U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB AMENDED
General Form For Registration of Securities
of Small Business Issuers Under Section 12(b)
or 12(g) of the Securities Act of 1934
HAMILTON-McGREGOR INTERNATIONAL, INC.
- -----------------------------------------------------------------
(Name of Small Business Issuer in its Charter)
New York, U.S.A. 11-3280448
(State or other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
1719 Route 10 W, Suite 119, Parsippany, New Jersey 07054
(Address of Principal Executive Offices)
(973) 292-2833
(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered: Each Class is to be Registered:
Securities to be registered under Section 12(g) of the Act:
Common Stock
-------------------------
(Title of Class)
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
(a) Business Development. Hamilton-McGregor International,
Inc. ("Hamilton" or the "Company"), was incorporated in the State
of New York on August 17, 1995. In December 1995, Hamilton
acquired 100% of the outstanding capital stock (45.5 shares of no
par value common stock) of Prime Contracting Corporation
("Prime"), a New Jersey corporation, from a related entity. The
terms of the acquisition agreement, as modified in March 1996,
called for a payment of $200,000 upon execution and a $1,000,000
interest-bearing note at prime plus one percent, with a principal
payment of $600,000 due on October 27, 1997, and $400,000 on
April 27, 1998. On March 3, 1998, the Company restructured the
promissory note payable for the purchase of Prime as follows:
$200,000 to be paid over 36 months, with interest accruing at
prime plus one percent; plus a 36-month option to purchase
250,000 shares of Hamilton-McGregor stock at $0.05 per share.
The Company recorded a gain in the amount of $772,650 as
additional contributed capital.
(b) Business of Issuer. The Company's business is the
construction of state-of-the-art imaging centers and other
medical facilities. The Company offers a full range of services,
including turnkey design and construction, site analysis,
architectural engineering and on-site project management. Prime
builds free-standing structures and renovates existing facilities
with an emphasis on room renovations for hospitals and private
medical facilities. The Company focuses its construction
emphasis in an area of technology, radiology and non-invasive
analysis, as a true vertical market approach in a unique area
with limited competition. Prime's installations have included
the following: conventional X-Rays, Magnetic Resonance Imaging
("MRI"), Computerized Axial Tomography ("CAT"), Scan Suites,
Radiology/Fluoroscopy, Cardiac Catherization Labs, Laser Network
Systems, Special Procedures, Angiography, Mammography,
Ultrasound, Linear Accelerator, Lithotripsy, Cystography Units,
Nuclear Medicine, Laboratory areas and Operating Rooms. These
are all areas of construction which require high levels of
electrical installation expertise and even higher levels of
quality control, levels that the Company has reached after over
twenty years in the industry.
Businesses competitive with the Company are construction
companies specializing in the medical marketing industry. A key
component in the industry is historical market presence, which in
Prime's case, is more than 20 years. The market traditionally
values the knowledge and reputation within the medical community
as a key determinant to the securing of contracts, which is
usually accomplished through an open-bidding process. The
Company markets only by word-of-mouth and relies on its
long-standing, industry-wide reputation to attract all
incremental business. To this extent, the Company's business is
year-round, and not seasonal.
A listing of projects completed and the clients for which
they were completed is appended to this registration statement as
Exhibit 99.1. This is not a complete listing, as only projects
in the primary state of New Jersey have been included, and does
not include any jobs which are currently underway. The Company
does operate in several other states, but the greater portion of
its business, approximately 65%, is conducted within New Jersey.
The Company obtains its construction supplies from numerous
suppliers and does not rely on any one vendor for any of its
materials. The Company does not have any major contracts upon
which it is reliant, nor does it have any patents, trademarks,
licenses, franchises, concessions, royalty agreements or labor
contracts. The Company's business is not presently subject to
any federal regulation, but rather is only required to comply
with state and/or local standard manufacturing and construction
codes. As the sites are built, they are inspected for compliance
by state officials from the Department of Health Services, with
such compliance being the responsibility of the agency or
hospital in contract with the Company. As such, the Company has
no requisite government approvals.
During the past two years, the Company has spent no money on
research and development activities.
As of the date of this filing, the Company has 16 full-time
employees. When projects are under construction, the Company
hires temporary help sufficient to staff the projects, as and if
necessary.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.
The Company's business is the construction of state-of-
the-art imaging centers and other medical facilities. The
Company offers a full range of services, including turnkey design
and construction services, site analysis, architectural
engineering, and on-site project management.
Except for historical information contained in this
Discussion and Analysis, forward-looking statements set forth
below are subject to certain risks and uncertainties, including
those discussed, that could cause actual results to differ
materially from those projected. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
reflect management's analysis only as of the date of this
document. The Company undertakes no obligation to publicly
release the results of any revisions to these forward-looking
statements which may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of
unanticipated events.
The Company plans to continue its operations in the same
manner in which it has conducted business during the previous two
years. More clients are seeking construction contracts with the
Company as the number of completed jobs rises and the competency
of the Company is ascertained.
Utilizing existing cash and receivables, totaling
approximately $1,362,735, the Company will be able to meet its
operating capital requirements for the next 12 months. The
Company, through its subsidiary Prime, has in place a $200,000
line of credit from NGF Investment Corp., carrying a 14.5% annual
rate of interest, which the Company uses for operating capital
only, and not for construction loans. At December 31, 1998, the
outstanding balance on the NGF line of credit was $171,000. No
current plan is pending for raising additional capital, as none
is currently required, and there are no expenditures contemplated
for research and development during the next year. The Company
does not anticipate the purchase or sale of any significant plant
or equipment, but does expect to hire additional employees if the
anticipated increase in the volume of business occurs. However,
this will be on a job-by-job basis, and will occur as a result of
increased billings and profit opportunities. Unless an extremely
large contract is secured, the Company should be able to engage
additional employees utilizing existing cash flow to cover the
advances required between time of service and time of collection
from the Clients of the Company.
For the six months ended December 31, 1998, the Company
reported net cash used by operations in the amount of $145,104.
The Company's cash flows from operations have been reduced by
over $522,000 based upon the reductions of billings in excess of
costs and estimated earnings on uncompleted contracts. The
Company has funded cash flows from operations by increasing its
accounts payable and accrued expenses by over $243,000. The
Company has further financed cash flow with additional borrowings
of $120,000, of which $70,000 was from a related party. In
addition, the Company has financed approximately $61,000 of
compensation in the form of capital stock.
For the year ended June 30, 1998, the Company reported cash
used in excess of cash generated by operating activities in an
amount approximating $357,000. Contract revenues decreased by
24% for the fiscal year ended June 30, 1998, as compared with the
year ended, June 30, 1997. This was due to management's policy
of evaluating the profitability of new contracts prior to
commitment. As a result, the number of new contracts decreased
in an effort to increase profits, and gross profit percentage
increased by 1.5%. During the year ended June 30, 1998, the
Company restructured the promissory note payable for the
acquisition of its subsidiary, from a related party, from
$972,650 to $200,000. The reduction of debt in the amount of
$772,650 was recorded as contributed capital. The Company repaid
its $200,000 line of credit with the bank by obtaining a
long-term note payable from a related party.
During the year ended June 30, 1997, the Company generated
excess cash of approximately $204,000 from its operating
activities. The Company was able to finance its operations and
accounts receivable through accounts payable financing from its
vendors. In fiscal 1997, the Company invested about $43,000 in
office equipment, machinery and vehicles. The Company financed
these assets in addition to its increase in accounts receivable
with a line of credit from the bank.
The results of the Company's operations for fiscal 1998
(year ended June 30, 1998), reflected a loss in the amount of
$63,611, with Contracts Receivable increasing from $967,419
(1997) to $1,186,610 (1998) and Total Current Liabilities
essentially falling from approximately $1,805,000 (1997) to
$1,567,000 (1998). Two major changes occurred: one, the
refinance of the short term loan of $200,000, which was paid in
part and transformed into a long-term note, and two, the
restructuring of debt associated with the acquisition of Prime
Contractors, whereby $800,000 in principal value of the note
(originally for $1,000,000) was converted into an option to
purchase the Company's common stock at $0.05 per share, good for
36 months from March, 1998. The Company recorded this
transaction as an addition to contributed capital. Income from
operations has continued to improve, resulting in a six-month
profit (December, 1998) of $227,894.
The market in which the Company operates is currently in an
expansive mode, because the construction of specialty medical
facilities is increasing as new technologies are developed and
hospitals and clinics provide specialty facilities for the
provision of services associated with the more modern
technologies. The niche that Hamilton-McGregor focuses on,
radiology and non-invasive analysis of medical conditions, is far
preferable to most patients and is therefore in high demand. The
Company believes that it is in an ideal position to capitalize on
this trend because of its existing track record with the numerous
medical facilities already served (see Exhibit 99.1) in the State
of New Jersey and the contiguous jurisdictions of New York and
Pennsylvania. Other than ordinary business fluctuations and the
Company's ability to bid successfully on projects, there are no
specific trends that affect the Company's business.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company presently maintains an office at 1719 Route 10,
Suite 119, Parsippany, New Jersey 07054. The landlord, Northern
New Jersey Management Corporation does not charge the Company for
these offices as the current demands on the space are minimal.
As the Company's business expands and as its demand for office
space increases, the Company will have to pay rent in the amount
of $500 per month. The term of this lease is for a minimum of
three years, the initial term of which expires in January 2002,
with an option to renew for an additional two years.
The Company at present owns no equipment. Prime, the
subsidiary, leases approximately 3,600 square feet of office
space located at 681 Chestnut Street, Union, New Jersey 07083.
The term of this lease expires on October 31, 1999, with a
renewal provision for an additional five-year term, and an annual
rent of approximately $18,000.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.
(a) Security ownership of certain beneficial owners. The
table below identifies any individual (including any "group") who
is known to the Company to be the beneficial owner of more than
five percent of any class of the small business issuer's voting
securities:
<TABLE>
<S> <C> <C> <C>
Title of Name and address Amount and nature Percentage of
class of beneficial of beneficial class
Owner ownership(1)
Common RF Management(2) 2,905,400 52.00
1719 Route 10
Suite 119,
Parsippany NJ
Common R. Findlay 874,000 15.64
29 Oak Knoll Road
Mendham, NJ 07945
Common A. Milleren 450,000 8.05
45 Lexington Ave
Oyster Bay, NY 11771
(1) Unless otherwise indicated, the Company believes that
all persons named in the above table have sole voting and
investment power with respect to all shares of common stock
beneficially owned by them.
(2) As of its most recent public filing, RF Management had
a total of 3,460,833 shares issued and outstanding, with
beneficial ownership as follows:
1) Roger Findlay owns 354,000 shares, of RF Management.
2) Oak Knoll Management Corp. owns 644,000. Alice
Findlay, wife of Roger Findlay, is the sole
stockholder, officer and director of Oak Knoll
Management. Roger Findlay has no other relationship
with Oak Knoll Management and disclaims any beneficial
ownership of Oak Knoll Management's shares.
3) Aron Scharf owns 210,000 shares of RF Management.
4) Jan Goldberg owns 120,000 shares of RF Management.
5) Gregory C. Maccia owns 120,000 shares of RF
Management.
6) Wayne P. Miller owns 40,000 shares of RF Management.
</TABLE>
(b) Security ownership of management. The table below sets
for the ownership by all directors and nominees, and each of the
named executive officers of the Company, and directors and
executive officers of the registrant as a group.
<TABLE>
<S> <C> <C> <C>
Title of Name and address Amount and nature Percentage of
class of beneficial of beneficial class
Owner ownership(1)
Common RF Management 2,905,400 52.0
1719 Route 10 W (affiliate)
Suite 119,
Parsippany NJ
Common Aron D. Scharf 150,000 2.7
1719 Route 10 W
Suite 119,
Parsippany, NJ
Common Otto Von Eilbergh 50,000 0.009
1719 Route 10 W
Suite 119,
Parsippany, NJ
Common Wayne P. Miller 40,000 0.007
1719 Route 10 W
Suite 119,
Parsippany, NJ
Common All Officers and 240,000 4.3
Directors as a
Group
(1) Unless otherwise indicated, the Company believes that
all persons named in the above table have sole voting and
investment power with respect to all shares of common stock
beneficially owned by them.
There are no agreements between or among any of the
shareholders which would restrict the issuance of shares in a
manner that would cause any change of control of the Company.
</TABLE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS.
(a) Directors and Executive Officers:
Aron D. Scharf, 48, was appointed as President and Chairman
of the Board of Directors of the Company on June 30, 1997. Mr.
Scharf was a co-founder of Modern Medical Modalities Corp.
("MMM") in 1989, and served as consultant to and business manager
of MMM until 1992. He returned to MMM in 1996. He was
responsible for financial projections and planning, cash flow
analysis and consultation. He was appointed to the Board of
Directors of RF Management Company in 1998. Mr. Scharf received
both a B.A. in Business and a B.S. in Industrial Engineering from
Rutgers College, in New Brunswick, New Jersey. He went on to
earn his Masters in Operations Research from Rutgers University
and an MBA from Fairleigh Dickenson University. From 1974-1982,
he was employed by Johnson and Johnson Domestic Operating Company
as a financial planner, financial forecaster and marketing
analyst. When he left J&J, Mr. Scharf opened MicroAge Computers,
a retail computer store and founded Sunrise Multi-Marketing, a
sales and leasing company specializing in computer equipment. He
served as president of Fidelity Telecom Group from 1993 until his
return to
MMM in 1996.
Otto Von Eilbergh, 44, has been Vice-President and a
Director of the Company since 1997. Mr. Von Eilbergh has been
associated with Prime Contracting Corporation, the Company's
wholly-owned subsidiary, since 1985, and has been President of
Prime since 1997. Prior to that time, he was a Senior Electrical
Estimator for commercial construction with Devon Electric Company
in Rockaway, New Jersey, responsible for all time and material
billings and overall invoicing (1984 to 1985). From 1971 to 1984
he worked with various fuel oil companies, serving as purchasing
agent, dispatcher, salesman, credit management, and ultimately
was responsible for the construction of 5 Texaco stations in
Northwest New Jersey for Contex Fuel Company.
Wayne P. Miller, 49, has been Vice-President, Secretary and
a Director of the Company since January, 1998. Mr. Miller has
been associated with RF Management Corporation since its
inception in 1995. Prior to that, Mr. Miller consulted to and
was employed by Modern Medical Modalities Corp., from 1989 to
1995, and then by its wholly-owned subsidiary, Medical Marketing
& Management, Inc., from 1991 to 1995, in the capacity as
National Marketing/Sales Director with direct responsibility for
contracting with third-party payors and development of new
business. Mr. Miller has been associated with The Physicians
Network since 1991, which provides turnkey medical billing
systems to billing companies, hospitals and physicians. From
1991 to 1995, Mr. Miller provided billing and computerization
consulting services to physicians and hospitals. Prior to that,
Mr. Miller was under contract to Healthnet as vice-president of
billing from 1990 to 1991. At Healthnet, Mr. Miller was
responsible for the centralization of billing, collections and
computerization of a $50,000,000 multi-state medical group with
offices in New York, New Jersey and Maryland. From 1986 to 1990,
Mr. Miller was vice-president of Marketing with HealthCare
Technologies, a company specializing in total turnkey physician
billing solutions. From 1983 to 1986, Mr. Miller was contracted
by the Health Corp. of the Archdiocese Newark as vice-president
of PrimeMark, to start a hospital-based collection agency for
three hospitals and create a physician fee-for-service billing
company for the hospital-based physicians. Mr. Miller also
worked with the physicians in assisting them to go
fee-for-service. Prior to 1983, Mr. Miller held various
management positions in billing and collections.
None of the officers or directors have been involved in a
bankruptcy, criminal conviction, or subject to any order,
judgment or decree, not subsequently reversed, suspended or
vacated of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking
activities, or found to be guilty of any securities laws
infractions.
(b) There are no significant employees who are not
described as executives above, and there are no family
relationships among directors, executive officers or any nominees
to these positions.
ITEM 6. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
<TABLE>
Annual compensation Long term compensation
Awards payouts
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Name and Year Salary($) Bonus($) Other Restricted Securities LTIP All
Principal annual stock awards underlying payouts other
position compensation options/SARs ($) compen-
(Medical) (#) sation
($)
----------------------------------------------------------------------------------------------------
Otto Von 1998 123,421 0 6,483.96 0 0 0 0
Eilbergh 1997 113,480 0 6,483.96 0 0 0 0
1996 102,929 0 6,483.96 0 0 0 0
Aron Scharf 1998 75,000 0 6,483.96 0 0 0 0
1997 0 0 0 0 0 0 0
1996 0 0 0 0 0 0 0
Stephen 1998 9,615 0 0 0 0 0 0
Findlay(1) 1997 250,016 240,000 6,483.96 0 0 0 0
1996 254,905 200,000 6,483.96 0 0 0 0
Wayne P. 1998 4,000 0 0 0 0 0 0
Miller(2) 1997 4,000 0 0 0 0 0 0
1996 0 0 0 0 0 0 0
(1) Mr. Findlay is no longer employed by the Company. See Legal
Proceedings (Part II, Item 2).
(2) No direct cash compensation was paid to Wayne P. Miller for
services rendered to the Company. However, the Company did
accrue non-cash compensation in the amount of $1,000 per quarter
for the years ended June 30, 1998 and 1997, as and for the fair
value of services rendered to the Company by Mr. Miller.
</TABLE>
The existing directors of the Company currently serve on a
non-compensated basis. The above compensation table reflects all
compensation awarded to, earned by or paid to the executive
officers and directors of the Company by any person and for all
services rendered to the Company.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On February 18, 1999, the Company issued shares of stock to
compensate RF Management, Inc. for its services for the 1998
calendar year, and James Morse for services provided during the
latter half of 1998. 439,400 shares were issued to RF Management
and 120,000 shares were issued to Morse, under Rule 505 of
Regulation D, which will be restricted as to future resale for a
minimum of one year from the date of issuance. The Company
evaluated this issuance at $0.10 per share for RF Management and
for Morse, based upon the par value of the issued and outstanding
shares, the fact that the Company lost money during its two
preceding years and the restriction against transfer imposed by
the private placement exemption utilized for the issuance.
James Morse reviewed the Company's history and its needs for
coming into compliance with various regulatory filings for
purposes of trading in the over-the-counter marketplace. Mr.
Morse recommended the filing of the Form 10SB, and identified
suitable professionals for the preparation of the required
filings. Morse received a payment of $10,000 plus the 120,000
shares of restricted common stock in consideration of his
services provided. Based upon a market value for the services
and the historical gross profit earned by the company in 1998,
the value of the shares is being recorded at $0.05 per share, or
a total non-cash compensation to Morse of $6,000. These shares
were not due until completion of the consulting services, which
occurred in the first quarter of 1999.
RF Management provides general operational supervision of
the Company on a day-to-day basis, but only if and when contracts
are being negotiated or are under construction. The services of
RF Management were valued at no more than $25,000 for the periods
involved. In compensation for these services, the Company issued
439,400 shares in February, 1999, which, due to their restrictive
legending and the uncertainty of any trading market developing,
were valued at $0.05 per share. Therefore, $24,470 is being
recorded in the Company's books for fees paid by stock issuance
to RF Management.
R.F. MANAGEMENT CORP.
R.F. Management Corp. is the controlling shareholder of the
Company by virtue of its 52% ownership interest in the Company's
common stock. R.F. Management Corp. is engaged in the business
of administering and managing free-standing outpatient centers
owed by radiologists who perform diagnostic services at such
Centers. In addition, R.F. Management is engaged in the business
of medical construction and mobile MRI services. It was
incorporated in the State of New York in August, 1994 and its
executive offices are located at 1719 Route 10 W, Suite 119,
Parsippany, New Jersey 07054. R.F. Management is a 12(g)
reporting company, and its information can be found within the
EDGAR System under Commission File Number 0-26488.
The Company offers a full range of administrative services,
including contract negotiations, site selection, equipment
procurement, construction, office personnel, office management,
patient scheduling, patient billing, cash collections, personnel
management and marketing. The company can provide either a full
or limited range of administrative services at the Centers,
depending upon the needs of the Centers' owners.
On January 1, 1997, R.F. Management acquired 52% of the
outstanding capital stock of Hamilton-McGregor in a private
transaction with Roger Findlay, a related party, for a total
purchase price of $750,000. As part of the purchase price, R.F.
Management issued an installment note in the sum of $600,000,
without interest, payable in four annual installments on the
anniversary date of the agreement.
On March 3, 1998, Hamilton-McGregor restructured the
promissory note payable for the acquisition of Prime Contracting
Corp. to Modern Medical Modalities Corp., a related party, as
follows: $200,000 in cash, payable over 36 months, plus interest
calculated at prime plus one percent and a 36-month option to
purchase 250,000 shares of Hamilton-McGregor stock at $0.05 per
share. Hamilton-McGregor recorded this transaction as additional
contributed capital in the amount of $772,650. Aron Scharf and
Wayne Miller, both officers and directors of Hamilton, have pre-
existing relationships with Modern Medical Modalities Corp. which
facilitated Hamilton's negotiation and structuring of the
acquisition of Prime Contracting Corp. Both Mr. Scharf and Mr.
Miller were, at one time, consultants to Modern Medical
Modalities Corp.
Wayne P. Miller, President of R.F. Management, and on salary
from R.F. Management, is also the Vice President, Secretary and a
Director of Hamilton-McGregor. For his services at Hamilton-
McGregor, Mr. Miller shall accrue, beginning on July 1, 1999,
compensation from the Company in the amount of $1000 per quarter.
Aron Scharf, President of Hamilton-McGregor, and on salary from
Hamilton-McGregor, is also a director on the board of R.F.
Management, but receives no compensation for that position.
Other than the transactions with R.F. Management, and
private placement conducted in 1995, the Company has had not
dealings with any promoters during the preceding 5 years, has not
acquired any assets from any promoters, nor given any discounts
on stock issuances to promoters.
A $171,000 note is due from the Company to NGF Investment
Corp., of which Aron Scharf, a director of the Company, owns 20%.
The only possibly-conflicting interest of Scharf in the
transaction on behalf of NGF would be to achieve a market rate of
interest for the repayment of the loan. However, Scharf is not
the controlling shareholder of NGF and did not negotiate the
original terms of the transaction for either the Company or NGF.
The Company has not acquired any assets other than in the
ordinary course of business during the preceding 5 years, and no
single asset has had a value in excess of $50,000.
ITEM 8. DESCRIPTION OF SECURITIES.
There is only one class of stock, common, each share having
equal and identical rights to every other share for purposes of
dividends, liquidation preferences, voting rights and any other
attributes of a company's common stock. No voting trusts or any
other arrangement for preferential voting exist among any of the
shareholders, and there are no restrictions in the bylaws or
articles of incorporation precluding issuance of further common
stock or requiring any liquidation preferences, voting rights or
dividend priorities with respect to this class of stock. As of
March 17, 1999, there were 5,586,905 shares issued and
outstanding.
Each share of Common Stock entitles the holder thereof to
one vote, either in person or by proxy, at a meeting of
shareholders. The holders are not entitled to vote their shares
cumulatively. Accordingly, the holders of more than 50% of the
issued and outstanding shares of Common Stock can elect all of
the directors of the Company.
All shares of common Stock are entitled to participate
ratably in dividends when and as declared by the Company's Board
of Directors out of the funds legally available therefor. Any
such dividends may be paid in cash, property or additional shares
of Common Stock. The Company has not paid any dividends since
its inception and presently anticipates that no dividends will
be declared in the foreseeable future. Any future dividends will
be subject to the discretion of the Company's Board of Directors
and will depend upon, among other things, future earnings, the
operating and financial condition of the Company, its capital
requirements, general business conditions and other pertinent
facts. Therefore, there can be no assurance that any dividends
on the Common Stock will be paid in the future.
Holders of Common Stock have no preemptive rights or other
subscription rights, conversion rights, redemption or sinking
fund provisions. In the event of the dissolution, whether
voluntary or involuntary, of the Company, each share of Common
Stock is entitled to share ratably in any assets available for
distribution to holders of the equity securities of the Company
after satisfaction of all liabilities.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS.
The Company has never been listed on any exchanges, nor has
it traded its shares in any private or "pink sheet" style of
marketplace. At the date of this filing, the Company has 21
shareholders, all of which have held their shares at least one
year, and in most cases, for more than two years since the date
of issuance. All of these shareholders would be eligible for
transactions under Rule 144, restricted, however, by the volume
limitations of 144(d) with respect to any existing or former
shareholders that are officers, directors or affiliates (or were
at the time of the issuance of the shares). No dividends have
been earned or declared since the inception of the Company.
Applicability of Low-Priced Stock Risk Disclosure
Requirements: The securities of the Company will be considered
low-priced or "designated" securities under rules promulgated
under the Exchange Act. Under these rules, broker/dealers
participating in transactions in low-priced securities must
first deliver a risk disclosure document which describes the
risks associated with such stocks, the broker/dealer's duties,
the customer's rights and remedies, certain market and other
information, and make a suitability determination approving the
customer for low-priced stock transactions based on the
customer's financial situation, investment experience and
objectives. Broker/dealers must also disclose these restrictions
in writing to the customer and obtain specific written consent of
the customer, and provide monthly account statements to the
customer. The likely effect of these restrictions will be a
decrease in the willingness of broker/dealers to make a market in
the stock, decreased liquidity of the stock and increased
transaction costs for sales and purchases of the stock as
compared to other securities.
ITEM 2. LEGAL PROCEEDINGS.
The Company is involved with one of its former Presidents,
Stephen Findlay, who is suing to recover on a claim for bonus and
severance pay. The case is being conducted as an arbitration,
with the American Arbitration Association, commencing June 9,
1998, under the caption Stephen Findlay vs. Hamilton-McGregor,
Inc. The Company has cross-complained against Mr. Findlay and
John Schultz (also a former employee) for breach of their
contractual and non-compete agreements with the Company.
Findlay is seeking 6 month's pay, which he claims is
$125,000, plus some form of bonus, which he claims to be
approximately $210,000. Vincent Ludwig, Esq., Counsel for the
Company, is of the opinion that the claim is not meritorious, and
that the Company's cross-complaint for breach of contractual and
non-compete agreements will offset any possible award to Findlay.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
In August 1995, the Company's Board of Directors passed a
resolution authorizing the a private placement of the Company's
securities in order to raise capital. Management was granted
authority to prepare a Private Placement Memorandum pursuant to
Rule 504 of Regulation D, governing the Limited Offer and Sale of
Securities Without Registration Under the Securities Act of 1933
(as amended) and to register the securities in any state
jurisdiction that management felt was required and appropriate.
The Offering called for the Company to offer for sale up to
500,000 shares of the Company's common stock (the "shares") at
$6.00 per share. The Offering was closed on March 29, 1996, and
resulted in 80,834 shares of the Company's $0.0001 par value
common stock being issued to four separate New York investors at
the Offering price of $6 per share. As a result of the Offering,
the Company raised an aggregate of $341,811, net of expenses of
$143,189, spent on legal, accounting and brokerage. The shares
sold in the Offering were subsequently split three for one,
resulting in 242,505 shares at $2.00 per share.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Six of the Articles of Incorporation provides that
no director of the Company shall have personal liability to the
corporation or to its shareholders for damages for any breach of
duty in such capacity, provided, however, that the provisions
shall not eliminate or limit:
(a) the liability of any director of the corporation if
a judgment or other final adjudication adverse to him establishes
that his acts or omissions were in bad faith or involved
intentional misconduct or a knowing violation of law or that he
personally gained in fact a financial profit or other advantage
to which he was not legally entitled or, with respect to any
director of the corporation, that his acts violated Section 719
of the Business Corporation law of the State of New York, or
(b) the liability of a director for any act or
omission prior to the final adoption of this article.
PART F/S FINANCIAL
FINANCIAL STATEMENTS AND EXHIBITS.
(a) List separately all financial statements filed as part
of the registration statement.
1) Interim Statement for December 31, 1998 (unaudited),
including Audited Financial Statements for
June 30, 1998, and June 30, 1997
<PAGE>
HAMILTON-MCGREGOR INTERNATIONAL, INC.
AND SUBSIDIARY
FINANCIAL STATEMENTS
December 31, 1998
<PAGE>
ACCOUNTANTS' REVIEW REPORT
To the Board of Directors
Hamilton-McGregor International and Subsidiary
We have reviewed the consolidated balance sheet of Hamilton-
McGregor International, Inc. and Subsidiary as at December 31,
1998, and the related consolidated statements of operations, and
cash flows for the six months then ended, in accordance with
Statements on Standards for Accounting and Review Services issued
by the American Institute of Certified Public Accountants. All
information included in these financial statements is the
representation of the management of Hamilton-McGregor
International, Inc.
A review of interim financial information consists principally of
obtaining an understanding of the system for the preparation of
interim financial information, applying analytical review
procedures to financial data, and making inquiries of persons
responsible for financial and accounting matters. It is
substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material
modifications that should be made to the consolidated financial
statements referred to above for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Hamilton-
McGregor International, Inc. and Subsidiary as at June 30, 1998
and 1997, and the related consolidated statements of operations,
stockholders' equity, and cash flows for the two years then ended
not presently herein, and in our report dated August 26, 1998, we
expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet as at December 31, 1998
is fairly presented, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
Vincent J. Batyr & Co.
Certified Public Accountants
Tarrytown, NY
February 8, 1999
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Hamilton-McGregor International, Inc. and Subsidiary
We have audited the accompanying consolidated balance sheet of
Hamilton-McGregor International, Inc. and Subsidiary as at June
30, 1998 and 1997, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the two
years ended June 30, 1998 and 1997. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits 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 consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Hamilton-McGregor International, Inc. and
Subsidiary as at June 30, 1998 and 1997, and the consolidated
results of their operations and their cash flows for the years
ended June 30, 1998 and 1997 in conformity with generally
accepted accounting principles.
Vincent J. Batyr & Co.
Certified Public Accountants
Tarrytown, NY
August 26, 1998
<PAGE>
HAMILTON-MCGREGOR INTERNATIONAL INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
December 31, June 30,
-------------- ------------- -------------
1998 1998 1997
-------------- ------------- -------------
(unaudited)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 27,660 $ 21,102 $ 544,567
Contracts receivable, less allowance
for doubtful accounts of $40,000,
$30,000 and $10,000, respectively 1,260,075 1,186,610 967,419
Other receivable 75,000 - -
Costs and estimated earnings in excess of
billings on uncompleted contracts 74,957 96,582 31,999
Current prepaid incentive compensation - - 20,100
Prepaid expenses and other current assets 1,352 2,648 13,070
Current deferred tax assets 14,744 13,243 10,243
Other current assets 80,731 55,450 -
-------------- ------------- -------------
Total current assets 1,534,519 1,375,635 1,587,398
-------------- ------------- -------------
Furniture, fixtures, equipment and leasehold
improvements (net of accumulated
depreciation of $150,190, $133,604 and
$181,123, respectively) 67,704 84,089 120,306
Prepaid incentive compensation - - 125,625
Deferred tax assets 69,234 124,070 128,552
Other assets 5,000 3,188 3,284
-------------- ------------- -------------
TOTAL ASSETS $ 1,676,157 $ 1,586,982 $ 1,965,165
============== ============= =============
LIABILITIES & STOCKHOLDERS' (DEFICIENCY)
Current Liabilities:
Short-term borrowings $ - $ - $ 200,000
Current portion of note payable -
acquisition 83,333 72,222 -
Current maturities of long-term debt 8,072 10,632 12,237
Accounts payable and accrued expenses 914,877 671,557 1,094,837
Billings in excess of costs and estimated
earnings on uncompleted contracts 298,898 812,207 491,631
Current deferred tax liabilities 220,544 - 6,030
-------------- ------------- -------------
Total current liabilities 1,296,180 1,566,618 1,804,735
Note payable - acquisition, net of
current portion 58,334 91,667 1,000,000
Note payable - related party 171,000 101,000 -
Long-term debt 59,111 15,611 23,695
Non-current deferred tax liabilities - - 37,688
COMMITMENTS AND CONTINGENCIES - - -
-------------- ------------- -------------
TOTAL LIABILITIES 1,584,625 1,774,896 2,866,118
-------------- ------------- -------------
Stockholders' (deficiency)
Common stock, $.0001 par value,
15,000,000 shares authorized,
4,977,505 shares issued and outstanding 559 498 498
Additional paid in capital 843,493 780,650 4,000
Retained (deficit) (752,520) (969,062) (905,451)
-------------- ------------- -------------
TOTAL STOCKHOLDERS' EQUITY
(DEFICIENCY) 91,532 (187,914) (900,953)
-------------- ------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIENCY) $ 1,676,157 $ 1,586,982 $ 1,965,165
============== ============= =============
See Accountants' Review Report and Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
For the For the
Six Months Ended Years Ended
December 31, June 30,
-------------- ------------- -------------
1998 1998 1997
-------------- ------------- -------------
(unaudited)
<S> <C> <C> <C>
Contract revenues $ 3,595,738 $ 5,633,716 $ 7,389,279
Costs of revenues earned 2,492,309 4,388,829 5,860,886
-------------- ------------- -------------
Gross profit 1,103,429 1,244,887 1,528,393
Selling, general and administrative expenses
(includes depreciation and amortization
expense of $16,584, $34,720 and $36,131,
respectively) 808,059 1,356,873 1,605,134
-------------- ------------- -------------
Income (loss) from operations 295,370 (111,986) (76,741)
-------------- ------------- -------------
Other income (expense)
Interest income - - 321
Interest expense (25,492) 6,139 (107,226)
-------------- ------------- -------------
Income (loss) before provision for
(recovery of) income taxes 269,878 (105,847) (183,646)
Provision for (recovery of) income taxes 53,335 (42,236) (5,703)
-------------- ------------- -------------
Net income (loss) $ 216,543 $ (63,611) $ (177,943)
============== ============= =============
Weighted average number of shares of
common stock outstanding 4,977,505 4,977,505 4,977,505
============== ============= =============
Basic income (loss) per share $ 0.04 $ (0.01) $ (0.04)
============== ============= =============
See Accountants' Review Report and Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
1998 1998 1997
-------------- ------------- -------------
(unaudited)
<S> <C> <C> <C>
Net income (loss) $ 216,543 $ (63,611) $ (177,943)
Adjustments to reconcile excess of revenue
over expenses to net cash provided by
(used in) operating activities:
Depreciation and amortization 16,584 34,720 36,131
Provision for doubtful accounts 10,000 20,000 -
Deferred income taxes 53,335 (42,236) (5,703)
(Income) loss on investment in
limited partnership (1,812) 96 182
Changes in operating assets and
liabilities:
Contracts receivable (83,465) (239,191) (326,946)
Other receivable (75,000) - -
Costs and estimated earnings in excess
of billings on uncompleted contracts 21,625 (64,583) (11,536)
Prepaid expenses and other current
assets (23,985) 100,697 29,928
Deferred financing costs - - -
Accounts payable and accrued expenses 243,380 (423,280) 473,379
Billings in excess of costs and
estimated earnings on uncompleted
contracts (522,309) 320,576 186,416
-------------- ------------- -------------
Net cash provided by (used in)
operating activities (145,104) (356,812) 203,909
-------------- ------------- -------------
Acquisition of furniture, fixtures and equipment - - (42,536)
-------------- ------------- -------------
Net cash provided by (used in)
investing activities - - (42,536)
-------------- ------------- -------------
Repayment of note payable - acquisition (22,222) (62,064) -
Proceeds from note payable - related party 70,000 200,000 -
Proceeds from long-term debt 50,000 - -
Repayment of long-term debt (8,959) (881,239) 14,481
Proceeds from line of credit - - 200,000
Repayment of line of credit - (200,000) -
Additional paid in capital 62,483 776,650 4,000
-------------- ------------- -------------
Net cash provided by financing
activities 151,662 (166,653) 218,481
-------------- ------------- -------------
Net increase (decrease) in cash and cash
equivalents 6,558 (523,465) 379,854
Cash and cash equivalents at beginning of year 21,102 544,567 164,713
-------------- ------------- -------------
Cash and cash equivalents at end of year $ 27,660 $ 21,102 $ 544,567
============== ============= =============
See Accountants' Review Report and Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
HAMILTON-MCGREGOR INTERNATIONAL INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND JUNE 30, 1998 AND 1997
1 - Business
The Company's business is the construction of state-of-the-
art imaging centers and other medical facilities. The Company
offers a full range of services, including turnkey design and
construction services, site analysis, architectural engineering,
and on-site project management.
2 - Summary of Significant Accounting Policies
Principles of consolidation
The consolidated financial statements include the accounts
of Hamilton-McGregor International Inc. ("Hamilton") and its
wholly-owned subsidiary, Prime Contracting Corporation ("Prime"),
collectively the "Company". Hamilton was incorporated in the
State of New York on August 17, 1995. Prime was incorporated in
the State of New Jersey on June 16, 1978. Hamilton acquired all
of the outstanding capital stock (forty-five and one-half [45.5]
shares no par value common stock) of Prime in December 1995. The
Company accounted for the acquisition of Prime in a manner
similar to a pooling of interests due to the stockholders' common
control of both Hamilton and a related entity.
Cash equivalents
The Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents.
Contract receivables
Amounts recorded as contract receivables represent amounts
receivable form completed construction contracts, whether billed
or unbilled.
Furniture, fixtures, equipment and leasehold improvements
Property and equipment are stated at cost and are
depreciated by an accelerated method over the estimated useful
lives. Leasehold improvements are amortized over the life of the
lease or the economic useful lives of the improvements, whichever
is shorter. Betterments and large renewals which extend the life
of the asset are capitalized whereas maintenance and repairs and
small renewals are expensed as incurred.
Basis of Accounting
The Company's financial statements have been prepared on the
accrual basis of accounting and, accordingly, reflect all
significant receivables, payables and other liabilities.
Revenue and cost recognition
Revenues are recognized on the percentage-of-completion
method and are measured by costs incurred to date as compared to
estimated total costs for each contract. Costs and amounts
earned on specific jobs in excess of billings are treated as a
current asset. Billings in excess of costs and estimated
earnings are treated as a current liability.
Cost and profit estimates are reviewed periodically as work
progresses and adjustments, if needed, are reflected in the
period in which the estimates are revised. Provisions for
estimated losses, if any, on uncompleted contracts are made in
the period in which such losses become known and are estimable.
Change-orders which may result in revisions to costs and income
are recognized in the period in which the revisions are approved.
Expenses from contract claim settlements are recognized in the
period awarded.
Contracts costs included all direct material and labor
costs, as well as subcontractor costs, and those indirect costs
related to contract performance, such as indirect labor and
supplies and overhead costs. Selling, general and administrative
costs are charged to expense as incurred.
Use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could
differ from those estimates.
Income taxes
The Company adopted Financial Accounting Standards Board
(FASB) Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes", for financial statement
reporting purposes, which requires the asset and liability method
of accounting for income taxes. The asset and liability
approach requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases of
assets and liabilities and the effect of future tax planning
strategies to reduce any deferred tax liability.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, contracts
receivables, accounts payable and short-term debt approximate
fair value due to the short maturity of the instruments and the
provision for what management believes to be adequate reserves
for potential losses. It was not practicable to estimate the
fair value of long-term debt because quoted market prices do not
exist and an estimate could not be made through other means
without incurring excessive costs.
Earnings (loss) per share
Earnings (loss) per share have been computed by dividing the
net income (loss) by the weighted average number of common stock
shares outstanding. The earnings per share computations reflect
a 3:1 stock split.
3 - Private Placement Offering
In August 1995, the Board of Directors of the Company passed
a resolution authorizing the management of the Company to
initiate steps for a private placement of the Company's
securities in order to raise capital. Management was granted
authority to prepare a Private Placement Memorandum pursuant to
Regulation Rules governing the Limited Offer and Sale of
Securities Without Registration Under the securities Act of 1933
(as amended) and to register the securities in any state
jurisdiction that management felt was required and appropriate.
The private offering called for the Company to offer for sale up
to 1,500,000 shares of the Company's common stock (the "shares")
at $2.00 per share. The offering closed on March 29, 1996 with
the sale of 242,500 shares of the Company's $0.0001 par value
common stock at the offering price of $2.00 per share that raised
an aggregate of $341,811, net of expenses of $143,189, for the
Company.
4 - Contracts Receivable
Contracts receivable from long-term construction contracts
and programs are as follows:
December 31, June 30,
-------------- ------------- -------------
1998 1998 1997
-------------- ------------- -------------
Billed $ 1,202,917 $ 1,099,494 $ 910,230
Unbilled 57,158 87,166 57,189
-------------- ------------- -------------
Total $ 1,260,075 $ 1,186,610 $ 967,419
============== ============= =============
Unbilled receivables represent amounts for which billings
have not yet been presented to customers at the balance sheet
date. These amounts are billed and generally collected within
one year. Amounts due upon completion of contracts are retained
by customers until work is completed and customer acceptance is
obtained. Retainage amounts at December 31, 1998, June 30, 1998
and 1997 are not significant.
5 - Furniture, Fixtures, Equipment and Leasehold Improvements
Furniture, fixture, equipment and leasehold improvements
consist of the following:
Estimated December 31, June 30,
Useful Life- -------------- ------------- -------------
Years 1998 1998 1997
-------------- -------------- ------------- -------------
Office equipment 5 $ 24,479 $ 24,479 $ 54,877
Machinery and equipment 5 - - 9,484
Vehicles 5 142,257 142,257 186,210
Leasehold improvements 20 50,858 50,858 50,858
-------------- ------------- -------------
Total furniture, fixtures,
equipment and leasehold
improvements $ 217,594 $ 217,594 $ 301,429
Less: Accumulated depreciation (150,190) (133,505) (181,123)
-------------- ------------- -------------
Net furniture, fixtures,
equipment and leasehold
improvements $ 67,704 $ 84,089 $ 120,306
============== ============= =============
6 - Investment in Limited Partnership
The Company has an investment in Stamford Towers, Limited Partnership as
follows:
December 31, June 30,
-------------- ------------- -------------
1998 1998 1997
-------------- ------------- -------------
Limited partnership interest $ 5,000 $ 5,000 $ 5,000
-------------- ------------- -------------
Aggregate cost $ 5,000 $ 5,000 $ 5,000
============== ============= =============
Aggregate market value $ 5,000 $ 3,188 $ 3,284
Cash balance - - -
-------------- ------------- -------------
$ 5,000 $ 3,188 $ 3,284
============== ============= =============
7 - Short-Term Borrowings
At June 30, 1997, there was $200,000 outstanding on a revolving
line of credit with Summit Bank, bearing interest due monthly at the
prime rate plus 1%, which matured on December 31, 1997. The line of
credit, which was used for short-term working capital, was secured by
real property owned by an officer/stockholder and all business assets of
the Company, excluding accounts receivable. On January 26, 1998, the
loan was refinanced with a long term note payable to NGF Investment
Corp., a related party. The note bears interest due monthly at 14.5%,
and matures on September 15, 2001.
8 - Long-Term Debt
Long-term debt consists of the following:
December 31, June 30,
-------------- ------------- -------------
1998 1998 1997
-------------- ------------- -------------
Notes payable $ 67,183 $ 26,243 $ 35,932
Less: Amounts due in one year 8,072 10,632 12,237
-------------- ------------- -------------
Total long-term debt $ 59,111 $ 15,611 $ 23,695
============== ============= =============
The future principal payments for long-term debt at December 31, 1998
are as follows:
Year Ending June 30,
--------------------
1999 3,807
2000 56,494
2001 6,882
------
$ 67,183
======
9 - Income Taxes
The company recognizes deferred tax liabilities and assets for the
expected future tax consequences of events that have been recognized in the
Company's financial statements or tax returns. Under this method, deferred
tax liabilities and assets are determined based on the differences between
the financial statement carrying amounts and tax basis of assets and
liabilities using enacted rated in effect in the years in which the
differences are expected to reverse.
The Company has recorded total income tax expenses (credits) of
($53,335), ($42,236) and ($5,703), for the six months ended December 31,
1998 and the years ended June 30, 1998 and 1997, respectively. The Company
has a net operating loss (NOL) carryforward for federal income tax purposes
of $876,213 at June 30, 1998 available to offset income taxes in future
years through 2011.
Components of income (loss) before income taxes (recovery), and net
income (loss) are as follows:
December 31, June 30,
-------------- ------------- -------------
1998 1998 1997
-------------- ------------- -------------
Income (loss) before (recovery of)
income taxes $ 269,878 $ (105,847) $ (183,646)
Provision for (recovery of) income
taxes 53,355 (42,236) (5,703)
-------------- -------------- ------------
Net income (loss) $ 216,543 $ (63,611) $ (177,943)
============== ============= =============
The following is a reconciliation of the U.S. federal statutory tax rate and
the apparent tax rate:
1998 1998 1997
-------------- ------------- -------------
U.S. Federal tax 34.0% 34.0% 34.0%
Expense (benefit) from graduated rates (10.0%) 10.0% 10.0%
State taxes, net of federal
tax benefit 6.0% (6.0%) (6.0%)
Valuation allowance 10.0% (10.0%) 27.0%
-------------- ------------- -------------
Effective tax rate 20.0% (40.0%) (3.0%)
============== ============= =============
The tax effects of temporary differences and carryforwards which give
rise to significant portions of deferred tax assets and liabilities are as
follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
December 31, 1998 June 30, 1998 June 30, 1997
Current Non-current Current Non-current Current Non-current
Deferred income tax assets:
Net operating loss
carryforwards $ 15,000 $138,470 $ 15,000 $ 248,141 $ 15,000 257,105
Doubtful Accounts 12,000 - 9,000 - 3,000 -
Depreciation 2,487 - 2,487 - 2,487 -
Valuation Reserve (14,743) (69,235) (13,244) (124,071) (10,244) (128,553)
-------- -------- -------- --------- -------- --------
Total deferred income
tax assets 14,744 69,235 13,243 124,070 10,243 128,552
-------- -------- -------- --------- -------- --------
Deferred income tax liabilities:
Incentive compensation - - - - (6,030) (37,688)
-------- -------- -------- --------- -------- --------
Total deferred income
tax (liabilities) - - - - (6,030) (37,688)
-------- -------- -------- --------- -------- --------
Net deferred income
tax assets
(liabilities) 14,744 69,235 13,243 124,070 4,213 90,864
======== ======== ======== ========= ======== ========
</TABLE>
The Company has recorded current and deferred provision for (recovery
of) income taxes as follows:
December 31, June 30,
-------------- ------------- -------------
1998 1998 1997
-------------- ------------- -------------
Current $ - $ - $ -
Deferred 53,355 (42,236) (5,703)
-------------- -------------- ------------
Total $ 53,355 $ (42,236) $ (5,703)
============== ============= =============
10 - Related Party Transactions
Operating lease
The Company is obligated under a five year operating lease
for a facility located at 681 Chestnut Street, Union, New Jersey
07083. The lease expires October 31, 1999 and calls for a fixed
annual rental of $18,000, payment of all real estate taxes and
utilities and contains a renewal provision for an additional
five-year term. Rent expense for the years ended June 30, 1998
and 1997 was $23,404 and $18,590 respectively.
Acquisition
In December 1995, Hamilton-McGregor International Inc.
acquired one hundred percent (100%) of the outstanding shares
(forty-five and one-half [45.5] shares of no par value common
stock) of Prime Contracting Corporation ("Prime"), a New Jersey
Corporation, from a related entity. Prime is a full service
contractor that provides turnkey design and construction
services. The terms of the agreement, as modified in March 1996,
called for a payment of two hundred thousand ($200,000) and a one
million dollar ($1,000,000) note bearing interest at prime plus
one percent (1%) and require a principal payment of six hundred
thousand dollars ($600,000) on October 27, 1997 and four hundred
thousand dollars ($400,000) on April 27, 1998. The
extinguishment of Prime's accounts payable to its former parent
aggregating approximately $358,000, in conjunction with the
modification agreement, has been treated as a contribution to
additional paid-in capital. The Company accounted for the
business combination in a manner similar to a pooling of
interests due to the stockholder's common control of both
Hamilton and the related party.
On March 3, 1998 the Company restructured the promissory
note payable for the sale of Prime Contracting Corp. as follows:
$ 200,000 in cash payable over 36 months, plus interest
calculated at prime plus 1% and a 36 month option to purchase
250,000 shares of the related party stock at $ 0.05. The Company
recorded the gain in the amount of $772,650 as contributed
capital.
11 - Commitments and Contingencies
Employment contract
In November 1994, Prime entered into an employment agreement
with its president to receive gross revenue bonuses at the end of
any of the first five bonus years beginning October 1994. The
gross revenue bonus advanced in accordance with the agreement is
amortized over the ten year contract term. In addition, a
special bonus was paid to the same party, and was amortized over
a 12 month period beginning January 1, 1995.
In December 1997, the employment contract was terminated,
resulting in a charge to operations in the amount of $145,725 for
the balance of prepaid compensation.
12 - Litigation
In June, 1998, "Hamilton" was named as defendant in an
arbitration filed by Stephen Findlay under the Employment
Arbitration Rules of the American Arbitration Association. The
claim alleges termination of Mr. Findlay without cause and breach
of an employment contract. The plaintiff seeks compensatory
and punitive damages, costs and legal fees. This matter is in
the pleading stage. It is too early at this time to estimate the
eventual outcome of this case.
PART III
EXHIBITS
3.1 Articles of Incorporation, dated August 11, 1995
3.2 Bylaws, adopted on August 11, 1995
10.1 Real Property Office Lease, dated November 1, 1994
10.2 Rider to Real Property Office Lease, dated
November 1, 1994
27 Financial Data Schedule
99.1 List of Completed Jobs in State of New Jersey
99.2 Credit Line with NGF Investment Corp.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act
of 1934, the registrant has caused this registration statement to
be signed on its behalf by the undersigned, thereunto duly
authorized.
HAMILTON-MCGREGOR INTERNATIONAL, INC.
Date: March 31, 2000 By: /s/ Aron Scharf
Aron Scharf, President
Chairman, Treasurer
Date: March 31, 2000 By: /s/ Wayne P. Miller
Wayne P. Miller, Secretary
Director
Date: March 31, 2000 By: /s/ Otto Van Eilbergh
Otto Van Eilbergh
Director
<PAGE>
Exhibit 3.1 Articles of Incorporation
CERTIFICATE OF INCORPORATION
OF
HAMILTON-MCGREGOR INTERNATIONAL INC.
Pursuant to Section 402 of the Business Corporation Law
I, the undersigned, a natural person of at least 18 years of age, for the
purpose of forming a corporation under Section 402 of the Business
Corporation Law of the State of New York hereby certify:
FIRST: The name of the corporation is:
HAMILTON-MCGREGOR INTERNATIONAL, INC.
SECOND: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under Article IV of the
Business Corporation Law, except that is not formed to engage in any act or
activity requiring the consent or approval of any state official, department,
board, agency or other body' without such consent or approval first being
obtained.
THIRD: The office of the corporation is to be located in the County of
NASSAU, State of New York.
FOURTH: The aggregate number of shares which the corporation shall have the
authority to issue is FIFTEEN MILLION @ .0001 par value, each of which shall
be common stock.
FIFTH: The Secretary of State is designated as agent of the corporation upon
whom process against it may be served. The post office address to which the
Secretary of State shall mail a copy of any process against the corporation
served upon him is:
C/O SCOTT ZUCKER
111 GREAT NECK RD
STE 300
GREAT NECK, NY 11021
SIXTH: No director of the corporation shall have personal liability to the
corporation or to its shareholders for damages for any breach of duty in such
capacity, provided, however, that the 'Provision shall not eliminate or
limit:
(a) the liability of any director of the corporation if a judgment or
other final adjudication adverse to him establishes that his acts or
omissions were in bad faith or involved intentional misconduct or a
knowing violation of law or that he personally gained in fact a financial
profit or other advantage to which he was not legally entitled or, with
respect to any director of the corporation, that his acts violated Section
719 of the Business Corporation Law of the State of New York, or
(b) the liability of a director for any act or omission prior to the
final adoption of this article.
IN WITNESS WHEREOF, this certificate of incorporation has been subscribed by
the undersigned this 08/11/95, who affirms the statements made herein are
true under the penalties of perjury.
s/ Sherri Cook
Sherri Cook, Incorporator
XL Corporate & Research
Services, Inc.
194 Washington Avenue
Albany, New York 12210
<PAGE>
Exhibit 3.2 Bylaws
BY-LAWS
OF
HAMILTON-MCGREGOR INTERNATIONAL, INC.
ARTICLE I - OFFICES
The principal office of the corporation shall be in the City of Great Neck,
County of Nassau, State of New York. The corporation may also have offices
at such other places within or without the State of New York as the board may
from time to time determine or the business of the corporation may require.
ARTICLE II - SHAREHOLDERS
1. PLACE OF MEETINGS.
Meetings of shareholders shall be held at the principal office of the
corporation or at such place within or without the State of New York as the
board shall authorize.
2. ANNUAL MEETING.
The annual meeting of the shareholders shall be held on first day of May at
10:00 A. M. in each year if not a legal holiday, and, if a legal holiday,
then on the next business day following at the same hour when the
shareholders shall elect a board and transact such other business as may
properly come before the meeting.
3. SPECIAL MEETINGS.
Special meetings of the shareholders may be called by the board or by the
president and shall be called by the president or the secretary at the
request in writing of a majority of the board or at the request in writing by
shareholders owning a majority in amount of the shares issued and
outstanding. Such request shall state the purpose or purposes of the
proposed meeting, Business transacted at a special meeting shall be confined
to the purposes stated in the notice.
4. FIXING RECORD DATE.
For the purpose of determining the shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof, or to express
consent to or dissent from any proposal without a meeting, or for the purpose
of determining shareholders entitled to receive payment of any dividend or
the allotment of any rights, or for the purpose of any other action, the
board shall fix, in advance, a date as the record date for any such
determination of shareholders. Such date Shall not be more than fifty nor
less than ten days before the date of such meeting, nor more than fifty days
prior to any other action. If no record date is fixed it shall be determined
in accordance with the provisions of law.
5. NOTICE OF MEETINGS OF SHAREHOLDERS.
Written notice of each meeting of shareholders shall state the purpose or
purposes for which the meeting is called, the place, date and hour of the
meeting and unless it is the annual meeting, shall indicate that it is being
issued by or at the direction of the person or persons calling the meeting.
Notice shall be given either personally or by mail to each shareholder
entitled to vote at such meeting, not less than ten nor more than fifty days
before the date of the meeting. If action is proposed to be taken that might
entitle shareholders to payment for their shares, the notice shall include a
statement of that purpose and to that effect. If mailed, the notice is given
when deposited in the United States mail, with postage thereon prepaid,
directed to the shareholder at his address as it appears on the record of
shareholders, or, if he shall have filed with the secretary a written request
that notices to him be mailed to some other address, then directed to him at
such other address.
6. WAIVERS.
Notice of meeting need not be given to any shareholder who signs a waiver of
notice, in person or by proxy, whether before or after the meeting. The
attendance of any shareholder at a meeting, in person or by proxy, without
protesting prior to the conclusion of the meeting the lack of notice of such
meeting, shall constitute a waiver of notice by him.
7. QUORUM OF SHAREHOLDERS.
Unless the certificate of incorporation provide s otherwise, the holders of
a majority of the shares entitled to vote thereat shall constitute a quorum
at a meeting of shareholders for the transaction of any business, provided
that when a specified item of business is required to be voted on by a class
or classes, the holders of a majority of the shares of such class or classes
shall constitute a quorum for the transaction of such specified item of
business, When a quorum is once present to organize a meeting, it is not
broken by the subsequent withdrawal of any shareholders. The shareholders
present may adjourn the meeting despite the absence of a quorum.
8. PROXIES.
Every shareholder entitled to vote at a meeting of shareholders or to express
consent or dissent without a meeting may authorize another person or persons
to act for him by proxy. Every proxy must be signed by the shareholder or
his attorney-in -fact. No proxy shall be valid after expiration of eleven
months from the date thereof unless otherwise provided in the. proxy. Every
proxy shall be revocable at the pleasure of the shareholder executing it,
except as otherwise provided by law.
9. QUALIFICATION OF VOTERS.
Every shareholder of record shall be entitled at every meeting of
shareholders to one vote for every share standing in his name on the record
of shareholders, unless otherwise provided in the certificate of
incorporation.
10. VOTE OF SHAREHOLDERS.
Except as otherwise required by statute or by the certificate of
incorporation:
(a) directors shall be elected by a plurality of the Votes cast at a meeting
of shareholders by the holders of shares entitled to vote in the election;
(b) all other corporate action shall be authorized by a majority of the votes
cast.
11. WRITTEN CONSENT OF SHAREHOLDERS.
Any action that may be taken by vote may be taken without a meeting on
written consent, setting forth the action so taken, signed by the holders of
all the outstanding shares entitled to vote thereon or signed by 'such lesser
number of holders as may be provided for in the certificate of incorporation.
ARTICLE III - DIRECTORS
1. BOARD OF DIRECTORS
Subject to any provision in the certificate of incorporation the business of
the corporation shall be managed by its board of directors, each of whom
shall be at least 18 years of age and be shareholders.
2. NUMBER OF DIRECTORS.
The number of directors shall be seven. When all of the shares are owned by
less than three shareholders, the number of directors may be less than three
but not less than the number of shareholders.
3. ELECTION AND TERM OF DIRECTORS.
At each annual meeting of shareholders, the shareholders shall elect
directors to hold office until the next annual meeting. Each director shall
hold office until the expiration of the term for which he is elected and
until his successor has been elected and qualified, or until his prior
resignation or removal.
4. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies, occurring in the board for any reason except the
removal of directors without cause may be filled by a vote of a majority of
the directors then in office, although less than a quorum exists, unless
otherwise provided in the certificate of incorporation. Vacancies occurring
by reason of the removal of directors without cause shall be filled by vote
of the shareholders unless otherwise provided in the certificate of
incorporation. A director elected to fill a vacancy caused by resignation,
death or removal shall be elected to hold office for the unexpired term of
his predecessor.
5. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
shareholders or by action of the board. Directors may be removed without
cause only by vote of the shareholders.
6. RESIGNATION.
A director may resign at any time by giving written notice to the board, the
president or the secretary of the corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the
board or such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
7. QUORUM OF DIRECTORS.
Unless otherwise provided in the certificate of incorporation, a majority of
the entire board shall constitute a quorum for the transaction of business or
of any specified item of business.
8. ACTION OF THE BOARD.
Unless otherwise required by Law, the vote of a majority of the directors
present at the time of the vote, if a quorum is present at such time, shall
be the act of the board. Each director present shall have one vote regardless
of the number of shares, if any, which he may hold.
9. PLACE AND TIME OF BOARD MEETINGS.
The board may hold its meetings at the office of the corporation or at such
other places, either within or without the State of New York, as it may from
time to time determine.
10. REGULAR ANNUAL MEETING.
A regular annual meeting of the board shall be held immediately following the
annual meeting of shareholders at the place of such annual meeting of
shareholders.
11. NOTICE OF MEETINGS OF THE BOARD, ADJOURNMENT.
(a) Regular meetings of the board may be held without notice at such time and
place as it shall from time to time determine. Special meetings of the board
Shall be held upon notice to the directors and may be called by the president
upon three days notice to each director either personally or by mail or by
wire; special meetings shall be called by the president or by the secretary
in a like manner on written request of two directors. Notice of a meeting
need not be given to any director who submits a waiver of notice whether
before or after the meeting or who attends the meeting without protesting
prior thereto or at its commencement the lack of notice to him.
(b) A majority of the directors present, whether or not a quorum IS present,
may adjourn any meeting to another time and place. Notice of the adjournment
shall be given all directors who were absent at the time of the adjournment
and, unless such time and place are announced at the meeting, to the other
directors.
12. CHAIRMAN.
At all meetings of the board the president, or in his absence, a chairman
chosen by the board shall preside.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution adopted by a majority of the entire board, may
designate from among its members an executive committee and other committees,
each consisting of three or more directors. Each such committee shall serve
at the pleasure of the board,
14, COMPENSATION.
No compensation shall be paid to directors, as such, for their services, but
by resolution of the board a fixed sum and expenses for actual attendance, at
each regular or special meeting of the board may be authorized. Nothing
herein contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
ARTICLE IV - OFFICERS
1. OFFICES, ELECTION, TERM.
(a) Unless otherwise provided for in the certificate of incorporation, the
board may elect or appoint a president, one or more vice-presidents, a
secretary and a treasurer, and such other officers as it may determine, who
shall have such duties, powers and functions as hereinafter provided.
(b) All officers shall be elected or appointed to hold office until the
meeting of the board following the annual meeting of shareholders.
(c) Each officer shall hold office for the term for which he is elected or
appointed and until his successor has been elected or appointed and
qualified.
2. REMOVAL, RESIGNATION, SALARY, ETC.
(a) Any officer elected or appointed by the board may be removed by the board
with or without cause.
(b) In the event of the death, resignation or removal of an officer, the
board in its discretion may elect or appoint a successor to fill the
unexpired term.
(c) Any two or more offices may be held by the same person, except the
offices of president and secretary. When all of the issued and outstanding
stock of the corporation is owned by one person, such person may hold all or
any combination of offices.
(d) The salaries of all officers shall be fixed by the board.
(e) The directors may require any officer to give security for the faithful
performance of his duties.
3. PRESIDENT. The president shall be the chief executive officer of the
corporation; he shall preside at all meetings of the shareholders and of the
board; he shall have the management of the business of the corporation and
shall see that all orders and resolutions of the board are carried into
effect.
4. VICE-PRESIDENTS. During the absence or disability of the president, the
vice-president or if there are more than one, the executive vice-president,
shall have all the powers and functions of the president. Each vice-president
shall perform such other duties as the board shall prescribe.
5. SECRETARY. The secretary shall: (a) attend all meetings of the board and
of the shareholders; (b) record all votes and minutes of all proceedings in a
book to be kept for that purpose; (c) give or cause to be given notice of all
meetings of shareholders and of special meetings of the board; (d) keep in
safe custody the seal of the corporation and affix it to any instrument when
authorized by the board; (e) when required, prepare or cause to be prepared
and available at each meeting of shareholders a certified list in
alphabetical order of the names of shareholders entitled to vote thereat,
indicating the number of shares of each respective class held by each;
(f) keep all the documents and records of the corporation as required by law
or otherwise in a proper and safe manner.
(g) perform such other duties as may be prescribed by the board.
6. ASSISTANT-SECRETARIES.
During the absence or disability of the secretary, the assistant-secretary,
or if there are more than one, the one so designated by the secretary or by
the board, shall have all the powers and functions of the secretary.
7. TREASURER.
The treasurer shall:
(a) have the custody of the corporate funds and securities;
(b) keep full and accurate accounts of receipts and disbursements in the
corporate books;
(c) deposit all money and other valuables in the name and to the credit of
the corporation in such depositories as may be designated by the board;
(d) disburse the funds of the corporation as may be ordered or authorized by
the board and preserve proper vouchers for such disbursements;
(e) render to the president and board at the regular meetings of the board,
or whenever they require it, an account of all his transactions as treasurer
and of the financial condition of the corporation;
(f) render a full financial report at the annual meeting of the shareholders
if so requested;
(g) be furnished by all corporate officers and agents at his request, with
such reports and statements as he may require as to all financial
transactions of the corporation;
(h) perform such other duties as are given to him by these by-laws or as from
time to time are assigned to him by the board or the president.
8. ASSISTANT-TREASURER.
During the absence or disability of the treasurer, the assistant-treasurer,
or if there are more than one, the one so designated by the secretary or by
the board, shall have all the powers and functions of the treasurer.
9. SURETIES AND BONDS.
In case the board shall so require, any officer or agent of the corporation
shall execute to the corporation a bond in such sum and with such surety or
sureties as the board may direct, conditioned upon the faithful performance
of his duties to. the corporation and including responsibility for negligence
and for the accounting for all property, funds or securities of the
corporation which may come into his hands.
ARTICLE V - CERTIFICATES FOR SHARES
1. CERTIFICATES.
The shares of the corporation shall be represented by certificates. They
shall be numbered and entered in the books of the corporation as they are
issued. They shall exhibit the holder's name and the number of shares and
shall be signed by the president or a vice-president and the treasurer or the
secretary and shall bear the corporate seal.
2. LOST OR DESTROYED CERTIFICATES.
The board may direct a new certificate or certificates to be issued in place
of any certificate or certificates theretofore issued by the corporation,
alleged to have been lost or destroyed, upon the making of an affidavit of
that fact by the person claiming the certificate to be lost or destroyed.
When authorizing such issue of a new certificate or certificates, the board
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost or destroyed certificate or certificates, or
his legal representative, to advertise the same in such manner as it shall
require and/or give the corporation a bond in such sum and with such surety
or sureties as it may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost or destroyed.
3. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall
be the duty of the corporation to issue a new certificate to the person
entitled thereto, and cancel the old certificate; every such transfer shall
be entered on the transfer book of the corporation which shall be kept at its
principal office. No transfer shall be made within ten days next preceding
the annual meeting of shareholders.
(b) The corporation shall be entitled to treat the holder of record of any
share as the holder in fact thereof and, accordingly, shall not be bound to
recognize- any equitable or other claim to or interest in such share on the
part of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of New York.
4. CLOSING TRANSFER BOOKS.
The board shall have the power to close the share transfer books of the
corporation for a period of not more than ten days during the thirty day
period immediately preceding (1) any shareholders' meeting, or (2) any date
upon which shareholders shall be called upon to or have a right to take
action without a meeting, or (3) any date fixed for the payment of a dividend
or any other form of distribution, and only those, shareholders of record at
the time the transfer books are closed, shall be recognized as such for the
purpose of (1) receiving notice of or voting at such meeting, or (2) allowing
them to take appropriate action, or (3) entitling them to receive any
dividend or other form of distribution.
ARTICLE VI - DIVIDENDS
Subject to the, provision of the certificate of incorporation and to
applicable law, dividends on the outstanding shares of the corporation may be
declared in such amounts and at such time or times as the board may
determine. Before payment of any dividend, there may be set aside out of the
net profits of the corporation available for dividends such sum or sums as
the board from time to time in its absolute discretion deems proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the board shall think conducive to the interests of the
corporation, and the board may modify or abolish any such reserve.
ARTICLE VII - CORPORATE SEAL
The seal of the corporation shall be circular in form and bear the name of
the corporation, the year of its organization and the words "Corporate Seal,
New York. " The seal may be used by causing it to be impressed directly on
the instrument or writing to be sealed, or upon adhesive substance affixed
thereto. The seal on the certificates for shares or on any corporate
obligation for the payment of money may be a facsimile, engraved or printed.
ARTICLE VIII - EXECUTION OF INSTRUMENTS
All corporate instruments and documents shall be signed or countersigned,
executed, verified or acknowledged by such officer or officers or other
person or persons as the board may from time to time designate.
ARTICLE IX - FISCAL YEAR
The fiscal year shall begin the first day of January in each year.
ARTICLE X - REFERENCES TO CERTIFICATE OF INCORPORATION
Reference to the certificate of incorporation in these by-laws shall include
all amendments thereto or changes thereof unless specifically excepted.
ARTICLE- XI - BY-LAW CHANGES
AMENDMENT, REPEAL, ADOPTION, ELECTION OF DIRECTORS.
(a) Except as otherwise provided in the certificate of incorporation the by-
laws may be amended, repealed or adopted by vote of the holders of the shares
at the time entitled to vote in the election of any directors, By-laws may
also be amended, repealed or adopted by the board but any by-law adopted by
the board may be amended by the shareholders entitled to vote thereon as
herein above provided.
(b) If any by-law regulating an impending election of directors is adopted,
amended or repealed by the board, there shall be set forth in the notice of
the next meeting of shareholders for the election of directors the by-law so
adopted, amended or repealed, together with a concise statement of the
changes made.
<PAGE>
Exhibit 10.1 Real Estate Office Lease Agreement (November 1, 1994)
LEASE AGREEMENT
This Agreement is made on November 1, 1994,
Between:
Landlord, STEPHEN FINDLAY,
residing or located at 681 Chestnut Street, in the Township of Union in the
County of Union and State of New Jersey, herein designated as the Landlord,
and
Tenant, PRIME CONTRACTING-CORP.,
residing or located at 681 Chestnut Street in the Township of Union in the
County of Union and State of New Jersey, herein designated as the Tenant,
Witnesseth that the Landlord does hereby lease to the Tenant and the Tenant
does hereby rent from the Landlord, the following described premises:
Premises 681 Chestnut Street, Union, New Jersey.
TERM: for a term of five (5) years commencing on November 1,
1994, and ending on October 31, 1999 to be used and occupied only
and for no other purpose than any lawful purpose having a
non-applicability Number under ISRA
USE: Upon the following Conditions and Covenants:
1st. Payment of Rent. The Tenant covenants and agrees to pay to the
Landlord, as rent for and during the term hereof, the sum of __________ in
the following manner: SEE ATTACHED SCHEDULE.
2nd: Repairs and Care. The Tenant has examined the premises and has entered
into this lease without any representation on the part and expense, make all
repairs, including painting and decorating, and shall maintain the premises
in good condition and state of repair, and at the end or other expiration of
the term hereof, shall deliver up the rented premises in good order and
condition, wear and tear from a reasonable use thereof, and damage by the
elements not resulting from the neglect or fault of the Tenant, excepted. The
Tenant shall neither encumber nor obstruct the sidewalks, driveways, yards,
entrances, hallways and stairs, ut shall keep and maintain the same in a
clean condition, free front debris, trash, refuse, snow and ice.
3rd: Compliance with Laws, Etc. The Tenant shall promptly comply with
all laws, ordinances, rules, regulations, requirements and directives of the
Federal, State and Municipal Governments or Public Authorities and of all
their departments, bureaus and subdivisions, Compliance applicable to and
affecting the said premises, their use and occupancy, for the correction,
prevention and abatement of nuisances, violations or other grievances in,
upon or connected with the said premises, during the term hereof ; and shall
promptly etc. comply with all orders, regulations, requirements and
directives of the Board of Fire Underwriters or similar authority and of any
insurance companies which have issued or are about to issue Policies of
insurance covering the said premises and its contents, for the prevention of
fire or other casualty, damage or injury, at the Tenant's own cost and
expense.
4th: Assignment. The Tenant shall not assign, mortgage or hypothecate
this lease, nor sublet or sublease the premises or assign any part thereof;
nor Occupy or use the leased premises or any part thereof, nor permit or
suffer the same to be occupied or used for any purposes other than as herein
limited, nor for any purpose deemed unlawful disreputable, or extra
hazardous, on account of fire or other casualty.
5th: Alterations/Improvements. No alterations, additions or improvements
shall be made, and no climate regulating, air conditioning, heating or
sprinkler systems, television or radio antennas, heavy equipment, apparatus
and fixtures shall be installed in or attached to the leased premises,
without the written consent of the Landlord. Unless otherwise provided
herein, all such alterations, additions or improvements and systems, when
made, installed in or attached to the said premises, shall belong to and
become the Property of the Landlord and shall be surrendered with the
premises and as part thereof upon the expiration or sooner termination of
this lease, without hindrance, molestation or injury.
6th: Fire and Other Casualty. In case of fire or other casualty, the Tenant
shall give immediate notice to the Landlord. If the premises shall be
partially damaged by fire, the elements or other casualty, the Landlord shall
repair the same as speedily as practicable, but the Tenant's obligation to
pay the rent hereunder shall not cease. However, if, in the opinion of the
Landlord, the premises be totally destroyed or so extensively and
substantially damaged as to require practically a rebuilding thereof, then
the rent shall be paid up to the time of such destruction and then and from
thenceforth this lease shall come to an end. In no event however, shall the
provisions of this clause become effective or be applicable, if the fire or
other casualty and damage shall be the result of the carelessness, negligence
or improper conduct of the Tenant or the Tenant's agents, employees, guests,
licensees, invitees, subtenants, assignees or successors. In such case, the
Tenant's liability for the payment of the rent and the performance of all the
covenants, conditions and terms hereof on the Tenant's part to be performed
shall continue and the Tenant shall be liable to the Landlord for the damage
and loss suffered by the Landlord. If the Tenant shall have been insured
against any of the risks herein covered, then the proceeds of such insurance
shall be paid over to the Landlord to the extent of the Landlord's costs and
expenses to make the repairs hereunder, and such insurance carriers shall
have no recourse against the Landlord for reimbursement.
7th: Inspection and Repair. The Tenant agrees that the Landlord and the
Landlord's agents, employees or other representatives, shall have the right
to enter into and upon the said premises or any part thereof, at all
reasonable hours, for the purpose of examining the same or making such
repairs or alterations therein as may be necessary for the safety and
preservation thereof. This clause shall not be deemed to be a covenant by the
Landlord nor be construed to create an obligation on the part of the Landlord
to make such inspection or repairs.
8th: Right to Exhibit. The Tenant agrees to permit the Landlord and the
Landlord's agents, employees or other representatives show the premises to
persons wishing to rent or purchase the same, and Tenant agrees that on and
after 6 months next preceding the expiration of the term hereof, the Landlord
or the Landlord's agents, employees or other representatives shall have the
right to place notices on the front of said premises or any part thereof,
offering the premises for rent or for sal and the Tenant hereby agrees to
permit the same to remain thereon without hindrance or molestation.
9th. Glass, etc., Damage, Repairs. In the case of the destruction of or any
damage to the glass in the leased premises or the destruction of or damage of
any kind whatsoever to the said premises, caused by the carelessness,
negligence or improper conduct on the part of the Tenant or the Tenant's
agents, employees, guests, licensees, invitees, subtenants, assignees or
successors, the Tenant shall repair the said damage or replace or restore any
destroyed parts of the premises, as speedily as possible, at the Tenant's own
cost and expense.
10th. Signs. The Tenant shall not place nor allow to be placed any signs of
any kind whatsoever, upon, in or about the same premises or any part thereof,
except of a design and structure and in or at such places as may be indicated
and consented to by the Landlord in writing. In case the Landlord or the
Landlord's agents, employees or representatives shall deem it necessary to
remove any such signs in order to paint or make any repairs, alterations or
improvements in or upon said premises or any Part thereof, they may be so
removed, but shall be replaced at the Landlord's expense when the said
repairs, alterations or improvements shall have been completed. Any signs
permitted by the Landlord shall at all times conform with all municipal
ordinances or other laws and regulations applicable thereto.
11th. Non-Liability of Landlord. The Landlord shall not be liable for any
damage or injury which may be sustained by the Tenant or any other person, as
a consequence of the failure, breakage, leakage or obstruction of the water,
plumbing, steam, sewer, waste or soil pipes roof, drains, leaders, gutters,
valleys, downspouts or the like or of the electrical, gas, power, conveyor,
refrigeration, sprinkler, air conditioning or heating systems, elevators or
hoisting equipment; or by reason of the elements; or resulting from the
carelessness, negligence or improper conduct on the part of any other Tenant
or of the Landlord or the Landlord's or this or any other Tenant's agents,
employees, guests, licensees, invitees, subtenants, assignees or successors;
or attributable to any interference with, interruption of or failure, beyond
the control of the landlord, of any services to be furnished or supplied by
the Landlord.
12th: Mortgage Priority. This lease shall not be a lien against the said
premises in respect to any mortgages that may hereafter be placed upon said
premises. The recording of such mortgage or mortgages shall have preference
and precedence and be superior and prior in lien to this lease, irrespective
of the date of recording and the Tenant agrees to execute any instruments,
without cost, which may be deemed necessary or desirable, to further effect
the subordination of this lease to any such mortgage or mortgages. A refusal
by the Tenant to execute such instruments shall entitle the Landlord to the
option of canceling this lease, and the term hereof is hereby expressly
limited accordingly.
13th: Security. The Tenant has this day deposited with the Landlord the
sum, of $ 0 as security for the payment of the rent hereunder and the full
and faithful performance by the Tenant of the covenants and conditions on the
part of the Tenant to be performed. Said sum shall be returned to the Tenant,
without interest, after the expiration of the term hereof, provided that the
Tenant has fully and faithfully performed all such covenants and conditions
and is not in arrears in rent. During the term hereof, the Landlord may, if
the Landlord so elects, have recourse to such security, to make good any
default by the Tenant, in which event the Tenant shall, on demand, promptly
restore said security to its original amount. Liability to repay said
security to the Tenant shall run with the reversion and title to said
premises, whether any change in ownership thereof be by voluntary alienation
or as the result of judicial sale, foreclosure or other proceedings, or the
exercise of a right of taking or entry by any mortgagee. The Landlord shall
assign or transfer said security, for the benefit of the Tenant, to any
subsequent owner or holder of the reversion or title to said premises, in
which case the assignee shall become liable for the repayment thereof as
herein provided, and the assignor shall be deemed to be released by the
Tenant from all liability to return such security. This provision shall be
applicable to every alienation or change in title and shall in no wise be
deemed to permit the Landlord to retain the security after termination of the
Landlord's ownership of the reversion or title. The Tenant shall not
mortgage, encumber or assign said security without the written consent of the
Landlord.
14th: Increase of Insurance Rates. If for any reason it shall be impossible
to obtain fire and other hazard insurance on the buildings and improvements
on the leased premises, in an amount and in the form and in insurance
companies acceptable to the Landlord, the Landlord may, if the Landlord so
elects at any time thereafter, terminate this lease and the term hereof, upon
riving to the Tenant fifteen days notice in writing of the Landlord's
intention so to do, and upon the giving of such notice, this ease and the
term thereof shall terminate. If by reason of the use to which the premises
are put by the Tenant or character of or the manner in which the Tenant's
business is carried on, the insurance rates for fire and other hazards shall
be increased, the Tenant shall upon demand, pay to the Landlord, as rent, the
amounts by which the premiums for such insurance are increased. Such payment
shall be paid with the next installment of rent but in no case later than one
month after such demand, whichever occurs sooner.
15th: Utilities. The Tenant shall pay when due all the rents or charges for
are or may be assessed or imposed upon the leased premises or which are or
may be charged to the Landlord by the suppliers thereof during the term
hereof, and if not paid, such rents or charges shall be added to and become
payable as additional rent with the installment of rent next due or within 30
days of demand therefor, whichever occurs sooner.
16th: If the land and premises leased herein, or of which the leased
premises are a part, or any portion thereof, shall be taken under eminent
domain or condemnation proceedings, or if suit or other action shall be
instituted for the taking or condemnation thereof, or if in lieu of any
formal condemnation proceedings or actions, the Landlord shall grant an
option to purchase and or shall sell and convey the said premises or any
portion thereof, to the governmental or other public authority, agency, body
or public utility, seeking to take said land and promises or any portion
thereof, then this lease, at the option of the Landlord, shall terminate, and
the term hereof shall end as of such date as the Landlord shall fix by notice
in writing; and the Tenant shall have no claim or right to claim or be
entitled to any portion of any amount which may be awarded as damages or paid
as the result of such condemnation proceedings or private sale or conveyance
in lieu of formal condemnation proceedings; and all rights of aid as the
purchase price for such option assigned to the Landlord. The Tenant agrees to
execute and deliver any instruments at the expense of the Landlord as may be
deemed necessary or required to expedite any condemnation proceedings or to
effectuate a proper transfer of title to such governmental or other public
authority, agency, body or public utility seeking to take or acquire the said
lands and premises or any portion thereof. The Tenant covenants and agrees to
vacate the said premises, remove all the Tenant's personal property therefrom
and deliver up peaceable possession thereof to the Landlord or to such other
party designated by the Landlord in the aforementioned notice. Failure by the
Tenant to comply with any provisions in this clause shall subject the Tenant
to such costs, expenses, damages and losses as the Landlord may incur by
reason of the Tenant's breach hereof.
17th: Remedies upon Tenant's Default. If there should occur any default on
the part of the Tenant in the performance of any conditions and covenants
herein contained, or if during the term hereof the premises or any part
thereof shall be or become abandoned or deserted, vacated or vacant, or
should the Tenant be evicted by summary proceedings or otherwise, the
Landlord, in addition to any other remedies herein contained or as may be
permitted by law, may either by force or otherwise, without being liable for
prosecution therefor, or for damages, re-enter the said premises and the same
have and again possess and enjoy; and as agent for the Tenant or otherwise,
re-let the premises and receive the rents therefor and apply the same, first
to the payment of such expenses, reasonable attorney fees and costs, as the
Landlord may have been put to in re-entering and repossessing the same and in
making such repairs and alterations as may be necessary; and second to the
payment of the rents due hereunder. The Tenant shall remain liable for such
rents as may be in arrears and also the rents as may accrue subsequent to the
re-entry by the Landlord, to the extent of the difference between the rents
reserved hereunder and the rents, if any, received by d lord during the
remainder of the unexpired term hereof, after deducting the aforementioned
expenses, fees and costs; the same to be paid as such deficiencies arise and
are ascertained each month.
18th. Termination on Default. Upon the occurrence of any of the
contingencies set forth in the preceding clause, or should the Tenant be
adjudicated a bankrupt, insolvent or placed in receivership, or should
proceedings be instituted by or against the Tenant for bankruptcy,
insolvency, receivership, agreement of composition or assignment for the
benefit of creditors, or if this lease or the estate of the Tenant hereunder
shall pass to another by virtue of any court proceedings, writ of execution,
levy, sale or by operation of law, the Landlord may, if the Landlord so
elects, at any time thereafter, terminate this lease and the term hereof,
upon giving to the Tenant or to any trustees, receiver, assignee or other
person in charge of or acting as custodian of the assets or property of the
Tenant, five days notice in writing, of the Landlord's intention so to do.
Upon the giving of such notice, this lease and the term hereof shall end on
the date fixed in such notice as if the said date was the date originally
fixed in this lease for the expiration hereof; and the Landlord shall have
the right to remove all persons, goods, fixtures and chattels therefrom, by
force or otherwise, without liability for damages.
19th: Removal of Tenant's Property. Any equipment, fixtures, goods or other
property of the Tenant, not removed by the Tenant upon the termination of
this lease, or upon any quitting, vacating or abandonment of the premises by
the Tenant, or upon the Tenant's eviction, shall be considered as abandoned
and the Landlord shall have the right, without any notice to the Tenant, to
sell or otherwise dispose of the same, at the expense of the Tenant, and
shall not be accountable to the Tenant for any part of the proceeds of such
sale, if any.
20th: Reimbursement of Landlord. If the Tenant shall fail or refuse to
comply with and perform any conditions and covenants of the within lease, the
Landlord may, if the Landlord so elects, carry out and perform such
conditions and covenants, at the cost and expense of the Tenant, and the said
cost and expense shall be payable on demand, or at the option of the Landlord
shall be added to the installment of rent due immediately thereafter but in
no case later than one month after such demand, whichever occurs sooner, and
shall be due and payable as such. This remedy shall be in addition to such
other remedies as the Landlord may have hereunder by reason of the breach by
the Tenant of any of the covenants and conditions in this lease contained.
21st: Non-Performance. This lease and the obligation of the Tenant to pay
the rent hereunder and to comply with the covenants an conditions hereof,
shall not be affected, Curtailed or impaired for failure of Landlord to
perform if for reasons beyond Landlord's control.
22nd: Validity of Lease. The terms, conditions, covenants and provisions of
this lease shall be deemed to be severable. If any clause or provision herein
contained shall be adjudged to be invalid or unenforceable by a court of
competent jurisdiction or by operation of any applicable law, it shall not
affect the validity of any other clause or provision herein, but such other
clauses or provisions shall remain in full force and effect.
23rd: Non-Waiver by Landlord. The various rights, remedies, options and
elections of the Landlord, expressed herein, are cumulative, and the failure
of the Landlord to enforce strict performance by the Tenant of the conditions
and covenants of this lease or Non-Waiver to exercise any election or option
or to resort or have recourse to any remedy herein conferred or the
acceptance by the Landlord of any installment of rent after any breach by the
Tenant, in any one or more instances, shall not be construed or deemed to
be a waiver or a relinquishment for the future by the Landlord of any such
conditions and covenants, options, elections or remedies, but the same shall
continue in full force and effect.
24th: Notices. All notices required under the terms of this lease shall be
given and shall be complete by mailing such notices by certified or
registered mail, return receipt requested, to the address of the parties as
shown at the head of this lease, or to such other address as may be
designated in writing, which notice of change of address shall be given in
the same manner.
25th: Title and Quiet Enjoyment. The Landlord covenants and represents that
the Landlord is the owner of the premises herein leased and has the right and
authority to enter into, execute and deliver this lease; and does further
covenant that the Tenant on paying the rent and performing the conditions and
covenants herein contained, shall and may peaceably and quietly have, hold
and enjoy the leased premises for the term aforementioned.
26th: Entire Contract. This lease contains the entire contract between the
parties. No representative, agent or employee of the Landlord has been
authorized to make any representations or promises with reference to the
within letting or to vary, alter or modify the terms hereof. No additions,
changes or modifications, renewals or extensions hereof, shall be binding
unless reduced to writing and signed by the Landlord and the Tenant.
See attached Rider
Conformation with Laws and Regulations. The Landlord may pursue the relief
or remedy sought in any case made and provided as if the particular
provisions of the statutes or the regulations of any governmental agency in
such visions of the applicable statutes or regulations were set forth herein
at length. In all references herein to any parties, persons, entities or
corporations the use of any particular gender or the plural or singular
number is intended to include the appropriate gender or number as the text of
the within instrument may require. All the terms, covenants and conditions
herein contained shall be for and shall inure to the benefit of and shall
bind the respective parties hereto, and their heirs, executors,
administrators, personal or legal representatives, successors and assigns.
In Witness Whereof, the parties hereto have hereunto set their hands and
seals, or caused these presents to be signed by their proper corporate
officers and their proper corporate seal to be hereto affixed, the day and
year first above written.
/s/ Stephen W. Findlay
STEPHEN FINDLAY, LANDLORD
PRIME CONTRACTING CORP.
By: /s/ Stephen W. Findlay, President
STEPHEN FINDLAY, President
<PAGE>
Exhibit 10.2 Rider to Real Estate Office Lease (November 1, 1994)
RIDER TO LEASE AGREEMENT
BETWEEN
STEPHEN FINDLAY, as Landlord
AND
PRIME CONTRACTING CORP., as Tenant
THIS RIDER CONTAINS PROVISIONS WHICH MAY CONFLICT OR BE INCONSISTENT WITH
THE TERMS OF THAT CERTAIN LEASE FOR THE PREMISES BY AND BETWEEN LANDLORD
AND TENANT (hereinafter referred to as the "Printed Lease") TO WHICH THIS
RIDER IS ATTACHED AND IN EVERY SUCH CASE THE TERMS SET FORTH IN THIS RIDER
SHALL GOVERN AS TO ANY SUCH CONFLICT OR INCONSISTENCY. THE PRINTED LEASE
AND THIS RIDER ARE COLLECTIVELY REFERRED TO AS THE "LEASE". THE LEASED
PREMISES DEMISED PURSUANT TO THE LEASE ARE REFERRED TO IN THIS LEASE AS
THE "PREMISES", "DEMISED PREMISES" OR "LEASED PREMISES'.
1. Option to Renew.
Provided that (i) this Lease shall not be terminated prior to the normal
expiration date thereof and (ii) there shall not exist at any time during
the last six (6) months of the term of this Lease a default or condition
which with the giving of notice or the lapse of time, or both, would
constitute a default by Tenant hereunder, Tenant shall have the option to
renew this Lease for one (1) additional consecutive term of five (5) years
each. Said option shall be exercised by Tenant by the giving of notice to
such effect to Landlord six (6) months prior to the expiration date of the
existing initial or additional term of this Lease, as the case may be;
PROVIDED, HOWEVER, that if on the first day of the additional term a
default or condition which with the giving of notice or lapse of time, or
both, would constitute a default by Tenant hereunder, shall exist, then
said notice shall be deemed to be vacated and null and void and the
aforesaid option shall have been deemed to have been not exercised. The
Lease for any additional term shall be on the same terms and conditions as
shall be provided herein with respect to the initial term of this Lease,
except (x) that the rent during any such additional term shall be as
hereinafter provided and (y) Tenant shall not have any further option to
renew this Lease after the last additional term set forth above.
2. Rent.
2. 1 Tenant covenants and agrees to pay to Landlord, during the initial
term of this Lease, without notice or demand, and without abatement,
set-off or deduction of any kind, the annual rental (such annual rent,
whether paid during the initial term or any additional term of this Lease,
is herein sometimes referred to as the "Basic Rent") of EIGHTEEN THOUSAND
($18,000) DOLLARS, payable in advance in equal monthly installments of ONE
THOUSAND FIVE HUNDRED ($1,500) DOLLARS on the first day of each calendar
month during said period. All rent shall be paid to Landlord in lawful
money of the United States of America at Landlords' address as set forth
at the head of this Lease or to such other person or such other address as
Landlord shall designate in writing.
2.2 During any additional term of this Lease, Tenant shall pay the Basic
Rent as determined in the following manner:
(a) As promptly as practicable after the end of the initial term of this
Lease and after the end of each term thereafter during the time when this
Lease shall be in effect, Landlord shall compute by the method hereinafter
set forth the percentage increase, if any, in the cost of living for such
period based upon the "Consumers Price Index--Urban Wage Earners and
Clerical Workers (revised) (1982-1984=100)" (hereinafter called the
"Index") published by the Bureau of Labor Statistics of the United States
Department of Labor.
(b) The Index number indicated in the column for the New York-Northeast
New Jersey Metropolitan area, entitled "All Items," for the month of
November, 1994 shall be the "base Index number" and the corresponding
Index for the month of November, 1999, shall be the "current Index number"
for the additional term of this Lease.
(c) The current Index number as determined hereinabove shall be divided
by the base Index number and the resulting quotient shall be deemed to be
the "Factor".
(d) The Factor multiplied by the annual fixed rental of EIGHTEEN THOUSAND
($18,000) DOLLARS shall be the Basic Rent for each year of such additional
term of this Lease; PROVIDED, HOWEVER, that in no event shall the Basic
Rent be less than EIGHTEEN THOUSAND ($18,000) DOLLARS per annum.
(e) Landlord shall within a reasonable time after obtaining the
appropriate data necessary for computing such increase in the Basic Rent,
give Tenant notice of any increase so determined.
(f) The Basic Rent, as so determined, shall be due and payable to
Landlord in twelve (12) equal monthly installments, in advance, without
notice or demand, and without abatement, setoff or deduction of any kind,
on the first day of each calendar year, in equity or otherwise for the
failure to pay additional rent as are available for the non-payment of
Basic Rent.
3. Payment of Taxes, Assessments, Etc.
3.1 (a) Tenant, as additional rent, shall pay to Landlord and discharge
all real estate taxes and assessments and all other charges or payments of
any kind and nature whatsoever, extraordinary as well as ordinary and
whether or not now within the contemplation of the parties, imposed by any
governmental or public authority as shall, during the term herein granted,
be imposed or become a lien in respect of the Premises or any. part
thereof or upon any building or appurtenance thereto, or any part thereof,
or upon any sidewalks or streets in front of or adjoining the Premises, or
which may become due and payable with respect thereto and any and all
taxes, assessments and charges, laid, levied, assessed or imposed upon the
Premises in lieu of or in addition to the foregoing, under or by virtue of
any present or future laws, rules, requirements, orders, directions,
ordinances or regulations of the State of New Jersey, the County of Union,
or the Township of Union or of any municipal, governmental or lawful
authority whatsoever. (All of the foregoing taxes, assessments and
governmental charges are herein referred to as the "Real Estate Taxes.")
(b) Tenant shall pay all Real Estate Taxes before any fine, penalty,
interest or cost may be added thereto or be imposed thereon for the
non-payment thereof, except that if, by law, the taxpayer may elect to pay
any special assessments levied against the Premises in installments
(whether or not interest shall accrue on the unpaid balance of such
special assessments), Tenant may exercise the option to pay the same in
installments. In such event, Tenant shall pay those installments of said
special assessments becoming due during the term of this Lease as and when
the same become due, before any fine, penalty, further interest or cost
may be added thereto.
(c) With respect to any Real Estate Taxes which are due for or relate to
the fiscal year in which the Commencement Date and expiration date of this
Lease occur, such taxes and assessments shall be apportioned so that
Tenant shall bear the portion thereof which is allocable to the term
hereof and Landlord shall bear the balance thereof.
(d) Tenant shall furnish to Landlord, within twenty (20) days after the
date when any Real Estate Taxes become due, official receipts of the.
appropriate taxing authority, or other evidence satisfactory to Landlord,
evidencing the payment thereof.
3.2 Tenant shall also pay and discharge, as additional rent, all taxes
and assessments which shall or may during the term of this Lease be
charged, laid, levied, assessed or imposed upon, or become a lien upon the
personal property of the Landlord or Tenant in the operation of the
Premises or in connection with Tenant's business conducted on the
Premises.
3.3 The certificate, advice notice or bill of the appropriate official
designated by law to make or issue the same, or to receive payment of any
taxes, of non-payment of such taxes shall be prima facie evidence that
such taxes are due and unpaid at the time of the making or issuance of
such certificate, advice, notice or bill.
3.4 Tenant shall be deemed to have complied with the foregoing covenants
of this Article if payment of any such taxes, assessments or other
governmental impositions, duties and charges is made by Tenant within the
period within which payment is permitted without penalty or interest.
Nothing herein contained shall be construed so as to require Tenant to pay
or be liable for any gift, inheritance, estate, franchise, income,
profits, capital or similar tax, or any tax in lieu of any of the
foregoing imposed upon Landlord, or the successors or assigns of Landlord,
unless such tax shall be imposed or levied upon or with respect to the
value of the Premises or the rents payable to Landlord hereunder in lieu
of real estate taxes upon the Premises.
3.5 If at any time during the term of this Lease the method or scope of
taxation prevailing at the commencement of the Lease term shall be
altered, modified or enlarged so as to cause the method of taxation to be
changed, in whole or in part, so that in substitution for the real estate
taxes now assessed there may be, in whole or in part, a capital levy or
other imposition based on the value of the Premises, or the rents received
therefrom, or some other form of assessment based in whole or in part on
some other valuation of Landlord's real property comprising the Premises,
then and in such event, such substituted tax or imposition shall be
payable and discharged by Tenant.
3.6 At Landlords option, at any time and from time to time during the
term of the Lease, Landlord shall estimate Real Estate Taxes (which
estimate may be changed by Landlord from time to time), and Tenant shall
pay to Landlord 1/12th of the amount so estimated on the first day of each
month in advance. Tenant shall also pay to Landlord on demand from time to
time the amount which, together with said monthly installments, will be
sufficient to pay Tenant's annual proportionate share of such Real Estate
Taxes thirty (30) days prior to the date when such Real Estate Taxes shall
first become due. Within forty-five (45) days after the end of each
calendar year and after the end of the term of this Lease, Landlord shall
submit to Tenant a statement in reasonable detail of the actual Real
Estate Taxes for such calendar year or partial calendar year in the event
the term of this Lease shall commence on a date other than a January 1st
or end on a date other than a December 31st, as the case may -be, and the
figures used for computing Tenant's share, and if Tenant's share so stated
for such period is more or less than the amount paid for such period,
Tenant shall pay to Landlord the deficiency, or Landlord shall credit to
Tenant for the next succeeding year's tax payments, the excess, within ten
(10) days after submission of such statement of Real Estate Taxes.
4. Use, Maintenance, Alterations, Repairs, Etc.
4.1 Tenant has leased the Premises after a full and complete examination
thereof, as well as the title thereto and its present uses and non-uses.
Tenant accepts the same "as is" and without any representation or
warranty, express or implied in fact or by law, by Landlord.
4.2 (a) Landlord shall be responsible to maintain, repair and replace the
roof and structure of the Premises unless any damage thereto shall be
caused by the Tenant or its subtenants, invitees, licensees, employees or
agents, in which event the Tenant shall be responsible to maintain, repair
and replace same at its cost and expense. Tenant shall give Landlord
prompt written notice of any need for maintenance, repair and replacement
of item which is the responsibility of the Tenant hereunder.
(b) Except as provided in Subsection 4.2(a), throughout the term of this
Lease Landlord shall not be required to furnish any services or facilities
or to make any repairs or alterations in or to the Premises, Tenant hereby
assuming the full and sole responsibility for the condition, operation,
repair, replacement, maintenance and management of the entire Premises.
4.3 Notice is hereby given that Landlord shall not be liable for any
labor or materials furnished or to be furnished to Tenant upon credit, and
that no mechanic's or other lien, for any such labor or materials shall
attach to or affect the estate or interest of Landlord in and to the
Premises. In the event that any mechanic's lien is filed against the
Premises as a result of alterations, additions or improvements made by
Tenant, then Landlord, at its option, after fifteen (15) days' notice to
Tenant, may terminate this Lease and may pay the, said lien, without
inquiring into the validity thereof, and Tenant shall forthwith reimburse
Landlord for the total expenses, including but not limited to attorney's
fees, incurred by Landlord in discharging the same, unless within said
fifteen (15) day period Tenant shall either cause said lien to be
discharged or shall appropriately bond said lien in a manner satisfactory
to Landlord.
4.4 Landlord reserves the right, easement and privilege to enter on the
Premises in order to install, at its own cost and expense, any storm
drains and sewers and/or utility lines in connection therewith as may be
required by Landlord. It is understood and agreed that if such work as may
be required by Landlord requires an installation which may displace any
paving, lawn, seeded area or shrubs, Landlord, shall, at its own cost and
expense, restore said paving, lawn, seeded area or shrubs. Landlord
covenants that the foregoing work shall not unreasonably interfere with
the normal operation of Tenant's business, and Landlord shall indemnify
and save Tenant harmless in connection with such installations.
5. Environmental Compliance
5.1 For purposes of this Article 5, "Hazardous Substances" include any
pollutants, dangerous substances, toxic substances, hazardous wastes,
hazardous materials, or hazardous substances as defined in or pursuant to
regulations issued under the Industrial Site Recovery Act (N.J.S.A.
13:1K-6 et seq.) or any successor or amendatory statute ("ISRA") , the
Spill Compensation and Control Act (N.J.S.A. 58:10-23.11 et seq ("Spill
Act"), the Solid Waste Management Act (N.J.S.A. 13:1E-1 et seq.), the
Resource and Conservation Recovery Act (42 U.S.C. sec 6901 et seq.)
("RCRA"), the Comprehensive Environmental Response compensation, and
Liability Act (42 U.S.C. sec 9601 et seq ("CERCLA") or any other federal,
state or local environmental law, ordinance, rule or regulation.
5.2 Tenant shall not keep or use or permit to be kept or used any
inflammable fluids, red labels or explosives at the Premises, nor keep or
use or permit or suffer to be kept or used at the Premises any Hazardous
Substances except for properly stored safe cleaning and maintenance agents
in reasonable amounts for standard maintenance uses.
5.3 Tenant shall, at Tenant's sole expense, promptly comply with ISRA, if
applicable, based upon Tenant's and any subtenant's use and occupancy of
the Premises. Tenant shall, at Tenant's own expense, make all submissions
to, provide all information to, and comply with all requirements of, the
Industrial Site Evaluation Element of New Jersey Department of
Environmental Protection ("NJDEP"). Should the NJDEP determine that a
remedial action plan be prepared and that a cleanup be undertaken because
of any spills or discharges of hazardous substances or wastes at the
Premises which occur during the term of this Lease, then Tenant shall, at
Tenant's own expense, prepare and submit the required plans and financial
assurances, complete the required remediation and carry out the approved
plans, to the satisfaction of the NJDEP and Landlord. Tenant's obligations
under this section shall arise if there is any closing, terminating or
transferring of operations of an industrial establishment at the Premises
pursuant to ISRA, whether triggered by Landlord, Tenant or any subtenant
of Tenant. Tenant shall indemnify, defend and save harmless Landlord from
all fines, suits, procedures, claims and actions of any kind arising out
of or in any way connected with any spills or discharges of hazardous
substances or wastes at the Premises which occur during the term of this
Lease; and from all fines, suits, procedures, claims and actions of any
kind arising out of Tenant's failure to provide all information, make all
submissions and take all actions required by NJDEP. Tenant's obligations
and liabilities under this section shall continue so long as Landlord
remains responsible for any spills or discharges of hazardous substances
or wastes at the Premises which occur during the term of this Lease and
shall survive the termination of this Lease. Tenant expressly understands
and acknowledges that Tenant's compliance with the provisions of this
Section 5.3 may require Tenant to expend funds or do acts after the
expiration or termination of the term of this Lease. Tenant agrees that it
shall expend such funds and do such acts, and Tenant shall not be excused
therefrom even through the term of this Lease shall have previously
expired or been terminated. Tenant's failure to abide by the terms of this
section shall be restrainable by injunction.
5.4 At no expense to Landlord, Tenant shall promptly provide all
information reasonably requested by Landlord to determine ISRA
applicability to the Tenant and shall promptly sign affidavits evidencing
any and all facts relevant to that determination when requested by
Landlord.
5.5 Tenant shall immediately furnish to Landlord true and complete copies
of all documents, reports, submissions, notices, orders, directives,
findings and correspondence and other materials pertinent to Tenant's
compliance with ISRA as such are issued or received by Tenant. Tenant
shall also promptly furnish to Landlord true and complete copies of all
sampling and test results obtained from all environmental and/or health
samples and tests taken at and around the Premises.
5.6 If Tenant believes that ISRA is not applicable to its operations tat
the Premises, then the Tenant shall at Tenant's sole cost and expense,
obtain an unqualified Letter of Non-Applicability under ISRA from NJDEP
and submit a copy of same, together with Tenant's application to NJDEP
therefor, to Landlord. Should Tenant obtain a letter of non-applicability
and the use of the Premises by Tenant shall change to include the storage
of hazardous materials, then Tenant shall, at Landlord's option, hire at
Tenant's cost and expense, a consultant satisfactory to Landlord to
undertake sampling at the Premises sufficient to determine whether or not
Tenant's operations have resulted in a spill or discharge of hazardous
substances or wastes at or about the Premises. Should the sampling reveal
any such spill or discharge of hazardous substances or waste, then Tenant
shall, at Tenants cost, promptly cleanup the Premises to the satisfaction
of Landlord and NJDEP.
5.7 If Tenant fails to obtain: (i) a nonapplicability letter; (ii) a de
minimis quantity exemption; or (iii) a no further action letter
(collectively referred to as "ISRA Clearance") from the NJDEP; or fails to
clean up the Premises pursuant to Section 5.6, prior to the expiration or
earlier termination of the lease term, then upon the expiration or earlier
termination of the lease term Landlord shall have the option either to
consider this Lease as having ended or to treat Tenant as a holdover
tenant in possession of the Premises. If Landlord considers this Lease as
having ended, then Tenant shall nevertheless be obligated to promptly
obtain ISRA Clearance and to fulfill the obligation set forth in this
Article 5 above, such obligations to survive any termination of this
Lease. If Landlord treats Tenant as a holdover tenant in possession of the
Premises, then Tenant shall monthly pay to Landlord twice the regular
monthly rend which Tenant would have otherwise paid , until such time as
Tenant obtains ISRA Clearance and fulfills its obligations under this
Article 5 above, and during the holdover period all of the terms of this
Lease shall remain in full force and effect.
5.8 In addition to any other indemnifications made by Tenant under this
Lease, Tenant hereby agrees to defend, indemnify and hold Landlord
harmless from and against any and all claims, law suits, liabilities,
losses, damages, penalties, judgments, costs and expenses (including
without limitation, cleanup costs and reasonable attorney's fees arising
by reason of any of the aforesaid or an action against Landlord under this
indemnity) arising directly or indirectly from, out of or by reason of (i)
any breach of this Article 5 occurring during the term of this Lease
and/or (ii) any act or omission by Tenant which gives rise to the Landlord
being charged, prosecuted or penalized due to a violation of any local,
state or federal law or regulation, or amendments or successors thereto,
involving Hazardous Substances, including without limitation, the
following laws: Spill Act, ISRA, RCRA, CERCLA and any other so-called
"Superfund" or "Superlien" law or any other law, rule or regulation
involving environmental regulation contamination or cleanup.
5.9 Tenant represents that its Standard Industrial Classification Number
("SIC") as issued by the United States or any other governmental authority
relating to the business of the Tenant and the uses and purposes for which
the Premises shall be utilized, is and during the term hereof shall remain
1542. Tenant shall not have the right to amend and/or add any use which
would result in a change in or addition to its SIC Number without the
prior written consent of Landlord, such consent not to be unreasonably
withheld.
5.10 Notwithstanding anything to the contrary herein contained, Landlord
shall be responsible for any environmental conditions at the Premises
existing on the date of this Lease and Tenant shall have no responsibility
for any remediation thereof.
6. Indemnification
6.1 (a) In addition to Tenant's obligation to provide insurance pursuant
to Article 7 hereof, Tenant covenants and agrees that it will indemnify,
defend and save harmless Landlord from and against any and all
liabilities, obligations, damages, penalties, claims, costs, charges and
expenses, including without limitation reasonable attorneys' fees, which
may be imposed upon or incurred by Landlord by reason of any of the
following occurring during the term of this Lease:
(i) Any matter, cause or thing arising out of use, occupancy, control or
management of the Premises and any part thereof;
(ii) Any negligence on the part of Tenant or any of its agents,
contractors, servants, employees, licensees or invitees;
(iii) Any accident, injury, damage to any person or property occurring in
or about the Premises;
(iv) Any failure on the part of Tenant to perform or comply with any of
the covenants, agreements, terms or conditions contained in this Lease on
its part to be performed or complied with.
(b) Landlord shall promptly notify Tenant of any such claim asserted
against it for which Landlord is entitled to indemnification pursuant to
this Section 6.1 and shall promptly send to Tenant copies of all papers or
legal process served upon it in connection with any action or proceeding
brought against Landlord by reason of any such claim. Landlord reserves
the right, at its cost and expense, to join in the defense of any such
action or claim with co-counsel of its choosing, which co-counsel shall
cooperate with Tenant's counsel in the defense of any such action.
6.2 The liability of Tenant to indemnify Landlord as set forth in Section
6.1 shall not extend to any matter against which Landlord shall be
protected by insurance, provided, however, that if any such liability
shall exceed the amount of the effective and collectible insurance in
question, the said liability of Tenant shall apply to such excess.
7. Insurance
7. 1 During the term of this Lease, Tenant, at its sole cost and expense,
and for the mutual benefit of Landlord and Tenant, and at Landlord's
request, Landlord's mortgagee, shall carry and maintain the following
types of insurance in the amounts specified:
(a) Fire and extended coverage insurance covering the Premises against
loss or damage by fire and against loss or damage by vandalism and
malicious mischief and by other risks now or hereafter embraced by the
standard "All Risk" extended coverage endorsement used in New Jersey, in
amounts at all times sufficient to prevent Landlord or Tenant from
becoming a co-insurer under the terms of the applicable policies and not
less than the full replacement value of the insurable improvements to the
Premises. The term "full replacement value" shall mean actual replacement
value (exclusive of cost of excavation, foundations and footings). Such
"full replacement value" shall be determined from time to time at the
request of Landlord, by one of the insurers or, at the option of Tenant,
by an appraiser, engineer, architect or contractor approved in writing by
Landlord (which approval shall not be unreasonably withheld) and paid by
Tenant. No omission on the part of Landlord to request any such
determination shall relieve Tenant of any of its obligations under this
Article.
(b) Fire and extended coverage insurance insuring all improvements,
additions, fixtures and contents installed or owned by Tenant in, on or at
the Premises, against loss or damage by fire and against loss or damage by
vandalism and malicious mischief and by other risks now or hereafter
embraced by the standard "All Risk" extended coverage endorsement used in
the State of New Jersey, in amounts equal to the full replacement value of
such improvements, alterations, additions, fixtures and contents. said
insurance shall be deemed to cover Tenant's property and not Landlord's
property.
(c) Comprehensive general public liability insurance, insuring Landlord
and Tenant against liability for injury and death to persons, or property
damage, including water damage and legal liability, occurring in or about
the Premises or arising out of the ownership, maintenance, use or
occupancy thereof including, without limitation, damage to natural
resources or other properties caused by releases of hazardous substances
or any other form of pollution. The liability under such insurance shall
not be less than TWO MILLION DOLLARS ($2,000,000) combined single limit in
respect of personal injury or death to any person or persons and/or
property damage. Such liability policy shall include a Broad Form Broad
Form Comprehensive General Liability endorsement.
(d) Plate glass insurance.
(e) Flood insurance if required by Landlord's mortgagee.
(f) Boiler and pressure vessel insurance including pressure pipes.
(g) Rental income insurance covering the Basic Rent, and real estate
taxes and insurance costs for a period of one year.
(h) If a sprinkler system shall be located in the Premises, sprinkler
leakage insurance in amounts and form reasonably acceptable to Landlord.
(i) Such other insurance on the Premises and in such amounts as may from
time to time be reasonably required by Landlord against other insurable
hazards which at the time are commonly insured against in the case of
premises similarly situated.
7.2 (a) All insurance provided for in Section 7.1 hereof, if readily
obtainable, shall be effected under standard form policies issued by
insurers of recognized responsibility, authorized to do business in the
State of New Jersey which are well rated by national rating organizations
and have been approved in writing by Landlord, such approval not to be
unreasonably withheld. Landlord and Tenant, and at the Landlord's request,
Landlord's mortgagee, shall be named insureds on such insurance policies.
(b) All policies of insurance (except liability insurance, fire and
casualty insurance on Tenant's property and rental income insurance) shall
provide by endorsement that any loss shall be adjusted with Landlord, and
any mortgagee of the Premises and payable to the Landlord or any mortgagee
as their respective interests may appear. The rental income insurance
policy shall be payable to Landlord and the fire and casualty insurance on
Tenant's property shall be payable to Tenant and Tenant's lender, if any.
(c) Each policy of insurance required to be obtained by Tenant as herein
provided and each certificate therefor issued by the insurer shall contain
an agreement by the insurer that such policy shall not be canceled or
modified without at least thirty (30) days prior written notice to
Landlord and to any mortgagee to whom a loss thereunder may be payable.
7.3 Upon the commencement of this Lease, Tenant shall deliver to Landlord
evidence of the above'-mentioned insurance coverage satisfactory to
counsel for Landlord. No later than fifteen (15) days prior to the
expiration of any policy of insurance required to be maintained by Tenant
under this Lease, Tenant shall deliver to Landlord evidence of the renewal
of the above-mentioned insurance coverage satisfactory to counsel for
Landlord. Upon Tenant's failure to comply in full with this Article 7,
Landlord shall have the immediate right to obtain the aforesaid insurance
coverage, to pay the premiums therefor and to add the said premiums
together with interest at the rate of eighteen (18%) percent per annum. or
the highest lawful rate, whichever is less, to the monthly installment of
rent next due, which amount shall be paid by Tenant to Landlord as
additional rent, in addition to said monthly installment.
7.4 Tenant shall not take out separate insurance (other than personal
liability insurance) concurrent in form or contributing in the event of
loss with that required in this Article to be furnished by, or which may
reasonably be required to be furnished by Tenant unless Landlord is
included therein as an insured, with loss payable as in this Lease
provided. Tenant shall immediately notify Landlord of the taking out of
any such separate insurance and shall deliver the policy or policies as
provided in Section 7.3 hereof.
7.5 Landlord reserves the right to require increased coverage as to the
liability insurance to be provided as hereinabove referred to, as the same
may be required to take into effect cost of living and/or inflationary
effects on the dollar value of the liability coverage, in order to affect
reasonable protection under then existing economic conditions. If at any
time during the term of this Lease Landlord shall request that the amount
of public liability insurance provided by Tenant as required by the
provisions of this Article 7 be increased on the ground that such coverage
is inadequate to properly protect the interests of Landlord, and Tenant
shall refuse to comply with such request or requirement, the dispute shall
be submitted to arbitration in New Jersey under the auspices and rules of
the American Arbitration Association and judgment upon any award of such
arbitrators may be entered in any court of competent jurisdiction.
7.6 The parties hereto mutually covenant and agree that each party, in
connection with insurance policies required to be furnished in accordance
with the terms and conditions of this Lease, or in connection with
insurance policies which they obtain insuring such insurable interest as
Landlord or Tenant may have in its own properties, whether personal or
real, shall expressly waive any right of subrogation on the part of the
insurer against Landlord or Tenant as the same may be applicable, and
Landlord and Tenant each mutually waive all right of recovery against each
other, their officers, directors, agents or employees for any loss, damage
or injury of any nature whatsoever to property or person for which either
party is required by this Lease to carry insurance, if the loss, damage or
injury shall have been caused by the event, fault or negligence of the
other party or anyone for whom such party may be responsible.
8. Assignment
8. 1 Supplementing Article 4th of the printed Lease, if at any time the
original Tenant named herein or the then Tenant or any Guarantor shall be
a corporation or partnership, any transfer of voting stock or partnership
interest resulting in the person(s) who shall have owned a majority of
such corporation's shares of voting stock or the general partners'
interest in such partnership, as the case may be, immediately before such
transfer, ceasing to own a majority of such shares of voting stock or
general partners' interest, as the case may be, except a s the result of
transfers by inheritance, shall be deemed to be an assignment of this
Lease as to which Landlord's consent shall have been required, and in any
such event Tenant shall so notify Landlord, except that this provision
shall not be applicable to any corporation all the outstanding voting
stock of which is listed on a national securities exchange (as defined in
the Securities Exchange Act of 1954, as amended). For the purposes of
this Section, the words "voting stock" shall refer to shares of stock
regularly entitled to vote for the election of directors of the
corporation. Notwithstanding the foregoing, Tenant shall have the right
to assign this Lease or sublet the Premises to Modern Medical Modalities
Corporation or its subsidiaries without the consent of the Landlord,
provided that the Tenant shall remain liable under this Lease and a copy
of the assignment or sublease shall be delivered to the Landlord and any
assignee shall assume the obligations of the Tenant under this Lease.
8.2 The making of any assignment, mortgage, pledge, encumbrance or
subletting, in whole or in part, whether or not with the consent of
Landlord, shall not operate to relieve Tenant from its obligations under
this Lease and, notwithstanding any such assignment, mortgage, pledge,
encumbrance or subletting, Tenant shall remain liable for the payment of
the rental and other charges and for the due performance of all the
covenants, agreements, terms and provisions of this Lease to the full end
of the term of this Lease, and whether or not there shall have been any
prior termination of this Lease by summary proceedings or otherwise. The
acceptance of rent by Landlord from any person, firm or entity other than
Tenant shall not be deemed to be a waiver by Landlord of any provision
hereof. The consent by Landlord to any assignment, mortgaging or
subletting by others shall be deemed to be a consent only for the
assignment, mortgage or subletting requested, and shall not in way be
considered to relieve Tenant from obtaining the express written consent of
Landlord to any other or further assignment, mortgaging or subletting.
8.3 In the event of any assignment or subletting by Tenant, any rent
(determined on a per square foot basis) or other compensation other than a
pass-through of the obligations of Tenant hereunder received by Tenant in
excess of the Basic Rent of Tenant under this Lease (determined on a per
square foot basis) shall belong to Landlord, and Tenant shall account for
same and remit same to Landlord promptly upon receipt. Tenant shall
deliver to Landlord a copy of any instrument of assignment or sublease at
the effective date thereof.
8.4 In the event Tenant shall assign or sublet the Premises or request
the consent of Landlord to any assignment or subletting, or if Tenant shall
request the consent of Landlord for any act that Tenant proposes to do,
then Tenant shall pay Landlord's reasonable attorneys fees incurred in
connection therewith.
9. Late Payment
Tenant agrees that as a material inducement to Landlord to enter into
this Lease, it will pay the rent and other charges as herein provided,
promptly on the first day of each and every month or as otherwise in this
Lease provided as to the additional rent and charges as herein provided.
Without waiving any of Landlord's other remedies for failure to pay rent as
in this Lease contained, Tenant agrees that any rent not paid by the tenth
(10th) day of any month shall require payment by Tenant of a late charge
of eight cents ($.08) for each dollar of rental payment required, which
payment shall be made in such event by Tenant with the required payment of
rent, if late, together with interest on amounts overdue from the date
thereof computed at the rate of eighteen (18%) percent per annum, which
payment for late charges and interest in any event shall be made by Tenant
upon demand if not otherwise theretofore paid. Anything hereinabove
contained to the contrary notwithstanding, it is expressly understood and
agreed that any pattern of consecutive late payment of rent or other
charges as required in this Lease shall be deemed a default pursuant to
the terms and conditions of this Lease, for which Landlord shall have such
rights or remedies as in this Lease provided.
10. Waiver of Landlord's Liability
Notwithstanding any provision to the contrary, Tenant shall look solely
to the equity of Landlord in and to the portion of the Premises then owned
by Landlord or, if there shall be any ground or underlying lease, the
equity of Landlord in and to the leasehold interest of Landlord under such
ground or underlying lease, in the event of a breach or default by Landlord
pursuant to the provisions of this Lease, and Tenant agrees that the
liability of Landlord under this Lease shall not exceed the value of such
equity of Landlord in the Premises or in said leasehold interest, as the
case may be. No other properties or assets of Landlord shall be subject to
levy, execution or enforcement procedures for the satisfaction of any
judgment (or other judicial process) arising out of, or in connection
with, this Lease; and if Tenant shall acquire a lien on any such other
properties or assets by judgment or otherwise, Tenant shall promptly
release such lien on such other properties and assets by executing,
acknowledging and delivering to Landlord an instrument to that effect
prepared by Landlord's attorneys.
11. Attorneys Fees
In the event of any default by Tenant under this Lease, Landlord shall be
entitled in addition to any other rights and remedies hereunder, to the
reimbursement by Tenant of all costs and reasonable attorney's fees
incurred by Landlord in the exercise of its rights and remedies.
12. Transfer of Landlord's Interest
It is expressly understood and agreed that the term "Landlord," as used
in this Lease, means only the owner for the time being of the Premises, and
in the event of the sale, assignment or transfer by such owner of its
interest in all or part of the Premises, such owner shall thereupon be
released and discharged from all covenants and obligations of Landlord
thereafter accruing with respect to the portion of the Premises so
transferred; but such covenants and obligations shall be binding upon each
new owner for the time being of the Premises or any part thereof.
13. Surrender by Tenant At End of Term
Tenant will surrender possession of the Premises and remove all goods and
chattels and other personal property in the possession of Tenant, by
whomsoever owned, at the end of the term of this Lease, or at such other
time as Landlord may be entitled to re-enter and take possession of the
Premises pursuant to any provision of this Lease, and leave the Premises
broom clean and free of occupants and in as good order and condition as
they were at the beginning of the term, reasonable wear and tear excepted,
together with all alterations, additions and improvements in, to or on the
Premises made by Tenant as permitted under the' Lease, subject to
Landlord's right to require Tenant at its cost and expense to remove any
alterations or improvements installed by Tenant and not permitted or
consented to by Landlord pursuant to the terms and conditions of the
Lease, so as to restore the Premises to the condition found at the
inception of the Lease term, which covenant by Tenant shall survive the
surrender and the delivery of the Premises as provided hereunder. For
purposes of this Article 13, ordinary wear and tear is deemed not to
include conditions created by Tenant due specifically to its operation
within the Premises, including but not limited to foreign substances
emitted by its machinery and equipment or other conditions specifically
produced by Tenant's operations and use of the Premises. In default of
such surrender of possession and removal of goods and chattels at the time
aforesaid, Tenant will pay to Landlord twice the rent reserved by the
terms of this Lease for such period as Tenant either holds over possession
of the Premises or allows its goods and chattels or other personal
property in its possession at such time to remain in the Premises, and in
addition thereto statutory penalties and all other damages which Landlord
shall suffer by reason of Tenant holding over in violation of the terms
and provisions of this Lease, including all reasonable claims for damages
made by any succeeding Tenant or purchaser of the Premises against
Landlord which may be founded upon delay by Landlord in giving possession
of the Premises to such succeeding Tenant or purchaser, so far as such
damages are occasioned by the holding over of Tenant.
14. Broker
The parties hereto acknowledge that no broker is entitled to any finders
fee, commission or similar compensation in connection with this Lease.
15. No Recording
It is understood between the parties hereto that this Lease will not be
recorded.
16. Waiver of Trial by Jury
Landlord and Tenant hereby mutually waive their rights to trial by jury
in any action, proceeding or counterclaim brought by either of the parties
hereto against the other on any matters whatsoever arising out of or in
any way connected with this Lease, Tenant's use or occupancy of the
Premises, and any claim of injury or damage.
17. Article Headings
The article headings in this Lease Agreement are for convenience of
reference only and shall not be deemed to define, limit, or describe the
scope and intent of this Agreement, or alter or affect any provisions.
18. Lease Not Offer
This Lease is transmitted for examination only, and does not constitute
an offer to lease, and this Lease shall become effective only upon
execution thereof by the parties hereto. No rights are to be conferred upon
Tenant until this Lease has been executed by Landlord and an executed copy
of this Lease has been delivered to Tenant.
19. Certain Special Provisions
As long as Stephen Findlay shall be President of the Tenant, Tenant
cannot be in default under this Lease unless the Tenant's noncompliance
with this Lease is as a result of a decision by the Board of Directors of
Tenant not to comply with the terms of this Lease over the objection of the
said Stephen Findlay. The provisions of this Section 19 shall terminate at
such time as Stephen Findlay shall cease to be President of Tenant for any
reason whatsoever.
<PAGE>
Exhibit 99.1 Completed Projects
MEDICAL INSTALLATIONS COMPLETED BY PRIME CONTRACTING CORP.
NEW JERSEY
(1) University of Medicine and Dentistry of New Jersey-
University Hospital
150 Bergen Street - Newark, New Jersey
Trauma Center Radiology Renovation-(1997) 4000 SF $1.2 million value.
Demolition of five X-ray rooms and supporting administrative offices. New
construction: Angiography Suite, C/T Suite, Radiography Room, Patient
Holding, Darkroom, Administrative/ Staff area. Design/Build project
stipulated sum agreement. GE Medical Systems Equipment
Other UMDNJ Projects:
Complete Design/Build of two Cardiac Cath. Labs,
Philips (1986) and XRE Corp (1997).
Complete Design/Build of GE Vascular Lab (1995)
Complete Design/Build of GE Angiography Suite
Alterations of O.R. #10 Cystography Suite
Relocation of existing C/T Scan Suite
Renovations to X-ray Rooms #2,3,4, &5
Renovations for installation of AT&T "PACS" system
Alterations to Doctor's "on-call" room E- 123
Renovations for complete Philips Angiography unit (1989)
(2) Rahway Hospital
865 Stone Street- Rahway, New Jersey
MRI Addition- (1996) 4500 SF. $850,000 Design/Build agreement.
Building addition to existing hospital for MRI suite and ancillary
functions. Philips Medical Systems 1.5 T MRI
Cardiac Catherization Suite Addition- (1997) 3 100 ST $ 1.1 Million
stipulated sum agreement. Building addition over existing second
floor. GE Medical Systems Advantx 80
C/T Renovation- (1995) GE Medical Systems HI Speed C/T
Emergency X-Ray Room Renovation- (1993) GE Advantx
(3) Riverview Hospital
Red Bank, New Jersey
Construction and relocation for new GE Cardiac Cath. Lab. Project
cost- $1 million Plus Complete room renovation for new GE Special
Procedures Room.
(4) Newark Beth Israel Medical Center
201 Lyons Avenue Newark, New Jersey
* Radiology Department Renovation- 2200 SF. $680,000 value. Phased
Renovation of Five R/F Rooms, Mammography Suite and Darkroom. GE
Medical Systems Equipment
* Other Newark Beth Israel Projects
* Renovations of new GE Cardiac Cath. Lab
* Complete alterations Micro Biology Lab
* Complete alterations new C/T Suite
* Relighting O.R. & Cystography Rooms
* Alterations for GE Optima and Maxxus Nuclear Medicine Units
(5) Hackensack Medical Center
30 Prospect Avenue- Hackensack, New Jersey
* Angiography Suite Renovation- 1200 SF. $550,000 value. Demolition
and reconstruction of Angiography Suite including darkroom and
ancillary areas. Design/Build stipulated sum agreement. Siemens
Medical Systems Equipment
* Alterations to CIF Suite #2- New Siemens Somation Plus 4 System
(6) E.D. Imaging Center
Bedminster Medical Plaza- I Robertson Drive, Bedminster, New Jersey
8400 SF $850,000 value. Complete Imaging Center, Design/Build project
including MRI, C/T, R/F, RAD, Mammography and Ultra Sound.
(7) Tri-Cat Associates
3840 Park Ave., Suite C, Edison, New Jersey 08820
A Complete Design/Build of new facility and subsequent addition to
include MRI, C/T. R/F, Nuclear Medicine, Mammo Ultra Sound and
support areas (1985-1995 cost $550,000)
Design/Build of 3300 SF space for new GE- Open MRI and support areas
(1997- cost $450,000)
Site preparation for mobile MRI trailer
(8) St. Elizabeth's Hospital
225 Williamson Street, Elizabeth, New Jersey 07207
Complete Design/Build of new Hitachi MRI Suite
Complete renovation for Siemens Cardiac Cath. Lab
Renovation of new Radiation Therapy Simulator Room
Complete renovation for ADC Cardiac Cath. Lab
Complete renovation for R/F Special Procedures Room
(9) Dover General Hospital
Jardine Street, Dover, New Jersey 07801
Alterations to X-ray Room 46 and 49
Renovations of new Maternity Suite
Installation of original C /T Suite (1979)
Alterations for new Mammography Suite
Installation of new GE Special Procedures Room
Installation of mobile C/T(1991)
Installation of new Cobalt Therapy unit
Renovation of O.R. Room #8- Cystography Suite
Installation of HDR Therapy unit
(10) Medical Imaging Associates
69 Orient Way, E. Rutherford, New Jersey 07073
MRI, R/F Tomo, Ultra Sound & Chest Rooms
Design/Build new GE C/T Suite
Renovations for installation of new Siemens 1.0 T MRI Suite
(11) Open MR1 of Morristown at Corvas
95 Madison Avenue, Morristown, New Jersey 07960
Design/Build of 1900 SF for new Picker "Open" MRI facility (1996)
Complete renovations to new facilities: C/T R/F, Mammography, offices
(1985)
(12) Magnetic Imaging of Morris
420 Boulevard, Suite 103, Mountain Lakes, New Jersey, 07046
1800 SF Design/Build renovation and installation of GE Profile MRI
system
(13) St. Michael's Hospital
268 Dr. Martin Luther King Boulevard, Newark, New Jersey, 07102
* Replacement of existing C/1'equipment; GE 9800
* Renovation of X-ray room #5 for Siemens unit
* Complete Design/Build of new Angiography Suite
* Renovations of two Mammography rooms, Lorad Steriotactic Suite and
GE Mammography unit
* Renovation for new ADC Cardiac Cath. Lab
* Design/Build of Cardiac Recovery unit
(14) Union Memorial Hospital
1000 Galloping Hill Road, Union, New Jersey, 07083
Design/Build new Philips V3000 Angio Room
Complete renovations of new C/T Suite (1986 and 1996)
Renovations for replacement of 4 R/F exam rooms
Renovations for upgrade of two new X-ray exam rooms
Site preparation for mobile C/Trailer (1986 and 1996)
(15) Somerset Medical Center
Somerset New Jersey
Renovation of existing Angio Room for Philips V3000 Angio equipment
(16) Passaic General Hospital
3500 Boulevard, Passaic, New Jersey, 07055
* Installation of new GE C/T/ unit
* Installation of new GE Special Procedures Room
(17) St. Mary's Hospital
135 S. Center Street, Orange, New Jersey, 07050
Complete renovations of former chapel area into new C/T Suite
Renovations to cafeteria and staff lounge
Installation of new Picker X-ray unit in exam room #6
Installation of new Laser unit in O.R. #2
(18) St. Clare's Hospital
Pocono Road, Denville, New Jersey, 07834
Complete renovation of new C/T Suite (1992)
(19) Newton Memorial Hospital
175 High Street, Newton, New Jersey, 07860
Complete renovation of existing GE R/F room.
Complete Design/Build for two nuclear medicine rooms.
(20) Orange Memorial Hospital
188 South Essex Avenue, Orange, New Jersey, 07051
Installation of Siemens mobile MRI unit and related support areas.
(21) Meadowlands Hospital & Medical Center
Meadowlands Parkway, Secaucus, New Jersey, 07094
Electrical upgrading & installation of Special Procedures Room,
Mammography & (2) R/F rooms
Procedures Room, Mammography & (2) R/F rooms
Renovation of Cystography; O.R. #3
Complete renovations for new Siemens C/T/ unit
(22) Robert Wood Johnson University Hospital
One Robert Wood Johnson Place, New Brunswick, New Jersey 08901
Renovations to C/T Suite for replacement of unit
Renovations of new Angio unit
Installation of two new Philips Cardiac Cath. Labs
(23) Passaic Beth Israel Hospital
70 Parker Avenue, Passaic, New Jersey, 07055
Complete room renovation for Picker R/F room
Complete room renovation for Toshiba Special Procedures Room
(24) Irvington General Hospital
Irvington, New Jersey,
Replacement of existing C/T equipment with new Elscint CIT
(25) Holy Name Hospital
718 Teaneck Road, Teaneck, New Jersey, 07666
Renovation of R/F Room #6
(26) Jersey Shore Medical
1945 Route 33, Neptune, New Jersey, 07754
Renovations for new Radiation Therapy Simulator Unit
Renovation of O.R. #3, Cystography Room
(27) East Orange V.A. Hospital
Tremont Avenue, East Orange, New Jersey, 07107
Siemens Linear Accelerator Installation
Renovation of new R/F X-ray rooms
(28) United Hospitals Medical Center
15 South Nine Street, Newark, New Jersey, 07109
* Renovations of new Radiation Therapy Simulator Room
* Renovations to doctor's on call lounge
* Complete renovations to X-ray Room #7
(29) St. James Hospital
155 Jefferson Street, Newark, New Jersey, 071.05
Renovations of new C/T Suite
Renovations of new Nuclear Medicine Suite
Renovations of new Histology Suite
Installation of X-ray Room #6
Installation of complete new fire alarm system
Renovation to O.R. Rooms #1,2,3, &4
(30) Pascack Valley Hospital
Old Hook Road, Westwood, New Jersey, 07675
* Electrical installation of (2) new Siemens E.R. X-ray rooms
* Renovations for new GE Special Procedures Room
* Installation of new GE R/F Room
(31) Bayonne Hospital
29 East Twenty Ninth Street, Bayonne, New Jersey, 07002
Renovation of Picker PQ C/T system
(32) Elizabeth General Hospital
925 East Jersey Street, Elizabeth, New Jersey, 07201
Renovation of R/F Room #3
Renovations for new Picker Vascular Lab
Renovations for new Mammography Suite
(33) Saddle Brook Imaging
300 Market Street, Saddle Brook, New Jersey, 07662
Complete Design/Build of Imaging Facility
(34) M.R.I of New Jersey
410 Centre Street, Nutley, New Jersey, 07710
Complete Design/Build of MRI facility, including C/T R/F and Mammo
(35) West Morris MRI Associates
66 Sunset Strip, Suite 101, Succasunna, New Jersey, 07876
Complete construction of 3600 SF MRI facility
(36) Rad Group of New Brunswick
579 Cranbury Road, East Brunswick, New Jersey, 08816
Complete renovations to 8500 SF Imaging Center and installation of GE
1.5 MRI] unit. Project cost $1 million (1985)
Design/Build of new Nuclear Medicine Suite
Installation of Mobile MRI.1 unit (1996)
(37) Union Imaging Center
451 Chestnut Street, Union, New Jersey, 07083
Complete Design/Build out of new MRI, C/T, Ultra Sound, Mammography,
offices (1992)
Design/Build of new Picker "Open" MRI facility (1996)
(38) Denville Radiology & CT Scanning Group
282 Route 46, Denville, New Jersey, 07834
Complete Design/Build of C/T Suite
(39) Comprehensive Cancer Care
772 Northfield Avenue, West Orange, New Jersey, 07052
Complete renovation & alteration to accommodate new C/T,
RJF, X-ray equipment, computer room
(40) Radiological Group of North Jersey
330 Ratzer Road, Wayne, New Jersey, 07470
Complete Design/Build for new C/T Suite
(41) Alliance Imaging
101 Madison Avenue, Morristown, New Jersey, 07960
Complete Design/Build of new Philips C/T Suite
(42) Atrium Imaging
Manalapan, New Jersey
Design/Build of new C/T & R/F Suite
(43) Somerset Imaging Center
Somerset, New Jersey
Design/Build of new C/T & R/F Suite
(44) Wayne General Hospital
224 Hamburg Turnpike, Wayne, New Jersey, 07470
Complete Design/Build on new Cystography Suite and dark room
Renovate existing C/T Suite for new GE High-speed
Renovate existing Angio Room for new Philips V 3000 system.
(45) St. Mary's Hospital
308 Willow Avenue, Hoboken, New Jersey
Complete C/T Suite renovations for installation of GEMS High Speed
C/T
(46) Advanced Imaging Center
1031 McBride Avenue, West Paterson, New Jersey
Complete Design/Build of new Toshiba C/T Suite, Mammography and
support areas
(47) Centra-State Hospital
Main Street, Freehold, New Jersey
Complete room renovations for:
Picker C/T Suite
Picker Angio Suite
GE R/F Room
<PAGE>
Exhibit 99.2 Credit Line with NGF Investment Corp.
PROMISSORY NOTE
Date: January 4, 1999
FOR VALUE RECEIVED, the undersigned hereby jointly and severally promise
to pay to the order of NGF Investment Corp. the sum of nor more than TWO
HUNDRED THOUSAND AND 00/100 DOLLARS ($200,000), together with interest
thereon at the rate of 14.5% (fourteen and 1/2%) per annum to the unpaid
balance.
All payments shall be first applied to interest and the balance to
principal. Interest payments shall be paid monthly. This note may be
prepaid, at any time, in whole or in part, without penalty. This note is due
and payable September 15, 2001. This note shall at the option of any holder
hereof be immediately due and payable upon the occurrence of any of the
following:
1. Failure to make any payment due hereunder within 10 days of its due date.
2. Breach of any condition of any security interest, mortgage, pledge
agreement or guarantee granted as collateral security for this note.
3. Breach of any condition of any security agreement or mortgage, if any,
having a priority over any security agreement or mortgage on collateral
granted, in whole or in part, as collateral security for this note.
4. Upon the death, dissolution or liquidation of any of the undersigned, or
any endorser, guarantor or surety hereto.
5. Upon the filing by any of the undersigned of an assignment for the
benefit of creditors, bankruptcy, or for relief under any provisions of the
Bankruptcy Code; or by suffering an involuntary petition in bankruptcy or
receivership not vacated within thirty days.
In the event this note shall be in default, and placed with an attorney for
collection, then the undersigned agree to pay all reasonable attorney fees
and costs of collection. Payments not made within ten days of due date shall
be subject to a late charge of 10% of said payment. All payments hereunder
shall be made to such address as may from time to time be designated by any
holder hereof.
The undersigned and all other parties to this note, whether as
endorsers, guarantors or sureties, agree to remain fully bound hereunder
until this note shall be fully paid and waive demand, presentment and protest
and all notices thereto and further agree to remain bound, notwithstanding
any extension, modification, waiver or other indulgence by any holder or upon
the discharge or release of any obligor hereunder or to this note, or upon
the exchange, substitution, or release of any collateral granted as security
for this note. No modification or indulgence by any holder hereof shall be
binding unless in writing; and any indulgence on any one occasion shall not
be an indulgence for any future occasion. Any modification or change of
terms, hereunder granted by any holder hereof, shall be valid and binding
upon each of the undersigned, notwithstanding the acknowledgment of any of
the undersigned, and each of the undersigned does hereby irrevocably grant to
each of the others a power of attorney to enter into any such modification on
their behalf. The rights of any holder hereof shall be cumulative and not
necessarily successive. This note shall take effect as a sealed instrument
and shall be construed, governed and enforced in accordance with the laws of
the State of New Jersey.
Prime Contracting Corporation NGF Investment Corp.
681 Chestnut Street 95 Madison Ave., Suite 101
Union, New Jersey 07083 Morristown, New Jersey 07960
By: /s/Otto Von Eilbergh By: /s/ Aron D. Scharf
Otto Von Eilbergh Aron D. Scharf
Acting President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 27660
<SECURITIES> 0
<RECEIVABLES> 1335075
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1534519
<PP&E> 217894
<DEPRECIATION> 150190
<TOTAL-ASSETS> 1676157
<CURRENT-LIABILITIES> 1296180
<BONDS> 0
0
0
<COMMON> 559
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1676157
<SALES> 3595738
<TOTAL-REVENUES> 3595738
<CGS> 2492309
<TOTAL-COSTS> 2492309
<OTHER-EXPENSES> 808059
<LOSS-PROVISION> 53335
<INTEREST-EXPENSE> (25492)
<INCOME-PRETAX> 269878
<INCOME-TAX> 216543
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 216543
<EPS-BASIC> 0.04
<EPS-DILUTED> 0.04
</TABLE>
