection .......................................
15. Damage and Destruction .....................................
15.1 Damage and Repair .................................
15.2 Business Interruption .............................
15.3 Property of Tenant ................................
16. Indemnification ............................................
17. Insurance ..................................................
17.1 Liability Insurance ...............................
17.2 Property Insurance ................................
17.3 Workers' Compensation Insurance ...................
17.4 Insurance Policy Requirements .....................
17.5 Waiver of Subrogation .............................
18. Advertising and Signs ......................................
19. Insolvency and Liens .......................................
19.1 Insolvency ........................................
19.2 Liens .............................................
20. Condemnation ...............................................
20.1 Entire Taking .....................................
20.2 Partial Taking ....................................
20.3 Awards and Damages ................................
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
21. Default; Remedies ..........................................
21.1 Events of Default .................................
21.2 Landlord Remedies for Tenant Default ..............
21.3 Cumulative Remedies ...............................
21.4 Right to Perform ..................................
21.5 Late Payments .....................................
21.6 Waiver of Redemption Rights .......................
22. Subordination to Mortgage ..................................
23. Holdover ...................................................
24. Agent ...................................................
25. Notices ...................................................
26. Costs and Attorneys' Fees ..................................
27. Estoppel Certificates ......................................
28. Limitation of Liability ....................................
29. Transfer of Landlord's Interest ............................
30. Nonwaiver ..................................................
31. Quiet Possession ...........................................
32. Security Deposit ...........................................
33. General ...................................................
33.1 Headings ..........................................
33.2 Successors and Assigns ............................
33.3 No Brokers ........................................
33.4 Entire Agreement ..................................
33.5 Severability ......................................
33.6 Force Majeure .....................................
33.7 Changes to Building ...............................
33.8 Building Directory ................................
33.9 Governing Law .....................................
33.10 Authority..........................................
33.11 Relocation Clause .................................
33.12 Landlord's Security Interest ......................
33.13 Tenant Representation .............................
33.14 Time Essence ......................................
33.15 Execution in Counterparts .........................
33.16 Joint and Several Liability .......................
33.17 Binding on Landlord ...............................
33.18 No Recording ......................................
33.19 Computation of Time ...............................
34. Option to Renew ..........................................
Notary ...................................................
</TABLE>
Exhibit A Legal Description
Exhibit B Floor Plan
Exhibit C Tenant Improvements
Exhibit D Additional Provisions
Exhibit E Estoppel Certificate
Exhibit F Building Rules and Regulations
Exhibit G Parking Rules and Regulations
<PAGE> 4
OFFICE LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease") is dated as of the day of
January 28, 2000, and is entered into by and between Yett Family Partnership,
L.P. ("Landlord") and Edgar Online, Inc.,
Landlord and Tenant agree as follows:
1. DEFINED TERMS; LEASE DATA; EXHIBITS.
1.1 BUILDING AND PREMISES. The "Building" means that 24
building office park known as the Linbrook Office Park, situated on the real
property (the "Property") more particularly described in Exhibit A attached
hereto. The Building contains approximately 105,740 net rentable square feet.
The "Premises" means that space consisting of approximately 3,650 net rentable
square feet in Building 21 with a postal address of 10628 NE 37th Circle,
Kirkland WA 98033, as outlined on the floor plan attached hereto as Exhibit B,
including tenant improvements as described in Exhibit C attached hereto.
1.2 TENANT'S PRO RATA SHARE. "Tenant's Pro Rata Share"
means three point four five percent (3.45 %), calculated by dividing the total
net rentable square feet of the Premises by the total net rentable square feet
of the Building.
1.3 TERM, COMMENCEMENT AND EXPIRATION DATES. The term of
this Lease (the "Lease Term") shall be approximately 33.61 months, commence on
the earlier of March 13, 2000, or the date Tenant takes possession of the
Premises (the "Commencement Date") and expiring on January 31, 2003, unless
earlier terminated as provided herein. The Lease Term means the entire term of
this Lease, including any extension or renewal terms.
1.4 RENT. Tenant shall pay to Landlord basic rent of
Seven Thousand Six Hundred Four Dollars ($7,604.00) per month, adjusted as
provided in Section 3.2 ("Basic Rent"). Tenant also shall pay as additional rent
all expenses allocable to the Premises in excess of the base rate amount (the
"Base Rate Amount") of NA per net rentable square foot in the Premises per year
as provided in Section 6 ("Additional Rent"). Tenant has deposited with Landlord
on the date hereof Seven Thousand Six Hundred Four Dollars ($7,604.00) to be
applied to Basic Rent first coming due under this Lease.
<TABLE>
<CAPTION>
Effective Date of New Basic
Rent Increase Monthly Rent
<S> <C> <C>
02/01/01 $7,908.00
02/01/02 $8,213.00
</TABLE>
1.5 SECURITY DEPOSIT. Tenant has deposited with Landlord
on the date Eight Thousand Two Hundred Thirteen Dollars ($8,213.00) as a
security deposit (the "Security Deposit") to be held and disbursed by Landlord
in accordance with Section 32.
1.6 EXHIBITS. Landlord and Tenant agree that this Lease
is further subject to the provisions of the attached Exhibits, which are listed
below. The provisions of the Exhibits are incorporated herein by this reference
and made a part of this Lease.
Exhibit A Legal Description
Exhibit B Floor Plan
Exhibit C Tenant Improvements
Exhibit D Additional Provisions
Exhibit E Estoppel Certificate
Exhibit F Building Rules and Regulations
Exhibit G Parking Rules and Regulations
2. PREMISES. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord upon the terms and conditions set forth herein the Premises,
together with nonexclusive rights of ingress and egress over common areas in the
Building. Tenant acknowledges that neither Landlord nor any agent of Landlord
has made any representation or warranty with respect to the suitability or
fitness of either for the conduct of Tenant's business or for any other purpose.
The taking of possession or use of the Premises by Tenant for any purpose [other
than construction] shall conclusively establish that the Premises and the
Building were at such time in satisfactory condition, except as to any punchlist
items required to be accomplished by Landlord pursuant to Exhibit C as to which
Tenant shall have given Landlord written notice in reasonable detail within
reasonable detail within fifteen (15) days after Tenant takes such possession or
commences such use of the Premises. Nothing contained in this Section 2 shall
affect, defer or modify the commencement Date or the obligation of Tenant to pay
rent hereunder.
1
<PAGE> 5
3. RENT.
3.1 TENANT PAYMENT. Tenant shall pay Landlord without
notice Basic Rent, Additional Rent, and any other payments due hereunder
(collectively, "Rent"), from and after the Commencement Date, without deduction
or offset, in lawful money of the United States of America in advance on or
before the [first] day of each month (or at other dates specified in this Lease)
during the Lease Term at Landlord's address set forth on the signature page of
this Lease, or to such other party or at such other place as Landlord may
hereafter from time to time designate to Tenant in writing. Rent for any partial
month at the beginning or end of the Lease Term shall be prorated.
3.2 BASIC RENT ADJUSTMENT. Basic Rent shall be adjusted in
accordance with the schedule set forth in Section 1.4 of the Lease and Exhibit
D.
4. CONSTRUCTION OF TENANT IMPROVEMENTS. Improvements to the Premises
(the "Tenant Improvements") shall be constructed as provided in Exhibit C. If as
a result of the Provisions of Exhibit C the Commencement date is established at
an earlier date than the date provided in Section 1.3 above, then Landlord shall
confirm the actual Commencement Date to Tenant in a written notice. All Tenant
Improvements shall be and remain the property of Landlord.
5. USES.
5.1 GENERAL USE. The Premises shall be used only for general
office purposes, research and development of software products, and any other
purpose consistent with applicable zoning and the operation of an office and
service business building ("Permitted Use") and for no other business or other
purpose without the prior written consent of Landlord, which may be withheld in
Landlord's sole discretion. No act shall be done in or about the Premises that
is unlawful or that will increase the then existing rate of insurance on the
Building. Tenant shall not commit or allow to be committed any waste upon the
Premises, or any public or private nuisance or other act or thing in or about
the Premises that disturbs the quiet enjoyment of any other tenant in the
Building. Tenant shall not, without the prior written consent of Landlord, which
may be withheld in its sole discretion, use, operate or maintain any apparatus,
machinery, equipment or device in or about the Premises that will cause any
significant noise, increase electrical loads or usage, vibration or fumes or
disturb the quiet enjoyment of any other tenants in the Building. If any of
Tenant's office machines or operating should disturb the quiet enjoyment of any
other tenants in the Building, then Tenant shall cease operating such equipment
until it has provided adequate insulation or taken such other action as Landlord
shall require to eliminate the disturbance. Tenant shall comply with all laws
and regulations relating to its use or concerning Tenant's use or occupancy of
the Premises or related to the common areas of the Building as may be adopted by
Landlord from time to time and made available to Tenant.
5.2 NO HAZARDOUS MATERIALS. Tenants shall not use, dispose of
or otherwise allow the release of any Hazardous materials in, on or under the
Premises, the Building, the Property, or any adjacent property, or in any
improvements thereto, thereon or therein. Tenant represents and warrants to
Landlord that Tenant's intended use of the Premises does not involve the use,
production, disposal or bringing on to the Premises, the Building or the
Property of any Hazardous Materials. As used herein, the term "Hazardous
Materials" includes any substance, waste or material defined or designated as
hazardous, toxic or dangerous (or any similar term) by any federal, state or
local statute, regulation, rule or ordinance now or hereafter in effect. Tenant
shall promptly comply with all statutes, regulations and ordinances, and with
all orders, decrees or judgments of governmental authorities or courts having
jurisdiction, relating to the use, collection, treatment, disposal, storage,
control, removal or cleanup of Hazardous Materials in, on or under the Premises,
the Building, the Property or any adjacent property, or incorporated in any
improvements thereto, thereon, therein, at Tenant's expense.
After notice to Tenant and a reasonable opportunity for Tenant to
effect such compliance, Landlord may, but shall not be obligated to, enter upon
the Premises and take such actions and incur such costs and expenses to effect
such compliance as it deems advisable to protect its interest in the Premises.
However, Landlord shall not be obligated to give Tenant notice and an
opportunity to effect compliance if (i) such delay might result in material
adverse harm to Landlord, the Premises, the Building or the Property; (ii)
Tenant has already had actual knowledge of the situation and a reasonable
opportunity to effect compliance, or (iii) Landlord reasonably believes that an
emergency exists. Whether or not Tenant has actual knowledge of the release of
Hazardous Material on the Premises, the Building, the Property or any adjacent
property as the result of Tenant's use of the Premises, the Building or the
Property, Tenant shall reimburse Landlord for the full amount of all costs and
expenses incurred by Landlord relating to such Hazardous Materials or in
connection with such compliance activities. Tenant shall notify Landlord
immediately of any release of any Hazardous Materials on the Premises of which
Tenant is aware.
Tenant agrees to indemnify and hold harmless Landlord against any and
all losses, liabilities, suits, obligations, fines, damages, judgments,
penalties, claims, charges, cleanup costs, remedial actions, costs and expenses
(including, without limitation, attorneys' and other professional fees and
disbursements) that may be imposed on, incurred or paid by, or asserted against
Landlord, the Premises, the Building, or the Property by reason of, or in
connection with (i) any misrepresentation, breach of warranty or other default
by Tenant under this Section 5.2, or (ii) the acts or omissions of Tenant, its
officers, contractors, subcontractors, licensees, agents, servants, employees,
guests, invitees or visitors, or any assignee or sublessee or other person for
whom Tenant would otherwise be liable, resulting in the release of any Hazardous
Materials. All of Tenant's obligations and liabilities under this Section 5.2
shall survive expiration or other termination of this Lease and shall be
separately enforceable by Landlord.
Landlord certifies that to the best of their knowledge and belief the
Premises are free from Asbestos.
2
<PAGE> 6
6. ADDITIONAL RENT.
6.1 TENANT PAYMENT. In addition to Basic rent, Tenant shall
pay to Landlord as Additional Rent, from and after the Commencement Date in the
manner described below, an amount equal to the Actual Expenses Allocable to the
Premises for all increases in Operating Expenses and Real Property Taxes that
exceed the Base Year Amount.
6.2 DEFINITIONS.
6.2.1 "Operating Expenses" shall mean all expenses
paid or incurred by Landlord for maintaining, operating and repairing the
Building, the Property, any parking structure serving the Building and related
improvements adjacent to the Building that serve the tenants of the Building
including without limitation, signage, sidewalks, terraces, parking, loading or
delivery areas and landscaping and the personal property used in conjunction
therewith (collectively, the "Building Complex"), including, without limitation,
the costs of refuse collection, water, sewer, electricity, gas and other
utilities, supplies, janitorial and cleaning services, window washing,
landscaping maintenance, services of independent contractors, compensation
(including employment taxes and fringe benefits) of all persons who perform
duties in connection with the operation, maintenance and repair of the Building
Complex, insurance premiums on insurance as Landlord in its sole discretion
elects to carry, licenses, permits and inspection fees, management fees, real
property taxes (as defined below), legal and accounting expenses, amortization
of capital improvements constructed after completion of the Building Complex,
and any other expense or charge whether or not herein above described, which in
accordance with generally accepted accounting and property management practices
would be considered an expense of maintaining, operating or repairing the
Building Complex, but excluding:
6.2.1.1 Costs of any special services rendered or
equipment or materials provided or expenses attributable to individual tenants
(including Tenant) for which a special charge is made to that tenant;
6.2.1.2 Costs of electrical, heating, cooling and
combined utility services to the extent that such services are separately
metered to the Premises and paid directly by Tenant.
Landlord may construct, and "Operating Expenses" shall include, any
additional capital improvements to the Building Complex common areas to enhance
the character, utility, or operating efficiency of the Building Complex, as
reasonably determined by Landlord, but the amount of the capital improvements
costs included in the Operating Expenses for any Lease Year shall be limited to
the annual amortized amount of the capital improvements determined by dividing
the capital improvement costs by the useful life of the capital improvements.
6.2.2 "Real Property Taxes" shall mean real and
personal property taxes, assessments (including local improvement or special
benefit districts), and all other governmental impositions and charges of every
kind and nature, including surcharges, now or hereafter imposed with respect to
the Building Complex, or any portion thereof, including, without limitation, all
tenant improvements, and all improvements, fixtures, and equipment to, on or in
the Building Complex, and/or the use, occupancy or possession thereof; taxes on
Property of Tenant (as defined in Section 7), which have not been paid by Tenant
directly to the taxing authority; and any taxes levied or assessed in addition
to, in lieu of, or as a substitute for, in whole or part, taxes now levied or
assessed or any other tax upon owning, leasing or rents receivable by Landlord
from the Building Complex, but excluding any federal, state or local income tax
or inheritance, gift, succession or franchise taxes imposed on Landlord.
6.2.3 "Lease Year" shall mean each 12-month period
commencing January 1 and ending December 31, or any portion thereof, during the
Lease Term.
6.2.4 "Actual Expenses" shall mean the actual
expenses paid or incurred by Landlord for Operating Expenses and Real Property
Taxes during any Lease Year.
6.2.5 "Actual Expenses Allocable to the Premises"
shall mean Actual Expenses multiplied by Tenant's Pro Rata Share.
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6.2.6 "Estimated Expenses Allocable to the Premises"
shall mean Landlord's estimate of Actual Expenses Allocable to the Premises for
the following Lease Year to be given by Landlord to Tenant pursuant to Section
6.3.1 below.
6.2.7 "Base Year" as used in this Lease means, for
the Term, the calendar year 2000 and, for each Extended Term, the Lease Year in
which the Extended Term falls. Electrical and janitorial expenses included in
Operating costs for the base Year shall be adjusted by Landlord to fairly
reflect ninety-five percent (95%) occupied on January 1 of the Base Year.
6.3 MANNER OF PAYMENT. Tenant's payment of Additional rent shall be
made as follows:
6.3.1 Prior to the commencement of each Lease Year,
Landlord shall furnish Tenant a written statement of the Estimated Expenses
allocable to the premises for such Lease Year, and a calculation of Additional
rent as follows: One-twelfth (1/12) of the amount, if any, by which Estimated
Expenses Allocable to the Premises exceeds the Base Amount, which excess amount
shall be additional Rent payable by Tenant for each month during such Lease
Year. If at any time or times during such Lease Year it reasonably appears to
Landlord that the Actual Expenses Allocable to the Premises shall vary from
Estimated Expenses Allocable to the Premises by more than five percent(5%) on an
annual basis, then Landlord by written notice to Tenant may revise the Estimated
Expenses Allocable to the Premises for such Lease Year and Additional Rent
payments by Tenant for such Lease Year shall thereafter be equal to one-twelfth
(1/12) of the amount by which such revised Estimated Expenses Allocable to the
Premises exceed the Base Amount.
6.3.2 Within ninety (90) days after the end of each
Lease Year, or as soon thereafter as practicable, Landlord shall provide a
statement (the "Statement") to Tenant showing: (a) the amount of Actual Expenses
Allocable to the Premises during the prior Lease Year, with a listing of amounts
for Real Property Taxes and major categories of Operating Expenses; (b) any
amount paid by Tenant as Additional Rent during such prior Lease Year; and (c)
any revision to the Estimated Expenses Allocable to the Premises for the current
Lease Year.
6.3.3 If the Statement shows Tenant's payments were
less than the excess of Actual Expenses Allocable to the premises for the prior
Lease Year over the Base Amount, then Tenant shall promptly pay to Landlord the
difference. If the Statement shows an increase in Estimated Expenses Allocable
to the Premises for the current Lease Year, then Tenant's Additional Rent
payments for the balance of the Lease Year shall be equal to one-twelfth (1/12)
of the amount by which such increased Estimated Expenses Allocable to the
Premises exceeds the Base Amount, and Tenant shall pay the difference between
the new and former estimates for the period from January 1 of the current Lease
Year through the month in which the Statement is sent. Tenant shall pay any such
difference within thirty (30) days after Landlord sends the Statement.
6.3.4 If the Statement shows that Tenant's payments
exceeded the amount by which Actual Expenses Allocable to the Premises exceeded
the Base Amount, then Tenant shall receive a credit in the amount of the
difference against payments of Rent next due. If the Lease Term shall have
expired and no further Rent shall be due, Tenant shall receive a refund in the
amount of such difference within (30) days after Landlord sends the Statement.
6.3.5 So long as Tenant's obligations hereunder are
not materially adversely affected thereby, Landlord reserves the right to
reasonably change, from time to time, the manner or timing of the foregoing
payments. In lieu of providing one (1) Statement covering Operating Expenses and
Real Property Taxes, Landlord may provide separate statements, at the same or
different times. No delay by Landlord in providing the Statement (or separate
statements) shall be deemed a default by Landlord or a waiver of Landlord's
right to require payment of Tenant's obligations for actual or estimated
Operating Expenses and Real Property Taxes.
6.4 PRORATION. If the Lease Term commences on a date other than January
1, or ends on a date other than December 31, Tenant's obligations to pay
estimated and actual amounts toward Additional Rent for such first or final
calendar year shall be prorated to reflect the portion of such year(s) included
in the Lease Term. Such Proration shall be made by multiplying (i) the Base
Amount (as stated on an annual basis) and (ii) the total Estimated or Actual
Expenses Allocable to the Premises for such calendar year(s) by a fraction the
numerator of which is the number of days of the Lease Term during such calendar
year and the denominator of which is 365.
6.5 LANDLORD'S RECORDS. The determination of Additional Rent shall be
made by Landlord. Landlord or its agents shall keep records in reasonable detail
showing all expenditures made or items enumerated above, which records shall be
available for inspection at Landlord's offices by Tenant. All costs of such
inspection shall be borne solely by Tenant, and at the Landlord's premises
conducted during Landlord's normal business hours. Tenant is entitled to audit
Landlord's records one (1) time per year and only for the preceding Lease Year
as defined in Section 6.2.3 Inspection of Landlord's records must be conducted
within one hundred twenty (120) days of receiving the "Statement". Furthermore,
any audit cannot be performed using a contingency basis auditor and all
information reviewed is to be kept strictly confidential between Landlord and
Tenant.
6.6 FURTHER ADJUSTMENT. In the event the average occupancy level of the
Building for any Lease Year was or is not ninety-five percent (95%) or more of
full occupancy, then Actual Expenses and Landlord's estimate thereof for such
Lease Year shall be proportionately adjusted by Landlord to reflect those costs
that would have occurred had the Building been ninety-five percent (95%)
occupied during such Lease Year.
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7. PERSONAL PROPERTY TAXES. Tenant shall pay, prior to delinquency, all
Personal Property Taxes (as defined below) payable with respect to all Property
of Tenant (as defined below) located on the Premises or in the Building Complex
and promptly upon request of Landlord shall provide written proof of such
payment. As used herein, "Property of Tenant" shall mean and include, without
limitation, all personal property of Tenant including inventory, equipment,
floor, ceiling and wall coverings, furniture and trade fixtures kept or used on
or installed in the Premises and any Tenant Improvements and other improvements
to the Premises that are owned by and separately assessed to Tenant. "Personal
Property Taxes" shall include all property taxes assessed against the Property
of Tenant, whether assessed as real or personal property.
8. TAXES ON RENT. The Rent provided for in this Lease is exclusive of
any sales or other tax or charge upon, based upon or measured by rents payable
to Landlord hereunder, or any tax or other charge based upon or measured by the
number of employees of Tenant, or any other tax that is not currently in effect.
If during the Lease Term any such tax or other charge becomes payable by
Landlord to any governmental authority, the Rent hereunder shall be deemed
increased by such amount upon thirty (30) days' written notice by Landlord to
Tenant. The foregoing does not apply to federal, state or local income, gross
receipts, inheritance, gift, succession or franchise taxes payable by Landlord.
9. SERVICES BY LANDLORD. Landlord will provide those services to the
Premises and the Building that are customary to similar office buildings in the
greater Seattle area, including without limitation electricity for lighting and
low-power usage office machines; water and sewer; and mechanical, cooling,
heating and ventilation at such times as Landlord normally furnishes this
service to other tenants of the Building, but in no event less than "Normal
Business Hours" (as defined as below), and at such temperatures and in such
amounts as are reasonably standard for office buildings in the greater Seattle
area. Building access, electricity as described above, water, sewer, and parking
if and as described in Exhibit D shall be available at all times. The cooling,
heating and ventilation system shall be available during Normal Business Hours.
"Normal Business Hours" shall be from 5:00a.m. to 6:00p.m. on weekdays, and
8:00a.m. to 1:00p.m. on Saturdays, excluding legal holidays (New Year's Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving, Christmas and days
associated therewith). Landlord also shall provide daily (i.e., five days per
week) janitorial service, lamp replacement for Landlord-furnished lighting,
toilet room supplies and perimeter window washing, all with reasonable frequency
customary to office buildings in the greater Seattle area. Landlord shall
provide cooling, heating and ventilation at times other than Normal Business
Hours upon Tenant's request and with reasonable notice to Landlord, and Tenant
shall pay the reasonable cost thereof. Landlord shall provide keys or other
appropriate access devices that will allow Tenant access to the Premises at all
times. Unless charged to individual tenants (including Tenant) as herein
provided, the costs of such Landlord services described in this Section 9 shall
be included as "Operating Expenses" and paid as Additional Rent pursuant to
Section 6. Landlord shall not be liable for any loss or damage caused by or
resulting from any variation, interruption or failure of such services due to
any cause whatsoever, and no temporary interruption or failure of such services
incident to the making of repairs, alterations or improvements or due to
accident or strike conditions shall be deemed an eviction of Tenant or relieve
Tenant from any of Tenant's obligations hereunder. For those services within
Landlord's reasonable control, Landlord will correct any interruption of
services as soon as practicable.
If Tenant has special mechanical, cooling, heating, ventilation,
electrical or other requirements, then the cost of furnishing, installing,
operating and maintaining the equipment and appurtenances (including separate
meters if requested by Landlord to satisfy these requirements) shall be borne by
Tenant, with Tenant either paying directly to the utility if separately metered
or paying to Landlord, as Rent, the reasonable cost of providing such additional
services. In addition, if the Premises are separately metered and charged for
some or all utilities or services (e.g. separate electric meter or gas meter),
then regardless of whether Tenant is engaged in special usage, Landlord may
elect to have Tenant contract with and pay directly the utility or service
provider. In any such case of individual metering and Premises-specific charges
of utilities or services. Operating Expenses for purposes of calculating
Tenant's Share of Operating Expenses shall not include the cost of providing
such utilities or services to other tenants of the Project (but will continue to
include the cost of providing such utilities or services to the Common Areas).
The Building standard mechanical system is designed to accommodate
heating loads generated by lights and standard office automation equipment.
Before installing lights or equipment in the Premises, which in the aggregate
exceed reasonable and customary loads, Tenant shall obtain the written
permission of Landlord. Landlord may refuse to grant such permission unless
Tenant shall agree to pay Landlord's costs to install supplementary air
conditioning capacity or electrical systems as necessitated by such equipment or
lights or if the equipment or lights requested by Tenant will, in Landlord's
reasonable judgment, overburden the Building's structure or mechanical system(s)
even if supplemented at Tenant's expense.
10. ASSIGNMENT AND SUBLETTING. Tenant shall not cause or permit,
directly or indirectly, voluntarily or involuntarily, any of the following
events (individually and collectively, a "Transfer") (or any amendment to the
instrument affecting the same) without in each case first obtaining Landlord's
written consent, which shall not be unreasonably withheld: (1) a sale,
assignment, hypothecation, mortgage, encumbrance, conveyance or other transfer
of this Lease (or any interest therein); (2) a sublease of the Premises or any
portion thereof; or (3) the use or occupancy of the Premises or any portion
thereof by anyone other than Tenant. No transfer shall relieve Tenant of any
liability under this Lease. Landlord's consent to any Transfer shall not operate
as a waiver of the necessity for consent to any subsequent Transfer. If such
consent is requested, Landlord reserves the right to terminate this Lease, or,
if consent is requested for subletting less than the entire Premises, to
terminate this Lease with respect to the portion for such consent is requested,
at the proposed effective date of the Transfer, in which event Landlord shall
have the right (but not the obligation) to enter into the relationship of
Landlord and tenant with any such assignee, subtenant or transferee, based on
the rent (and /or other consideration) and all other terms agreed to by such
assignee, subtenant or transferee and otherwise upon the terms and conditions of
this Lease. If Tenant assigns this Lease or sublease the Premises or portions
thereof for more than the Rent then payable under this Lease with Landlord's
consent as described above Tenant shall pay to Landlord the entire excess amount
of
Landlord [INITIALS ILLEGIBLE]
--------------------
Tenant D.H.
--------------------
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rent or other consideration, as and when received by Tenant, as Rent hereunder.
If Tenant is a corporation, any transfer of this Lease by merger, consolidation
or liquidation, or any change in the ownership of, or power to vote, a majority
of its outstanding voting stock (including redemption thereof) shall constitute
a Transfer, and in such event, Landlord's approval shall not be unreasonably
withheld. If Tenant is a partnership, any transfer of this Lease by merger,
consolidation, liquidation or dissolution of the partnership, or any change in
the ownership of a majority of the partnership interests shall constitute a
Transfer. As a condition to Landlord's approval, any potential assignee
otherwise approved by Landlord shall assume and shall assume and shall be
jointly and severally liable with Tenant for all obligations of Tenant under
this Lease with respect to the portion of the Premises that is subleased to such
sublessee. This Lease shall not be assigned by operation of law.
11. CARE OF PREMISES. Tenant shall keep the Premises in a neat, clean
and sanitary condition and shall at all times preserve them in good condition
and repair, ordinary wear and tear or damage due to casualty or condemnation
excepted. If Tenant shall fail to do so, Landlord may at its option place the
Premises into said condition and state of repair, and in such case Tenant on
demand shall pay or reimburse Landlord for the costs thereof. Tenant shall
reimburse Landlord for the cost of replacing all broken glass with glass of same
or similar quality.
12. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Subject to the terms of
Section 15 relating to damage and destruction, upon expiration or termination of
the Lease Term, whether by lapse of time or otherwise (including any holdover
period), Tenant at its expense shall: (1) remove Tenant's goods and effects and
those of all persons claiming under Tenant, and (2) repair and restore the
Premises to a condition as good as received by Tenant from Landlord or as
thereafter improved, reasonable wear and tear excepted, and (3) promptly and
peacefully surrender the Premises (including surrender of all tenant, except
Tenant's trade fixtures that do not become part of the Building). If Tenant
causes the Premises to be improved with other than Building standard ceiling
suspension system, fluorescent light fixtures, mechanical cooling, heating and
ventilation units, millwork detail, doors, door sills, hardware or hard surface
floor tile and base, then at Landlord's option Tenant shall pay Landlord an
amount equal to the cost to replace all such nonstandard items with Building
standard items. Any property left on the Premises after the expiration or
termination of the Lease Term shall be deemed to have been abandoned and to have
become the property of Landlord to dispose of as Landlord deems expedient, and
Tenant shall be liable for all costs associated with the disposal of such
property. Tenant hereby waives all claims for damages that may be caused by
Landlord's reentering and taking possession of the Premises or removing and
storing Tenant's property as herein provided, and Tenant shall indemnify and
hold harmless Landlord therefrom. No such reentry shall be considered or
construed to be a forcible entry.
13. ALTERATIONS. Tenant shall make no additions, changes, alterations
or improvements ("Work") to the Premises or any electrical, mechanical or fire
protection facilities pertaining to the Premises without the prior written
consent of Landlord. All Work shall be at Tenant's sole cost and shall be
performed in a good and workmanlike manner and all materials used shall be of a
quality comparable to those in the Premises and the Building and shall be in
accordance with plans and specifications approved by Landlord, and Landlord may
require that all Work be performed under Landlord's supervision. In any case,
Tenant shall pay Landlord a reasonable fee to cover Landlord's overhead or
third-party costs in reviewing Tenant's plans and specifications and performing
any supervision of Work. Tenant shall maintain a safe working environment,
including the continuation of all fire and security protection devices, if any,
previously installed in the Premises by Landlord. All damages or injury done to
the Premises or the Building Complex by Tenant or by any persons who may be in
or upon the Premises or the Building Complex with the express or implied consent
of Tenant, including but not limited to the cracking or breaking of any glass
windows and doors, shall be paid for by Tenant and Tenant shall pay for all
damage to the Building Complex caused by acts or omissions of Tenant or Tenant's
officers, contractors, subcontractors, agents, invitees, licensees, employees,
successors or assigns. If Landlord consents to or supervises any Work by Tenant,
the same shall not be deemed a warranty as to the adequacy of the design,
workmanship or quality of materials, and Landlord hereby expressly disclaims any
responsibility or liability for the same, except with respect to Landlord's
intentional misconduct. Landlord shall under no circumstances have any
obligation to repair, maintain or replace any portion of any Work. All
alterations, additions and improvements except Tenant's trade fixtures that do
not become a part of the Building shall remain in an be surrendered with the
Premises as a part thereof at the expiration or sooner termination of this
Lease. Tenant shall comply with all applicable laws, codes and regulations in
connection with all Work.
14. ENTRY AND INSPECTION. Landlord at all reasonable times and with
reasonable prior notice (and at any time in case of emergency) may enter the
Premises for the purpose of inspection, cleaning, repairing, altering or
improving the Premises or the Building subject to Tenant's reasonable security
requirements. Nothing in this Section 14 shall impose upon Landlord any
obligation not expressly imposed elsewhere in this Lease. Landlord shall have
the right at reasonable times to enter the Premises for the purpose of showing
the Premises to any fee owners, ground lessors, holders of encumbrances on the
interest of Landlord and any prospective purchasers, mortgagees, ground lessors
or tenants of the Building or a portion thereof. If during the last month of the
Lease Term Tenant shall have removed substantially all of Tenant's property and
personnel from the Premises, Landlord may enter the Premises and repair, alter
and redecorate the same without abatement of Rent and without liability to
Tenant, and such acts shall have no effect on this Lease.
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15. DAMAGE OR DESTRUCTION.
15.1 DAMAGE AND REPAIR. In case of damage to the Premises or
the Building by fire or other casualty, Tenant immediately shall notify
Landlord. If the Building is damaged by fire or any other cause to such extent
that the cost of restoration, as reasonably estimated by Landlord, will equal or
exceed thirty percent (30%) of the replacement value of the Building (exclusive
of foundations)just prior to the occurrence of the damage, or if insurance
proceeds sufficient for full restoration are unavailable for any reason, then
Landlord no later than the sixtieth (60th) day following the damage may give
Tenant notice of election to terminate this Lease. In the event of such election
this Lease shall surrender possession of the Premises within a reasonable time
thereafter, and Rent shall be apportioned as of the date of Tenant's surrender
and any Rent paid for any period beyond such date shall be repaid to Tenant. If
the cost of restoration as estimated by Landlord shall amount to less than
thirty (30%) percent of said replacement value of the Building and insurance
proceeds sufficient for restoration are available, or if Landlord does not elect
to terminate this Lease under the second sentence of this Section 15.1, then
Landlord shall restore the Building and Premises (to the extent of the Tenant
Improvements originally provided by Landlord hereunder) with reasonable
promptness, subject to delays beyond Landlord's control and delays in the making
of insurance adjustments by Landlord, and Tenant shall have no right to
terminate this Lease. To the extent that the Premises are rendered untenantable,
Rent shall proportionally abate during the period of such untenantability,
unless such damage resulted from or was contributed to directly or indirectly by
the act, fault or neglect of Tenant, Tenant's officers, contractors,
subcontractors, agents, employees, invitees or licensees, in which case Rent
shall abate only to the extent Landlord receives proceeds from any rental income
insurance policy to compensate Landlord for a loss of Rent hereunder.
15.2 BUSINESS INTERRUPTION. No damages, compensation or claims
shall be payable by Landlord for inconvenience, loss of business or annoyance
arising from any repair or restoration of any portion of the Premises or the
Building. Landlord shall use reasonable efforts to effect any such repairs
promptly.
15.3 PROPERTY OF TENANT. Landlord will not carry insurance of
any kind on any property of Tenant, including inventory, equipment, floor,
ceiling and wall coverings, furniture and trade fixtures, and any Tenant
Improvements and other improvements to the Premises that are paid for by Tenant
and Landlord shall be obligated to repair any damage thereto or replace the
same.
16. INDEMNIFICATION.
Tenant shall indemnify, hold harmless and defend Landlord from and
against all liabilities, damages, suits, obligations, fines, losses, claims,
actions, judgments, penalties, charges, costs, or expenses, including, without
limitation, attorneys' and other professional fees and disbursements
(collectively, "Liabilities"), in conjunction with any loss of life, personal
injury and/or property damage arising out of or relating to the occupancy or use
by Tenant or any part of the Premises or the Building Complex occasioned wholly
or in part by any act or omission of Tenant or its officers, contractors,
subcontractors, licensees, agents, servants, employees, or any assignee or
sublessee. Landlord shall not be liable for any loss or damage to persons or
property sustained by Tenant or other persons, which may be caused by theft, or
by any act or neglect of any tenant or occupant of the Building or any other
third parties. Notwithstanding the foregoing, for those Liabilities arising from
activities to which RCW 4.24.115 is held to be applicable, (i) Tenant shall have
no liability for any such Liabilities caused by or resulting from the sole
negligence of Landlord for its agents or employees and (ii) for any such
Liabilities that arise out of the concurrent negligence of Landlord or its
agents or employees and Tenant or its agents or employees, Tenant shall be
liable under this indemnity provision only to the extent of the negligence of
Tenant or its agents or employees.
17. INSURANCE.
17.1 LIABILITY INSURANCE. Throughout the Lease Term Tenant, at
its own expense, shall keep and maintain in full force and effect a policy of
commercial general liability insurance including a contractual liability
endorsement covering Tenant's obligations under Sections 16, insuring Tenant's
activities upon, in and about the Premises and the Building Complex against
claims of bodily injury or death or property damage or loss with a limit of not
less than One Million Dollars ($1,000,000) combined single limit per occurrence
and Two Million Dollars ($2,000,000) in the aggregate (per policy year). In no
event shall the deductible under such policy be in excess of One Thousand
Dollars ($1,000).
17.2 PROPERTY INSURANCE Throughout the Lease Term Tenant, as
its own expense, shall keep and maintain in full force and effect what is
commonly referred to as "all risk" coverage insurance or its equivalent (but
excluding earthquake and flood) on all property of Tenant, including inventory,
equipment, floor ceiling and wall coverings, furniture and trade fixtures, and
any Tenant Improvements and other improvements to the Premises that are paid for
by Tenant in an amount not less than the then current One Hundred Percent (100%)
replacement value thereof.
17.3 WORKERS' COMPENSATION INSURANCE. Throughout the Lease
Term Tenant, at its own expense, shall keep and maintain in full force and
effect workers' compensation insurance in an amount equal to at least the
minimum statutory amount then currently required in the State of Washington.
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17.4 INSURANCE POLICY REQUIREMENTS. All insurance required
under this Section 17 shall be with companies rated AX or better in Best's
Insurance Guide and who are qualified to do business in the State of Washington.
Tenant may, with the prior written consent of Landlord, elect to have reasonable
deductibles in connection with the policy required Section 17.2 above. No
insurance policy required under this Section 17 shall be canceled or reduced in
coverage and each insurance policy shall provide that it is not subject to
cancellation or material alteration except after thirty (30) days prior written
notice to Landlord. Tenant shall deliver to Landlord prior to Commencement Date
and from time to time thereafter, copies of policies of such insurance or
certificates evidencing the existence and amounts of same and, with the
exception of the policy required under Section 17.3, naming Landlord as an
additional insured thereunder, and each policy or certificate shall expressly
provide that the interest of Landlord therein shall not be affected by any
breach by Tenant of any provision of such policy or the policy for which such
certificate evidences coverage. Further, all certificates shall expressly
provide that the coverage evidenced thereby shall be primary and that any
policies carried by Landlord shall be excess and noncontributory with such
primary insurance. The limits of any required insurance policy shall not limit
the liability of Tenant under this Lease.
17.5 WAIVER OF SUBROGATION. Notwithstanding any other
provisions to the contrary herein, Landlord and Tenant release each other, their
agents and employees from liability and waive all right of recovery against each
other for any loss from perils insured against under their respective policies
for damage caused by fire or other perils (including those covered by all risk
extended coverage) that are covered by insurance, regardless of any fault or
negligence. Each party shall use reasonable efforts to cause its insurance
carriers to consent to the foregoing waiver of rights of subrogation against the
other party. The waiver of subrogation provided herein shall apply to the full
extent, but only to the extent, that the same shall be valid and enforceable
without impairment of insurance coverage.
18. ADVERTISING AND SIGNS. Tenant shall not place on the exterior of
the Premises or the Building, or on any exterior door or wall or the exterior
door or wall or the exterior or interior of any window thereof, or on any part
of the interior of the Premises visible form the exterior thereof, any sign or
advertising matter and shall not place any decoration, letter or other thing of
any kind on the glass of any window or door of the Premises, without the prior
written consent of Landlord. With respect to any sign or advertising matter or
decoration approved by Landlord, Tenant at its sole cost and expense shall
maintain the same in good condition and repair at all times. Landlord hereby
reserves the exclusive right to remove temporarily Tenant's sign during any
period when Landlord repairs, restores, constructs or renovates the Premises or
the Building. Landlord shall have the right to prohibit any advertising by
Tenant that, in Landlord's opinion, tends to impair the reputation of the
Building as a first class office building. Upon the expiration or sooner
termination of this Lease, Tenant at Landlord's request shall remove all signs,
advertising matters or decorations at its sole cost and expense and repair any
resulting damage to the Premises and the Building.
19. INSOLVENCY AND LIENS.
19.1 INSOLVENCY. If Tenant becomes insolvent or voluntarily
bankrupt, or if a receiver, trustee or other liquidating officer is appointed
for the business of Tenant, Landlord at its option may terminate this Lease and
Tenant's right of possession under this Lease and in no event shall this Lease
or any rights or privileges hereunder be an asset of Tenant in any bankruptcy,
insolvency or reorganization proceeding, or Landlord may treat such insolvency
as a default under Section 21 of this Lease and invoke any and all remedies
available thereunder. In the event of an assumption or assignment by operation
of law under the Federal Bankruptcy Code or any state bankruptcy or insolvency
law and Landlord elects not to terminate this Lease (or is otherwise prevented
from electing to terminate this Lease), the trustee in assuming this Lease or
any assignee thereof shall (a) remedy Tenant's prior default under this Lease,
(b) be bound by and assume all of the terms and conditions of this Lease, (c)
provide adequate assurances of future performance of all the terms, conditions
and covenants of this Lease, which shall include making the following express
covenants to the Landlord: (1) there is sufficient capital to pay all Rent due
under the Lease for the entire Lease Term, (2) assumption of the Lease by any
assignee will not cause Landlord to be in violation or breach of any provision
of any other lease, finance agreement, security instrument or operating
agreement concerning the Building or the Property, and (3) such assumption or
assignment by the assignee will not substantially disrupt or impair any existing
tenant mix or development plans for the Building or the Property.
19.2 LIENS. Tenants shall not permit any lien to be filed
against the Premises, the Building or the Property by reason of obligation
incurred by or on behalf of Tenant. Tenant hereby indemnifies and holds
Landlords harmless from any liability from any such lien. If any lien is filed
against the Premises, the Building or the Property by any person claiming by,
through or under Tenant, Tenant shall upon request of Landlord, at Tenant's
expense, immediately cause such lien to be released; or, at Landlord's election,
furnish to Landlord a bond in form and in an amount of not less than One Hundred
Fifty Percent (150%) of said lien and issued by a surety satisfaction to
Landlord, indemnifying Landlord, the Building and the Property against all
liability, cost and expenses, including attorneys' fees, which Landlord may
incur as a result thereof. Provided that such bond has been furnished to
Landlord, Tenant, at its sole cost and expense and after written notice to
Landlord, may contest, by appropriate proceedings conducted in good faith and
with due diligence, any lien, encumbrance or charge against the Premises arising
from work done or materials provided to and for Tenant, if, and only if, such
proceedings suspend the collection thereof from Landlord, Tenant and the
Premises, and neither the Premises, the Building, the Property nor any part
thereof or interest therein is or will be in any danger of being sold, forfeited
or lost.
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<PAGE> 12
20. CONDEMNATION.
20.1 ENTIRE TAKING. If all of the Premises or the Building or
such portions of the Building as may be required for the reasonable use of the
Premises, are taken by eminent domain or conveyance in lieu thereof, this Lease
shall automatically terminate as of the date title vests in the condemning
authority and all Rent shall be paid to that date.
20.2 PARTIAL TAKING. In the event of a taking of a part of the
Building other than the Premises or of a portion of the Property, and if
Landlord determines that the Building should be restored in such a way as to
alter the Premises materially, Landlord may terminate this Lease and the term
and estate hereby granted by notifying Tenant of such termination within sixty
(60) days following the date of vesting of title; and this Lease and the term
and estate hereby granted shall expire on the date specified in the notice of
termination, not less than sixty (60) days after the giving of such notice, as
fully and completely as if such date were the date hereinbefore set forth for
the expiration of the Lease Term, and Rent hereunder shall be apportioned as of
such date. Subject to the foregoing provisions of this Section 20.2, in case of
taking of a part of the Premises, or a portion of the Building or the Property
not required for the reasonable use of the Premises, then this Lease shall
continue in full force and effect and the Rent shall be equitably reduced based
on the proportion by which the net rentable area of the Premises is reduced (or
if one of the Premises is taken, based on the proportion by which the use of the
Premises is materially reduced), such Tent reduction to be effective as of the
date title to such portion vests in the condemning authority.
20.3 AWARDS AND DAMAGES. Landlord reserves all rights to
damages to the Premises for any partial or entire taking by eminent domain, and
Tenant hereby assigns to Landlord any right Tenant may have to such damages or
award (except for Property of Tenant as defined in Section 7), and the Tenant
shall make no claim against Landlord or the condemning authority for damages for
termination of the leasehold interest. Tenant shall have the right however, to
claim and recover from the condemning authority compensation for any loss to
which Tenant may be put for Tenant's moving expenses, business interruption or
taking of Property of Tenant (not including Tenant's leasehold interest), but
only to the extent that such loss is awarded separately in the eminent domain
proceeding and not out of or as part of the damages recoverable by Landlord.
21. DEFAULT; REMEDIES.
21.1 EVENTS OF Default. Each of the following shall be deemed a default
by Tenant and a material breach of this Lease:
21.1.1 Failure by Tenant to pay when due any rent hereunder if
such failure shall continue for a period of five (5) days after written notice
thereof has been given to Tenant; or
21.1.2 Failure by Tenant to perform or observe any of the other
terms, covenants. conditions, agreements or provisions of this Lease if such
failure shall continue for a period of fifteen (15) days after written notice
thereof has been given to Tenant; provided, however, that if any such failure
cannot reasonably be cured within such fifteen (15) day period, then Tenant
shall not be deemed to be in default if Tenant commences to cure such failure
within a reasonable time not to exceed fifteen (15) days and for as long as
Tenant is diligently prosecuting the cure thereof up to a total of thirty (30)
days after the notice from Landlord has been given; or
21.1.3 Any misrepresentation or material omission of
information made by Tenant orally to Landlord or in any documents or other
materials provided by Tenant to Landlord in connection with this Lease; and
21.1.4 Any vacation or abandonment by Tenant of the Premises.
As used herein "vacation" shall mean a prolonged absence from the Premises, and
"abandonment" shall mean an absence from the Premises of five (5) days or more
while Tenant is in default.
21.2 LANDLORD REMEDIES FOR TENANT DEFAULT. If any default
occurs hereunder, Landlord may, at any time thereafter and without waiving any
other rights hereunder, do one or more of the following:
21.2.1 Landlord's Reentry. At its option, Landlord may enter
the Premises or any part thereof, with process of law, and expel, remove or put
out Tenant or any other persons who may be thereon, together with all personal
property found therein; and Landlord may terminate this Lease, or it may from
time to time, without terminating this Lease and as agent of Tenant, relate the
Premises or any part thereof for such term or upon such other terms and
conditions as Landlord in its sole discretion may deem advisable, with the right
to repair, renovate, remodel, redecorate, alter and change the Premises, with
Tenant remaining liable for any deficiency computed as hereinafter set forth. In
the case of any default reentry and /or disposition by summary proceedings or
otherwise, all Rent shall become due thereupon and be paid up to the time of
such reentry or dispossession together with such expenses as Landlord may incur
for attorneys' fees, advertising expenses, brokerage fees and/ or putting the
Premises in good order or preparing the same for re-rental, together with
interest thereon as provided in Section 21.5 hereof, accruing from the date of
any such expenditure by Landlord. No such reentry or taking possession of the
Premises shall be construed as an election on Landlord's part to terminate this
Lease unless a written notice of such intention is given to Tenant.
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21.2.2 Reletting of Premises. At the option of Landlord, any
rents received by Landlord from any reletting as described in Section 21.2.1
shall be applied first to the payment of any indebtedness from Tenant to
Landlord other than Rent; second, to the payment of any costs and expenses of
such reletting and including, but not limited to, attorneys' fees, advertising
fees and brokerage fees, and to the payment of any repairs, renovations,
remodeling, redecoration, alterations and changes in the Premises; third, to the
payment of Rent to be paid by Tenant under this Lease, Tenant shall pay any
deficiency to Landlord monthly on the dates specified herein and any payment
made or suits brought to collect the amount of the deficiency for any months
shall not prejudice in any way the right of Landlord to collect the deficiency
for any subsequent month. The failure or refusal of Landlord to be liable for
failure to relet, or in the event of reletting, for failure to collect the rent
thereof, but Landlord shall attempt to mitigate its damages to the extent
required by law. In no event shall Tenant be entitled to receive any excess of
net rents collected over sums payable by Tenant to Landlord hereunder.
21.2.3 Termination. Notwithstanding any reletting termination
as described in Section 21.2.1, Landlord may at any time elect to terminate this
Lease for such previous breach and default. Should Landlord at any time
terminate this Lease by reason of any default, in addition to any other remedies
it may have, Landlord may recover from Tenant the present value of the entire
amount of Rent reserved by this Lease for the balance of the Lease Term, as it
may have been extended, over the then fair market rental value of the Premises
for the same period, plus all expenses, including court costs and attorneys'
fees, incurred by Landlord in the collection of the same.
21.3 CUMULATIVE REMEDIES. All rights and remedies of Landlord
herein enumerated shall be cumulative, and none shall exclude and other right or
remedy allowed by law.
21.4 RIGHT TO PERFORM. If Tenant shall fail to pay any sum of
money, required to be paid by Tenant to a person or entity other than Landlord
or shall fail to perform any other act to be performed by Tenant hereunder, and
such failure shall continue for five (5) days after notice thereof by Landlord,
Landlord may, but shall not be obligated so to do, and without waiving or
releasing Tenant from any obligations of Tenant, make any such payment or
perform any such other act on Tenant's part to be made or performed as provided
in this Lease. Notwithstanding any other provision hereof, Landlord may
undertake repairs in an emergency or to prevent further damage to the Building
or the Premises without delivery of notice and expiration of the cure period.
Tenant shall promptly on demand reimburse Landlord for any such payment or the
cost of performing any such act, and shall pay Landlord interest thereon at the
rate provided in Section 21.5. Landlord shall have (in addition to any other
right or remedy of Landlord), the same rights and remedies in the event of the
nonpayment of sums due under this Section 21.4 as in the case of default by
Tenant in the payment of Rent.
21.5 LATE PAYMENTS. All Rent not paid within five (5) business
days of the due date hereunder shall bear interest from the date due at the rate
of eighteen percent (18%) per annum or the maximum permitted by law, whichever
is less. In addition to any interest that may be charged hereunder, if Tenant
has been late in any payment more than once in any twelve (12) month period,
then Landlord, at its option, may collect from Tenant a service charge for the
collection of any subsequent payment during that twelve (12) month period that
is not made within five (5) business days of the due date in the amount equal to
four percent (4%) of the amount due.
21.6 WAIVER OF REDEMPTION RIGHTS. Tenant, for itself and on
behalf of any and all persons claiming through or under it, including creditors
of all kinds, does hereby surrender all right and privilege, which they or any
of them may have under or by reason of any present or future law, to redeem the
Premises or have a continuance of this Lease for the term hereof, as it may have
been extended, after having been dispossessed or ejected therefrom by process of
law or under the terms of this Lease or after the termination of this Lease as
herein provided.
22. SUBORDINATION TO MORTGAGE. This Lease is and shall be subordinate
to any mortgage or deed of trust placed at any time on the Building or the
Property by Landlord and to any and all advances to be made thereunder and to
interest thereon and all modifications, renewals and replacements or extensions
thereof ("Landlord's Mortgage"), and Tenant shall attorn to the holder of any
Landlord's Mortgage or any person or persons purchasing or otherwise acquiring
the Building, the Property or the Premises at any sale or other proceeding under
any Landlord's Mortgage; provided, however, that so long as Tenant is not in
default hereunder, Tenant's possession of the Premises shall not be disturbed
and all other rights of Tenant under this Lease shall be recognized; provided,
further, that Tenant's attornment shall be deemed to occur automatically without
further agreement of Tenant. If the holder or prospective holder of any
Landlord's Mortgage wishes to have this Lease as a prior lien to the Landlord's
Mortgage, it shall be so deemed upon the holder thereof so notifying Tenant.
Tenant shall properly execute and deliver within ten (10) days after written
notice any documents Landlord or the holder of any Landlord's Mortgage may
require to carry out the provisions of this Section. If, in connection with
obtaining financing for the Property or the Building, any holder of a Landlord's
Mortgage shall request modifications in this Lease as a condition to such
financing, Tenant shall not withhold, delay or defer its consent thereto,
provide that such modifications in this Lease as a condition do not materially
increase the obligations of Tenant hereunder or materially adversely affect the
leasehold interest hereby created.
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<PAGE> 14
23. HOLDOVER. If Tenant shall, with the written consent of Landlord,
hold over beyond the expiration of the Lease Term, or if Landlord shall so
notify Tenant at any time upon or after the expiration of the Lease Term, such
tenancy shall be deemed a month-to-month tenancy that may be terminated as
provided by applicable state law. During such tenancy Tenant shall be bound by
all the terms, covenants and conditions as herein specified as far as
applicable, except rental, which shall be Two Hundred Percent (200%) of the Rent
due prior to the expiration of the Lease Term.
24. AGENT. Landlord has appointed N/A ("Agent") as its agent in all
matters concerning this Lease, and the Tenant, until notified by Landlord in
writing to the contrary, shall pay all Rent and give any notices hereunder to
Agent at Landlord's Address set forth on the signature page of this Lease. As
long as such agency shall exist, each and every term and provision of this Lease
that it is in any way beneficial to Landlord, including every stipulation
imposing or limiting liability, shall inure to the benefit of Agent and its
agents in the same manner as fully and with the same effect as Landlord. Tenant
may rely without further inquiry upon the authority of N/A.
25. NOTICES. All notices under this Lease shall be in writing and
delivered in person or sent by registered or certified mail, return receipt
requested, postage prepaid, to Landlord and to Tenant at the addresses set for
the on the signature page of this Lease (except that, after the Lease commences,
any such notice may be so mailed or delivered by hand to Tenant at the
Premises), and to the holder of any Landlord's Mortgage at such place as such
holder shall specify to Tenant in writing; or to such other addresses as may
from time to time be designated by any such party in writing. Notices mailed as
aforesaid shall be deemed given at the earlier of three (3) day s after the date
of such mailing or upon the date of receipt.
26. COSTS AND ATTORNEYS' FEES. If Landlord employs attorneys in
connection with the enforcement of this Lease, then Tenant shall only be
required to reimburse the Landlord to the extent that the Tenant has been at
fault. If Tenant or Landlord shall bring any action arising out of this Lease,
the losing party shall reimburse the prevailing party for all reasonable
attorney's fees (including court costs and disbursements) incurred in such suit,
at trial and on appeal, and such attorneys' fees shall be deemed to have accrued
on the commencement of such action.
27. ESTOPPEL CERTIFICATES. Tenant, shall, from time to time, upon
written request of Landlord, execute, acknowledge and deliver to Landlord or its
designee an Estoppel Certificate in the form shown in Exhibit E stating: the
date this Lease was executed and the date it expires; the Commencement Date and
the date Tenant accepted the Premises; the amount of Basic Rent and any then
applicable Additional Rent and any other sums payable under the Lease and date
to which such rent and/or other sums have been paid; and certifying to the best
of its knowledge: that this Lease is in full force and effect and has not been
assigned, ratified, supplemented or amended in any way (or specifying the date
and terms of any agreement as to this tenancy); that all conditions under this
Lease to be performed by the Landlord have been satisfied (or specifying any
such unsatisfied conditions and the extent to which such conditions are
unsatisfied); that all required contributions by Landlord to Tenant on account
of the Tenant Improvements have been received (or specifying the nature and
amount of any such contributions that have not been received); that no Tenant
has been paid more than one month in advance (or specifying the amount and
payment dates of any Tenant that has been so paid); the amount of the Security
Deposit held by Landlord (if any); and any other information or items requested
by Landlord. It is intended that any such statement delivered pursuant to this
Section 27 may be relied upon by Landlord and any prospective purchaser of or
prospective holder of any mortgage upon Landlord's interest in the Building
and/or the Property. If Tenant shall fail to provide such estoppel certificate
within ten (10) days of receipt by Tenant of a written request by Landlord as
herein provide, Tenant shall be deemed to have given such certificate as above
provided without modification and shall be deemed to have admitted the accuracy
of any information supplied by Landlord to any prospective purchaser or
mortgagee and to have certified that this Lease is in full force and effect,
that there are no uncured defaults in Landlord's performance, that the Security
Deposit is as stated in the Lease, and that not more than one month's Rent has
been paid in advance.
28. LIMITATION OF LIABILITY. Notwithstanding any other Lease provision,
all covenants, undertakings and agreements herein made on the part of Landlord
are made and intended not as personal covenants, undertakings and agreements for
the purpose of binding Landlord personally or the assets of Landlord except
Landlord's interest in the Building and the Property, but are made and intended
for the purpose of binding only the Landlord's interest in the Building and the
Property, as the same may from time to time be encumbered. No personal liability
or personal responsibility is assumed by , nor shall at any time be asserted or
enforceable against Landlord's or its partners, shareholders, directories and
officers of their respective heirs, legal representatives, successors or assigns
on account of this Lease or on account of any covenant, undertaking or agreement
of Landlord contained in this Lease.
29. TRANSFER OF LANDLORD'S INTEREST. In the event of any transfer or
transfers of Landlord's interest in the Premises or in the Building, other than
a transfer for security purposes only, the transferor shall automatically be
relieved of any and all obligations and liabilities on the part of Landlord
accruing from and after the date of such transfer, but for the security deposit
paid hereunder. Tenant agrees to attorn to the transferee, such attornment shall
be deemed to occur automatically without further agreement of Tenant.
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30. NONWAIVER. Waiver by Landlord of any term, covenant or condition
herein contained or any breach thereof shall not be deemed to be a waiver of
such term, covenant, or condition or of any subsequent acceptance of any Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular Rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
Rent.
31. QUIET POSSESSION. Landlord warrants that so long as Tenant is not
in default under this Lease beyond any applicable cure period and so long as
this Lease has not been terminated, Tenant's quiet possession of the Premises
during the Lease Term shall not be disturbed by Landlord or others claiming
through Landlord.
32. SECURITY DEPOSIT. As security for the full and faithful performance
of covenant and condition of this Lease to be performed by Tenant, Tenant has
paid to Landlord the Security Deposits specified in Section 1.5, receipt of
which is hereby acknowledged. If Tenant shall default with respect to any
covenant or condition of this Lease, including but not limited to the payment of
Rent, then Landlord may apply all or any part of the Security Deposit to the
payment of any sum in default or any sum which Landlord may in its reasonable
discretion deem necessary to spend or incur by reason of Tenant's default. In
such event, Tenant within ten (10) days of written demand therefor by Landlord
shall deposit with Landlord the amount so applied. If Tenant shall have fully
complied with all covenants and conditions of this Lease, but not otherwise, the
amount of the Security Deposit then held by Landlord shall be repaid to Tenant
(or at Landlord's option, to the last assignee of Tenant's interest hereunder)
within thirty (30) days after the expiration or sooner termination of this
Lease. In the event of Tenant's default, Landlord's rights to retain the
Security Deposit shall be deemed to be in addition to any and all other rights
and remedies at law or in equity available to Landlord for Tenant's default
under this Lease. Landlord shall not be required to keep any Security Deposit
separate from its general funds and Tenant shall not be entitled to any interest
thereon.
33. GENERAL.
33.1 HEADINGS. Titles or captions to Sections of this Lease
are not a part of this Lease and shall not have not effect upon the construction
or interpretation of any part hereof.
33.2 SUCCESSORS AND ASSIGNS. All of the covenants, agreements,
terms and conditions contained in this Lease shall inure to and be binding upon
Landlord and Tenant and their respective heirs, executors, administrators,
successors and permitted assigns.
33.3 NO BROKERS. Tenant represents and warrants to Landlord
that it has not engaged any broker, finder or other person who would be entitled
to any commission or fees from Landlord in respect of the negotiation, execution
or delivery of this Lease and Tenant shall indemnify and hold Landlord harmless
from and against any loss, cost, liability or expense incurred by Landlord as a
result of any claim asserted by any such broker, finder or other person based on
any arrangements or agreements made or alleged to have been made by or on behalf
of Tenant. The provisions of this Section 33.3 shall not apply to brokers with
whom Landlord has an express written brokerage agreement.
33.4 ENTIRE AGREEMENT. This Lease contains all covenants and
agreements between Landlord and Tenant relating in any manner to the leasing,
use and occupancy of the Premises and Tenant's use of the Building and the
Property and other matters set forth in this Lease. No prior agreements or
understandings pertaining to the same shall be valid or of any force or effect
and the covenants and agreements of this Lease shall not be altered, modified or
added to except in writing signed by Landlord and Tenant.
33.5 SEVERABILITY. Any provision of this Lease that shall
prove to be invalid, void or illegal shall in no way affect, impair or
invalidate any other provision hereof and the remaining provisions hereof shall
remain in full force and effect.
33.6 FORCE MAJEURE. Time periods for Landlord's performance
under any provisions of this Lease shall be extended for periods of time during
which Landlord's performance is prevented due to circumstances beyond Landlord's
control, including without limitation, strikes, embargoes, shortages of labor or
materials governmental regulations, acts of God, war or other strife.
33.7 CHANGES TO BUILDING. Landlord may at its option make any
repairs, alterations, additions or improvements that Landlord may deem necessary
or advisable for the preservation, safety or improvement of the Building, so
long as Tenant has reasonable access to the Premises. Landlord shall have the
right from time to time without thereby creating an actual or constructive
eviction or incurring any liability to Tenant, to renovate, repair, replace,
and/or change the arrangement or location of any of the following: sidewalks,
terraces, landscaping, loading and/or delivery areas, parking areas, lobbies,
entrances, passageways, doors and doorways, corridors, stairs, toilets and other
common areas of the Building, mechanical, cooling, heating, ventilation,
security, electrical, lighting, plumbing and other systems servicing the
Building, and other similar common service portions of the Building Complex.
Landlord shall incur no liability to Tenant, nor shall Tenant be entitled to any
abatement of Rent on account of any noise, vibration, or other disturbance to
Tenant's business in the Premises (provided that Tenant is not denied access to
the Premises) that shall arise out of the performance by Landlord of any
aforesaid improvements or renovations at or to the Building Complex. Landlord
shall use reasonable efforts (which shall not include any obligation to employ
labor at overtime rates) to avoid disruption of Tenant's business during any
such renovations. In no event shall Landlord permanently diminish any service,
change the arrangement or location of the elevators serving the Premises, make
any change that diminishes the area of the Premises, or make any change that
alters the character of the Building from a first-class building. Landlord may
change the name of the Building at any time.
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33.8 BUILDING DIRECTORY. Landlord shall maintain in the
Building or on the Property a directory that shall include the name of the
Tenant.
33.9 GOVERNING LAW. This Lease shall be governed by and
construed in accordance with the laws of the State of Washington.
33.10 AUTHORITY. If Tenant is a corporation, the individual
executing this Lease on behalf of Tenant represents and warrants that he/she is
duly authorized to execute and deliver this Lease on behalf of the Tenant in
accordance with a duly adopted resolution of the board of directors of Tenant
and in accordance with Tenant's bylaws, and that this Lease is binding upon
Tenant in accordance with its terms. At Landlord's request, Tenant shall, within
thirty (30) days after execution of this Lease, deliver to Landlord a certified
copy of a resolution of the board of directors of Tenant authorizing or
ratifying the execution of this Lease or provide other evidence of Tenant's
authority reasonably satisfactory to Landlord. If Tenant is a partnership, the
individual executing this Lease on behalf of Tenant represents and warrants that
he/she is duly authorized to execute and deliver this Lease on behalf of the
Tenant in accordance with Tenant's partnership agreement, and that this Lease is
binding upon Tenant in accordance with its terms. At Landlord's request, Tenant
shall, within thirty (30) days after execution of this Lease, deliver to
Landlord an executed copy of Tenant's partnership agreement or provide other
evidence of Tenant's authority reasonably satisfactory to Landlord.
33.11 RELOCATION. If the Premises contain less than Five
Thousand (5,000) square feet of net rentable area, Landlord shall have the
right, at its option, upon thirty (30) days written notice to the Tenant, to
relocate Tenant and to substitute for the Premises other space in the Building
containing at least as much net rentable area as the original Premises. Such
substitute Premises shall be improved with decorations and improvements of
comparable quantity and quality to the Tenant Improvements, at Landlord expense.
Landlord shall reimburse Tenant for the expenses reasonably incurred by Tenant
in connection with such substitution of Premises, including but not limited to
costs of moving, door lettering, telephone relocation and costs reasonably
related to interuption of business.
33.12 LANDLORD'S SECURITY INTEREST. Tenant hereby grants to
Landlord a first lien and security interest (which shall be in addition to and
not in lieu of any statutory Landlord's lien or security interest) in all
Property of Tenant (as defined in Section 7) to secure all sums due from and all
obligations to be performed by Tenant hereunder, which lien and security
interest may be enforced by Landlord in any manner provided by law, including,
without limitation, under and in accordance with the Washington Uniform
Commercial Code. Tenant agrees to provide Landlord with an itemized listing and
copies of all receipts for Property of Tenant within ten (10) days of purchase
and/or installation. In furtherance of the foregoing, Tenant shall execute any
instrument requested by Landlord to evidence or perfect the security interest
granted hereby.
Tenant shall not encumber, mortgage, hypothecate, or finance any Property of
Tenant or this Lease, the leasehold interest, the Premises, or any other
property rights therein, without Landlord's prior written consent; nor shall
Tenant execute any document involved in the financing of this Lease, the
leasehold estate or any Property of Tenant without Landlord's prior written
approval.
33.13 TENANT REPRESENTATION. Tenant acknowledges that Tenant
has been represented (or has had the opportunity to be represented) in the
signing of this Lease by independent legal counsel, selected of Tenant's own
free will, and that Tenant has had the opportunity to discuss this lease with
counsel. Tenant further acknowledges that Tenant has read and understands the
meaning and ramifications of this lease, and, as evidence of this fact, signs
his initials.
TENANT'S INITIALS: D.H.
33.14 TIME OF ESSENCE. Time is of the essence of this Lease.
Tenant execute any document involved in the financing of this Lease, the
leasehold estate or any Property of Tenant without Landlord's prior written
approval.
33.15 EXECUTION IN COUNTERPARTS. This Lease may be executed in
two or more counterparts, each of which shall constitute an original and all of
which shall be one and the same agreement.
33.16 JOINT AND SEVERAL LIABILITY. If more than one person
executes this Lease as Tenant, then (I) each of them is jointly and severally
liable for the keeping, observing and performing of all of the terms, covenants,
conditions, provisions and agreements of this Lease to be kept, observed and
performed by Tenant, and (ii) the term "Tenant" as used in this Lease shall mean
and include each of them jointly and severally and any act of or notice from, or
notice or refund to, or signature of, any one or more of them, with respect to
the tenancy of this Lease, including without limitation any renewal, extension,
expiration, termination or modification of this Lease, shall be binding upon
each and all of the persons executing this Lease as Tenant with the same force
and effect as if each and all of them had so acted or so given or received such
notice or refund or so signed.
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33.17 BINDING ON LANDLORD. Submission of this Lease for
examination, even though executed by Tenant, shall not bind Landlord in any
manner, and no lease or other obligation on the part of Landlord shall arise
until this Lease is executed and delivered by Landlord to Tenant.
33.18 NO RECORDING. Neither this Lease nor any memorandum
hereof shall be recorded in the real property records of the county wherein the
Property is located.
33.19 COMPUTATION OF TIME. The word "day" means "calendar day"
herein and the computation of time shall include all Saturdays, Sundays and
holidays for purposes of determining time periods specified herein.
34. OPTION TO RENEW. INTENTIONALLY DELETED.
IN WITNESS WHEREOF, the Landlord and the Tenant have signed their name
and affixed their seals the day and year first above written.
TENANT: LANDLORD:
Edgar Online, Inc. Yett Family Partnership, L.P.
by Yett Corp. its General Partner
By \s\ Dave Hamburg
--------------------- By \s\ Stephen E. Yett
--------------------------
Stephen E. Yett
Its: Director, Its: President
West Coast Operations
- --------------------------
Address: Address:
Attention: Dave Hamburg
- -------------------------
Edgar Online, Inc. Yett Management N.W., Inc.
- -------------------------
10628 NE 37th Circle 2525 152nd Ave NE
- -------------------------
Kirkland, WA 98033 Redmond, WA 98052
- -------------------------
Telephone: (425) 803-5726 Telephone: (425) 883-1300
- -------------------------
Facsimile: (425) 822-3034 Facsimile: (425) 881-8664
- -------------------------
cc:
Attention: Tom Vos
- -------------------------
EDGAR Online, Inc.
- -------------------------
50 Washington Street, 9th Floor
- -------------------------
Norwalk, CT 06854
- -------------------------
Exhibit A Legal Description
- ---------
Exhibit B Floor Plan
- ---------
Exhibit C Tenant Improvements
- ---------
Exhibit D Additional Provisions
- ---------
Exhibit E Estoppel Certificate
- ---------
Exhibit F Building Rules and Regulations
- ---------
Exhibit G Parking Rules and Regulations
- ---------
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LANDLORD
STATE OF WASHINGTON )
COUNTY OF KING )
I certify that I know or have satisfactory evidence that the person appearing
before me and making this acknowledgment is the person whose true signature
appears on this document.
On this 15th day of March, 2000, before me personally appeared STEPHEN E. YETT
to me known to be the PRESIDENT of YETT MANAGEMENT N.W., INC., the corporation
that executed the within and foregoing instrument, and acknowledged that said
instrument to be the free and voluntary act and deed of said corporation, for
the uses and purposes therein mentioned, and on oath stated that he was
authorized to execute said instrument and that the seal affixed, if any, is the
corporate seal of said corporation.
WITNESS my hand and seal hereto affixed the day and year first above written.
- -----------------------------
MARCOS J. POLICAR /s/ Marcos J. Policar
STATE OF WASHINGTON ----------------------------------
NOTARY -.- PUBLIC NOTARY PUBLIC in and for the State
MY COMMISSION EXPIRES 2-10-03 of Washington, residing in Bellevue.
- ----------------------------- My commission expires 2-10-03.
TENANT
STATE OF WASHINGTON )
) ss:
COUNTY OF KING )
I certify that I know or have satisfactory evidence that the person appearing
before me and making this acknowledgment is the person whose true signature
appears on this document.
On this 10th day of March, 2000, before me personally appeared
Dave Hamburg
- -------------------------------------------------------------------------------
known to be the Director, West Coast Operations
----------------------------------------------------------------
of Edgar Online, Inc. the corporation that executed the within and
--------------------------,
foregoing instrument, and acknowledged that he/she signed the same as his/her
free and voluntary act and deed to the uses and purposes therein mention.
WITNESS my hand and seal hereto affixed the day and year first above written.
- ----------------------------- /s/ Marcos J. Policar
MARCOS J. POLICAR -----------------------------------
STATE OF WASHINGTON NOTARY PUBLIC in and for the State
NOTARY -.- PUBLIC of Washington, residing in Bellevue.
MY COMMISSION EXPIRES 2-10-03 My commission expires 2-10-03.
- -----------------------------
TENANT
STATE OF )
---------------
)ss:
COUNTY OF )
--------------
I certify that i know or have satisfactory evidence that the person appearing
before me and making this acknowledgment is the person whose true signature
appears on this document.
On this day of , 2000, before me personally appeared
------ --------
- -------------------------------------------------------------------------------
known to be the
----------------------------------------------------------------
of , the corporation that executed the
-----------------------------------------
within and foregoing instrument, and acknowledged that he/she signed the same as
his/her free and voluntary act and deed to the uses and purposes therein
mentioned.
WITNESS my hand and seal hereto affixed the day and year first above written.
------------------------------------
NOTARY PUBLIC in and for the State
of
--------------------------------,
residing in
-----------------------.
My commission expires
-------------.
<PAGE> 19
EXHIBIT A
Legal Description
Lot 21 and an undivided one-twelfth(1\12th) interest in Tract A of Linbrook
Yarrow Bay, as per plat recorded in Volume 118 of Plats, Pages 94 through 96,
Records of King County, as revised by City of Kirkland Lot Line Adjustment No.
84-76, filed in Volume 42 of Surveys, Pages 23 and 23A, and recorded under King
County Recording No. 8410099003, Records of King County;
TOGETHER with a perpetual, non-exclusive easement and right of access, ingress,
egress and utilities as established by Declaration of Covenants, Conditions and
Restrictions and Reservation of Easements for Linbrook Yarrow Bay, Recorded
under King County Recording No. 8410290408 and as delineated over and across the
North 24 feet of Lot 26 at Linbrook Yarrow Bay, as per plat recorded in Volume
118 of Plats, Pages 94 through 96, Records of King County, and as revised by
City of Kirkland Lot Line Adjustment No. 84-76, filed in Volume 42 of Surveys,
Pages 23 and 23A, and recorded under King County Recording No. 8410099003,
Records of King County;
Situated in the City of Kirkland, County of King, State of Washington.
<PAGE> 20
EXHIBIT B
[LINBROOK OFFICE PARK Floor Plan]
(Buildings 21 & 22)
<PAGE> 21
EXHIBIT C
Tenant Improvements for Office Lease Agreement
Between Yett Family Partnership, L.P. ("Landlord")
and Edgar Online, Inc. ("Tenant")
I. COMMENCEMENT AND EXPIRATION DATES; POSSESSION.
A.COMMENCEMENT DATE. The Commencement Date shall be as provided in
Section 1.3 of the Lease, unless notice is given pursuant to this Exhibit C as
follows:
(1) If Landlord delivers to Tenant a notice at least fifteen
(15) days prior to the date upon which the Premises, together with the common
facilities for access and service thereto, shall be substantially completed,
then the Commencement Date shall be the date specified in such notice (which
shall not be prior to January 20, 2000, without Tenant's consent) or any earlier
date upon which Tenant occupies the Premises; and
(2) As used herein, "substantially completed" shall mean (i)
any Tenant Improvements to be installed by Landlord in the Premises pursuant to
this Exhibit C are completed, subject to punch list items, (ii) Tenant has
access to the Premises, and (iii) the cooling, heating and ventilation systems
servicing the Premises are operable. The determination when the Premises are
substantially completed shall be reasonably and exclusively made by Landlord's
architect. Landlord shall use its reasonable efforts to cause the Commencement
Date to occur by January 20, 2000.
B.TENANT OBLIGATIONS. If the Tenant Improvements are not competed on
the Commencement Date due to the failure of Tenant to fulfill any obligations
pursuant to the terms of this Lease or any Exhibit hereto, including without
limitation Tenant's failure to substantially comply with any dates set forth in
this Exhibit C, the Lease shall be deemed to have commenced upon the date it
would have commenced but for Tenant's failure, which date shall be determined by
Landlord in its sole reasonable discretion and confirmed to Tenant in writing.
C.TENANT TERMINATION RIGHTS. If the Commencement Date does not occur
within three (3) months following the date specified in Section 1.3, then Tenant
may terminate this Lease by written notice, except such three (3)-month period
at Landlord's sole option may be extended to a date not later than six
(6)-months from the Commencement Date specified in Section 1.3 for delays due to
causes beyond the reasonable control of Landlord. If the Commencement Date has
not occurred within such six (6)-month period at Tenant's option, this Lease
shall be deemed null and void and all rights and obligations of the parties
shall terminate. Termination under this Exhibit C shall be Tenant's sole remedy
for any failure or delay in delivering possession of the Premises or completion
of the Tenant Improvements and Tenant shall have no other rights or claims
hereunder at law or in equity.
The premises will be delivered in as-is condition, except for the following,
which will occur at Landlord's sole expense: (i) paint finished portion of
premises with building-standard paint; (ii) Shampoo carpets.
<PAGE> 22
EXHIBIT D
Additional Provisions for Office Lease Agreement
Between Yett Family Partnership, L.P. ("Landlord")
and Edgar Online, Inc. ("Tenant")
1. PARKING: Notwithstanding the terms and conditions of this Lease
Agreement, during the term of this Lease and all option periods, the
Tenant shall have the right to use a share of the parking based upon
the ratio of four (4) stalls per 1,000 square feet of rentable space,
(which equates to 15 stalls during the initial term) on an unassigned
basis.
2. SIGNAGE: The Landlord shall permit the Tenant to install, at Landlord's
expense, a building standard sign in a mutually acceptable location
near the entry to the Tenant's premises.
<PAGE> 23
EXHIBIT E
ESTOPPEL CERTIFICATE
1 Re: Lease dated ____________ ("Lease") by and between Stephen E. Yett,
President ("Landlord") and __________________________________
("Tenant")
Gentlemen:
Reference is made to the above-described Lease in which the undersigned
is the Tenant. We understand that you are accepting an assignment of Landlord's
rights under the Lease as _____________________, and we hereby, as a material
inducement for you to consummate the transaction, represent that:
1. The Lease is for a term, commencing on _________ , ______ 19 and
ending ______ (__) years thereafter, and the Lease covers the real property
("Premises") depicted in EXHIBIT A, attached hereto and incorporated herein by
reference thereto, the Premises being part of certain real property ("Property")
located in the City of ________, County of ________, State of ____________, and
more particularly described in EXHIBIT B, attached hereto and incorporated
herein by reference thereto. A true and correct copy of the Lease is attached
hereto as EXHIBIT C and incorporated herein by reference thereto.
2. There are no modifications, amendments, supplements, arrangements,
side letters or understandings, oral or written, of any sort, modifying,
amending, altering, supplementing or changing the terms of the Lease, except for
those attached hereto as EXHIBIT D.
3. The Lease is in full force and effect, and the Lease has been duly
executed and delivered by, and is a binding obligation of, the Tenant as set
forth therein.
4. The undersigned acknowledges (a) that rent on the Lease had been
paid up to and including _______________, 19__, (b) that monthly rent during
the ____________ ( ) years of the term of the Lease is $________ per month, and
(c) that rent has not been paid for any period after ____________________, 19
and shall not be paid for a period in excess of one (1) month in advance.
5. A security deposit in the amount of $___________ has been made by
Tenant and is now held by Landlord.
6. All conditions under the Lease to be performed by Landlord have been
satisfied (or those conditions not yet satisfied, and the extent to which such
conditions are satisfied, shall be explained in detail attached to this
Certificate).
7. The improvements on the Premises are free from defects in design,
materials and workmanship; and the improvements meet all governmental
requirements, including, but not limited to, zoning and environmental
requirements.
8. The Lease is not in default, and Landlord has performed the
obligations required to be performed by Landlord under the terms thereof through
the date hereof, and there are no existing claims, defenses, or offsets that the
Tenant had against the enforcement of this Lease by the Landlord.
9. The Lease shall be subordinate to a Deed of Trust on the Premises
and an assignment of Landlord's interest in the Lease given by Landlord
to _______________; and in the event of a merger of Landlord and Tenant in any
manner, the interest of Tenant and Landlord shall not merge.
10. Tenant agrees not to modify, amend, terminate or otherwise change
the Lease without ten (10) days' prior written notice to you.
11. In the event of a default by Landlord under any of the terms or
provisions of the Lease, Tenant shall give you adequate notice and sufficient
time to cure such default.
12. This lease represents the entire agreement between the parties as
to Tenant's occupancy of the Premises.
Dated: ________________, 19___.
Very truly yours,
"Tenant"
By:__________________________
Its:_________________________
<PAGE> 24
EXHIBIT F
LINBROOK OFFICE PARK
BUILDING RULES AND REGULATIONS
1. SIGN. No sign, placard, picture, advertisement, name or notice shall
be inscribed, displayed, printed or affixed on or to any part of the outside or
inside of the Building, the Premises or the surrounding area without the written
consent of the Landlord being first obtained. If such consent is given by
Landlord, Landlord may regulate the manner of display of the sign, placard,
picture, advertisement, name or notice. Landlord shall have the right to remove
any sign, placard, picture, advertisement, name or notice which has not been
approved by Landlord or is being displayed in a non-approved manner without
notice to and at the expense of the Tenant. Tenant shall not place anything or
allow anything to be placed near the glass of any window, door partition or wall
which may appear unsightly from outside of the Premises; provided, however that
Landlord is to furnish and install a building standard window blind at all
exterior windows. Tenant shall not, without prior written consent of Landlord,
install a sunscreen on any window.
2 DIRECTORIES. The directories of the Building will be provided
exclusively for the display of the name and location of tenants and Landlord
reserves the right to exclude any other names therefrom.
3. ACCESS. The sidewalks, halls, passages, exits, entrances, and
stairways shall not be obstructed by any of the tenants or used by them for any
purpose other than for ingress to and egress from their respective Premises. The
halls, passages, entrances, exits, stairways, and roof are not for the use of
the general public and the Landlord shall in all cases retain the right to
control thereof and prevent access thereto by all persons whose presence in the
judgment of the Landlord shall be prejudicial to the safety, character,
reputation and interests of the Building or its tenants; provided, however, that
nothing herein contained shall be construed to prevent access by persons with
whom the Tenant normally deals in the ordinary course of Tenant's business
unless such persons are engaged in illegal activities. No Tenant and no
employees or invitees of any Tenant shall go upon the roof of the building.
4. LOCKS. Tenant shall not alter any lock or install any new additional
locks or any bolts on any door of the Premises without the written consent of
Landlord.
5. RESTROOMS AND SHOWER ROOMS. The toilet rooms, urinals, wash bowls,
shower rooms, and other apparatus shall not be used for any purpose other than
that for which they were constructed and no foreign substance of any kind
whatsoever shall be thrown therein. No towels, wash cloths, soaps, or shampoos
shall be left in or around the shower rooms. The expense of any breakage,
stoppage or damage resulting from a violation of this rule shall be borne by the
Tenant who, or whose employees, sublessees, assignees, agents, licensees, or
invitees, shall have caused it.
6. NO DEFACING PREMISES. Tenant shall not overload the floor of the
Premises, shall not mark on or drive nails, screw or drill into the partitions,
woodwork or plaster (except as may be incidental to the hanging of wall
decorations), and shall not in any way deface the Premises or any part thereof.
7. SAFES, HEAVY EQUIPMENT AND MOVING OF FURNITURE. No furniture,
freight or equipment of any kind shall be brought into the Building without
prior consent of Landlord and all moving of the same into or out of the Building
shall be done at such time and in such manner as Landlord shall designate.
Landlord shall have the right to prescribe the times and manner of moving all
heavy equipment in and out of the Building. Landlord will not be responsible for
loss of or damage to any such safe or property from any cause and all damage
done to the Building by moving or maintaining any such safe or other property
shall be repaired at the expense of Tenant. There shall not be used in any
Premises, or in the public halls of the Building, either by any tenant or
others, any hand trucks except those equipped with rubber tires and side guards.
8. JANITORIAL SERVICES. Tenant shall not cause any unnecessary labor by
reason of Tenant's carelessness or indifference in the preservation of good
order and cleanliness. Janitorial service shall include ordinary dusting and
cleaning by the janitor assigned to such work and shall not include cleaning of
carpets or rugs, except normal vacuuming, or moving of furniture and other
special services. Janitorial service will be furnished between 7:00 p.m. and
6:00 a.m. Occupants in the space during these hours may cause the space not to
be cleaned that day. Window cleaning shall be done only by Landlord and only
between 4:00 a.m. and 5:00 p.m.
(daylight hours).
9. NUISANCE. Tenant shall not use, keep or permit to be used or kept
any food or noxious gas or substance in the Premises, or permit or suffer the
Premises to be occupied or used in a manner offensive or objectionable to the
Landlord or other occupants of the Building by reason of noise, odors and/or
vibrations, or interfere in any way with other tenants or those having business
in the Building. No animals or birds shall be brought in or kept in or about the
Premises or the Building. No Tenant shall make or permit to be made any
disturbing noises or disturb or interfere with occupants of this or neighboring
Buildings or Premises, or with those having business with such occupants by the
use of any musical instrument, radio, phonograph, unusual noise, or in any other
way. No Tenant shall throw anything out of doors or down passageways.
<PAGE> 25
10. PERMITTED USE. The Premises shall not be used for manufacturing or
for the storage of merchandise except as such storage may be incidental to the
use of the Premises for general office purposes. No Tenant shall occupy or
permit any portion of its Premises to be occupied for the manufacture or sale of
liquor, narcotics, or tobacco in any form, or as a medical office, or as a
barber shop or manicure shop except with prior written consent of Landlord. No
tenant shall advertise for laborers giving an address at the Premises. The
Premises shall not be used for lodging or sleeping or for illegal purposes.
11. HAZARDOUS SUBSTANCES. Tenant shall not use or keep in the Premises
or the Building any kerosene, gasoline or inflammable or combustible fluid or
material or any Hazardous Substance or use any method of heating or air
conditioning other than that supplied by the Landlord.
12. COMMON AREA CONTROL. Landlord shall have the right to control and
operate the public portions of the Building, and the public facilities, and
heating and air conditioning, as well as facilities furnished for the common use
of the tenants, in such manner as it deems best for the benefit of the tenants
generally.
13. ENTRY DOORS. All entrance doors in the Premises shall be left
locked when the Premises are not in use, and all doors opening to public
corridors shall be kept closed except for normal ingress and egress from the
Premises.
14. TELEPHONES. Landlord will direct electricians as to where and how
telephone and telegraph wires are to be introduced. No boring or cutting for or
stringing of wires will be allowed without the consent of Landlord. The location
of telephones, call boxes and other office equipment affixed to the Premises
shall be subject to the approval of Landlord.
15. KEYS. All keys to the Building, Premises, and rooms shall be
obtained from Landlord's office and Tenant shall not from any other source
duplicate or obtain keys or have keys made without prior consent by Landlord.
The Tenant, upon termination of tenancy, shall deliver to the Landlord the keys
to the Building, Premises, and rooms which shall have been furnished and shall
pay the Landlord for the cost of replacing any lost key or of changing the lock
or locks opened by such lost key if Landlord deems it necessary to make such
change.
16. FLOOR COVERING. No Tenant shall lay linoleum, tile, carpet or other
similar floor coverings so that the same shall be affixed to the floor or the
Premises in any manner except as approved by the Landlords. The expenses of
repairing any damage resulting from a violation of this rule or removal of any
floor covering shall be borne by the Tenant by whom, or by whose contractors,
agents, sublessees, licenses, employees or invitees, the floor covering shall
have been laid.
17. BUILDING CLOSURE. Except during Tenant's normal business hours,
access to the Building or to the halls, corridors, or stairways in the Building,
or to the Premises may be refused unless the person seeking access is known to
any person or employee of the Building in charge and has a pass or is properly
identified. The Landlord shall in no case be liable for damages for any error
with regard to the admission to or exclusion from the Building of any person. In
case of invasion, mob, riot, public excitement, or other commotion, the Landlord
reserves the right to prevent access to the Building and property located
therein. Anything to the foregoing notwithstanding, Landlord shall have no duty
to provide security protection for the Building at any time or to monitor access
thereto.
18. PREMISES CLOSURE. Tenant shall see that the doors of the Premises
are closed and securely locked before leaving the Building and that all water
faucets, water apparatus and electricity are entirely shut off before Tenant or
Tenant's employees leave the Building. Tenant shall be responsible for any
damage to the Building or other tenants caused by failure to comply with this
rule.
19. DISORDERLY CONDUCT. Landlord reserves the right to exclude or expel
from the Building any person who, in the judgment of Landlord, is intoxicated or
under the influence of liquor or drugs, or who shall in any manner do any act in
violation of any of the rules and regulations of the Building.
20. TENANT REQUESTS. Any requests of Tenant will be considered only
upon application at the office of the Landlord. Employees of Landlord shall not
be requested to perform any work or do anything outside of their regular duties
unless under special instructions from the Landlord.
21. VENDING MACHINES. No vending machine shall be installed, maintained
or operated upon the Premises without the written consent of the Landlord.
22. BUILDING NAME AND ADDRESS. Landlord shall have the right,
exercisable without notice and without liability to Tenant, to change the name
of the Building of which the Premises are a part.
23. FIRE REGULATIONS. Tenant agrees that it shall comply with all fire
regulations that may be issued from time to time by Landlord and Tenant also
shall provide Landlord with the names of a designated responsible employee to
represent Tenant in all matter pertaining to fire regulations.
24. TENANT ADVERTISING. Without the written consent of Landlord, Tenant
shall not use the name of the Building in connection with or in promotion or
advertising the business of Tenant except as Tenant's address.
<PAGE> 26
25. EMERGENCY INFORMATION. Tenant must provide Landlord with names and
telephone numbers to contact in case of emergency. Tenant must fill out a tenant
emergency information sheet and return it to Landlord's office within three (3)
days of occupancy.
26. INSTALLATION OF BURGLAR AND INFORMATIONAL SERVICES. If Tenant
requires telegraphic, telephonic, burglar alarm or similar services, it shall
first obtain, and comply with, Landlord's instructions in their installation.
27. DELIVERIES. No equipment, materials, furniture, packages, supplies
merchandise or other property will be received in the Building except between
such hours as may be designated by Landlord. Tenant's initial move in and
subsequent deliveries of bulky items, such as furniture, safes and similar items
shall, unless otherwise agreed in writing by Landlord, be made during the hours
of 6:00 p.m. to 6:00 a.m. or on Saturday or Sunday. No deliveries shall be made
which impede or interfere with other tenants or the operation of the Building.
28. FLOOR LOADS. Tenant shall not place a load upon any floor of the
Premises which exceeds the load per square foot which such floor was designed to
carry and which is allowed by law. Landlord shall have the right to prescribe
the weight, size and position of all equipment, materials, furniture or other
property brought into the Building. Heavy object shall, if considered necessary
by Landlord, stand on such platforms as determined by Landlord to be necessary
to properly distribute the weight, which platforms shall be provided at Tenant's
expense. Business machines and mechanical equipment belonging to Tenant, which
cause noise or vibration that may be transmitted to the structure of the
Building or to any space therein to such a degree as to be objectionable to
Landlord or any tenants in the Building, shall be placed and maintained by
Tenant, at Tenant's expense, on vibration eliminators or other devices
sufficient to eliminate noise or vibration. The person employed to move such
equipment in or out of Building must be acceptable to the Landlord. Landlord
will not be responsible for loss of, or damage to, any such equipment or other
property from any cause, and all damage done to the Building by maintaining or
moving such equipment or other property shall be repaired at the expense of
Tenant.
29. ENERGY CONSERVATION. Tenant shall not waste electricity, water or
air-conditioning and agrees to cooperate fully with Landlord to assure the most
effective operation of the Building's heating and air-conditioning and to comply
with any governmental energy-saving rules, laws, or regulations of which Tenant
has actual notice, and shall refrain from attempting to adjust controls. Tenant
shall keep corridor doors closed, and shall close window coverings at the end of
each business day. No exterior doors shall be held or left open by Tenant, its
employees, or visitors, except for normal ingress and egress.
30. NO ANTENNAS. Tenant shall not install any radio or television
antenna, loudspeaker or other devices on the roof or exterior walls of the
Building. Tenant shall not interfere with radio or television broadcasting or
reception from or in the Building or elsewhere.
31. NO SOLICITING. Canvassing, soliciting and distribution of handbills
or any other written material, and peddling in the Building are prohibited, and
Tenant shall cooperate to prevent such activities.
32. PROHIBITED USES. The Premises shall not be used for any improper,
immoral or objectionable purpose. No cooking shall be done or permitted on the
Premises without Landlord's consent, except that use by Tenant of Underwriters
Laboratory approved equipment for brewing coffee, tea, hot chocolate and similar
beverages or use of microwave ovens for employee use shall be permitted,
provided that such equipment and use is in accordance with all applicable
federal, state, county and city laws, codes, ordinances, rules and regulations.
33. ENFORCEMENT OF RULES. Landlord may waive any one or more of these
Rules and Regulations for the benefit of Tenant or any other Tenant, but no such
waiver by Landlord shall be construed as a waiver of such Rules and Regulations
in favor of Tenant, nor prevent Landlord from thereafter enforcing any such
Rules and Regulations against any or all of the tenants of the Building.
34. LEASE. These Rules and Regulations are in addition to, and are made
a part of the terms, covenants, agreements and conditions of Tenants Lease of
its Premises in the Building.
35. ADDITIONAL RULES. Landlord reserves the right to make such other
Rules and Regulations or amendments hereto as, in its reasonable judgment, may
from time to time be needed for safety and security, for care and cleanliness of
the Building and for the preservation of good order therein. Tenant agrees to
abide by all such Rules and Regulations hereinabove stated and any additional
rules and regulations which are adopted.
36. OBSERVANCE OF RULES. Tenant shall be responsible for the observance
of all of the foregoing rules by Tenant's employees, agents, licensees,
sublessees, assigns, and invitees.
<PAGE> 27
EXHIBIT G
LINBROOK OFFICE PARK
PARKING RULES AND REGULATIONS
The following rules and regulations shall govern use of the parking facilities
which are appurtenant to the Building.
1. Landlord hereby grants to Tenant and Tenant's customers, suppliers, employees
and invitees, a non-exclusive license to use the designated parking areas in the
Project on an unreserved, first come, first serve basis for the parking of motor
vehicles during the term of this Lease. Landlord reserves the right at any time
to grant similar non-exclusive use to other tenants, to promulgate rules and
regulations relating to the use of such parking areas, including reasonable
restrictions on parking by tenants and employees, to designate specific spaces
for the use of any tenant, to make changes in parking layout from time to time,
and to establish reasonable time limits on parking.
2. Landlord reserves the right to disperse any concentration of parking by
tenant's employees in an area that is located closer to another tenant's entry
than to their own.
3. Landlord reserves the right at a future date to charge for parking at a rate
to be set forth by Landlord.
4. Parking stickers or any other device or form of identification supplied by
Landlord and/or Parking Operator shall remain the property of the Landlord
and/or Parking Operator. Such parking identification device must be displayed as
requested and may not be mutilated in any manner. The serial number of the
parking identification device may not be obliterated. Devices are not
transferable and any device in the possession of an unauthorized holder will be
void. There will be a replacement charge payable by Tenant or Tenant's employee
for the loss of any parking identification device.
5. Landlord reserves the right to refuse parking identification devices to any
tenant or person and/or his agents or representatives who willfully refuse to
comply with these Rules and Regulations and all unposted City, State or Federal
ordinances, laws or agreements. Tenant shall acquaint all persons to whom Tenant
assigns parking spaces of the Rules and Regulations.
6. Loss or theft of parking identification devices from automobiles must be
reported immediately, and a lost or stolen report must be filed by the customer
at that time. Landlord and/or Parking Operator has the right to exclude any
vehicle from the parking facilities that does not have an identification device.
7. Any parking identification devices reported lost or stolen found on any
unauthorized vehicle will be confiscated and the illegal holder will be subject
to prosecution.
8. Every parker is required to park and lock his own vehicle. All responsibility
for damage to vehicle is assumed by the parker, Landlord and/or Parking Operator
shall not be responsible for any theft or vandalism to Tenant's vehicle from the
parking facilities that does not have an identification device.
9. Tenant shall not park or permit the parking of any vehicle under its control
in any parking areas designated by Landlord as areas for handicapped, van pool,
and car pool parking pr parking by visitors to the Building. Tenant shall not
leave vehicles in the parking areas other than automobiles, motorcycles, motor
driven bicycles or 4-wheeled trucks.
10. Washing, waxing, cleaning or servicing of any vehicle in any area not
specifically reserved for such purpose is prohibited.
11. Vehicles must be parked entirely within the painted stall lines of a single
parking stall.
12. All directional signs and arrows must be observed.
13. The speed limit within all parking areas shall be 5 miles per hour.
Parking is prohibited:
(a) in areas not striped for parking;
(b) in aisles;
(c) where "no parking" signs are posted;
(d) on ramps;
(e) in cross hatched areas;
(f) in such other areas, as may be designated by Landlord
or Landlord's Parking Operator; and
(g) on the premises for more than twenty-four (24)
consecutive hours.
<PAGE> 28
14. Landlord or its agents shall have the right to cause to be removed any
vehicle of Tenant, its employees, invitees, licensees, or agents, that may be
parked in unauthorized areas, and Tenant agrees to save and hold harmless
Landlord, its agents and employees from any and all claims, losses, damages and
demands asserted or arising in respect to or in connection with the removal of
any such vehicle and for all expenses incurred by Landlord in connection with
such removal. Tenant will from time to time, upon request of Landlord, supply
Landlord with a list of License plate numbers for vehicles owned or operated by
its employees and agent.
15. Landlord reserves the right to modify and/or adopt such other reasonable and
non-discriminatory rules and regulations for the parking facilities as it deems
necessary for the operation of the parking facilities. Landlord may refuse to
permit any person who violates these rules to park in the parking facilities,
and any violation of the rules shall subject the car to removal at the owners
expense.
16. Lot managers or attendants are not authorized to make or allow any
exceptions to these Rules and Regulations.
<PAGE> 1
Exhibit 10.25
OFFICE LEASE AGREEMENT
BETWEEN
YETT FAMILY PARTNERSHIP, L.P. (LANDLORD)
AND
EDGAR ONLINE, INC. (TENANT)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Defined Terms; Lease Data; Exhibits ..................................
1.1 Building and Premises .......................................
1.2 Tenant's Pro Rata Share .....................................
1.3 Term, Commencement and Expiration ...........................
1.4 Rent ........................................................
1.5 Security Deposit ............................................
2. Premises .............................................................
3. Rent .............................................................
3.1 Tenant Payment ..............................................
3.2 Basic Rent ..................................................
4. Construction of Tenant Improvements ..................................
5. Uses .............................................................
5.1 General Use .................................................
5.2 No Hazardous Materials ......................................
6. Additional Rent ......................................................
6.1 Tenant Payment ..............................................
6.2 Definitions .................................................
6.3 Manner of Payment ...........................................
6.4 Proration ...................................................
6.5 Landlord's Records ..........................................
6.6 Further Adjustments .........................................
7. Personal Property Taxes ..............................................
8. Taxes on Rent ........................................................
9. Services by Landlord .................................................
10. Assignment and Subletting ............................................
11. Care of Premises .....................................................
12. Surrender of Premises; Removal of Property ...........................
13. Alterations ..........................................................
14. Entry and Inspection .................................................
15. Damage and Destruction ...............................................
15.1 Damage and Repair ...........................................
15.2 Business Interruption .......................................
15.3 Property of Tenant ..........................................
16. Indemnification ......................................................
17. Insurance ............................................................
17.1 Liability Insurance .........................................
17.2 Property Insurance ..........................................
17.3 Workers' Compensation Insurance .............................
17.4 Insurance Policy Requirements ...............................
17.5 Waiver of Subrogation .......................................
18. Advertising and Signs ................................................
19. Insolvency and Liens .................................................
19.1 Insolvency ..................................................
19.2 Liens .......................................................
20. Condemnation .........................................................
20.1 Entire Taking ...............................................
20.2 Partial Taking ..............................................
20.3 Awards and Damages ..........................................
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
21. Default; Remedies ....................................................
21.1 Events of Default ...........................................
21.2 Landlord Remedies for Tenant Default ........................
21.3 Cumulative Remedies .........................................
21.4 Right to Perform ............................................
21.5 Late Payments ...............................................
21.6 Waiver of Redemption Rights .................................
22. Subordination to Mortgage ............................................
23. Holdover .............................................................
24. Agent .............................................................
25. Notices .............................................................
26. Costs and Attorneys' Fees ............................................
27. Estoppel Certificates ................................................
28. Limitation of Liability ..............................................
29. Transfer of Landlord's Interest ......................................
30. Nonwaiver ............................................................
31. Quiet Possession .....................................................
32. Security Deposit .....................................................
33. General .............................................................
33.1 Headings ....................................................
33.2 Successors and Assigns ......................................
33.3 No Brokers ..................................................
33.4 Entire Agreement ............................................
33.5 Severability ................................................
33.6 Force Majeure ...............................................
33.7 Changes to Building .........................................
33.8 Building Directory ..........................................
33.9 Governing Law ...............................................
33.10 Authority....................................................
33.11 Relocation Clause ...........................................
33.12 Landlord's Security Interest ................................
33.13 Tenant Representation .......................................
33.14 Time Essence ................................................
33.15 Execution in Counterparts ...................................
33.16 Joint and Several Liability .................................
33.17 Binding on Landlord .........................................
33.18 No Recording ................................................
33.19 Computation of Time .........................................
34. Option to Renew ......................................................
Notary ...............................................................
</TABLE>
<TABLE>
<S> <C>
Exhibit A Legal Description
Exhibit B Floor Plan
Exhibit C Tenant Improvements
Exhibit D Additional Provisions
Exhibit E Estoppel Certificate
Exhibit F Building Rules and Regulations
Exhibit G Parking Rules and Regulations
</TABLE>
<PAGE> 4
OFFICE LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease") is dated as of the day of January
28, 2000, and is entered into by and between Yett Family Partnership, L.P.
("Landlord") and Edgar Online, Inc.,
Landlord and Tenant agree as follows:
1. DEFINED TERMS; LEASE DATA; EXHIBITS.
1.1 BUILDING AND PREMISES. The "Building" means that 24
building office park known as the Linbrook Office Park, situated on the real
property (the "Property") more particularly described in Exhibit A attached
hereto. The Building contains approximately 105,740 net rentable square feet.
The "Premises" means that space consisting of approximately 3,568 net rentable
square feet in Building 24 with a postal address of 10635 NE 38th Place Suite B,
Kirkland WA 98033, as outlined on the floor plan attached hereto as Exhibit B,
including tenant improvements as described in Exhibit C attached hereto.
1.2 TENANT'S PRO RATA SHARE. "Tenant's Pro Rata Share" means
three point four six percent (3.46%), calculated by dividing the total net
rentable square feet of the Premises by the total net rentable square feet of
the Building.
1.3 TERM, COMMENCEMENT AND EXPIRATION DATES. The term of this
Lease (the "Lease Term") shall be approximately 36.39 months, commence on the
earlier of January 20, 2000, or the date Tenant takes possession of the Premises
(the "Commencement Date") and expiring on January 31, 2003, unless earlier
terminated as provided herein. The Lease Term means the entire term of this
Lease, including any extension or renewal terms.
1.4 RENT. Tenant shall pay to Landlord basic rent of Seven
Thousand Six Hundred Twenty One Dollars ($7,621.00) per month, adjusted as
provided in Section 3.2 ("Basic Rent"). Tenant also shall pay as additional rent
all expenses allocable to the Premises in excess of the base rate amount (the
"Base Rate Amount") of NA per net rentable square foot in the Premises per year
as provided in Section 6 ("Additional Rent"). Tenant has deposited with Landlord
on the date hereof Seven Thousand Six Hundred Twenty One Dollars ($7,621.00) to
be applied to Basic Rent first coming due under this Lease.
<TABLE>
<CAPTION>
Effective Date of New Basic
Rent Increase Monthly Rent
------------- ------------
<S> <C> <C>
02/01/01 $7,926.00
02/01/02 $8,231.00
</TABLE>
1.5 SECURITY DEPOSIT. Tenant has deposited with Landlord on
the date Eight Thousand Two Hundred Thirty One Dollars ($8,231.00) as a security
deposit (the "Security Deposit") to be held and disbursed by Landlord in
accordance with Section 32.
1.6 EXHIBITS. Landlord and Tenant agree that this Lease is
further subject to the provisions of the attached Exhibits, which are listed
below. The provisions of the Exhibits are incorporated herein by this reference
and made a part of this Lease.
<TABLE>
<S> <C>
Exhibit A Legal Description
Exhibit B Floor Plan
Exhibit C Tenant Improvements
Exhibit D Additional Provisions
Exhibit E Estoppel Certificate
Exhibit F Building Rules and Regulations
Exhibit G Parking Rules and Regulations
</TABLE>
2. PREMISES. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord upon the terms and conditions set forth herein the Premises,
together with nonexclusive rights of ingress and egress over common areas in the
Building. Tenant acknowledges that neither Landlord nor any agent of Landlord
has made any representation or warranty with respect to the suitability or
fitness of either for the conduct of Tenant's business or for any other purpose.
The taking of possession or use of the Premises by Tenant for any purpose [other
than construction] shall conclusively establish that the Premises and the
Building were at such time in satisfactory condition, except as to any punchlist
items required to be accomplished by Landlord pursuant to Exhibit C as to which
Tenant shall have given Landlord written notice in reasonable detail within
reasonable detail within fifteen (15) days after Tenant takes such possession or
commences such use of the Premises. Nothing contained in this Section 2 shall
affect, defer or modify the commencement Date or the obligation of Tenant to pay
rent hereunder.
1
<PAGE> 5
3. RENT.
3.1 TENANT PAYMENT. Tenant shall pay Landlord without notice
Basic Rent, Additional Rent, and any other payments due hereunder (collectively,
"Rent"), from and after the Commencement Date, without deduction or offset, in
lawful money of the United States of America in advance on or before the [first]
day of each month (or at other dates specified in this Lease) during the Lease
Term at Landlord's address set forth on the signature page of this Lease, or to
such other party or at such other place as Landlord may hereafter from time to
time designate to Tenant in writing. Rent for any partial month at the beginning
or end of the Lease Term shall be prorated.
3.2 BASIC RENT ADJUSTMENT. Basic Rent shall be adjusted in
accordance with the schedule set forth in Section 1.4 of the Lease and Exhibit
D.
4. CONSTRUCTION OF TENANT IMPROVEMENTS. Improvements to the Premises
(the "Tenant Improvements") shall be constructed as provided in Exhibit C. If as
a result of the Provisions of Exhibit C the Commencement date is established at
an earlier date than the date provided in Section 1.3 above, then Landlord shall
confirm the actual Commencement Date to Tenant in a written notice. All Tenant
Improvements shall be and remain the property of Landlord.
5. USES.
5.1 GENERAL USE. The Premises shall be used only for general
office purposes, research and development of software products, and any other
purpose consistent with applicable zoning and the operation of an office and
service business building ("Permitted Use") and for no other business or other
purpose without the prior written consent of Landlord, which may be withheld in
Landlord's sole discretion. No act shall be done in or about the Premises that
is unlawful or that will increase the then existing rate of insurance on the
Building. Tenant shall not commit or allow to be committed any waste upon the
Premises, or any public or private nuisance or other act or thing in or about
the Premises that disturbs the quiet enjoyment of any other tenant in the
Building. Tenant shall not, without the prior written consent of Landlord, which
may be withheld in its sole discretion, use, operate or maintain any apparatus,
machinery, equipment or device in or about the Premises that will cause any
significant noise, increase electrical loads or usage, vibration or fumes or
disturb the quiet enjoyment of any other tenants in the Building. If any of
Tenant's office machines or operating should disturb the quiet enjoyment of any
other tenants in the Building, then Tenant shall cease operating such equipment
until it has provided adequate insulation or taken such other action as Landlord
shall require to eliminate the disturbance. Tenant shall comply with all laws
and regulations relating to its use or concerning Tenant's use or occupancy of
the Premises or related to the common areas of the Building as may be adopted by
Landlord from time to time and made available to Tenant.
5.2 NO HAZARDOUS MATERIALS. Tenants shall not use, dispose of
or otherwise allow the release of any Hazardous materials in, on or under the
Premises, the Building, the Property, or any adjacent property, or in any
improvements thereto, thereon or therein. Tenant represents and warrants to
Landlord that Tenant's intended use of the Premises does not involve the use,
production, disposal or bringing on to the Premises, the Building or the
Property of any Hazardous Materials. As used herein, the term "Hazardous
Materials" includes any substance, waste or material defined or designated as
hazardous, toxic or dangerous (or any similar term) by any federal, state or
local statute, regulation, rule or ordinance now or hereafter in effect. Tenant
shall promptly comply with all statutes, regulations and ordinances, and with
all orders, decrees or judgments of governmental authorities or courts having
jurisdiction, relating to the use, collection, treatment, disposal, storage,
control, removal or cleanup of Hazardous Materials in, on or under the Premises,
the Building, the Property or any adjacent property, or incorporated in any
improvements thereto, thereon, therein, at Tenant's expense.
After notice to Tenant and a reasonable opportunity for Tenant to
effect such compliance, Landlord may, but shall not be obligated to, enter upon
the Premises and take such actions and incur such costs and expenses to effect
such compliance as it deems advisable to protect its interest in the Premises.
However, Landlord shall not be obligated to give Tenant notice and an
opportunity to effect compliance if (i) such delay might result in material
adverse harm to Landlord, the Premises, the Building or the Property; (ii)
Tenant has already had actual knowledge of the situation and a reasonable
opportunity to effect compliance, or (iii) Landlord reasonably believes that an
emergency exists. Whether or not Tenant has actual knowledge of the release of
Hazardous Material on the Premises, the Building, the Property or any adjacent
property as the result of Tenant's use of the Premises, the Building or the
Property, Tenant shall reimburse Landlord for the full amount of all costs and
expenses incurred by Landlord relating to such Hazardous Materials or in
connection with such compliance activities. Tenant shall notify Landlord
immediately of any release of any Hazardous Materials on the Premises of which
Tenant is aware.
Tenant agrees to indemnify and hold harmless Landlord against any and
all losses, liabilities, suits, obligations, fines, damages, judgments,
penalties, claims, charges, cleanup costs, remedial actions, costs and expenses
(including, without limitation, attorneys' and other professional fees and
disbursements) that may be imposed on, incurred or paid by, or asserted against
Landlord, the Premises, the Building, or the Property by reason of, or in
connection with (i) any misrepresentation, breach of warranty or other default
by Tenant under this Section 5.2, or (ii) the acts or omissions of Tenant, its
officers, contractors, subcontractors, licensees, agents, servants, employees,
guests, invitees or visitors, or any assignee or sublessee or other person for
whom Tenant would otherwise be liable, resulting in the release of any Hazardous
Materials. All of Tenant's obligations and liabilities under this Section 5.2
shall survive expiration or other termination of this Lease and shall be
separately enforceable by Landlord.
Landlord certifies that to the best of their knowledge and belief the
Premises are free from Asbestos.
2
<PAGE> 6
6. ADDITIONAL RENT.
6.1 TENANT PAYMENT. In addition to Basic rent, Tenant shall
pay to Landlord as Additional Rent, from and after the Commencement Date in the
manner described below, an amount equal to the Actual Expenses Allocable to the
Premises for all increases in Operating Expenses and Real Property Taxes that
exceed the Base Year Amount.
6.2 DEFINITIONS.
6.2.1 "Operating Expenses" shall mean all expenses
paid or incurred by Landlord for maintaining, operating and repairing the
Building, the Property, any parking structure serving the Building and related
improvements adjacent to the Building that serve the tenants of the Building
including without limitation, signage, sidewalks, terraces, parking, loading or
delivery areas and landscaping and the personal property used in conjunction
therewith (collectively, the "Building Complex"), including, without limitation,
the costs of refuse collection, water, sewer, electricity, gas and other
utilities, supplies, janitorial and cleaning services, window washing,
landscaping maintenance, services of independent contractors, compensation
(including employment taxes and fringe benefits) of all persons who perform
duties in connection with the operation, maintenance and repair of the Building
Complex, insurance premiums on insurance as Landlord in its sole discretion
elects to carry, licenses, permits and inspection fees, management fees, real
property taxes (as defined below), legal and accounting expenses, amortization
of capital improvements constructed after completion of the Building Complex,
and any other expense or charge whether or not herein above described, which in
accordance with generally accepted accounting and property management practices
would be considered an expense of maintaining, operating or repairing the
Building Complex, but excluding:
6.2.1.1 Costs of any special services rendered or
equipment or materials provided or expenses attributable to individual tenants
(including Tenant) for which a special charge is made to that tenant;
6.2.1.2 Costs of electrical, heating, cooling and
combined utility services to the extent that such services are separately
metered to the Premises and paid directly by Tenant.
Landlord may construct, and "Operating Expenses" shall include, any
additional capital improvements to the Building Complex common areas to enhance
the character, utility, or operating efficiency of the Building Complex, as
reasonably determined by Landlord, but the amount of the capital improvements
costs included in the Operating Expenses for any Lease Year shall be limited to
the annual amortized amount of the capital improvements determined by dividing
the capital improvement costs by the useful life of the capital improvements.
6.2.2 "Real Property Taxes" shall mean real and
personal property taxes, assessments (including local improvement or special
benefit districts), and all other governmental impositions and charges of every
kind and nature, including surcharges, now or hereafter imposed with respect to
the Building Complex, or any portion thereof, including, without limitation, all
tenant improvements, and all improvements, fixtures, and equipment to, on or in
the Building Complex, and/or the use, occupancy or possession thereof; taxes on
Property of Tenant (as defined in Section 7), which have not been paid by Tenant
directly to the taxing authority; and any taxes levied or assessed in addition
to, in lieu of, or as a substitute for, in whole or part, taxes now levied or
assessed or any other tax upon owning, leasing or rents receivable by Landlord
from the Building Complex, but excluding any federal, state or local income tax
or inheritance, gift, succession or franchise taxes imposed on Landlord.
6.2.3 "Lease Year" shall mean each 12-month period
commencing January 1 and ending December 31, or any portion thereof, during the
Lease Term.
6.2.4 "Actual Expenses" shall mean the actual
expenses paid or incurred by Landlord for Operating Expenses and Real Property
Taxes during any Lease Year.
6.2.5 "Actual Expenses Allocable to the Premises"
shall mean Actual Expenses multiplied by Tenant's Pro Rata Share.
3
<PAGE> 7
6.2.6 "Estimated Expenses Allocable to the Premises"
shall mean Landlord's estimate of Actual Expenses Allocable to the Premises for
the following Lease Year to be given by Landlord to Tenant pursuant to Section
6.3.1 below.
6.2.7 "Base Year" as used in this Lease means, for
the Term, the calendar year 2000 and, for each Extended Term, the Lease Year in
which the Extended Term falls. Electrical and janitorial expenses included in
Operating costs for the base Year shall be adjusted by Landlord to fairly
reflect ninety-five percent 95%) occupied on January 1 of the Base Year.
6.3 MANNER OF PAYMENT. Tenant's payment of Additional rent shall be
made as follows:
6.3.1 Prior to the commencement of each Lease Year,
Landlord shall furnish Tenant a written statement of the Estimated Expenses
allocable to the premises for such Lease Year, and a calculation of Additional
rent as follows: One-twelfth (1/12) of the amount, if any, by which Estimated
Expenses Allocable to the Premises exceeds the Base Amount, which excess amount
shall be additional Rent payable by Tenant for each month during such Lease
Year. If at any time or times during such Lease Year it reasonably appears to
Landlord that the Actual Expenses Allocable to the Premises shall vary from
Estimated Expenses Allocable to the Premises by more than five percent(5%) on an
annual basis, then Landlord by written notice to Tenant may revise the Estimated
Expenses Allocable to the Premises for such Lease Year and Additional Rent
payments by Tenant for such Lease Year shall thereafter be equal to one-twelfth
(1/12) of the amount by which such revised Estimated Expenses Allocable to the
Premises exceed the Base Amount.
6.3.2 Within ninety (90) days after the end of each
Lease Year, or as soon thereafter as practicable, Landlord shall provide a
statement (the "Statement") to Tenant showing: (a) the amount of Actual Expenses
Allocable to the Premises during the prior Lease Year, with a listing of amounts
for Real Property Taxes and major categories of Operating Expenses; (b) any
amount paid by Tenant as Additional Rent during such prior Lease Year; and (c)
any revision to the Estimated Expenses Allocable to the Premises for the current
Lease Year.
6.3.3 If the Statement shows Tenant's payments were
less than the excess of Actual Expenses Allocable to the premises for the prior
Lease Year over the Base Amount, then Tenant shall promptly pay to Landlord the
difference. If the Statement shows an increase in Estimated Expenses Allocable
to the Premises for the current Lease Year, then Tenant's Additional Rent
payments for the balance of the Lease Year shall be equal to one-twelfth (1/12)
of the amount by which such increased Estimated Expenses Allocable to the
Premises exceeds the Base Amount, and Tenant shall pay the difference between
the new and former estimates for the period from January 1 of the current Lease
Year through the month in which the Statement is sent. Tenant shall pay any such
difference within thirty (30) days after Landlord sends the Statement.
6.3.4 If the Statement shows that Tenant's payments
exceeded the amount by which Actual Expenses Allocable to the Premises exceeded
the Base Amount, then Tenant shall receive a credit in the amount of the
difference against payments of Rent next due. If the Lease Term shall have
expired and no further Rent shall be due, Tenant shall receive a refund in the
amount of such difference within (30) days after Landlord sends the Statement.
6.3.5 So long as Tenant's obligations hereunder are
not materially adversely affected thereby, Landlord reserves the right to
reasonably change, from time to time, the manner or timing of the foregoing
payments. In lieu of providing one (1) Statement covering Operating Expenses and
Real Property Taxes, Landlord may provide separate statements, at the same or
different times. No delay by Landlord in providing the Statement (or separate
statements) shall be deemed a default by Landlord or a waiver of Landlord's
right to require payment of Tenant's obligations for actual or estimated
Operating Expenses and Real Property Taxes.
6.4 PRORATION. If the Lease Term commences on a date other than January
1, or ends on a date other than December 31, Tenant's obligations to pay
estimated and actual amounts toward Additional Rent for such first or final
calendar year shall be prorated to reflect the portion of such year(s) included
in the Lease Term. Such Proration shall be made by multiplying (i) the Base
Amount (as stated on an annual basis) and (ii) the total Estimated or Actual
Expenses Allocable to the Premises for such calendar year(s) by a fraction the
numerator of which is the number of days of the Lease Term during such calendar
year and the denominator of which is 365.
6.5 LANDLORD'S RECORDS. The determination of Additional Rent shall be
made by Landlord. Landlord or its agents shall keep records in reasonable detail
showing all expenditures made or items enumerated above, which records shall be
available for inspection at Landlord's offices by Tenant. All costs of such
inspection shall be borne solely by Tenant, and at the Landlord's premises
conducted during Landlord's normal business hours. Tenant is entitled to audit
Landlord's records one (1) time per year and only for the preceding Lease Year
as defined in Section 6.2.3 Inspection of Landlord's records must be conducted
within one hundred twenty (120) days of receiving the "Statement". Furthermore,
any audit cannot be performed using a contingency basis auditor and all
information reviewed is to be kept strictly confidential between Landlord and
Tenant.
6.6 FURTHER ADJUSTMENT. In the event the average occupancy level of the
Building for any Lease Year was or is not ninety-five percent (95%) or more of
full occupancy, then Actual Expenses and Landlord's estimate thereof for such
Lease Year shall be proportionately adjusted by Landlord to reflect those costs
that would have occurred had the Building been ninety-five percent (95%)
occupied during such Lease Year.
4
<PAGE> 8
7. PERSONAL PROPERTY TAXES. Tenant shall pay, prior to delinquency, all
Personal Property Taxes (as defined below) payable with respect to all Property
of Tenant (as defined below) located on the Premises or in the Building Complex
and promptly upon request of Landlord shall provide written proof of such
payment. As used herein, "Property of Tenant" shall mean and include, without
limitation, all personal property of Tenant including inventory, equipment,
floor, ceiling and wall coverings, furniture and trade fixtures kept or used on
or installed in the Premises and any Tenant Improvements and other improvements
to the Premises that are owned by and separately assessed to Tenant. "Personal
Property Taxes" shall include all property taxes assessed against the Property
of Tenant, whether assessed as real or personal property.
8. TAXES ON RENT. The Rent provided for in this Lease is exclusive of
any sales or other tax or charge upon, based upon or measured by rents payable
to Landlord hereunder, or any tax or other charge based upon or measured by the
number of employees of Tenant, or any other tax that is not currently in effect.
If during the Lease Term any such tax or other charge becomes payable by
Landlord to any governmental authority, the Rent hereunder shall be deemed
increased by such amount upon thirty (30) days' written notice by Landlord to
Tenant. The foregoing does not apply to federal, state or local income, gross
receipts, inheritance, gift, succession or franchise taxes payable by Landlord.
9. SERVICES BY LANDLORD. Landlord will provide those services to the
Premises and the Building that are customary to similar office buildings in the
greater Seattle area, including without limitation; water and sewer; such times
as Landlord normally furnishes this service to other tenants of the Building,
but in no event less than "Normal Business Hours" (as defined as below), and in
such amounts as are reasonably standard for office buildings in the greater
Seattle area. Except for water and sewer, Tenant shall pay the cost of all
electric and other utility services which are separately metered, or incurred by
Tenant, as referenced in paragraph 6.2.1.2. Building access, water, sewer, and
parking if and as described in Exhibit D shall be available at all times.
"Normal Business Hours" shall be from 5:00a.m. to 6:00p.m. on weekdays, and
8:00a.m. to 1:00p.m. on Saturdays, excluding legal holidays (New Year's Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving, Christmas and days
associated therewith). Landlord also shall provide daily (i.e., five days per
week) janitorial service, lamp replacement for Landlord-furnished lighting,
toilet room supplies and perimeter window washing, all with reasonable frequency
customary to office buildings in the greater Seattle area. Landlord shall
provide keys or other appropriate access devices that will allow Tenant access
to the Premises at all times. Unless charged to individual tenants (including
Tenant) as hereinafter provided, the costs of such Landlord services described
in this Section 9 shall be included as "Operating Expenses" and paid as
Additional Rent pursuant to Section 6. Landlord shall not be liable for any loss
or damage caused by or resulting from any variation, interruption or failure of
such services due to any cause whatsoever, and no temporary interruption or
failure of such services incident to the making of repairs, alterations or
improvements or due to accident or strike conditions shall be deemed an eviction
of Tenant or relieve Tenant from any of Tenant's obligations hereunder. For
those services within Landlord's reasonable control, Landlord will correct any
interruption of services as soon as practicable.
If Tenant has special mechanical, cooling, heating, ventilation,
electrical or other requirements, then the cost of furnishing, installing,
operating and maintaining the equipment and appurtenances (including separate
meters if requested by Landlord to satisfy these requirements) shall be borne by
Tenant, with Tenant either paying directly to the utility if separately metered
or paying to Landlord, as Rent, the reasonable cost of providing such additional
services.
The Building standard mechanical system is designed to accommodate
heating loads generated by lights and standard office automation equipment.
Before installing lights or equipment in the Premises, which in the aggregate
exceed reasonable and customary loads, Tenant shall obtain the written
permission of Landlord. Landlord may refuse to grant such permission unless
Tenant shall agree to pay Landlord's costs to install supplementary air
conditioning capacity or electrical systems as necessitated by such equipment or
lights or if the equipment or lights requested by Tenant will, in Landlord's
reasonable judgment, overburden the Building's structure or mechanical system(s)
even if supplemented at Tenant's expense.
10. ASSIGNMENT AND SUBLETTING. Tenant shall not cause or permit,
directly or indirectly, voluntarily or involuntarily, any of the following
events (individually and collectively, a "Transfer") (or any amendment to the
instrument affecting the same) without in each case first obtaining Landlord's
written consent, which may be withheld in Landlord's sole discretion: (1) a
sale, assignment, hypothecation, mortgage, encumbrance, conveyance or other
transfer of this Lease (or any interest therein); (2) a sublease of the Premises
or any portion thereof; or (3) the use or occupancy of the Premises or any
portion thereof by anyone other than Tenant. No transfer shall relieve Tenant of
any liability under this Lease. Landlord's consent to any Transfer shall not
operate as a waiver of the necessity for consent to any subsequent Transfer. If
such consent is requested, Landlord reserves the right to terminate this Lease,
or, if consent is requested for subletting less than the entire Premises, to
terminate this Lease with respect to the portion for such consent is requested,
at the proposed effective date of the Transfer, in which event Landlord shall
have the right (but not the obligation) to enter into the relationship of
Landlord and tenant with any such assignee, subtenant or transferee, based on
the rent (and/or other consideration) and all other terms agreed to by such
assignee, subtenant or transferee and otherwise upon the terms and conditions of
this Lease. If Tenant assigns this Lease or sublease the Premises or portions
thereof for more than the Rent then payable under this Lease with Landlord's
consent as described above Tenant shall pay to Landlord the entire excess amount
of rent or other consideration, as and when received by Tenant, as Rent
hereunder. If Tenant is a corporation, any transfer of this Lease by merger,
consolidation or liquidation, or any change in the ownership of, or power to
vote, a majority of its outstanding voting stock (including redemption thereof)
shall constitute a Transfer, and in such event, Landlord's approval shall not be
unreasonably withheld. If Tenant is a partnership, any transfer of this Lease by
merger, consolidation, liquidation or dissolution of the partnership, or any
change in the ownership of a majority of the partnership interests shall
constitute a Transfer. As a condition to Landlord's approval, any potential
assignee otherwise approved by Landlord shall assume and shall assume and shall
be jointly and severally liable with Tenant for all obligations of Tenant under
this Lease with respect to the portion of the Premises that is subleased to such
sublessee. This Lease shall not be assigned by operation of law.
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11. CARE OF PREMISES. Tenant shall keep the Premises in a neat, clean
and sanitary condition and shall at all times preserve them in good condition
and repair, ordinary wear and tear or damage due to casualty or condemnation
excepted. If Tenant shall fail to do so, Landlord may at its option place the
Premises into said condition and state of repair, and in such case Tenant on
demand shall pay or reimburse Landlord for the costs thereof. Tenant shall
reimburse Landlord for the cost of replacing all broken glass with glass of same
or similar quality.
12. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Subject to the terms of
Section 15 relating to damage and destruction, upon expiration or termination of
the Lease Term, whether by lapse of time or otherwise (including any holdover
period), Tenant at its expense shall: (1) remove Tenant's goods and effects and
those of all persons claiming under Tenant, and (2) repair and restore the
Premises to a condition as good as received by Tenant from Landlord or as
thereafter improved, reasonable wear and tear excepted, and (3) promptly and
peacefully surrender the Premises (including surrender of all tenant, except
Tenant's trade fixtures that do not become part of the Building). If Tenant
causes the Premises to be improved with other than Building standard ceiling
suspension system, fluorescent light fixtures, mechanical cooling, heating and
ventilation units, millwork detail, doors, door sills, hardware or hard surface
floor tile and base, then at Landlord's option Tenant shall pay Landlord an
amount equal to the cost to replace all such nonstandard items with Building
standard items. Any property left on the Premises after the expiration or
termination of the Lease Term shall be deemed to have been abandoned and to have
become the property of Landlord to dispose of as Landlord deems expedient, and
Tenant shall be liable for all costs associated with the disposal of such
property. Tenant hereby waives all claims for damages that may be caused by
Landlord's reentering and taking possession of the Premises or removing and
storing Tenant's property as herein provided, and Tenant shall indemnify and
hold harmless Landlord therefrom. No such reentry shall be considered or
construed to be a forcible entry.
13. ALTERATIONS. Tenant shall make no additions, changes, alterations
or improvements ("Work") to the Premises or any electrical, mechanical or fire
protection facilities pertaining to the Premises without the prior written
consent of Landlord. All Work shall be at Tenant's sole cost and shall be
performed in a good and workmanlike manner and all materials used shall be of a
quality comparable to those in the Premises and the Building and shall be in
accordance with plans and specifications approved by Landlord, and Landlord may
require that all Work be performed under Landlord's supervision. In any case,
Tenant shall pay Landlord a reasonable fee to cover Landlord's overhead or
third-party costs in reviewing Tenant's plans and specifications and performing
any supervision of Work. Tenant shall maintain a safe working environment,
including the continuation of all fire and security protection devices, if any,
previously installed in the Premises by Landlord. All damages or injury done to
the Premises or the Building Complex by Tenant or by any persons who may be in
or upon the Premises or the Building Complex with the express or implied consent
of Tenant, including but not limited to the cracking or breaking of any glass
windows and doors, shall be paid for by Tenant and Tenant shall pay for all
damage to the Building Complex caused by acts or omissions of Tenant or Tenant's
officers, contractors, subcontractors, agents, invitees, licensees, employees,
successors or assigns. If Landlord consents to or supervises any Work by Tenant,
the same shall not be deemed a warranty as to the adequacy of the design,
workmanship or quality of materials, and Landlord hereby expressly disclaims any
responsibility or liability for the same, except with respect to Landlord's
intentional misconduct. Landlord shall under no circumstances have any
obligation to repair, maintain or replace any portion of any Work. All
alterations, additions and improvements except Tenant's trade fixtures that do
not become a part of the Building shall remain in an be surrendered with the
Premises as a part thereof at the expiration or sooner termination of this
Lease. Tenant shall comply with all applicable laws, codes and regulations in
connection with all Work.
14. ENTRY AND INSPECTION. Landlord at all reasonable times 2nd with
resonable prior notice (and at any time in case of emergency) may enter the
Premises for the purpose of inspection, cleaning, repairing, altering or
improving the Premises or the Building subject to Tenant's reasonable security
requirements. Nothing in this Section 14 shall impose upon Landlord any
obligation not expressly imposed elsewhere in this Lease. Landlord shall have
the right at reasonable times to enter the Premises for the purpose of showing
the Premises to any fee owners, ground lessors, holders of encumbrances on the
interest of Landlord and any prospective purchasers, mortgagees, ground lessors
or tenants of the Building or a portion thereof. If during the last month of the
Lease Term Tenant shall have removed substantially all of Tenant's property and
personnel from the Premises, Landlord may enter the Premises and repair, alter
and redecorate the same without abatement of Rent and without liability to
Tenant, and such acts shall have no effect on this Lease.
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15. DAMAGE OR DESTRUCTION.
15.1 DAMAGE AND REPAIR. In case of damage to the Premises or
the Building by fire or other casualty, Tenant immediately shall notify
Landlord. If the Building is damaged by fire or any other cause to such extent
that the cost of restoration, as reasonably estimated by Landlord, will equal or
exceed thirty percent (30%) of the replacement value of the Building (exclusive
of foundations)just prior to the occurrence of the damage, or if insurance
proceeds sufficient for full restoration are unavailable for any reason, then
Landlord no later than the sixtieth (60th) day following the damage may give
Tenant notice of election to terminate this Lease. In the event of such election
this Lease shall surrender possession of the Premises within a reasonable time
thereafter, and Rent shall be apportioned as of the date of Tenant's surrender
and any Rent paid for any period beyond such date shall be repaid to Tenant. If
the cost of restoration as estimated by Landlord shall amount to less than
thirty (30%) percent of said replacement value of the Building and insurance
proceeds sufficient for restoration are available, or if Landlord does not elect
to terminate this Lease under the second sentence of this Section 15.1, then
Landlord shall restore the Building and Premises (to the extent of the Tenant
Improvements originally provided by Landlord hereunder) with reasonable
promptness, subject to delays beyond Landlord's control and delays in the making
of insurance adjustments by Landlord, and Tenant shall have no right to
terminate this Lease. To the extent that the Premises are rendered untenantable,
Rent shall proportionally abate during the period of such untenantability,
unless such damage resulted from or was contributed to directly or indirectly by
the act, fault or neglect of Tenant, Tenant's officers, contractors,
subcontractors, agents, employees, invitees or licensees, in which case Rent
shall abate only to the extent Landlord receives proceeds from any rental income
insurance policy to compensate Landlord for a loss of Rent hereunder.
15.2 BUSINESS INTERRUPTION. No damages, compensation or claims
shall be payable by Landlord for inconvenience, loss of business or annoyance
arising from any repair or restoration of any portion of the Premises or the
Building. Landlord shall use reasonable efforts to effect any such repairs
promptly.
15.3 PROPERTY OF TENANT. Landlord will not carry insurance of
any kind on any property of Tenant, including inventory, equipment, floor,
ceiling and wall coverings, furniture and trade fixtures, and any Tenant
Improvements and other improvements to the Premises that are paid for by Tenant
and Landlord shall be obligated to repair any damage thereto or replace the
same.
16. INDEMNIFICATION.
Tenant shall indemnify, hold harmless and defend Landlord from and
against all liabilities, damages, suits, obligations, fines, losses, claims,
actions, judgments, penalties, charges, costs, or expenses, including, without
limitation, attorneys' and other professional fees and disbursements
(collectively, "Liabilities"), in conjunction with any loss of life, personal
injury and/or property damage arising out of or relating to the occupancy or use
by Tenant or any part of the Premises or the Building Complex occasioned wholly
or in part by any act or omission of Tenant or its officers, contractors,
subcontractors, licensees, agents, servants, employees, or any assignee or
sublessee. Landlord shall not be liable for any loss or damage to persons or
property sustained by Tenant or other persons, which may be caused by theft, or
by any act or neglect of any tenant or occupant of the Building or any other
third parties. Notwithstanding the foregoing, for those Liabilities arising from
activities to which RCW 4.24.115 is held to be applicable, (i) Tenant shall have
no liability for any such Liabilities caused by or resulting from the sole
negligence of Landlord for its agents or employees and (ii) for any such
Liabilities that arise out of the concurrent negligence of Landlord or its
agents or employees and Tenant or its agents or employees, Tenant shall be
liable under this indemnity provision only to the extent of the negligence of
Tenant or its agents or employees.
17. INSURANCE.
17.1 LIABILITY INSURANCE. Throughout the Lease Term Tenant, at
its own expense, shall keep and maintain in full force and effect a policy of
commercial general liability insurance including a contractual liability
endorsement covering Tenant's obligations under Sections 16, insuring Tenant's
activities upon, in and about the Premises and the Building Complex against
claims of bodily injury or death or property damage or loss with a limit of not
less than One Million Dollars ($1,000,000) combined single limit per occurrence
and Two Million Dollars ($2,000,000) in the aggregate (per policy year). In no
event shall the deductible under such policy be in excess of One Thousand
Dollars ($1,000).
17.2 PROPERTY INSURANCE Throughout the Lease Term Tenant, as
its own expense, shall keep and maintain in full force and effect what is
commonly referred to as "all risk" coverage insurance or its equivalent (but
excluding earthquake and flood) on all property of Tenant, including inventory,
equipment, floor ceiling and wall coverings, furniture and trade fixtures, and
any Tenant Improvements and other improvements to the Premises that are paid for
by Tenant in an amount not less than the then current One Hundred Percent (100%)
replacement value thereof.
17.3 WORKERS' COMPENSATION INSURANCE. Throughout the Lease
Term Tenant, at its own expense, shall keep and maintain in full force and
effect workers' compensation insurance in an amount equal to at least the
minimum statutory amount then currently required in the State of Washington.
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17.4 INSURANCE POLICY REQUIREMENTS. All insurance required
under this Section 17 shall be with companies rated AX or better in Best's
Insurance Guide and who are qualified to do business in the State of Washington.
Tenant may, with the prior written consent of Landlord, elect to have reasonable
deductibles in connection with the policy required Section 17.2 above. No
insurance policy required under this Section 17 shall be canceled or reduced in
coverage and each insurance policy shall provide that it is not subject to
cancellation or material alteration except after thirty (30) days prior written
notice to Landlord. Tenant shall deliver to Landlord prior to Commencement Date
and from time to time thereafter, copies of policies of such insurance or
certificates evidencing the existence and amounts of same and, with the
exception of the policy required under Section 17.3, naming Landlord as an
additional insured thereunder, and each policy or certificate shall expressly
provide that the interest of Landlord therein shall not be affected by any
breach by Tenant of any provision of such policy or the policy for which such
certificate evidences coverage. Further, all certificates shall expressly
provide that the coverage evidenced thereby shall be primary and that any
policies carried by Landlord shall be excess and noncontributory with such
primary insurance. The limits of any required insurance policy shall not limit
the liability of Tenant under this Lease.
17.5 WAIVER OF SUBROGATION. Notwithstanding any other
provisions to the contrary herein, Landlord and Tenant release each other, their
agents and employees from liability and waive all right of recovery against each
other for any loss from perils insured against under their respective policies
for damage caused by fire or other perils (including those covered by all risk
extended coverage) that are covered by insurance, regardless of any fault or
negligence. Each party shall use reasonable efforts to cause its insurance
carriers to consent to the foregoing waiver of rights of subrogation against the
other party. The waiver of subrogation provided herein shall apply to the full
extent, but only to the extent, that the same shall be valid and enforceable
without impairment of insurance coverage.
18. ADVERTISING AND SIGNS. Tenant shall not place on the exterior of
the Premises or the Building, or on any exterior door or wall or the exterior
door or wall or the exterior or interior of any window thereof, or on any part
of the interior of the Premises visible form the exterior thereof, any sign or
advertising matter and shall not place any decoration, letter or other thing of
any kind on the glass of any window or door of the Premises, without the prior
written consent of Landlord. With respect to any sign or advertising matter or
decoration approved by Landlord, Tenant at its sole cost and expense shall
maintain the same in good condition and repair at all times. Landlord hereby
reserves the exclusive right to remove temporarily Tenant's sign during any
period when Landlord repairs, restores, constructs or renovates the Premises or
the Building. Landlord shall have the right to prohibit any advertising by
Tenant that, in Landlord's opinion, tends to impair the reputation of the
Building as a first class office building. Upon the expiration or sooner
termination of this Lease, Tenant at Landlord's request shall remove all signs,
advertising matters or decorations at its sole cost and expense and repair any
resulting damage to the Premises and the Building.
19. INSOLVENCY AND LIENS.
19.1 INSOLVENCY. If Tenant becomes insolvent or voluntarily
bankrupt, or if a receiver, trustee or other liquidating officer is appointed
for the business of Tenant, Landlord at its option may terminate this Lease and
Tenant's right of possession under this Lease and in no event shall this Lease
or any rights or privileges hereunder be an asset of Tenant in any bankruptcy,
insolvency or reorganization proceeding, or Landlord may treat such insolvency
as a default under Section 21 of this Lease and invoke any and all remedies
available thereunder. In the event of an assumption or assignment by operation
of law under the Federal Bankruptcy Code or any state bankruptcy or insolvency
law and Landlord elects not to terminate this Lease (or is otherwise prevented
from electing to terminate this Lease), the trustee in assuming this Lease or
any assignee thereof shall (a) remedy Tenant's prior default under this Lease,
(b) be bound by and assume all of the terms and conditions of this Lease, (c)
provide adequate assurances of future performance of all the terms, conditions
and covenants of this Lease, which shall include making the following express
covenants to the Landlord: (1) there is sufficient capital to pay all Rent due
under the Lease for the entire Lease Term, (2) assumption of the Lease by any
assignee will not cause Landlord to be in violation or breach of any provision
of any other lease, finance agreement, security instrument or operating
agreement concerning the Building or the Property, and (3) such assumption or
assignment by the assignee will not substantially disrupt or impair any existing
tenant mix or development plans for the Building or the Property.
19.2 LIENS. Tenants shall not permit any lien to be filed
against the Premises, the Building or the Property by reason of obligation
incurred by or on behalf of Tenant. Tenant hereby indemnifies and holds
Landlords harmless from any liability from any such lien. If any lien is filed
against the Premises, the Building or the Property by any person claiming by,
through or under Tenant, Tenant shall upon request of Landlord, at Tenant's
expense, immediately cause such lien to be released; or, at Landlord's election,
furnish to Landlord a bond in form and in an amount of not less than One Hundred
Fifty Percent (150%) of said lien and issued by a surety satisfaction to
Landlord, indemnifying Landlord, the Building and the Property against all
liability, cost and expenses, including attorneys' fees, which Landlord may
incur as a result thereof. Provided that such bond has been furnished to
Landlord, Tenant, at its sole cost and expense and after written notice to
Landlord, may contest, by appropriate proceedings conducted in good faith and
with due diligence, any lien, encumbrance or charge against the Premises arising
from work done or materials provided to and for Tenant, if, and only if, such
proceedings suspend the collection thereof from Landlord, Tenant and the
Premises, and neither the Premises, the Building, the Property nor any part
thereof or interest therein is or will be in any danger of being sold, forfeited
or lost.
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20. CONDEMNATION.
20.1 ENTIRE TAKING. If all of the Premises or the Building or
such portions of the Building as may be required for the reasonable use of the
Premises, are taken by eminent domain or conveyance in lieu thereof, this Lease
shall automatically terminate as of the date title vests in the condemning
authority and all Rent shall be paid to that date.
20.2 PARTIAL TAKING. In the event of a taking of a part of the
Building other than the Premises or of a portion of the Property, and if
Landlord determines that the Building should be restored in such a way as to
alter the Premises materially, Landlord may terminate this Lease and the term
and estate hereby granted by notifying Tenant of such termination within sixty
(60) days following the date of vesting of title; and this Lease and the term
and estate hereby granted shall expire on the date specified in the notice of
termination, not less than sixty (60) days after the giving of such notice, as
fully and completely as if such date were the date hereinbefore set forth for
the expiration of the Lease Term, and Rent hereunder shall be apportioned as of
such date. Subject to the foregoing provisions of this Section 20.2, in case of
taking of a part of the Premises, or a portion of the Building or the Property
not required for the reasonable use of the Premises, then this Lease shall
continue in full force and effect and the Rent shall be equitably reduced based
on the proportion by which the net rentable area of the Premises is reduced (or
if one of the Premises is taken, based on the proportion by which the use of the
Premises is materially reduced), such Tent reduction to be effective as of the
date title to such portion vests in the condemning authority.
20.3 AWARDS AND DAMAGES. Landlord reserves all rights to
damages to the Premises for any partial or entire taking by eminent domain, and
Tenant hereby assigns to Landlord any right Tenant may have to such damages or
award (except for Property of Tenant as defined in Section 7), and the Tenant
shall make no claim against Landlord or the condemning authority for damages for
termination of the leasehold interest. Tenant shall have the right however, to
claim and recover from the condemning authority compensation for any loss to
which Tenant may be put for Tenant's moving expenses, business interruption or
taking of Property of Tenant (not including Tenant's leasehold interest), but
only to the extent that such loss is awarded separately in the eminent domain
proceeding and not out of or as part of the damages recoverable by Landlord.
21. DEFAULT; REMEDIES.
21.1 EVENTS OF Default. Each of the following shall be deemed
a default by Tenant and a material breach of this Lease:
21.1.1 Failure by Tenant to pay when due any rent
hereunder if such failure shall continue for a period of five (5) days after
written notice thereof has been given to Tenant; or
21.1.2 Failure by Tenant to perform or observe any of
the other terms, covenants. conditions, agreements or provisions of this Lease
if such failure shall continue for a period of fifteen (15) days after written
notice thereof has been given to Tenant; provided, however, that if any such
failure cannot reasonably be cured within such fifteen (15) day period, then
Tenant shall not be deemed to be in default if Tenant commences to cure such
failure within a reasonable time not to exceed fifteen (15) days and for as long
as Tenant is diligently prosecuting the cure thereof up to a total of thirty
(30) days after the notice from Landlord has been given; or
21.1.3 Any misrepresentation or material omission of
information made by Tenant orally to Landlord or in any documents or other
materials provided by Tenant to Landlord in connection with this Lease; and
21.1.4 Any vacation or abandonment by Tenant of the
Premises. As used herein "vacation" shall mean a prolonged absence from the
Premises, and "abandonment" shall mean an absence from the Premises of five (5)
days or more while Tenant is in default.
21.2 LANDLORD REMEDIES FOR TENANT DEFAULT. If any default
occurs hereunder, Landlord may, at any time thereafter and without waiving any
other rights hereunder, do one or more of the following:
21.2.1 Landlord's Reentry. At its option, Landlord
may enter the Premises or any part thereof, with process of law, and expel,
remove or put out Tenant or any other persons who may be thereon, together with
all personal property found therein; and Landlord may terminate this Lease, or
it may from time to time, without terminating this Lease and as agent of Tenant,
relate the Premises or any part thereof for such term or upon such other terms
and conditions as Landlord in its sole discretion may deem advisable, with the
right to repair, renovate, remodel, redecorate, alter and change the Premises,
with Tenant remaining liable for any deficiency computed as hereinafter set
forth. In the case of any default reentry and /or disposition by summary
proceedings or otherwise, all Rent shall become due thereupon and be paid up to
the time of such reentry or dispossession together with such expenses as
Landlord may incur for attorneys' fees, advertising expenses, brokerage fees
and/ or putting the Premises in good order or preparing the same for re-rental,
together with interest thereon as provided in Section 21.5 hereof, accruing from
the date of any such expenditure by Landlord. No such reentry or taking
possession of the Premises shall be construed as an election on Landlord's part
to terminate this Lease unless a written notice of such intention is given to
Tenant.
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21.2.2 Reletting of Premises. At the option of
Landlord, any rents received by Landlord from any reletting as described in
Section 21.2.1 shall be applied first to the payment of any indebtedness from
Tenant to Landlord other than Rent; second, to the payment of any costs and
expenses of such reletting and including, but not limited to, attorneys' fees,
advertising fees and brokerage fees, and to the payment of any repairs,
renovations, remodeling, redecoration, alterations and changes in the Premises;
third, to the payment of Rent to be paid by Tenant under this Lease, Tenant
shall pay any deficiency to Landlord monthly on the dates specified herein and
any payment made or suits brought to collect the amount of the deficiency for
any months shall not prejudice in any way the right of Landlord to collect the
deficiency for any subsequent month. The failure or refusal of Landlord to be
liable for failure to relet, or in the event of reletting, for failure to
collect the rent thereof, but Landlord shall attempt to mitigate its damages to
the extent required by law. In no event shall Tenant be entitled to receive any
excess of net rents collected over sums payable by Tenant to Landlord hereunder.
21.2.3 Termination. Notwithstanding any reletting
termination as described in Section 21.2.1, Landlord may at any time elect to
terminate this Lease for such previous breach and default. Should Landlord at
any time terminate this Lease by reason of any default, in addition to any other
remedies it may have, Landlord may recover from Tenant the present value of the
entire amount of Rent reserved by this Lease for the balance of the Lease Term,
as it may have been extended, over the then fair market rental value of the
Premises for the same period, plus all expenses, including court costs and
attorneys' fees, incurred by Landlord in the collection of the same.
21.3 CUMULATIVE REMEDIES. All rights and remedies of Landlord
herein enumerated shall be cumulative, and none shall exclude and other right or
remedy allowed by law.
21.4 RIGHT TO PERFORM. If Tenant shall fail to pay any sum of
money, required to be paid by Tenant to a person or entity other than Landlord
or shall fail to perform any other act to be performed by Tenant hereunder, and
such failure shall continue for five (5) days after notice thereof by Landlord,
Landlord may, but shall not be obligated so to do, and without waiving or
releasing Tenant from any obligations of Tenant, make any such payment or
perform any such other act on Tenant's part to be made or performed as provided
in this Lease. Notwithstanding any other provision hereof, Landlord may
undertake repairs in an emergency or to prevent further damage to the Building
or the Premises without delivery of notice and expiration of the cure period.
Tenant shall promptly on demand reimburse Landlord for any such payment or the
cost of performing any such act, and shall pay Landlord interest thereon at the
rate provided in Section 21.5. Landlord shall have (in addition to any other
right or remedy of Landlord), the same rights and remedies in the event of the
nonpayment of sums due under this Section 21.4 as in the case of default by
Tenant in the payment of Rent.
21.5 LATE PAYMENTS. All Rent not paid within five (5) business
days of the due date hereunder shall bear interest from the date due at the rate
of eighteen percent (18%) per annum or the maximum permitted by law, whichever
is less. In addition to any interest that may be charged hereunder, if Tenant
has been late in any payment more than once in any twelve (12) month period,
then Landlord, at its option, may collect from Tenant a service charge for the
collection of any subsequent payment during that twelve (12) month period that
is not made within five (5) business days of the due date in the amount equal to
four percent (4%) of the amount due.
21.6 WAIVER OF REDEMPTION RIGHTS. Tenant, for itself and on
behalf of any and all persons claiming through or under it, including creditors
of all kinds, does hereby surrender all right and privilege, which they or any
of them may have under or by reason of any present or future law, to redeem the
Premises or have a continuance of this Lease for the term hereof, as it may have
been extended, after having been dispossessed or ejected therefrom by process of
law or under the terms of this Lease or after the termination of this Lease as
herein provided.
22. SUBORDINATION TO MORTGAGE. This Lease is and shall be subordinate
to any mortgage or deed of trust placed at any time on the Building or the
Property by Landlord and to any and all advances to be made thereunder and to
interest thereon and all modifications, renewals and replacements or extensions
thereof ("Landlord's Mortgage"), and Tenant shall attorn to the holder of any
Landlord's Mortgage or any person or persons purchasing or otherwise acquiring
the Building, the Property or the Premises at any sale or other proceeding under
any Landlord's Mortgage; provided, however, that so long as Tenant is not in
default hereunder, Tenant's possession of the Premises shall not be disturbed
and all other rights of Tenant under this Lease shall be recognized; provided,
further, that Tenant's attornment shall be deemed to occur automatically without
further agreement of Tenant. If the holder or prospective holder of any
Landlord's Mortgage wishes to have this Lease as a prior lien to the Landlord's
Mortgage, it shall be so deemed upon the holder thereof so notifying Tenant.
Tenant shall properly execute and deliver within ten (10) days after written
notice any documents Landlord or the holder of any Landlord's Mortgage may
require to carry out the provisions of this Section. If, in connection with
obtaining financing for the Property or the Building, any holder of a Landlord's
Mortgage shall request modifications in this Lease as a condition to such
financing, Tenant shall not withhold, delay or defer its consent thereto,
provide that such modifications in this Lease as a condition do not materially
increase the obligations of Tenant hereunder or materially adversely affect the
leasehold interest hereby created.
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23. HOLDOVER. If Tenant shall, with the written consent of Landlord,
hold over beyond the expiration of the Lease Term, or if Landlord shall so
notify Tenant at any time upon or after the expiration of the Lease Term, such
tenancy shall be deemed a month-to-month tenancy that may be terminated as
provided by applicable state law. During such tenancy Tenant shall be bound by
all the terms, covenants and conditions as herein specified as far as
applicable, except rental, which shall be Two Hundred Percent (200%) of the Rent
due prior to the expiration of the Lease Term.
24. AGENT. Landlord has appointed N/A ("Agent") as its agent in all
matters concerning this Lease, and the Tenant, until notified by Landlord in
writing to the contrary, shall pay all Rent and give any notices hereunder to
Agent at Landlord's Address set forth on the signature page of this Lease. As
long as such agency shall exist, each and every term and provision of this Lease
that it is in any way beneficial to Landlord, including every stipulation
imposing or limiting liability, shall inure to the benefit of Agent and its
agents in the same manner as fully and with the same effect as Landlord. Tenant
may rely without further inquiry upon the authority of N/A.
25. NOTICES. All notices under this Lease shall be in writing and
delivered in person or sent by registered or certified mail, return receipt
requested, postage prepaid, to Landlord and to Tenant at the addresses set for
the on the signature page of this Lease (except that, after the Lease commences,
any such notice may be so mailed or delivered by hand to Tenant at the
Premises), and to the holder of any Landlord's Mortgage at such place as such
holder shall specify to Tenant in writing; or to such other addresses as may
from time to time be designated by any such party in writing. Notices mailed as
aforesaid shall be deemed given at the earlier of three (3) day s after the date
of such mailing or upon the date of receipt.
26. COSTS AND ATTORNEYS' FEES. If Landlord employs attorneys in
connection with the enforcement of this Lease, then Tenant shall only be
required to reimburse the Landlord to the extent that the Tenant has been at
fault. If Tenant or Landlord shall bring any action arising out of this Lease,
the losing party shall reimburse the prevailing party for all reasonable
attorney's fees (including court costs and disbursements) incurred in such suit,
at trial and on appeal, and such attorneys' fees shall be deemed to have accrued
on the commencement of such action.
27. ESTOPPEL CERTIFICATES. Tenant, shall, from time to time, upon
written request of Landlord, execute, acknowledge and deliver to Landlord or its
designee an Estoppel Certificate in the form shown in Exhibit E stating: the
date this Lease was executed and the date it expires; the Commencement Date and
the date Tenant accepted the Premises; the amount of Basic Rent and any then
applicable Additional Rent and any other sums payable under the Lease and date
to which such rent and/or other sums have been paid; and certifying to the best
of its knowledge: that this Lease is in full force and effect and has not been
assigned, ratified, supplemented or amended in any way (or specifying the date
and terms of any agreement as to this tenancy); that all conditions under this
Lease to be performed by the Landlord have been satisfied (or specifying any
such unsatisfied conditions and the extent to which such conditions are
unsatisfied); that all required contributions by Landlord to Tenant on account
of the Tenant Improvements have been received (or specifying the nature and
amount of any such contributions that have not been received); that no Tenant
has been paid more than one month in advance (or specifying the amount and
payment dates of any Tenant that has been so paid); the amount of the Security
Deposit held by Landlord (if any); and any other information or items requested
by Landlord. It is intended that any such statement delivered pursuant to this
Section 27 may be relied upon by Landlord and any prospective purchaser of or
prospective holder of any mortgage upon Landlord's interest in the Building
and/or the Property. If Tenant shall fail to provide such estoppel certificate
within ten (10) days of receipt by Tenant of a written request by Landlord as
herein provide, Tenant shall be deemed to have given such certificate as above
provided without modification and shall be deemed to have admitted the accuracy
of any information supplied by Landlord to any prospective purchaser or
mortgagee and to have certified that this Lease is in full force and effect,
that there are no uncured defaults in Landlord's performance, that the Security
Deposit is as stated in the Lease, and that not more than one month's Rent has
been paid in advance.
28. LIMITATION OF LIABILITY. Notwithstanding any other Lease provision,
all covenants, undertakings and agreements herein made on the part of Landlord
are made and intended not as personal covenants, undertakings and agreements for
the purpose of binding Landlord personally or the assets of Landlord except
Landlord's interest in the Building and the Property, but are made and intended
for the purpose of binding only the Landlord's interest in the Building and the
Property, as the same may from time to time be encumbered. No personal liability
or personal responsibility is assumed by , nor shall at any time be asserted or
enforceable against Landlord or its partners, shareholders, directories and
officers of their respective heirs, legal representatives, successors or assigns
on account of this Lease or on account of any covenant, undertaking or agreement
of Landlord contained in this Lease.
29. TRANSFER OF LANDLORD'S INTEREST. In the event of any transfer or
transfers of Landlord's interest in the Premises or in the Building, other than
a transfer for security purposes only, the transferor shall automatically be
relieved of any and all obligations and liabilities on the part of Landlord
accruing from and after the date of such transfer, but for the security deposit
paid hereunder. Tenant agrees to attorn to the transferee, such attornment shall
be deemed to occur automatically without further agreement of Tenant.
11
<PAGE> 15
30. NONWAIVER. Waiver by Landlord of any term, covenant or condition
herein contained or any breach thereof shall not be deemed to be a waiver of
such term, covenant, or condition or of any subsequent acceptance of any Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular Rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
Rent.
31. QUIET POSSESSION. Landlord warrants that so long as Tenant is not
in default under this Lease beyond any applicable cure period and so long as
this Lease has not been terminated, Tenant's quiet possession of the Premises
during the Lease Term shall not be disturbed by Landlord or others claiming
through Landlord.
32. SECURITY DEPOSIT. As security for the full and faithful performance
of covenant and condition of this Lease to be performed by Tenant, Tenant has
paid to Landlord the Security Deposits specified in Section 1.5, receipt of
which is hereby acknowledged. If Tenant shall default with respect to any
covenant or condition of this Lease, including but not limited to the payment of
Rent, then Landlord may apply all or any part of the Security Deposit to the
payment of any sum in default or any sum which Landlord may in its reasonable
discretion deem necessary to spend or incur by reason of Tenant's default. In
such event, Tenant within five (5) days of written demand therefor by Landlord
shall deposit with Landlord the amount so applied. If Tenant shall have fully
complied with all covenants and conditions of this Lease, but not otherwise, the
amount of the Security Deposit then held by Landlord shall be repaid to Tenant
(or at Landlord's option, to the last assignee of Tenant's interest hereunder)
within thirty (30) days after the expiration or sooner termination of this
Lease. In the event of Tenant's default, Landlord's rights to retain the
Security Deposit shall be deemed to be in addition to any and all other rights
and remedies at law or in equity available to Landlord for Tenant's default
under this Lease. Landlord shall not be required to keep any Security Deposit
separate from its general funds and Tenant shall not be entitled to any interest
thereon.
33. GENERAL.
33.1 HEADINGS. Titles or captions to Sections of this Lease
are not a part of this Lease and shall not have not effect upon the construction
or interpretation of any part hereof.
33.2 SUCCESSORS AND ASSIGNS. All of the covenants, agreements,
terms and conditions contained in this Lease shall inure to and be binding upon
Landlord and Tenant and their respective heirs, executors, administrators,
successors and permitted assigns.
33.3 NO BROKERS. Tenant represents and warrants to Landlord
that it has not engaged any broker, finder or other person who would be entitled
to any commission or fees from Landlord in respect of the negotiation, execution
or delivery of this Lease and Tenant shall indemnify and hold Landlord harmless
from and against any loss, cost, liability or expense incurred by Landlord as a
result of any claim asserted by any such broker, finder or other person based on
any arrangements or agreements made or alleged to have been made by or on behalf
of Tenant. The provisions of this Section 33.3 shall not apply to brokers with
whom Landlord has an express written brokerage agreement.
33.4 ENTIRE AGREEMENT. This Lease contains all covenants and
agreements between Landlord and Tenant relating in any manner to the leasing,
use and occupancy of the Premises and Tenant's use of the Building and the
Property and other matters set forth in this Lease. No prior agreements or
understandings pertaining to the same shall be valid or of any force or effect
and the covenants and agreements of this Lease shall not be altered, modified or
added to except in writing signed by Landlord and Tenant.
33.5 SEVERABILITY. Any provision of this Lease that shall
prove to be invalid, void or illegal shall in no way affect, impair or
invalidate any other provision hereof and the remaining provisions hereof shall
remain in full force and effect.
33.6 FORCE MAJEURE. Time periods for Landlord's performance
under any provisions of this Lease shall be extended for periods of time during
which Landlord's performance is prevented due to circumstances beyond Landlord's
control, including without limitation, strikes, embargoes, shortages of labor or
materials governmental regulations, acts of God, war or other strife.
33.7 CHANGES TO BUILDING. Landlord may at its option make any
repairs, alterations, additions or improvements that Landlord may deem necessary
or advisable for the preservation, safety or improvement of the Building, so
long as Tenant has reasonable access to the Premises. Landlord shall have the
right from time to time without thereby creating an actual or constructive
eviction or incurring any liability to Tenant, to renovate, repair, replace,
and/or change the arrangement or location of any of the following: sidewalks,
terraces, landscaping, loading and/or delivery areas, parking areas, lobbies,
entrances, passageways, doors and doorways, corridors, stairs, toilets and other
common areas of the Building, mechanical, cooling, heating, ventilation,
security, electrical, lighting, plumbing and other systems servicing the
Building, and other similar common service portions of the Building Complex.
Landlord shall incur no liability to Tenant, nor shall Tenant be entitled to any
abatement of Rent on account of any noise, vibration, or other disturbance to
Tenant's business in the Premises (provided that Tenant is not denied access to
the Premises) that shall arise out of the performance by Landlord of any
aforesaid improvements or renovations at or to the Building Complex. Landlord
shall use reasonable efforts (which shall not include any obligation to employ
labor at overtime rates) to avoid disruption of Tenant's business during any
such renovations. In no event shall Landlord permanently diminish any service,
change the arrangement or location of the elevators serving the Premises, make
any change that diminishes the area of the Premises, or make any change that
alters the character of the Building from a first-class building. Landlord may
change the name of the Building at any time.
12
<PAGE> 16
33.8 BUILDING DIRECTORY. Landlord shall maintain in the
Building or on the Property a directory that shall include the name of the
Tenant.
33.9 GOVERNING LAW. This Lease shall be governed by and
construed in accordance with the laws of the State of Washington.
33.10 AUTHORITY. If Tenant is a corporation, the individual
executing this Lease on behalf of Tenant represents and warrants that he/she is
duly authorized to execute and deliver this Lease on behalf of the Tenant in
accordance with a duly adopted resolution of the board of directors of Tenant
and in accordance with Tenant's bylaws, and that this Lease is binding upon
Tenant in accordance with its terms. At Landlord's request, Tenant shall, within
thirty (30) days after execution of this Lease, deliver to Landlord a certified
copy of a resolution of the board of directors of Tenant authorizing or
ratifying the execution of this Lease or provide other evidence of Tenant's
authority reasonably satisfactory to Landlord. If Tenant is a partnership, the
individual executing this Lease on behalf of Tenant represents and warrants that
he/she is duly authorized to execute and deliver this Lease on behalf of the
Tenant in accordance with Tenant's partnership agreement, and that this Lease is
binding upon Tenant in accordance with its terms. At Landlord's request, Tenant
shall, within thirty (30) days after execution of this Lease, deliver to
Landlord an executed copy of Tenant's partnership agreement or provide other
evidence of Tenant's authority reasonably satisfactory to Landlord.
33.11 RELOCATION. If the Premises contain less than Five
Thousand (5,000) square feet of net rentable area, Landlord shall have the
right, at its option, upon thirty (30) days written notice to the Tenant, to
relocate Tenant and to substitute for the Premises other space in the Building
containing at least as much net rentable area as the original Premises. Such
substitute Premises shall be improved with decorations and improvements of
comparable quantity and quality to the Tenant Improvements, at Landlord expense.
Landlord shall reimburse Tenant for the expenses reasonably incurred by Tenant
in connection with such substitution of Premises, including but not limited to
costs of moving, door lettering and telephone relocation.
33.12 LANDLORD'S SECURITY INTEREST. Tenant hereby grants to
Landlord a first lien and security interest (which shall be in addition to and
not in lieu of any statutory Landlord's lien or security interest) in all
Property of Tenant (as defined in Section 7) to secure all sums due from and all
obligations to be performed by Tenant hereunder, which lien and security
interest may be enforced by Landlord in any manner provided by law, including,
without limitation, under and in accordance with the Washington Uniform
Commercial Code. Tenant agrees to provide Landlord with an itemized listing and
copies of all receipts for Property of Tenant within ten (10) days of purchase
and/or installation. In furtherance of the foregoing, Tenant shall execute any
instrument requested by Landlord to evidence or perfect the security interest
granted hereby.
Tenant shall not encumber, mortgage, hypothecate, or finance any Property of
Tenant or this Lease, the leasehold interest, the Premises, or any other
property rights therein, without Landlord's prior written consent; nor shall
Tenant execute any document involved in the financing of this Lease, the
leasehold estate or any Property of Tenant without Landlord's prior written
approval.
33.13 TENANT REPRESENTATION. Tenant acknowledges that Tenant
has been represented (or has had the opportunity to be represented) in the
signing of this Lease by independent legal counsel, selected of Tenant's own
free will, and that Tenant has had the opportunity to discuss this lease with
counsel. Tenant further acknowledges that Tenant has read and understands the
meaning and ramifications of this lease, and, as evidence of this fact, signs
his initials.
TENANT'S INITIALS: D.H.
________
33.14 TIME OF ESSENCE. Time is of the essence of this Lease.
Tenant execute any document involved in the financing of this Lease, the
leasehold estate or any Property of Tenant without Landlord's prior written
approval.
33.15 EXECUTION IN COUNTERPARTS. This Lease may be executed in
two or more counterparts, each of which shall constitute an original and all of
which shall be one and the same agreement.
33.16 JOINT AND SEVERAL LIABILITY. If more than one person
executes this Lease as Tenant, then (I) each of them is jointly and severally
liable for the keeping, observing and performing of all of the terms, covenants,
conditions, provisions and agreements of this Lease to be kept, observed and
performed by Tenant, and (ii) the term "Tenant" as used in this Lease shall mean
and include each of them jointly and severally and any act of or notice from, or
notice or refund to, or signature of, any one or more of them, with respect to
the tenancy of this Lease, including without limitation any renewal, extension,
expiration, termination or modification of this Lease, shall be binding upon
each and all of the persons executing this Lease as Tenant with the same force
and effect as if each and all of them had so acted or so given or received such
notice or refund or so signed.
13
<PAGE> 17
33.17 BINDING ON LANDLORD. Submission of this Lease for
examination, even though executed by Tenant, shall not bind Landlord in any
manner, and no lease or other obligation on the part of Landlord shall arise
until this Lease is executed and delivered by Landlord to Tenant.
33.18 NO RECORDING. Neither this Lease nor any memorandum
hereof shall be recorded in the real property records of the county wherein the
Property is located.
33.19 COMPUTATION OF TIME. The word "day" means "calendar day"
herein and the computation of time shall include all Saturdays, Sundays and
holidays for purposes of determining time periods specified herein.
34. OPTION TO RENEW. INTENTIONALLY DELETED.
IN WITNESS WHEREOF, the Landlord and the Tenant have signed their name
and affixed their seals the day and year first above written.
TENANT: LANDLORD:
Edgar Online, Inc. Yett Family Partnership, L.P.
- -----------------------------------
By /s/ Dave Hamburg By /s/ Stephen E. Yett
------------------------------ -------------------------------
Stephen E. Yett
Its: Director, West Coast Operations Its: President
Address: Address:
Attention: Dave Hamburg
- ------------------------------------
Edgar Online, Inc. Yett Management N.W., Inc.
- ------------------------------------
10635 NE 38th Place, Suite B 2525 152nd Ave NE
- ------------------------------------
Kirkland, WA 98033 Redmond, WA 98052
- ------------------------------------
Telephone: (425) 803-5726 Telephone: (425) 883-1300
-------------------------
Facsimile: (425) 822-3034 Facsimile: (425) 881-8664
-------------------------
cc:
- ---
Attention: Tom Vos
- ------------------------------------
EDGAR Online, Inc.
- ------------------------------------
50 Washington Street, 9th Floor
- ------------------------------------
Norwalk, CT 06854
- ------------------------------------
<TABLE>
<S> <C>
Exhibit A Legal Description
Exhibit B Floor Plan
Exhibit C Tenant Improvements
Exhibit D Additional Provisions
Exhibit E Estoppel Certificate
Exhibit F Building Rules and Regulations
Exhibit G Parking Rules and Regulations
</TABLE>
14
<PAGE> 18
LANDLORD
STATE OF WASHINGTON )
COUNTY OF KING )
I certify that I know or have satisfactory evidence that the person appearing
before me and making this acknowledgement is the person whose true signature
appears on this document.
On this 3rd day of February, 2000, before me personally appeared STEPHEN E.
YETT to me known to be the PRESIDENT of YETT MANAGEMENT N.W., INC., the
corporation that executed the within and foregoing instrument, and acknowledged
that said instrument to be the free and voluntary act and deed of said
corporation, for the uses and purposes therein mentioned, and on oath stated
that he was authorized to execute said instrument and that the seal affixed, if
any, is the corporate seal of said corporation.
WITNESS my hand and seal hereto affixed the day and year first above written.
[MELANIE L. BEDARD
COMMISSION EXPIRES /s/ Melanie L. Bedard
12-06-03 ------------------------------------------------------
NOTARY PUBLIC NOTARY PUBLIC in and for the State of Washington,
STATE OF WASHINGTON ----------
SEAL] residing in Bellevue. My commission expires 12-06-03.
-------- --------
TENANT
STATE OF WASHINGTON )
- -------------------- )ss:
COUNTY OF KING )
- --------------------
I certify that I know or have satisfactory evidence that the person appearing
before me and making this acknowledgement is the person whose true signature
appears on this document.
On this 31st day of January, 2000, before me personally appeared
Dave Hamburg
- -----------------------------------------------------------------------------
known to be the Director, West Coast Operations
-------------------------------------------------------------
of Edgar Online, Inc. , the corporation that executed the within and
------------------------------
foregoing instrument, and acknowledged that he/she signed the same as his/her
free and voluntary act and deed to the uses and purposes therein mentioned.
WITNESS my hand and seal hereto affixed the day and year first above written,
[MELANIE L. BEDARD
COMMISSION EXPIRES /s/ Melanie L. Bedard
12-06-03 ------------------------------------------------------
NOTARY PUBLIC NOTARY PUBLIC in and for the State of Washington,
STATE OF WASHINGTON ----------
SEAL] residing in Bellevue My commission expires 12-06-03.
-------- --------
TENANT
STATE OF )
- -------------------- )ss:
COUNTY OF )
- --------------------
I certify that I know or have satisfactory evidence that the person appearing
before me and making this acknowledgement is the person whose true signature
appears on this document.
On this day of , 2000, before me personally appeared
---- ---------
- -----------------------------------------------------------------------------
known to be the
-------------------------------------------------------------
of , the corporation that executed the within and
------------------------------
foregoing instrument, and acknowledged that he/she signed the same as his/her
free and voluntary act and deed to the uses and purposes therein mentioned.
WITNESS my hand and seal hereto affixed the day and year first above written.
------------------------------------------------------
NOTARY PUBLIC in and for the State of ,
----------
residing in My commission expires .
-------- --------
<PAGE> 19
EXHIBIT A
Legal Description
Lot 24 and an undivided one-twelfth(1\12th) interest in Tract A of Linbrook
Yarrow Bay, as per plat recorded in Volume 118 of Plats, Pages 94 through 96,
Records of King County, as revised by City of Kirkland Lot Line Adjustment No.
84-76, filed in Volume 42 of Surveys, Pages 23 and 23A, and recorded under King
County Recording No. 8410099003, Records of King County;
TOGETHER with a perpetual, non-exclusive easement and right of access, ingress,
egress and utilities as established by Declaration of Covenants, Conditions and
Restrictions and Reservation of Easements for Linbrook Yarrow Bay, Recorded
under King County Recording No. 8410290408 and as delineated over and across the
North 24 feet of Lot 26 at Linbrook Yarrow Bay, as per plat recorded in Volume
118 of Plats, Pages 94 through 96, Records of King County, and as revised by
City of Kirkland Lot Line Adjustment No. 84-76, filed in Volume 42 of Surveys,
Pages 23 and 23A, and recorded under King County Recording No. 8410099003,
Records of King County;
Situated in the City of Kirkland, County of King, State of Washington.
<PAGE> 20
EXHIBIT B
Floor Plan
[FLOOR PLAN FOR LINBROOK OFFICE PARK]
<PAGE> 21
EXHIBIT C
Tenant Improvements for Office Lease Agreement
Between Yett Family Partnership, L.P. ("Landlord")
and Edgar Online, Inc. ("Tenant")
I. COMMENCEMENT AND EXPIRATION DATES; POSSESSION.
A.COMMENCEMENT DATE. The Commencement Date shall be as provided in
Section 1.3 of the Lease, unless notice is given pursuant to this Exhibit C as
follows:
(1) If Landlord delivers to Tenant a notice at least fifteen
(15) days prior to the date upon which the Premises, together with the common
facilities for access and service thereto, shall be substantially completed,
then the Commencement Date shall be the date specified in such notice (which
shall not be prior to January 20, 2000, without Tenant's consent) or any earlier
date upon which Tenant occupies the Premises; and
(2) As used herein, "substantially completed" shall mean (i)
any Tenant Improvements to be installed by Landlord in the Premises pursuant to
this Exhibit C are completed, subject to punch list items, (ii) Tenant has
access to the Premises, and (iii) the cooling, heating and ventilation systems
servicing the Premises are operable. The determination when the Premises are
substantially completed shall be reasonably and exclusively made by Landlord's
architect. Landlord shall use its reasonable efforts to cause the Commencement
Date to occur by January 20, 2000.
B.TENANT OBLIGATIONS. If the Tenant Improvements are not competed on
the Commencement Date due to the failure of Tenant to fulfill any obligations
pursuant to the terms of this Lease or any Exhibit hereto, including without
limitation Tenant's failure to substantially comply with any dates set forth in
this Exhibit C, the Lease shall be deemed to have commenced upon the date it
would have commenced but for Tenant's failure, which date shall be determined by
Landlord in its sole reasonable discretion and confirmed to Tenant in writing.
C.TENANT TERMINATION RIGHTS. If the Commencement Date does not occur
within three (3) months following the date specified in Section 1.3, then Tenant
may terminate this Lease by written notice, except such three (3)-month period
at Landlord's sole option may be extended to a date not later than six(6)-months
from the Commencement Date specified in Section 1.3 for delays due to causes
beyond the reasonable control of Landlord. If the Commencement Date has not
occurred within such six (6)-month period at Tenant's option, this Lease shall
be deemed null and void and all rights and obligations of the parties shall
terminate. Termination under this Exhibit C shall be Tenant's sole remedy for
any failure or delay in delivering possession of the Premises or completion of
the Tenant Improvements and Tenant shall have no other rights or claims
hereunder at law or in equity.
II. The premises will be delivered in as-is condition, except that the Landlord
shall allow Tenant $5,000.00 to be used towards tenant improvements. Allowance
shall be due Tenant in the form of a credit and shall be due Tenant upon
Landlord's receipt of contractor's materialman's lien waiver. All tenant
improvements shall be subject to mutual acceptance by Landlord and Tenant.
<PAGE> 22
EXHIBIT D
Additional Provisions for Office Lease Agreement
Between Yett Family Partnership, L.P. ("Landlord")
and Edgar Online, Inc. ("Tenant")
1. PARKING: Notwithstanding the terms and conditions of this Lease
Agreement, during the term of this Lease and all option periods, the
Tenant shall have the right to use a share of the parking based upon
the ratio of four (4) stalls per 1,000 square feet of rentable space,
(which equates to 12 stalls during the initial term) on an unassigned
basis.
2. SIGNAGE: The Landlord shall permit the Tenant to install, at Landlord's
expense, a building standard sign in a mutually acceptable location
near the entry to the Tenant's premises.
<PAGE> 23
EXHIBIT E
ESTOPPEL CERTIFICATE
________________________
________________________
________________________
________________________
Re: Lease dated____________________("Lease") by and between Stephen E.
Yett, President ("Landlord") and _____________________________________
___________________ ("Tenant")
Gentlemen:
Reference is made to the above-described Lease in which the undersigned
is the Tenant. We understand that you are accepting an assignment of Landlord's
rights under the Lease as _________________________________, and we hereby, as a
material inducement for you to consummate the transaction, represent that:
1. The Lease is for a term, commencing on _________, 19__________ and
ending ______ (__) years thereafter, and the Lease covers the real property
("Premises") depicted in EXHIBIT A, attached hereto and incorporated herein by
reference thereto, the Premises being part of certain real property ("Property")
located in the City of ___________, County of __________, State of ___________,
and more particularly described in EXHIBIT B, attached hereto and incorporated
herein by reference thereto. A true and correct copy of the Lease is attached
hereto as EXHIBIT C and incorporated herein by reference thereto.
2. There are no modifications, amendments, supplements, arrangements,
side letters or understandings, oral or written, of any sort, modifying,
amending, altering, supplementing or changing the terms of the Lease, except for
those attached hereto as EXHIBIT D.
3. The Lease is in full force and effect, and the Lease has been duly
executed and delivered by, and is a binding obligation of, the Tenant as set
forth therein.
4. The undersigned acknowledges (a) that rent on the Lease had been
paid up to and including __________________, 19___, (b) that monthly rent during
the____________ (__) years of the term of the Lease is $_________ per month, and
(c) that rent has not been paid for any period after _________________, 19___
and shall not be paid for a period in excess of one (1) month in advance.
5. A security deposit in the amount of $________ Has been made by
Tenant and is now held by Landlord.
6. All conditions under the Lease to be performed by Landlord have been
satisfied (or those conditions not yet satisfied, and the extent to which such
conditions are satisfied, shall be explained in detail attached to this
Certificate).
7. The improvements on the Premises are free from defects in design,
materials and workmanship; and the improvements meet all governmental
requirements, including, but not limited to, zoning and environmental
requirements.
8. The Lease is not in default, and Landlord has performed the
obligations required to be performed by Landlord under the terms thereof through
the date hereof, and there are no existing claims, defenses, or offsets that the
Tenant had against the enforcement of this Lease by the Landlord.
9. The Lease shall be subordinate to a Deed of Trust on the Premises
and an assignment of Landlord's interest in the Lease given by Landlord to
__________________; and in the event of a merger of Landlord and Tenant in any
manner, the interest of Tenant and Landlord shall not merge.
10. Tenant agrees not to modify, amend, terminate or otherwise change
the Lease without ten (10) days' prior written notice to you.
11. In the event of a default by Landlord under any of the terms or
provisions of the Lease, Tenant shall give you adequate notice and sufficient
time to cure such default.
12. This lease represents the entire agreement between the parties as
to Tenant's occupancy of the Premises.
Dated:____________________, 19_______.
Very truly yours,
"Tenant"
By:
__________________________________
Its:
_________________________________
<PAGE> 24
EXHIBIT F
LINBROOK OFFICE PARK
BUILDING RULES AND REGULATIONS
1. SIGN. No sign, placard, picture, advertisement, name or notice shall
be inscribed, displayed, printed or affixed on or to any part of the outside or
inside of the Building, the Premises or the surrounding area without the written
consent of the Landlord being first obtained. If such consent is given by
Landlord, Landlord may regulate the manner of display of the sign, placard,
picture, advertisement, name or notice. Landlord shall have the right to remove
any sign, placard, picture, advertisement, name or notice which has not been
approved by Landlord or is being displayed in a non-approved manner without
notice to and at the expense of the Tenant. Tenant shall not place anything or
allow anything to be placed near the glass of any window, door partition or wall
which may appear unsightly from outside of the Premises; provided, however that
Landlord is to furnish and install a building standard window blind at all
exterior windows. Tenant shall not, without prior written consent of Landlord,
install a sunscreen on any window.
2 DIRECTORIES. The directories of the Building will be provided
exclusively for the display of the name and location of tenants and Landlord
reserves the right to exclude any other names therefrom.
3. ACCESS. The sidewalks, halls, passages, exits, entrances, and
stairways shall not be obstructed by any of the tenants or used by them for any
purpose other than for ingress to and egress from their respective Premises. The
halls, passages, entrances, exits, stairways, and roof are not for the use of
the general public and the Landlord shall in all cases retain the right to
control thereof and prevent access thereto by all persons whose presence in the
judgment of the Landlord shall be prejudicial to the safety, character,
reputation and interests of the Building or its tenants; provided, however, that
nothing herein contained shall be construed to prevent access by persons with
whom the Tenant normally deals in the ordinary course of Tenant's business
unless such persons are engaged in illegal activities. No Tenant and no
employees or invitees of any Tenant shall go upon the roof of the building.
4. LOCKS. Tenant shall not alter any lock or install any new additional
locks or any bolts on any door of the Premises without the written consent of
Landlord.
5. RESTROOMS AND SHOWER ROOMS. The toilet rooms, urinals, wash bowls,
shower rooms, and other apparatus shall not be used for any purpose other than
that for which they were constructed and no foreign substance of any kind
whatsoever shall be thrown therein. No towels, wash cloths, soaps, or shampoos
shall be left in or around the shower rooms. The expense of any breakage,
stoppage or damage resulting from a violation of this rule shall be borne by the
Tenant who, or whose employees, sublessees, assignees, agents, licensees, or
invitees, shall have caused it.
6. NO DEFACING PREMISES. Tenant shall not overload the floor of the
Premises, shall not mark on or drive nails, screw or drill into the partitions,
woodwork or plaster (except as may be incidental to the hanging of wall
decorations), and shall not in any way deface the Premises or any part thereof.
7. SAFES, HEAVY EQUIPMENT AND MOVING OF FURNITURE. No furniture,
freight or equipment of any kind shall be brought into the Building without
prior consent of Landlord and all moving of the same into or out of the Building
shall be done at such time and in such manner as Landlord shall designate.
Landlord shall have the right to prescribe the times and manner of moving all
heavy equipment in and out of the Building. Landlord will not be responsible for
loss of or damage to any such safe or property from any cause and all damage
done to the Building by moving or maintaining any such safe or other property
shall be repaired at the expense of Tenant. There shall not be used in any
Premises, or in the public halls of the Building, either by any tenant or
others, any hand trucks except those equipped with rubber tires and side guards.
8. JANITORIAL SERVICES. Tenant shall not cause any unnecessary labor by
reason of Tenant's carelessness or indifference in the preservation of good
order and cleanliness. Janitorial service shall include ordinary dusting and
cleaning by the janitor assigned to such work and shall not include cleaning of
carpets or rugs, except normal vacuuming, or moving of furniture and other
special services. Janitorial service will be furnished between 7:00 p.m. and
6:00 a.m. Occupants in the space during these hours may cause the space not to
be cleaned that day. Window cleaning shall be done only by Landlord and only
between 4:00 a.m. and 5:00 p.m. (daylight hours).
9. NUISANCE. Tenant shall not use, keep or permit to be used or kept
any food or noxious gas or substance in the Premises, or permit or suffer the
Premises to be occupied or used in a manner offensive or objectionable to the
Landlord or other occupants of the Building by reason of noise, odors and/or
vibrations, or interfere in any way with other tenants or those having business
in the Building. No animals or birds shall be brought in or kept in or about the
Premises or the Building. No Tenant shall make or permit to be made any
disturbing noises or disturb or interfere with occupants of this or neighboring
Buildings or Premises, or with those having business with such occupants by the
use of any musical instrument, radio, phonograph, unusual noise, or in any other
way. No Tenant shall throw anything out of doors or down passageways.
<PAGE> 25
10. PERMITTED USE. The Premises shall not be used for manufacturing or
for the storage of merchandise except as such storage may be incidental to the
use of the Premises for general office purposes. No Tenant shall occupy or
permit any portion of its Premises to be occupied for the manufacture or sale of
liquor, narcotics, or tobacco in any form, or as a medical office, or as a
barber shop or manicure shop except with prior written consent of Landlord. No
tenant shall advertise for laborers giving an address at the Premises. The
Premises shall not be used for lodging or sleeping or for illegal purposes.
11. HAZARDOUS SUBSTANCES. Tenant shall not use or keep in the Premises
or the Building any kerosene, gasoline or inflammable or combustible fluid or
material or any Hazardous Substance or use any method of heating or air
conditioning other than that supplied by the Landlord.
12. COMMON AREA CONTROL. Landlord shall have the right to control and
operate the public portions of the Building, and the public facilities, and
heating and air conditioning, as well as facilities furnished for the common use
of the tenants, in such manner as it deems best for the benefit of the tenants
generally.
13. ENTRY DOORS. All entrance doors in the Premises shall be left
locked when the Premises are not in use, and all doors opening to public
corridors shall be kept closed except for normal ingress and egress from the
Premises.
14. TELEPHONES. Landlord will direct electricians as to where and how
telephone and telegraph wires are to be introduced. No boring or cutting for or
stringing of wires will be allowed without the consent of Landlord. The location
of telephones, call boxes and other office equipment affixed to the Premises
shall be subject to the approval of Landlord.
15. KEYS. All keys to the Building, Premises, and rooms shall be
obtained from Landlord's office and Tenant shall not from any other source
duplicate or obtain keys or have keys made without prior consent by Landlord.
The Tenant, upon termination of tenancy, shall deliver to the Landlord the keys
to the Building, Premises, and rooms which shall have been furnished and shall
pay the Landlord for the cost of replacing any lost key or of changing the lock
or locks opened by such lost key if Landlord deems it necessary to make such
change.
16. FLOOR COVERING. No Tenant shall lay linoleum, tile, carpet or other
similar floor coverings so that the same shall be affixed to the floor or the
Premises in any manner except as approved by the Landlords. The expenses of
repairing any damage resulting from a violation of this rule or removal of any
floor covering shall be borne by the Tenant by whom, or by whose contractors,
agents, sublessees, licenses, employees or invitees, the floor covering shall
have been laid.
17. BUILDING CLOSURE. Except during Tenant's normal business hours,
access to the Building or to the halls, corridors, or stairways in the Building,
or to the Premises may be refused unless the person seeking access is known to
any person or employee of the Building in charge and has a pass or is properly
identified. The Landlord shall in no case be liable for damages for any error
with regard to the admission to or exclusion from the Building of any person. In
case of invasion, mob, riot, public excitement, or other commotion, the Landlord
reserves the right to prevent access to the Building and property located
therein. Anything to the foregoing notwithstanding, Landlord shall have no duty
to provide security protection for the Building at any time or to monitor access
thereto.
18. PREMISES CLOSURE. Tenant shall see that the doors of the Premises
are closed and securely locked before leaving the Building and that all water
faucets, water apparatus and electricity are entirely shut off before Tenant or
Tenant's employees leave the Building. Tenant shall be responsible for any
damage to the Building or other tenants caused by failure to comply with this
rule.
19. DISORDERLY CONDUCT. Landlord reserves the right to exclude or expel
from the Building any person who, in the judgment of Landlord, is intoxicated or
under the influence of liquor or drugs, or who shall in any manner do any act in
violation of any of the rules and regulations of the Building.
20. TENANT REQUESTS. Any requests of Tenant will be considered only
upon application at the office of the Landlord. Employees of Landlord shall not
be requested to perform any work or do anything outside of their regular duties
unless under special instructions from the Landlord.
21. VENDING MACHINES. No vending machine shall be installed, maintained
or operated upon the Premises without the written consent of the Landlord.
22. BUILDING NAME AND ADDRESS. Landlord shall have the right,
exercisable without notice and without liability to Tenant, to change the name
of the Building of which the Premises are a part.
23. FIRE REGULATIONS. Tenant agrees that it shall comply with all fire
regulations that may be issued from time to time by Landlord and Tenant also
shall provide Landlord with the names of a designated responsible employee to
represent Tenant in all matter pertaining to fire regulations.
24. TENANT ADVERTISING. Without the written consent of Landlord, Tenant
shall not use the name of the Building in connection with or in promotion or
advertising the business of Tenant except as Tenant's address.
<PAGE> 26
25. EMERGENCY INFORMATION. Tenant must provide Landlord with names and
telephone numbers to contact in case of emergency. Tenant must fill out a tenant
emergency information sheet and return it to Landlord's office within three (3)
days of occupancy.
26. INSTALLATION OF BURGLAR AND INFORMATIONAL SERVICES. If Tenant
requires telegraphic, telephonic, burglar alarm or similar services, it shall
first obtain, and comply with, Landlord's instructions in their installation.
27. DELIVERIES. No equipment, materials, furniture, packages, supplies
merchandise or other property will be received in the Building except between
such hours as may be designated by Landlord. Tenant's initial move in and
subsequent deliveries of bulky items, such as furniture, safes and similar items
shall, unless otherwise agreed in writing by Landlord, be made during the hours
of 6:00 p.m. to 6:00 a.m. or on Saturday or Sunday. No deliveries shall be made
which impede or interfere with other tenants or the operation of the Building.
28. FLOOR LOADS. Tenant shall not place a load upon any floor of the
Premises which exceeds the load per square foot which such floor was designed to
carry and which is allowed by law. Landlord shall have the right to prescribe
the weight, size and position of all equipment, materials, furniture or other
property brought into the Building. Heavy object shall, if considered necessary
by Landlord, stand on such platforms as determined by Landlord to be necessary
to properly distribute the weight, which platforms shall be provided at Tenant's
expense. Business machines and mechanical equipment belonging to Tenant, which
cause noise or vibration that may be transmitted to the structure of the
Building or to any space therein to such a degree as to be objectionable to
Landlord or any tenants in the Building, shall be placed and maintained by
Tenant, at Tenant's expense, on vibration eliminators or other devices
sufficient to eliminate noise or vibration. The person employed to move such
equipment in or out of Building must be acceptable to the Landlord. Landlord
will not be responsible for loss of, or damage to, any such equipment or other
property from any cause, and all damage done to the Building by maintaining or
moving such equipment or other property shall be repaired at the expense of
Tenant.
29. ENERGY CONSERVATION. Tenant shall not waste electricity, water or
air-conditioning and agrees to cooperate fully with Landlord to assure the most
effective operation of the Building's heating and air-conditioning and to comply
with any governmental energy-saving rules, laws, or regulations of which Tenant
has actual notice, and shall refrain from attempting to adjust controls. Tenant
shall keep corridor doors closed, and shall close window coverings at the end of
each business day. No exterior doors shall be held or left open by Tenant, its
employees, or visitors, except for normal ingress and egress.
30. NO ANTENNAS. Tenant shall not install any radio or television
antenna, loudspeaker or other devices on the roof or exterior walls of the
Building. Tenant shall not interfere with radio or television broadcasting or
reception from or in the Building or elsewhere.
31. NO SOLICITING. Canvassing, soliciting and distribution of handbills
or any other written material, and peddling in the Building are prohibited, and
Tenant shall cooperate to prevent such activities.
32. PROHIBITED USES. The Premises shall not be used for any improper,
immoral or objectionable purpose. No cooking shall be done or permitted on the
Premises without Landlord's consent, except that use by Tenant of Underwriters
Laboratory approved equipment for brewing coffee, tea, hot chocolate and similar
beverages or use of microwave ovens for employee use shall be permitted,
provided that such equipment and use is in accordance with all applicable
federal, state, county and city laws, codes, ordinances, rules and regulations.
33. ENFORCEMENT OF RULES. Landlord may waive any one or more of these
Rules and Regulations for the benefit of Tenant or any other Tenant, but no such
waiver by Landlord shall be construed as a waiver of such Rules and Regulations
in favor of Tenant, nor prevent Landlord from thereafter enforcing any such
Rules and Regulations against any or all of the tenants of the Building.
34. LEASE. These Rules and Regulations are in addition to, and are made
a part of the terms, covenants, agreements and conditions of Tenants Lease of
its Premises in the Building.
35. ADDITIONAL RULES. Landlord reserves the right to make such other
Rules and Regulations or amendments hereto as, in its reasonable judgment, may
from time to time be needed for safety and security, for care and cleanliness of
the Building and for the preservation of good order therein. Tenant agrees to
abide by all such Rules and Regulations hereinabove stated and any additional
rules and regulations which are adopted.
36. OBSERVANCE OF RULES. Tenant shall be responsible for the observance
of all of the foregoing rules by Tenant's employees, agents, licensees,
sublessees, assigns, and invitees.
<PAGE> 27
EXHIBIT G
LINBROOK OFFICE PARK
PARKING RULES AND REGULATIONS
The following rules and regulations shall govern use of the parking facilities
which are appurtenant to the Building.
1. Landlord hereby grants to Tenant and Tenant's customers, suppliers, employees
and invitees, a non-exclusive license to use the designated parking areas in the
Project on an unreserved, first come, first serve basis for the parking of motor
vehicles during the term of this Lease. Landlord reserves the right at any time
to grant similar non-exclusive use to other tenants, to promulgate rules and
regulations relating to the use of such parking areas, including reasonable
restrictions on parking by tenants and employees, to designate specific spaces
for the use of any tenant, to make changes in parking layout from time to time,
and to establish reasonable time limits on parking.
2. Landlord reserves the right to disperse any concentration of parking by
tenant's employees in an area that is located closer to another tenant's entry
than to their own.
3. Landlord reserves the right at a future date to charge for parking at a rate
to be set forth by Landlord.
4. Parking stickers or any other device or form of identification supplied by
Landlord and/or Parking Operator shall remain the property of the Landlord
and/or Parking Operator. Such parking identification device must be displayed as
requested and may not be mutilated in any manner. The serial number of the
parking identification device may not be obliterated. Devices are not
transferable and any device in the possession of an unauthorized holder will be
void. There will be a replacement charge payable by Tenant or Tenant's employee
for the loss of any parking identification device.
5. Landlord reserves the right to refuse parking identification devices to any
tenant or person and/or his agents or representatives who willfully refuse to
comply with these Rules and Regulations and all unposted City, State or Federal
ordinances, laws or agreements. Tenant shall acquaint all persons to whom Tenant
assigns parking spaces of the Rules and Regulations.
6. Loss or theft of parking identification devices from automobiles must be
reported immediately, and a lost or stolen report must be filed by the customer
at that time. Landlord and/or Parking Operator has the right to exclude any
vehicle from the parking facilities that does not have an identification device.
7. Any parking identification devices reported lost or stolen found on any
unauthorized vehicle will be confiscated and the illegal holder will be subject
to prosecution.
8. Every parker is required to park and lock his own vehicle. All responsibility
for damage to vehicle is assumed by the parker, Landlord and/or Parking Operator
shall not be responsible for any theft or vandalism to Tenant's vehicle from the
parking facilities that does not have an identification device.
9. Tenant shall not park or permit the parking of any vehicle under its control
in any parking areas designated by Landlord as areas for handicapped, van pool,
and car pool parking or parking by visitors to the Building. Tenant shall not
leave vehicles in the parking areas other than automobiles, motorcycles, motor
driven bicycles or 4-wheeled trucks.
10. Washing, waxing, cleaning or servicing of any vehicle in any area not
specifically reserved for such purpose is prohibited.
11. Vehicles must be parked entirely within the painted stall lines of a single
parking stall.
12. All directional signs and arrows must be observed.
13. The speed limit within all parking areas shall be 5 miles per hour.
Parking is prohibited:
(a) in areas not striped for parking;
(b) in aisles;
(c) where "no parking" signs are posted;
(d) on ramps;
(e) in cross hatched areas;
(f) in such other areas, as may be designated by Landlord
or Landlord's Parking Operator; and
(g) on the premises for more than twenty-four (24)
consecutive hours.
<PAGE> 28
14. Landlord or its agents shall have the right to cause to be removed any
vehicle of Tenant, its employees, invitees, licensees, or agents, that may be
parked in unauthorized areas, and Tenant agrees to save and hold harmless
Landlord, its agents and employees from any and all claims, losses, damages and
demands asserted or arising in respect to or in connection with the removal of
any such vehicle and for all expenses incurred by Landlord in connection with
such removal. Tenant will from time to time, upon request of Landlord, supply
Landlord with a list of License plate numbers for vehicles owned or operated by
its employees and agent.
15. Landlord reserves the right to modify and/or adopt such other reasonable and
non-discriminatory rules and regulations for the parking facilities as it deems
necessary for the operation of the parking facilities. Landlord may refuse to
permit any person who violates these rules to park in the parking facilities,
and any violation of the rules shall subject the car to removal at the owners
expense.
16. Lot managers or attendants are not authorized to make or allow any
exceptions to these Rules and Regulations.
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