<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from ____________ to
______________
Commission File No: 0-30100
CORPAS INVESTMENTS, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2890565
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
1640 5TH STREET
SUITE 218
SANTA MONICA, CALIFORNIA 90405
(310) 392-5640
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AS OF MAY 1, 2000
----- -----------------------------
Common Stock
Par value $.001 per share 14,078,579
Transitional Small Business Disclosure Format [ ] Yes [X] No
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CORPAS INVESTMENTS, INC.
A DEVELOPMENT STAGE ENTERPRISE
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
(NOTE 1) (NOTE 1)
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 385,000 $ 937,000
Employee advances 8,000 16,000
Production inventory 340,000 --
Prepaid expenses 57,000 --
----------- -----------
Total current assets 790,000 953,000
=========== ===========
Property and equipment, net 182,000 100,000
Other assets:
Investments 17,000 --
Goodwill, net 17,455,000 --
Other intangible assets, net 138,000 58,000
Deposits 32,000 --
----------- -----------
Total other assets 17,642,000 58,000
----------- -----------
$18,614,000 $ 1,111,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 72,000 $ 127,000
Accrued liabilities 90,000 54,000
Notes payable 636,000 --
Deposits on unissued stock -- 1,739,000
----------- -----------
Total current liabilities 798,000 1,920,000
----------- -----------
Stockholders' equity:
Common stock, par value $.001, 50,000,000,
shares authorized 14,079,000 and 9,600,000
shares issued and outstanding 14,000 10,000
Additional paid-in capital 19,589,000 --
Deficit accumulated during the development stage (1,781,000) (813,000)
Subscriptions receivable (6,000) (6,000)
----------- -----------
Total stockholders' equity 17,816,000 (809,000)
----------- -----------
$18,614,000 $ 1,111,000
=========== ===========
</TABLE>
Unaudited -- See accompanying notes to condensed financial statements.
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CORPAS INVESTMENTS, INC.
A DEVELOPMENT STAGE ENTERPRISE
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS,
<TABLE>
<CAPTION>
THREE MONTHS ENDED June 22, 1999
MARCH 31, (Date of
--------- Inception)
2000 1999 to March 31, 2000
---- ---- -----------------
<S> <C> <C> <C>
REVENUES: $ 8,000 $ -- $ 8,000
------------ ------------ ------------
COSTS AND EXPENSES:
Operating expenses 970,000 -- 1,780,000
------------ ------------ ------------
970,000 -- 1,780,000
------------ ------------ ------------
OPERATING LOSS (962,000) -- (1,772,000)
------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest income 2,000 -- 3,000
Interest expense (8,000) -- (8,000)
------------ ------------ ------------
(6,000) -- (5,000)
NET LOSS $ (968,000) $ (--) $ (1,777,000)
============ ============ ============
WEIGHTED AVERAGE NUMBER OF,
COMMON SHARES OUTSTANDING 10,775,000 1,000,000
============ ============
NET INCOME (LOSS) PER SHARE $ (.09) $ (.00)
============ ============
</TABLE>
Unaudited -- See accompanying notes to condensed financial statements.
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CORPAS INVESTMENTS, INC.
A DEVELOPMENT STAGE ENTERPRISE
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
June 22, 1999
THREE MONTHS ENDED (Date of
MARCH 31, Inception)
2000 1999 to March 31, 2000
---- ---- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (968,000) $ -- $ (1,777,000)
Adjustments to reconcile net loss to
net cash flows used in operating activities:
Depreciation and amortization 85,000 -- 90,000
Issuance of common stock for services 336,000 -- 336,000
Changes in assets and liabilities (453,000) -- (289,000)
------------ ------------ ------------
Net cash flows used in operating activities (1,000,000) -- (1,640,000)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (89,000) -- (191,000)
Purchase of intangible asset (35,000) -- (95,000)
------------
Decrease in deposits (32,000) -- (32,000)
------------ ------------ ------------
Net cash provided by investing activities (156,000) -- (318,000)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 380,000 -- 380,000
Issuance of notes payable 636,000 -- 636,000
Costs of issuance of common stock (412,000) -- (412,000)
Deposits on unissued stock -- -- 1,739,000
------------ ------------ ------------
Net cash flows from financing activities 604,000 -- 2,343,000
------------ ------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (552,000) -- 385,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 937,000 -- --
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 385,000 $ -- $ 385,000
============ ============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash paid for interest $ 1,000 $ -- $ 1,000
============ ============ ============
Stock issued for intangible asset $ 50,000 $ -- $ 50,000
============ ============ ============
Acquisition of Planet Extreme $ 17,528,000 $ -- $ 17,528,000
============ ============ ============
</TABLE>
Unaudited-See accompanying notes to condensed financial statements.
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CORPAS INVESTMENTS, INC.
A DEVELOPMENT STAGE ENTERPRISE
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION:
The financial statements included herein have been prepared by Corpas
Investments, Inc. ("Corpas" or the "Company"), without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures are adequate to make the information presented not
misleading. These condensed financial statements should be read in conjunction
with the financial statements for the year ended December 31, 1999, and the
notes thereto, included in the Company's Form 10-KSB (File No. 0-30100).
The unaudited financial statements included herein include normal recurring
adjustments and reflect all adjustments, which are, in the opinion of
management, necessary for a fair presentation of such financial statements.
Actual results could differ from those estimated.
NOTE 2 - PRODUCTION INVENTORY
Production inventory consists of production costs the Company has incurred for
the making of the television program "Extreme Games." This program is currently
a project in process. Production inventory will be amortized, and revenue
recognized, when the program is televised in June of 2000.
NOTE 3 - ACQUISITIONS
On February 29, 2000, the Company entered into an agreement to acquire Planet
Extreme Ltd., Inc. ("Planet Extreme") a leading distributor of extreme sports
content around the world. Projects of Planet Extreme include the Planet Extreme
Film Festival and Planet Extreme Championships. Also included is a 50% interest
in Extreme Distribution, owner of Planet Extreme.com. The Company purchased
100% of the assets of Planet Extreme for $45,000 in cash, and 3,500,000 shares
of common stock with a fair market value of $5.00 per share. This acquisition
resulted in the recording of goodwill in the amount of $17,528,000 and an
increase in common stock and additional paid in capital of $17,500,000.
NOTE 4 - NOTES PAYABLE
The Company issued 10.5% redeemable promissory notes due February 20, 2001.
Warrants to purchase 1 share of the Company's common stock have been issued for
each $3.00 of principal amount of Note. Warrants are exercisable at a price of
$2.00 per share. At March 31, 2000 the principal amount of notes issued was
$636,000, and options to purchase 212,000 shares of common stock were
outstanding.
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NOTE 5 - STOCKHOLDERS' EQUITY
On February 29, 2000, 8,500 shares of the Company's common stock were issued to
an individual as part of the purchase price of the Internet Domain Name
Ufotv.com. Also, as a finder's fee in connection with this transaction, the
Company issued 1,500 shares of common stock to GreatDomains.com. The Domain
Name was recorded at the fair market value of common stock at February 29, 2000
of $5.00 per share. The acquisition of this intangible asset resulted in an
increase in common stock and additional paid in capital of $50,000.
The Company issued 224,000 shares of common stock to Medical Development
Management, Inc. ("MDM"). These shares were issued for consulting services
provided at the initial offering price of the Company of $1.50 per share. MDM
also received options to purchase additional 112,000 shares of the Company, at
a purchase price the Company has booked at $1.50 per share, 56,000 vesting
immediately and 56,000 vesting on November 22, 2001.
NOTE 6 - STOCK OPTIONS AND WARRANTS
All employees are granted options exercisable over three years. For all
employees, after three months of employment, one-twelfth of the total number of
options vests. Then, each month, an additional one-thirty-sixth vests. Exercise
prices vary from $3.50 to $14.00. Employee options of 50,000 are vested at
March 31, 2000 and are exercisable to purchase 50,000 shares of stock at a
purchase price of $1.50 per share. Officer's vested options at March 31, 2000
are exercisable at $1.50 to purchase 408,333 shares of stock.
The Company had warrants to purchase 75,000 shares of common stock which vested
upon the execution of consulting agreements. These warrants are exercisable in
increments of 25,000 shares at prices of $12.00, $15.00, and $18.00.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Consulting Agreements
The Company issued 224,000 shares of common stock to Medical Development
Management, Inc., ("MDM") pursuant to an agreement entered into on November 22,
1999. These shares were issued for consulting services provided at the initial
offering price of the Company of $1.50 per share. The consulting agreement also
provided that MDM receive options to purchase an additional 112,000 shares of
the Company, at a purchase price per share equal to the most favorable option
price granted to any officer, director, employee or consultant, 56,000 vesting
immediately and 56,000 vesting on November 22, 2001. The Company booked the
exercise price at $1.50 per share. In addition, the Company owes the consultant
$1,000,000, payable at $16,666.66 monthly commencing December 1, 1999 for 60
months. If the Company terminates the agreement for consultant's material
breach, bankruptcy, gross negligence or willful misconduct, the agreement
provides that the fee payable would be pro-rated to date of termination.
On January 26, 2000 the Company entered into a consulting agreement with an
individual (the "Consultant"). The Consultant will serve as Vice President of
New Business Development of the Company, and shall serve to research, identify,
evaluate and provide content to be used by the Company in its capacity as a
distributor. For services provided, the Company agreed to issue 150,000 shares
of the Company's common stock in monthly increments over two years. In
addition, the Company agreed to grant the Consultant options for an aggregate
of 200,000 shares of common stock, which options vest in equal monthly
increments over a period of two years. The exercise price of the options is
$2.75 per share. The agreement also provides for options for an aggregate of
1,000,000 shares of common stock, exercisable at $2.75 per share, that will
vest and be exercisable as follows: (a) 50,000 shares for each exclusive 15
hours of usable video footage, or 15,000 shares for less than 15 hours; and (b)
25,000 shares for each non-exclusive 15 hours of usable video footage, or
10,000 shares for less than 15 hours. Any of the 1,000,000
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options granted under the consulting agreement that have not vested lapse on
the January 26, 2002, unless renewed for successive one-year terms.
On February 28, 2000 the Company entered into a financial advisory agreement
with D.R.F.W. Group, Inc. (the "Financial Advisor"). The Financial Advisor's
duty is to provide consulting advice to the Company. In exchange for services
provided, the Company, upon entering into the financial advisory agreement,
sold 500,000 warrants to purchase common stock to the Financial Advisor for a
price of $10.00. These warrants are exercisable in increments of 300,000,
100,000, and 100,000 at $1.00, $2.00, and $4.00 per share respectively.
Legal Proceedings
On March 3, 2000, All-Life.com, Inc. as plaintiff filed a complaint in the
Superior Court of the State of California, County of Los Angeles, against the
chairman, Chief Executive Officer and director of the Company. The subject of
the suit involves his actions as Chief Executive Officer of the Company. The
Company's Board of Directors resolved to indemnify him with regard to his
defense against this lawsuit. This is an action for breach of contract, fraud,
negligent misrepresentation, and intentional interference with prospective
economic advantage, intentional interference with prospective contractual
relations, negligent interference with economic relations, misappropriation of
trade secrets and defamation. Plaintiff was seeking financing to provide
working capital to further the development and expansion of its business
operations. Plaintiff alleges that Defendant proposed a merger between
Plaintiff and Corpas Investments with the intent and motivation to lure
plaintiff into a false sense that merger was imminent and to gain plaintiff's
trust and confidence to the point that defendant could gain control of
plaintiff's assets and business operations under the guise of due diligence.
Plaintiff is seeking general, special, punitive and exemplary damages.
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CORPAS INVESTMENTS, INC.
A DEVELOPMENT STAGE ENTERPRISE
MARCH 31, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Report contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1933, as amended. Discussions containing such forward-looking
statements may be found in Management's Discussion and Analysis of Financial
Condition and Results of Operations under the captions "Fiscal Quarter Ended
March 31, 2000" and "Liquidity and Capital Resources," below. These statements
by their nature involve substantial risks and uncertainties, certain of which
are beyond the Company's control, and actual results for future periods could
differ materially from those discussed in forward-looking statements depending
on a variety of important factors, among which are the growth of the market for
on-line health education and on-line entertainment; the ability of the Company
to acquire by purchase or license sufficient content; the Company's ability to
properly manage growth and successfully integrate acquired companies and
operations; the ability of the Company to respond to technological changes in
the Internet industry; the Company's ability to successfully compete in a very
competitive environment, the Company's ability to accurately forecast capital
expenditures, and the ability of the Company to obtain new sources of
financing. A summary of these and other risks and uncertainties can be found in
the Company's filings with the Securities and Exchange Commission from time to
time, including the Company's annual report on Form 10-KSB for the fiscal year
ended December 31, 1999 (File No. 0-30100). The following discussion should be
read in conjunction with the financial statements and notes thereto included
elsewhere in this Report.
RESULTS OF OPERATIONS
FISCAL QUARTER ENDED MARCH 31, 2000
REVENUE
The Company had revenues of $8,000 for the three month period ended
March 31, 2000. The Company plans to produce more television programs to
generate revenue. The Planet Extreme website will execute banner advertisement
in July 2000. Tape libraries are also expected to generate licensing revenue.
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OPERATING EXPENSES
AMORTIZATION. Amortization expense amounted to $78,000 for the three months
ended March 31, 2000. The amortization charge to operations represents the
construction of the Company's website, a domain name, and goodwill acquired
from Planet Extreme (Note 2). The total cost of the website amounted to $95,000
at March 31, 2000 and is being amortized over a five-year period. Goodwill is
amortized principally over a 20-year period.
DEPRECIATION. Depreciation expense amounted to $7,000 for the three months
ended March 31, 2000. Depreciation expenses consist of depreciation on the
Company's tape library, computer equipment, telephone equipment, office
equipment and furniture. Capital assets such as computer equipment, telephone
equipment, and office equipment are depreciated on a straight-line basis over
their estimated useful lives, computer equipment over five years and telephone
and office equipment over five years.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses primarily consist of management, financial and administrative
personnel expenses and related costs and professional service fees. General and
administrative expenses amounted to $893,000 for the three months ended March
31, 2000. The Company anticipates that general and administrative expenses will
increase significantly during the next year due to the implementation of its
Internet/Intranet enabled software initiatives.
RESEARCH AND DEVELOPMENT. There were no expenses incurred for research
and development during the three months ended March 31, 2000. The Company
continues to develop its research and development staff and anticipates that it
will continue to grow through 2000 as the Company focuses on improving and
expanding the features and availability of its Internet/Intranet
network-enabled software products. Research and development costs are expensed
as incurred. However, computer software development costs incurred after
technological feasibility of a product is established are capitalized.
Technological feasibility is generally not established until substantially all
related product development is complete and the product is released.
SALES AND MARKETING. Promotional expense amounted to $5,000 for the
three month period ended March 31, 2000. The Company plans to increase its
sales and marketing team to market software to new and existing customers. The
sales team is currently targeting hospitals and health networks for sales of
its continuing education and training service. The Company plans to launch a
branding and advertising campaign focused on building awareness of its products
and services to all of its market segments.
INCOME TAXES. No provision for federal income taxes has been recorded
during the three months ended March 31, 2000 as a result of losses incurred in
the amount of $968,000.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed operations and met its capital
expenditure requirements primarily through private sales of equity and debt
securities, which have resulted in net proceeds of $2,343,000 through March 31,
2000. At March 31, 2000, the Company had $385,000
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in cash and cash equivalents and a working capital deficit of $8,000. In
January 2000, the Company issued the common stock certificates to the
purchasers of the private placement offering under Regulation D, Rule 506 of
the Securities and Exchange Commission. This allowed the Company to reclassify
the deposits on unissued common stock to stockholders' equity and reduced the
working capital deficit. The Company has also reduced its working capital
deficit by producing a television show "Extreme Games" that is included in
production inventory.
The Company has not yet generated positive cash flows from operating
activities. Cash used in operating activities was $1,000,000 for the three
months ended March 31, 2000. The Company does not expect to generate positive
cash from operations for the year ending December 31, 2000. Net cash losses
amounted to $547,000 for the three months ended March 31, 2000.
The Company's investing activities have consisted of capital expenditures
totaling $156,000 for the three months ended March 31, 2000. This increase
includes additions to the tape library and purchases of computer equipment.
Net cash provided by financing activities was $604,000 for the three months
ended March 31, 2000. Net cash provided by financing activities resulted
primarily from issuance of notes payable.
The Company does foresee a significant increase in operating expenses in order
to implement its Internet/Intranet enabled applications as well as the
continued upgrade of its software application. The Company expects to fund
these increases with further issuance of equity or debt securities of the
Company and from advertising revenues that are expected to begin in the third
fiscal quarter of 2000.
ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS
Need for additional capital
The Company believes that anticipated private placements of equity capital and
anticipated operating revenues will be adequate to fund the Company's
operations over the next twelve months. Thereafter, the Company expects it will
need to raise additional capital to meet its long term operating requirements.
The Company may encounter business initiatives that require significant cash
commitments or unanticipated problems or expenses that could result in a
requirement for additional cash before that time. If the Company raises
additional funds through the issuance of equity or convertible debt securities,
the percentage ownership of its shareholders would be reduced, and such
securities may have rights, preferences, or privileges senior to its common
stock. If adequate funds are not available or are not available on acceptable
terms, the Company's ability to fund its expansion, take advantage of business
opportunities, develop or enhance its products or otherwise respond to
competitive pressures would be significantly limited, and it may significantly
restrict the Company's operations.
Stock Price Fluctuations
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The Company's participation in a highly competitive industry often results in
significant volatility in the Company's common stock price. This volatility in
the stock price is a significant risk investors should consider.
Forward Looking Statements
This report contains certain forward-looking statements that are based on
current expectations. In light of the important factors that can materially
affect results, including those set forth above and elsewhere in this report,
the inclusion of forward-looking information herein should not be regarded as a
representation by the Company or any other person that the objectives or plans
of the Company will be achieved. The Company may encounter competitive,
technological, financial and business challenges making it more difficult than
expected to continue to market its products and services; competitive
conditions within the industry may change adversely; the Company may be unable
to retain existing key management personnel; the Company's forecasts may not
accurately anticipate market demand; and there may be other material adverse
changes in the Company's operations or business. Certain important factors
affecting the forward looking statements made herein include, but are not
limited to (i) accurately forecasting capital expenditures and (ii) obtaining
new sources of external financing. Assumptions relating to budgeting,
marketing, product development and other management decisions are subjective in
many respects and thus susceptible to interpretations and periodic revisions
based on actual experience and business developments, the impact of which may
cause the Company to alter its capital expenditure or other budgets, which may
in turn affect the Company's financial position and results of operations.
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CORPAS INVESTMENTS, INC.
A DEVELOPMENT STAGE ENTERPRISE
MARCH 31, 2000
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On March 3, 2000, All-Life.com, Inc. as plaintiff filed a complaint in the
Superior Court of the State of California, County of Los Angeles, against Ross
A. Love, defendant. Mr. Love is Chairman, Chief Executive Officer and a
director of the Company. The subject of the suit involves his actions as Chief
Executive Officer of the Company. The Company's Board of Directors resolved to
indemnify him with regard to his defense against this lawsuit. This is an
action for breach of contract, fraud, negligent misrepresentation, intentional
interference with prospective economic advantage, intentional interference with
prospective contractual relations, negligent interference with economic
relations, misappropriation of trade secrets and defamation. Plaintiff was
seeking financing to provide working capital to further the development and
expansion of its business operations. Plaintiff alleges that Defendant proposed
a merger between Plaintiff and Corpas Investments with the intent and
motivation to lure plaintiff into a false sense that merger was imminent and to
gain plaintiff's trust and confidence to the point that defendant could gain
control of plaintiff's assets and business operations under the guise of due
diligence. Plaintiff is seeking general, special, punitive and exemplary
damages, to be proven at trial.
On March 24, 2000, the Company as plaintiff filed a separate complaint in
the Superior Court of the State of California, County of Los Angeles against
All-Life.com, Inc., Jonathan. Dariyanani and Ivan Sokolsky, defendants,
alleging fraud and breach of contract. The Company alleges that the Company and
the defendants entered into three interrelated contracts: a content licensing
agreement and amendment thereto, and a website development and support
agreement. The Company alleges that, except to the extent excused, it performed
all of obligations required of it under the terms of the agreements, including
but not limited to providing the required consideration for $200,000, while the
defendants have failed and refused to honor or perform their respective
obligations under the agreements. The Company is seeking general and special
damages believed to be in excess of $500,000, plus exemplary and special
damages, according to proof at trial. While the Company intends to vigorously
prosecute this action and believes its position has merit, it is unable to
predict the ultimate outcome at this time.
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ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) Not applicable.
(b) Not applicable.
(c) Effective January 26, 2000, the Company entered into a consulting agreement
with Dr. Bob Goldman and pursuant to the terms of the agreement, agreed to
issue to Dr. Goldman 150,000 shares of the Company's common stock in monthly
increments [of 6,250 shares] over two years. The Company agreed to register the
resale of the 150,000 shares. In addition, the Company agreed to grant Dr.
Goldman options for an aggregate of 200,000 shares of common stock, which
options vest in equal monthly increments over a period of two years. The
exercise price of the options is $2.75 per share. In addition, the agreement
provides for options for an aggregate of 1,000,000 shares of common stock,
exercisable at $2.75 per share, which options shall vest and be exercisable as
follows: (a) 50,000 shares for each exclusive 15 hours of usable video footage,
or 15,000 shares for less than 15 hours; and (b) 25,000 shares for each
non-exclusive 15 hours of usable video footage, or 10,000 shares for less than
15 hours. Any of the 1,000,000 options granted under the consulting agreement
that have not vested lapse on the expiration date of the agreement (January 26,
2002), unless renewed for successive one year terms.
On February 28, 2000, the Company entered into a Financial Advisory
Agreement with D. R. F. W. Group, Inc. for financial advice regarding business
and financing activities. As consideration for such services and the payment of
$10.00 by consultant, the company issued a common stock purchase warrant
(included in the consulting agreement) exercisable for a period of 5 years from
February 28, 2000 for an aggregate of 500,000 shares of the Company's common
stock at the following exercise prices: (300,000 shares at $1.00 per share;
100,000 shares at $2.00 per share; and 100,000 shares at $4.00 per share). The
warrant contains piggy-back registration rights, requiring the Company to
include the common stock underlying the warrant in a registration statement
registering the Company's securities or that of any of its selling
stockholders, subject to underwriter cut-back if the offering is underwritten.
On February 29, 2000, 8,500 shares of common stock of the Company were
issued to Mark Avant as part of the purchase price of the Internet Domain Name
Ufotv.com from Mr. Avant. Also, as a finder's fee in connection with this
transaction, the Company issued 1,500 shares of common stock to
GreatDomains.com (Note 2).
In March 6, 2000, the Company issued 3,500,00 shares of common stock
to Gene Fein in connection with the Company's acquisition of all of the assets
of Planet Extreme, Ltd. pursuant to an asset purchase agreement entered into on
February 29, 2000.
On November 15, 1999, the Company entered into a consulting agreement
with Columbia Financial Group for investor relations services. Under the terms
of the agreement, the Company agreed to issue to the consultant a warrant
exercisable for a total of 300,000 shares of common stock at the following
exercise prices: 100,000 shares at $12.00 per share; 100,000 shares at $15.00
per share; and 100,000 shares at $18.00 per share. The agreement provides that
one-quarter of the warrants were to be delivered by the Company on November 15,
1999 and the remainder of the warrants are to be delivered by the Company on or
before the beginning of the
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third quarter of the term of the agreement. The agreement provides for
piggy-back registration rights for the common stock underlying the warrant.
The foregoing securities were issued in reliance upon Section 4(2) of the
Securities Act. The investors were provided information about the Company or
had access to such information, and they were provided opportunity to ask
questions of management concerning the information provided or made available.
The investors confirmed their investment intent in writing, and the
certificates for the securities bear a legend accordingly.
(d) Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a Special Meeting of Shareholders held on April 21, 2000, the
Company presented its 2000 Equity Incentive Compensation Plan (the "Plan") for
approval by the shareholders. The Plan was approved by shareholders holding a
majority of the issued and outstanding common stock on the record date of March
8, 2000. Voting was by proxy and the number of votes cast for, against or
withheld, as well as the number of abstentions and broker non-votes as to such
matters are as follows:
<TABLE>
<S> <C>
For: 6,086,901
Against: --
Abstentions: 24,000
Broker Non-Votes: --
</TABLE>
There was no other business brought before the Special Meeting.
ITEM 5. OTHER INFORMATION
In addition to the office space leased by the Company at its
headquarters at 1640 5th Street, Santa Monica, California, the Company also
rents on a month to month basis a house in Santa Monica, California which the
Company has converted to office space and which is occupied by administrative
and other personnel of the Company. The rent on this additional space is $4,000
per month.
-14-
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS.
<TABLE>
<CAPTION>
NUMBER NAME
- ---------- ------------------------------------------------------------------------------
<S> <C>
2 Agreement and Plan of Merger effective as of November 22, 1999 (1)
3.1 Articles of Incorporation (2)
3.2 Amendment to Articles of Incorporation (2)
3.3 By-laws (2)
4.0 Registration Rights Agreement (3)
10.1 Agreement of Purchase and Sale between the Company and Plant Extreme, Ltd. (4)
10.2 Content Provider and Service Agreement - MDM/A4M (3)
10.3 Web Site Development and Support Agreement (3)
10.4 Consulting Services Agreement between Company and John Clayton (5)
10.5 Stock Option Agreement between Company and John Clayton (5)
10.6 2000 Equity Incentive Compensation Plan (6)
10.7 Office Lease dated February 22, 2000*
10.8 Office Lease dated January 22, 2000*
10.9 Consulting and Services Agreement between Company and Dr. Bob Goldman*
10.10 Financial Advisory Agreement between Company and D.R.F.W. Group, Inc.*
10.11 Consultant Agreement between Company and Columbia Financial Group*
27.1 Financial Data Schedule* (for SEC use only)
</TABLE>
- ---------------
*Filed herewith
(1) Incorporated by reference and filed as an exhibit to the Company's
Current Report on Form 8-K dated November 24, 1999.
(2) Incorporated by reference and filed as an exhibit to the Company's
Registration Statement on Form 10SB, filed on May 18, 1999.
(3) Incorporated by reference and filed as an exhibit to the Company's
Annual Report on Form 10KSB, filed on April 14, 2000.
(4) Incorporated by reference and filed as an exhibit to the Company's
Current Report on Form 8-K filed March 21, 2000.
(5) Incorporated by reference and filed as an exhibit to the Company's Form
S-8 Registration Statement (No. 333-36862).
(6) Incorporated by reference to the Company's definitive proxy statement
dated March 30, 2000 relating to a special shareholders' meeting held on
April 21, 2000.
-15-
<PAGE> 16
(B) REPORTS ON FORM 8-K
(i) The Company filed a Current Report on Form 8-K/A on March 3, 2000,
amending the Company's Current Report on Form 8-K filed December 9, 1999.
(ii) The Company filed a Current Report on Form 8-K on March 21, 2000 to report
the acquisition by the Company of Planet Extreme, Ltd.
(iii) The Company filed a Current Report on Form 8-K/A on May 17, 2000,
amending the Company's Current Report on Form 8-K filed March 21, 2000.
-16-
<PAGE> 17
CORPAS INVESTMENTS, INC.
A DEVELOPMENT STAGE ENTERPRISE
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORPAS INVESTMENTS, INC.
Date: May 19, 2000
/s/ Ross A. Love
---------------------------------
Ross A. Love, Chairman and Chief
Executive Officer
(Principal Executive Officer)
Date: May 22, 2000 /s/ Edward Z. Estrin
---------------------------------
Edward Z. Estrin, Chief Financial
Officer
(Principal Financial Officer)
-17-
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER NAME
- ---------- ----------------------------------------------------------------------
<S> <C>
10.7 Office Lease dated February 22, 2000*
10.8 Office Lease dated January 22, 2000*
10.9 Consulting and Services Agreement between Company and Dr. Bob Goldman*
10.10 Financial Advisory Agreement between Company and D.R.F.W. Group, Inc.*
10.11 Consultant Agreement between Company and Columbia Financial Group*
27.1 Financial Data Schedule* (for SEC use only)
</TABLE>
* Filed Herewith
<PAGE> 1
EXHIBIT 10.7
STANDARD OFFICE LEASE - GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. BASIC LEASE PROVISIONS ("Basic Lease Provisions")
1.1 PARTIES: This Lease, dated, for reference purposes only, February
22, 2000, is made by and between Spector Waldman Company, (herein called
"Lessor") and CORPAS Investments, Inc., a Florida corporation ________________,
doing business under the name of ________________________________, (herein
called "Lessee").
1.2 PREMISES: Suite Number(s) 218 floors, consisting of approximated
3,193 feet, more or less, as defined in paragraph 2.
1.3 BUILDING: Commonly described as located at 1640 5th Street, in the
City of Santa Monica, County of Los Angeles, State of California, as more
particularly described in Exhibit __ hereto, and as defined in paragraph 2.
1.4 USE: general office use, subject to paragraph 6.
1.5 TERM: Thirty-Six (36) months commencing April 1, 2000
("Commencement Date") and ending March 31, 2003, as defined in paragraph 3.
1.6 BASE RENT: $6,545.65 per month, payable on the 1st day of each
month, per paragraph 4.1 ____________________________________.
1.7 BASE RENT INCREASE: On April 1, 2001 and April 1, 2002 the monthly
Base Rent payable under paragraph 1.6 above shall be adjusted as provided in
paragraph 4.3 below.
1.8 RENT PAID UPON EXECUTION: $6,545.65 as rent for the period from
April 1, 2000 through April 30, 2000 (continued on Addendum).
1.9 SECURITY DEPOSIT: $26,182.60 (continued on Addendum).
1.10 LESSEE'S SHARE OF OPERATING EXPENSE INCREASE: 11.75% as defined in
paragraph 4.2.
2. PREMISES, PARKING AND COMMON AREAS.
2.1 PREMISES: The Premises are a portion of a building, herein
sometimes referred to as the "Building" identified in paragraph 1.3 of the Basic
Lease Provisions. "Building" shall include adjacent parking structures used in
connection therewith. The Premises, the Building, the Common Areas, the land
upon which the same are located, along with all other buildings and improvements
thereon or thereunder, are herein collectively referred to as the "Office
Building Project." Lessor hereby leases to Lessee and Lessee leases from Lessor
for the term, at the rental, and upon all of the conditions set forth herein,
the real property referred to in the Basic Lease Provisions, paragraph 1.2, as
the "Premises," including rights to the Common Areas as hereinafter specified.
2.2 VEHICLE PARKING: So long as Lessee is not in default, and subject
to the rules and regulations attached hereto, and as established by Lessor from
time to time, Lessee shall [ TEXT MARKED OUT - ILLEGIBLE ] rent and use 9
parking spaces in the Office Building Project at the monthly rate applicable
from time to time for monthly parking as set by Lessor and/or its licensee.
2.2.1 If Lessee commits, permits or allows any of the prohibited
activities described in the Lease or the rules then in effect, then Lessor shall
have the right, without notice, in addition to such other rights and remedies
that it may have to remove or tow away the vehicle involved and charge the cost
to Lessee, which cost shall be immediately payable upon demand by Lessor.
2.2.2 The monthly parking rate [ TEXT MARKED OUT - ILLEGIBLE ] will
be $615.00 per month at the commencement of the term of this Lease, and is
subject to change upon five (5) days prior written notice to Lessee. Monthly
parking fees shall be payable one month in advance prior to the first day of
each calendar month.
2.3 COMMON AREAS-DEFINITION. The term "Common Areas" is defined as all
areas and facilities outside the Premises and within the exterior boundary line
of the Office Building Project that are provided and designated by the Lessor
from time to time for the general non-exclusive use of Lessor, Lessee and of
other lessees of the Office Building Project and their respective employees,
suppliers, shippers, customers and invitees, including but not limited to common
entrances, lobbies, corridors, stairways and stairwells, public restrooms,
elevators, escalators, parking areas to the extent not otherwise prohibited by
this Lease, loading and unloading areas, trash areas, roadways, sidewalks,
walkways, parkways, ramps, driveways, landscaped areas and decorative walls.
2.4 COMMON AREAS-RULES AND REGULATIONS. Lessee agrees to abide by and
conform to the rules and regulations attached hereto as Exhibit B with respect
to the Office Building Project and Common Areas, and to cause its employees,
suppliers, shippers, customers, and invitees to so abide and conform. Lessor or
such other person(s) as Lessor may appoint shall have the exclusive control and
management of the Common Areas and shall have the right, from time to time, to
modify, amend and enforce said rules and regulations. Lessor shall not be
responsible to Lessee for the noncompliance with said rules and regulations by
other lessees, their agents, employees and invitees of the Office Building
Project.
2.5 COMMON AREAS-CHANGES. Lessor shall have the right, in Lessor's sole
discretion, from time to time:
(a) To make changes to the Building interior and exterior and
Common Areas, including, without limitation, changes in the location, size,
shape, number, and appearance thereof, including but not limited to the lobbies,
windows, stairways, air shafts, elevators, escalators, restrooms, driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, decorative walls, landscaped areas and walkways;
provided, however, Lessor shall at all times provide the parking facilities
required by applicable law;
(b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;
(c) To designate other land and improvements outside the boundaries
of the Office Building Project to be a part of the Common Areas, provided that
such other land and improvements have a reasonable and functional relationship
to the Office Building Project;
(d) To add additional buildings and improvements to the Common
Areas;
(e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Office Building Project, or any
portion thereof;
(f) To do and perform such other acts and make such other changes
in, to or with respect to the Common Areas and Office Building Project as Lessor
may, in the exercise of sound business judgment deem to be appropriate.
3. TERM.
3.1 TERM. The term and Commencement Date of this Lease shall be as
specified in paragraph 1.5 of the Basic Lease Provisions.
3.2 DELAY IN POSSESSION. Notwithstanding said Commencement Date, if for
any reason Lessor cannot deliver possession of the Premises to Lessee on said
date and subject to paragraph 3.2.2, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease or
the obligations of Lessee hereunder or extend the term hereof; but, in such
case, Lessee shall not be obligated to pay rent or perform any other obligation
of Lessee under the terms of this Lease, except as may be otherwise provided in
this Lease until possession of the Premises is tendered to Lessee, as
hereinafter defined; provided, however, that if Lessor
1
<PAGE> 2
shall not have delivered possession of the Premises within sixty (60) days
following said Commencement Date, as the same may be extended under the terms of
a Work Letter executed by Lessor and Lessee. Lessee may, at Lessee's option, by
notice in writing to Lessor within ten (10) days thereafter, cancel this Lease,
in which event the parties shall be discharged from all obligations hereunder;
provided, however, that, as to Lessee's obligations, Lessee first reimburses
Lessor for all costs incurred for Non-Standard Improvements and, as to Lessor's
obligations, Lessor shall return any money previously deposited by Lessee (less
any offsets due Lessor for Non-Standard Improvements), and provided further,
that if such written notice by Lessee is not received by Lessor within said ten
(10) day period, Lessee's right to cancel this Lease hereunder shall terminate
and be of no further force or effect.
3.2.1 POSSESSION TENDERED-DEFINED. Possession of the Premises
shall be deemed tendered to Lessee ("Tender of Possession") when (1) the
improvements to be provided by Lessor under this Lease are substantially
completed, (2) the Building utilities are ready for use in the Premises, (3)
Lessee has reasonable access to the Premises, and (4) ten (10) days shall have
expired following advance written notice to Lessee of the occurrence of the
matters described in (1), (2) and (3), above of this paragraph 3.2.1.
3.2.2 DELAYS CAUSED BY LESSEE. There shall be no abatement of
rent, and the sixty (60) day period following the Commencement Date before which
Lessee's right to cancel this Lease accrues under paragraph 3.2, shall be deemed
extended to the extent of any delays caused by acts or omissions of Lessee,
Lessee's agents, employees and contractors.
3.3 EARLY POSSESSION. If Lessee occupies the Premises prior to said
Commencement Date, such occupancy shall be subject to all provisions of this
Lease, such occupancy shall not change the termination date, and Lessee shall
pay rent for such occupancy.
3.4 UNCERTAIN COMMENCEMENT. In the event commencement of the Lease term
is defined as the completion of the improvements, Lessee and Lessor shall
execute an amendment to this Lease establishing the date of Tender of Possession
(as defined in paragraph 3.2.1) or the actual taking of possession by Lessee,
whichever first occurs, as the Commencement Date.
4. RENT.
4.1 BASE RENT. Subject to adjustment as hereinafter provided in
paragraph 4.3, and except as may be otherwise expressly provided in this Lease,
Lessee shall pay to Lessor the Base Rent for the Premises set forth in paragraph
1.6 of the Basic Lease Provisions, without offset or deduction. Lessee shall pay
Lessor upon execution hereof the advance Base Rent described in paragraph 1.8 of
the Basic Lease Provisions. Rent for any period during the term hereof which is
for less than one month shall be prorated based upon the actual number of days
of the calendar month involved. Rent shall be payable in lawful money of the
United States to Lessor at the address stated herein or to such other persons or
at such other places as Lessor may designate in writing.
4.2 OPERATING EXPENSE INCREASE. Lessee shall pay to Lessor during the
term hereof, in addition to the Base Rent, Lessee's Share, as hereinafter
defined, of the amount by which all Operating Expenses, as hereinafter defined,
for each Comparison Year exceeds the amount of all Operating Expenses for the
Base Year, such excess being hereinafter referred to as the "Operating Expense
Increase", in accordance with the following provisions:
(a) "Lessee's Share" is defined, for purposes of this Lease, as the
percentage set forth in paragraph 1.10 of the Basic Lease Provisions, which
percentage has been determined by dividing the approximate square footage of the
Premises by the total approximate square footage of the rentable space contained
in the Office Building Project. It is understood and agreed that the square
footage figures set forth in the Basic Lease Provisions are approximations which
Lessor and Lessee agree are reasonable and shall not be subject to revision
except in connection with an actual change in the size of the Premises or a
change in the space available for lease in the Office Building Project.
(b) "Base Year" is defined as the calendar year in which the Lease
term commences.
(c) "Comparison Year" is defined as each calendar year during the
term of this Lease subsequent to the Base Year; provided, however, Lessee shall
have no obligation to pay a share of the Operating Expense Increase applicable
to the first twelve (12) months of the Lease Term (other than such as are
mandated by a governmental authority, as to which government mandated expenses
Lessee shall pay Lessee's Share, notwithstanding they occur during the first
twelve (12) months). Lessee's Share of the Operating Expense Increase for the
first and last Comparison Years of the Lease Term shall be prorated according to
that portion of such Comparison Year as to which Lessee is responsible for a
share of such increase.
(d) "Operating Expenses" is defined, for purposes of this Lease, to
include all costs, if any, incurred by Lessor in the exercise of its reasonable
discretion, for:
(i) The operation, repair, maintenance, and replacement, in
neat, clean, safe, good order and condition, of the Office Building Project,
including but not limited to, the following:
(aa) The Common Areas, including their surfaces, coverings,
decorative items, carpets, drapes and window coverings, and including parking
areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, driveways, landscaped areas, striping, bumpers, irrigation systems,
Common Area lighting facilities, building exteriors and roofs, fences and gates;
(bb) All heating, air-conditioning, plumbing, electrical
systems, life safety equipment, telecommunication and other equipment used in
common by, or for the benefit of, lessees or occupants of the Office Building
Project, including elevators and escalators, tenant directories, fire detection
systems including sprinkler system maintenance and repair.
(ii) Trash disposal, janitorial and security services;
(iii) Any other service to be provided by Lessor that is
elsewhere in this Lease stated to be an "Operating Expense";
(iv) The cost of the premiums for the liability and property
insurance policies to be maintained by Lessor under paragraph 8 hereof;
(v) The amount of the real property taxes to be paid by Lessor
under paragraph 10.1 hereof;
(vi) The cost of water, sewer, gas, electricity, and other
publicly mandated services to the Office Building Project;
(vii) Labor, salaries and applicable fringe benefits and costs,
materials, supplies and tools, used in maintaining and/or cleaning the Office
Building Project and accounting and a management fee attributable to the
operation of the Office Building Project.
(viii) Replacing and/or adding improvements mandated by any
governmental agency and any repairs or removals necessitated thereby amortized
over its useful life according to Federal income tax regulations or guidelines
for depreciation thereof (including interest on the unamortized balance as is
then reasonable in the judgment of Lessor's accountants).
(ix) Replacements of equipment or improvements that have a
useful life for depreciation purposes according to Federal income tax guidelines
of five (5) years or less, as amortized over such life.
(e) Operating Expenses shall not include the costs of replacements
of equipment or improvements that have a useful life for Federal income tax
purposes in excess of five (5) years unless it is of the type described in
paragraph 4.2(d)(viii), in which case their cost shall be included as above
provided.
(f) Operating Expenses shall not include any expenses paid by any
lessee directly to third parties, or as to which Lessor is otherwise reimbursed
by any third party, other tenant, or by insurance proceeds.
(g) Lessee's Share of Operating Expenses Increase shall be payable
by Lessee within ten (10) days after a reasonably detailed statement of actual
expenses is presented to Lessee by Lessor. At Lessor's option, however, an
amount may be estimated by Lessor from time to time in advance of Lessee's Share
of the Operating Expense Increase for any Comparison Year, and the same shall be
payable monthly or quarterly, as Lessor shall designate, during each Comparison
Year of the Lease term, on the same day as the Base Rent is due hereunder. In
the event that Lessee pays Lessor's estimate of Lessee's Share of Operating
Expense Increase as aforesaid, Lessor shall deliver to Lessee within sixty (60)
days after the expiration of each Comparison Year a reasonably detailed
statement showing Lessee's Share of the actual Operating Expense Increase
incurred during such year. If Lessee's payments under this paragraph 4.2(g)
during said Comparison Year exceed Lessee's Share as indicated on said
statement, Lessee shall be entitled to credit the amount of such overpayment
against Lessee's Share of Operating Expense Increase next falling due. If
Lessee's payments under this paragraph during said Comparison Year were less
than Lessee's Share as indicated on said statement, Lessee shall pay to Lessor
the amount of the deficiency within ten (10) days after delivery by Lessor to
Lessee of said statement. Lessor and Lessee shall forthwith adjust between them
by cash payment any balance determined to exist with respect to
2
<PAGE> 3
that portion of the last Comparison Year for which Lessee is responsible as to
Operating Expense Increases, notwithstanding that the Lease term may have
terminated before the end of such Comparison Year.
4.3 RENT INCREASE.
4.3.1 [deleted]
4.3.2 [deleted]
4.3.3 [deleted]
4.3.4 [deleted]
4.3.5 [deleted]
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof the
security deposit set forth in paragraph 1.9 of the Basic Lease Provisions as
security for Lessee's faithful performance of Lessee's obligations hereunder. If
Lessee fails to pay rent or other charges due hereunder or otherwise defaults
with respect to any provision of this Lease, Lessor may use, apply or retain all
or any portion of said deposit for the payment of any rent or other charge in
default for the payment of any other sum to which Lessor may become obligated by
reason of Lessee's default, or to compensate Lessor for any loss or damage which
Lessor may suffer thereby. If Lessor so uses or applies all or any portion of
said deposit, Lessee shall within ten (10) days after written demand therefor
deposit cash with Lessor in an amount sufficient to restore said deposit to the
full amount then required of Lessee. If the monthly Base Rent shall, from time
to time, increase during the term of this Lease, Lessee shall, at the time of
such increase, deposit with Lessor additional money as a security deposit so
that the total amount of the security deposit held by Lessor shall at all times
bear the same proportion to the then current Base Rent as the initial security
deposit bears to the initial Base Rent set forth in paragraph 1.6 of the Basic
Lease Provisions. Lessor shall not be required to keep said security deposit
separate from its general accounts. If Lessee performs all of Lessee's
obligations hereunder, said deposit, or so much thereof as has not heretofore
been applied by Lessor, shall be returned, without payment of interest or other
increment for its use, to Lessee (or, at Lessor's option, to the last assignee,
if any, of Lessee's interests hereunder) at the expiration of the term hereof,
and after Lessee has vacated the Premises. No trust relationship is created
herein between Lessor and Lessee with respect to said Security Deposit.
6. USE. CONTINUED ON ADDENDUM (NEW 6.4)
6.1 USE. The Premises shall be used and occupied only for the purpose
set forth in paragraph 1.4 of the Basic Lease Provisions or any other use which
is reasonably comparable to that use and for no other purpose.
6.2 COMPLIANCE WITH LAW.
(a) Lessor warrants to Lessee that the Premises, in the state
existing on the date that the Lease term commences, but without regard to
alterations or improvements made by Lessee or the use for which Lessee will
occupy the Premises, does not violate any covenants or restrictions of record,
or any applicable building code, regulation or ordinance in effect on such Lease
term Commencement Date. In the event it is determined that this warranty has
been violated, then it shall be the obligation of the Lessor, after written
notice from Lessee, to promptly, at Lessor's sole cost and expense, rectify any
such violation.
(b) Except as provided in paragraph 6.2(a), Lessee shall, at
Lessee's expense, promptly comply with all applicable statutes, ordinances,
rules, regulations, orders, covenants and restrictions of record, and
requirements of any fire insurance underwriters or rating bureaus, now in effect
or which may hereafter come into effect, whether or not they reflect a change in
policy from that now existing, during the term or any part of the term hereof,
relating in any manner to the Premises and the occupation and use by Lessee of
the Premises. Lessee shall conduct its business in a lawful manner and shall not
use or permit the use of the Premises or the Common Areas in any manner that
will tend to create waste or a nuisance or shall tend to disturb other occupants
of the Office Building Project.
6.3 CONDITION OF PREMISES.
(a) Lessor shall deliver the Premises to Lessee in a clean
condition on the Lease Commencement Date (unless Lessee is already in
possession) and Lessor warrants to Lessee that the plumbing, lighting, air
conditioning, and heating system in the Premises shall be in good operating
condition. In the event that it is determined that this warranty has been
violated, then it shall be the obligation of Lessor, after receipt of written
notice from Lessee, setting forth with specificity the nature of the violation,
to promptly, at Lessor's sole cost, rectify such violation.
(b) Except as otherwise provided in this Lease, Lessee hereby
accepts the Premises and the Office Building Project in their condition existing
as of the Lease Commencement Date or the date that Lessee takes possession of
the Premises, whichever is earlier, subject to all applicable zoning, municipal,
county and state laws, ordinances and regulations governing and regulating the
use of the Premises, and any easements, covenants or restrictions of record, and
accepts this Lease subject thereto and to all matters disclosed thereby and by
any exhibits attached hereto. Lessee acknowledges that it has satisfied itself
by its own independent investigation that the Premises are suitable for its
intended use, and that neither Lessor nor Lessor's agent or agents has made any
representation or warranty as to the present or future suitability of the
Premises, Common Areas, or Office Building Project for the conduct of Lessee's
business.
7. MAINTENANCE, REPAIRS, ALTERATIONS AND COMMON AREA SERVICES.
7.1 LESSOR'S OBLIGATIONS. Lessor shall keep the Office Building
Project, including the Premises, interior and exterior walls, roof, and common
areas, and the equipment whether used exclusively for the Premises or in common
with other premises, in good condition and repair; provided, however, Lessor
shall not be obligated to paint, repair or replace wall coverings, or to repair
or replace any improvements that are not ordinarily a part of the Building or
are above then Building standards. Except as provided in paragraph 9.5, there
shall be no abatement of rent or liability of Lessee on account of any injury or
interference with Lessee's business with respect to any improvements,
alterations or repairs made by Lessor to the Office Building Project or any part
thereof. Lessee expressly waives the benefit of any statute now or hereafter in
effect which would otherwise afford Lessee the right to make repairs at Lessor's
expense or to terminate this Lease because of Lessor's failure to keep the
Premises in good order, condition and repair. SEE ADDENDUM.
7.2 LESSEE'S OBLIGATIONS.
(a) Notwithstanding Lessor's obligation to keep the Premises in
good condition and repair, Lessee shall be responsible for payment of the cost
thereof to Lessor as additional rent for that portion of the cost of any
maintenance and repair of the Premises, or any equipment (wherever located) that
serves only Lessee or the Premises, to the extent such cost is attributable to
causes beyond normal wear and tear. Lessee shall be responsible for the cost of
painting, repairing or replacing wall coverings, and to repair or replace any
Premises improvements that are not ordinarily a part of the Building or that are
above then Building standards. Lessor may, at its option, upon reasonable
notice, elect to have Lessee perform any particular, such maintenance or repairs
the cost of which is otherwise Lessee's responsibility hereunder. SEE ADDENDUM.
(b) On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same condition
as received, ordinary wear and tear excepted, clean and free of debris. Any
damage or deterioration of the Premises shall not be deemed ordinary wear and
tear if the same could have been prevented by good maintenance practices by
Lessee. Lessee shall repair any damage to the Premises occasioned by the
Installation or removal of Lessee's trade fixtures, alterations, furnishings and
equipment. Except as otherwise stated in this Lease, Lessee shall leave the air
lines, power panels, electrical distribution systems, lighting fixtures, air
conditioning, window coverings, wall coverings, carpets, wall paneling, ceilings
and plumbing on the Premises and in good operating condition.
7.3 ALTERATIONS AND ADDITIONS.
(a) Lessee shall not, without Lessor's prior written consent make
any alterations, improvements, additions, Utility Installations or repairs in,
on or about the Premises, or the Office Building Project. As used in this
paragraph 7.3 the term "Utility Installation" shall mean carpeting, window and
wall coverings, power panels, electrical distribution systems, lighting
fixtures, air conditioning, plumbing, and telephone and telecommunication wiring
and equipment. At the expiration of the term, Lessor may require the removal of
any or all of said alterations, improvements, additions or Utility
Installations, and the restoration of the Premises and the Office Building
Project to their prior condition, at Lessee's expense. Should Lessor permit
Lessee to make its own alterations, improvements, additions or Utility
Installations, Lessee shall use only such contractor as has been expressly
approved by Lessor, and Lessor may require Lessee to provide Lessor, at Lessee's
sole cost and expense, a lien and completion bond in an amount equal to one and
one-half times the estimated cost of such improvements, to insure Lessor against
any liability for mechanic's and materialmen's liens and to insure completion of
the work. Should Lessee make any alterations, improvements, additions or Utility
Installations without the prior approval of Lessor, or use a contractor not
expressly approved by Lessor, Lessor may, at any time during the term of this
Lease, require that Lessee remove any part or all of the same.
3
<PAGE> 4
(b) Any alterations, improvements, additions or Utility
Installations in or about the Premises or the Office Building Project that
Lessee shall desire to make shall be presented to Lessor in written form, with
proposed detailed plans. If Lessor shall give its consent to Lessee's making
such alteration, improvement, additional or Utility Installation, the consent
shall be deemed conditioned upon Lessee acquiring a permit to do so from its
applicable governmental agencies, furnishing a copy thereof to Lessor prior to
the commencement of the work, and compliance by Lessee with all conditions of
said permit in a prompt and expeditious manner.
(c) Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use of
the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises, the Building or the Office Building
Project, or any interest therein.
(d) Lessee shall give Lessor not less than ten (10) days' notice
prior to the commencement of any work in the Premises by Lessee, and Lessee
shall have the right to post notices of non-responsibility in or on the Premises
or the Building as provided by law. If Lessee shall, in good faith, contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend itself and Lessor against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof against the Lessor or the Premises, the Building or the Office Building
Project, upon the condition that if Lessor shall require, Lessee shall furnish
to Lessor a surety bond satisfactory to Lessor in an amount equal to such
contested lien, claim or demand indemnifying Lessor against liability for the
same and holding the Premises, the Building and the Office Building Project free
from the effect of such lien or claim. In addition, Lessor may require Lessee to
pay Lessor's reasonable attorney's fees and costs in participating in such
action if Lessor shall decide it is to Lessor's best interest so to do.
(e) All alterations, improvements, additions and Utility
Installations (whether or not such Utility Installations constitute trade
fixtures of Lessee) which may be made to the Premises by Lessee, including but
not limited to, floor coverings, panelings, doors, drapes, built-ins, moldings,
sound attenuation, and lighting and telephone or communication systems, conduit,
wiring and outlets, shall be made and done in a good and workmanlike manner and
of good and sufficient quality and materials and shall be the property of Lessor
and remain upon and be surrendered with the Premises at the expiration of the
Lease term, unless Lessor requires their removal pursuant to paragraph 7.3(a).
Provided Lessee is not in default, notwithstanding the provisions of this
paragraph 7.3(e), Lessee's personal property and equipment, other than that
which is affixed to the Premises so that it cannot be removed without material
damage to the Premises or the Building, and other than Utility Installations,
shall remain the property of Lessee and may be removed by Lessee subject to the
provisions of paragraph 7.2.
(f) Lessee shall provide Lessor with as-built plans and
specifications for any alterations, improvements, additions or Utility
Installations.
7.4 UTILITY ADDITIONS. Lessor reserves the right to install new or
additional utility facilities throughout the Office Building Project for the
benefit of Lessor or Lessee, or any other lessee of the Office Building Project,
including, but not by way of limitation, such utilities as plumbing, electrical
system, communication systems, and fire protection and detection systems, so
long as such installations do not unreasonably interfere with Lessee's use of
the Premises.
8. INSURANCE; INDEMNITY.
8.1 LIABILITY INSURANCE-LESSEE. Lessee shall, at Lessee's expense, obtain
and keep in force during the term of this Lease a policy of Comprehensive
General Liability insurance utilizing an Insurance Services Office standard form
with Board Form General Liability Endorsement (GL040) or equivalent, in an
amount of not less than $1,000,000 per occurrence of bodily injury and property
damage combined or in a greater amount as reasonably determined by Lessor and
shall insure Lessee with Lessor as an additional insured against liability
arising out of the use, occupancy or maintenance of the Premises. Compliance
with the above requirement shall not, however, limit the liability of Lessee
hereunder.
8.2 LIABILITY INSURANCE-LESSOR. Lessor shall obtain and keep in force
during the term of this Lease a policy of Combined Single Limit Bodily Injury
and Broad Form Property Damage Insurance, plus coverage against such other risks
Lessor deems advisable from time to time, insuring Lessor but not Lessee,
against liability arising out of the ownership, use, occupancy or maintenance of
the Office Building Project in an amount not less than $5,000,000.00 per
occurrence.
8.3 PROPERTY INSURANCE-LESSEE. Lessee shall, at Lessee's expense, obtain
and keep in force during the term of this Lease for the benefit of Lessee's,
replacement cost fire and extended coverage insurance, with vandalism and
malicious mischief, sprinkler leakage and earthquake sprinkler leakage
endorsements, in an amount sufficient to cover not less than 100% of the full
replacement cost, as the same may exist from time to time, of all of Lessee's
personal property, fixtures, equipment and tenant improvements.
8.4 PROPERTY INSURANCE-LESSOR. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies of insurance covering loss or
damage to the Office Building Project improvements, but not Lessee's personal
property, fixtures, equipment or tenant improvements, in the amount of the full
replacement cost thereof, as the same may exist from time to time, utilizing
Insurance Services Office standard form, or equivalent, providing protection
against all perils included within the classification of fire, extended
coverage, vandalism, malicious mischief, plate glass, and such other perils as
Lessor deems advisable or may be required by a lender having a lien on the
Office Building Project. In addition, Lessor shall obtain and keep in force,
during the term of this Lease, a policy of rental value insurance covering a
period of one year, with loss payable to Lessor, which insurance shall also
cover all Operating Expenses for said period. Lessee will not be named in any
such policies carried by Lessor and shall have no right to any proceeds
therefrom. The policies required by these paragraphs 8.2 and 8.4 shall contain
such deductibles as Lessor or the aforesaid lender may determine. In the event
that the Premises shall suffer an insured loss as defined in paragraph 9.1(f)
hereof, the deductible amounts under the applicable insurance policies shall be
deemed an Operating Expense. Lessee shall not do or permit to be done anything
which shall invalidate the insurance policies carried by Lessor. Lessee shall
pay the entirety of any increase in the property insurance premium for the
Office Building Project over what it was immediately prior to the commencement
of the term of this Lease if the increase is specified by Lessor's insurance
carrier as being caused by the nature of Lessee's occupancy or any act or
omission of Lessee.
8.5 INSURANCE POLICIES. Lessee shall deliver to Lessor copies of
liability insurance policies required under paragraph 8.1 or certificates
evidencing the existence and amounts of such insurance within seven (7) days
after the Commencement Date of this Lease. No such policy shall be cancelable or
subject to reduction of coverage or other modification except after thirty (30)
days prior written notice to Lessor. Lessee shall, at least thirty (30) days
prior to the expiration of such policies, furnish Lessor with renewals thereof.
8.6 WAIVER OF SUBROGATION. Lessee and Lessor each hereby release and
relieve the other, and waive their entire right of recovery against the other
for direct or consequential loss or damage arising out of or incident to the
perils covered by property insurance carried by such party, whether due to the
negligence of Lessor or Lessee or their agents, employees, contractors and/or
invitees. If necessary all property insurance policies required under this Lease
shall be endorsed to so provide.
8.7 INDEMNITY. Lessee shall indemnify and hold harmless Lessor and its
agents, Lessor's master or ground lessor, partners and lenders, from and against
any and all claims for damage to the person or property of anyone or any entity
arising from Lessee's use of the Office Building Project, or from the conduct of
Lessee's business or from any activity, work or things done, permitted or
suffered by Lessee in or about the Premises or elsewhere and shall further
indemnify and hold harmless Lessor from and against any and all claims, costs
and expenses arising from any breach of default in the performance of any
obligation on Lessee's part to be performed under the terms of this Lease, or
arising from any act or omission of Lessee, or any of Lessee's agents,
contractors, employees, or invitees, and from and against all costs, attorney's
fees, expenses and liabilities incurred by Lessor as the result of any such use,
conduct, activity, work, things done, permitted or suffered, breach, default or
negligence, and in dealing reasonably therewith, including but not limited to
the defense or pursuit of any claim or any action or proceeding involved
therein; and in case any action or proceeding be brought against Lessor by
reason of any such matter, Lessee upon notice from Lessor shall defend the same
at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be so indemnified. Lessee, as a material part of the
consideration to Lessor, hereby assumes all risk of damage to properly of Lessee
or injury to persons, in, upon or about the Office Building Project arising from
any cause and Lessee hereby waives all claims in respect thereof against Lessor.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessee hereby agrees that Lessor
shall not be liable for injury to Lessee's business or any loss of income
therefrom or for loss of or damage to the goods, wares, merchandise or other
property of Lessee, Lessee's employees, invitees, customers, or any other person
in or about the Premises or the Office Building Project, nor shall Lessor be
liable for injury to the person of Lessee, Lessee's employees, agents or
contractors, whether such damage or injury is caused by or results from theft,
fire, steam, electricity, gas, water or rain, or from the breakage, leakage,
obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing,
air conditioning or lighting fixtures, or from any other cause, whether said
damage or injury results from conditions arising upon the Premises or upon other
portions of the Office Building Project, or from other sources or places, or
from new construction or the repair, alteration or improvement of any part of
the Office Building Project, or of the equipment, fixtures or appurtenances
applicable thereto, and regardless of whether the cause of such damage or injury
or the means of repairing the
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same is inaccessible, Lessor shall not be liable for any damages arising from
any act or neglect of any other lessee, occupant or user of the Office Building
Project, nor from the failure of Lessor to enforce the provisions of any other
lease of any other lessee of the Office Building Project.
8.9 NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no
representation that the limits or forms of coverage of insurance specified in
this paragraph 8 are adequate to cover Lessee's property or obligations under
this Lease.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "Premises Damage" shall mean if the Premises are damaged or
destroyed to any extent.
(b) "Premises Building Partial Damage" shall mean if the Building
of which the Premises are a part is damaged or destroyed to the extent that the
cost to repair is less than fifty percent (50%) of the then Replacement Cost of
the building.
(c) "Premises Building Total Destruction" shall mean if the
Building of which the Premises are a part is damaged or destroyed to the extent
that the cost to repair is fifty percent (50%) or more of the then Replacement
Cost of the Building.
(d) "Office Building Project Buildings" shall mean all of the
buildings on the Office Building Project site.
(e) "Office Building Project Buildings Total Destruction" shall
mean if the Office Buildings are damaged or destroyed to the extent that the
cost of repair is fifty percent (50%) or more of the then Replacement Cost of
the Office Building Project Buildings.
(f) "Insured Loss" shall mean damage or destruction which was
caused by an event required to be covered by the insurance described in
paragraph 8. The fact that an insured Loss has a deductible amount shall not
make the loss an uninsured loss.
(g) "Replacement Cost" shall mean the amount of money necessary to
be spent in order to repair or rebuild the damaged area to the condition that
existed immediately prior to the damage occurring, excluding all improvements
made by lessees, other than those installed by Lessor at Lessor's expense.
9.2 PREMISES DAMAGE; PREMISES BUILDING PARTIAL DAMAGE.
(a) Insured Loss Subject to the provisions of paragraphs 9.4 and
9.5, if at any time during the term of this Lease there is damage which is an
insured Loss and which falls into the classification of either Premises Damage
or Premises Building Partial Damage, then Lessor shall as soon as reasonably
possible and to the extent the required materials and labor are readily
available through usual commercial channels, at Lessor's expense, repair such
damage (but not Lessee's fixtures, equipment or tenant improvements originally
paid for by Lessee) to its condition existing at the time of the damage, and
this Lease shall continue in full force and effect.
(b) Uninsured Loss: Subject to the provisions of paragraphs 9.4 and
9.5, if at any time during the term of this Lease there is damage which is not
an insured Loss and which falls within the classification of Premises Damage or
Premises Building Partial Damage, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense), which
damage prevents Lessee from making any substantial use of the Premises, Lessor
may at Lessor's option either (i) repair such damage as soon as reasonably
possible at Lessor's expense, in which event this Lease shall continue in full
force and effect, or (ii) give written notice to Lessee within thirty (30) days
after the date of the occurrence of such damage of Lessor's intention to cancel
and terminate this Lease as of the date of the occurrence of such damage, in
which event this Lease shall terminate as of the date of the occurrence of such
damage.
9.3 PREMISES BUILDING TOTAL DESTRUCTION; OFFICE BUILDING PROJECT TOTAL
DESTRUCTION. Subject to the provisions of paragraphs 9.4 and 9.5, if at any time
during the term of this Lease there is damage, whether or not it is an insured
Loss, which falls into the classifications of either (i) Premises Building Total
Destruction, or (ii) Office Building Project Total Destruction, then Lessor may
at Lessor's option either (i) repair such damage or destruction as soon as
reasonably possible at Lessor's expense (to the extent the required materials
are readily available through usual commercial channels) to its condition
existing at the time of the damage, but not Lessee's fixtures, equipment or
tenant improvements, and this Lease shall continue in full force and effect, or
(ii) give written notice to Lessee within thirty (30) days after the date of
occurrence of such damage of Lessor's intention to cancel and terminate this
Lease, in which case this Lease shall terminate as of the date of the occurrence
of such damage.
9.4 DAMAGE NEAR END OF TERM.
(a) Subject to paragraph 9.4(b), if at any time during the last
twelve (12) months of the term of this Lease there is substantial damage to the
Premises, Lessor may at Lessor's option cancel and terminate this Lease as of
the date of occurrence of such damage by giving written notice to Lessee of
Lessor's election to do so within 30 days after the date of occurrence of such
damage.
(b) Notwithstanding paragraph 9.4(a), in the event that Lessee has
an option to extend or renew this Lease, and the time within which said option
may be exercised has not yet expired, Lessee shall exercise such option, if it
is to be exercised at all, no later than twenty (20) days after the occurrence
of an Insured Loss falling within the classification of Premises Damage during
the last twelve (12) months of the term of this Lease. If Lessee duly exercises
such option during said twenty (20) day period, Lessor shall, at Lessor's
expense, repair such damage, but not Lessee's fixtures, equipment or tenant
improvements, as soon as reasonably possible and this Lease shall continue in
full force and effect. If Lessee fails to exercise such option during said
twenty (20) day period, then Lessor may at Lessor's option terminate and cancel
this Lease as of the expiration of said twenty (20) day period by giving written
notice to Lessee of Lessor's election to do so within ten (10) days after the
expiration of said twenty (20) day period, notwithstanding any term or provision
in the grant of option to the contrary.
9.5 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event Lessor repairs or restores the Building or
Premises pursuant to the provisions of this paragraph 9, and any part of the
Premises are not usable (including loss of use due to loss of access or
essential services), the rent payable hereunder (including Lessee's Share of
Operating Expense Increase) for the period during which such damage, repair or
restoration continues shall be abated, provided (1) the damage was not the
result of the negligence of Lessee, and (2) such abatement shall only be to the
extent the operation and profitability of Lessee's business as operated from the
Premises is adversely affected. Except for said abatement of rent, if any,
Lessee shall have no claim against Lessor for any damage suffered by reason of
any such damage, destruction, repair or restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
or the Building under the provisions of this Paragraph 9 and shall not commence
such repair or restoration within ninety (90) days after such occurrence, or if
Lessor shall not complete the restoration and repair within six (6) months after
such occurrence, Lessee may at Lessee's option cancel and terminate this Lease
by giving Lessor written notice of Lessee's election to do so at any time prior
to the commencement or completion, respectively, of such repair or restoration.
In such event this Lease shall terminate as of the date of such notice.
(c) Lessee agrees to cooperate with Lessor in connection with any
such restoration and repair, including but not limited to the approval and/or
execution of plans and specifications required.
9.6 TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this paragraph 9, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor. Lessor shall, in
addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.
9.7 WAIVER. Lessor and Lessee waive the provisions of any statute which
relate to termination of leases when leased property is destroyed and agree that
such event shall be governed by the terms of this Lease.
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Lessor shall pay the real property tax, as defined
in paragraph 10.3, applicable to the Office Building Project subject to
reimbursement by Lessee of Lessee's Share of such taxes in accordance with the
provisions of paragraph 4.2, except as otherwise provided in paragraph 10.2.
10.2 ADDITIONAL IMPROVEMENTS. Lessee shall not be responsible for paying
any increase in real property tax specified in the tax assessor's records and
work sheets as being caused by additional improvements placed upon the Office
Building Project by other lessees or by Lessor for the exclusive enjoyment of
any other lessee. Lessee shall, however, pay to Lessor at the time that
Operating Expenses are payable under paragraph 4.2(c) the entirety of any
increase in real property tax if assessed solely by reason of additional
improvements placed upon the Premises by Lessee or a Lessee's request.
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10.3 DEFINITION OF "REAL PROPERTY TAX." As used herein, the term "real
property tax" shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, and any license fee, commercial rental tax,
Improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed on the Office Building Project or any portion thereof
by any authority having the direct or indirect power to tax including any city,
county, state or federal government, or any school, agricultural, sanitary,
fire, street, drainage or other improvement district thereon as against any
legal or equitable interest of Lessor in the Office Building Project or in any
portion thereof, as against Lessor's right to rent or other income therefrom,
and as against Lessor's business of leasing the Office Building Project. The
term "real property tax" shall also include any tax, fee, levy, assessment or
charge (i) in substitution of, partially or totally, any tax, fee, levy,
assessment or charge hereinabove included within the definition of "real
property tax," or (ii) the nature of which was hereinbefore included within the
definition of "real property tax," or (iii) which is imposed for service or
right not charged prior to June 1, 1978, or, if previously charged, has been
increased since June 1, 1978, or (iv) which is imposed as a result of a change
in ownership, as defined by applicable local statutes for property tax purposes,
of the Office Building Project or which is added to a tax charge hereinbefore
included within the definition of real property tax by reason of such change of
ownership, or (v) which is imposed by reason of this transaction, any
modifications or changes hereto, or any transfers hereof.
10.4 JOINT ASSESSMENT. If the improvements or property, the taxes for
which are to be paid separately by Lessee under paragraph 10.2 or 10.5 a not
separately assessed, Lessee's portion of that tax shall be equitably determined
by Lessor from the respective valuations assigned in the assessor's work sheets
or such other information (which may include the cost of construction) as may be
reasonably available. Lessor's reasonable determination thereof, in good faith,
shall be conclusive.
10.5 PERSONAL PROPERTY TAXES.
(a) Lessee shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the Premises or elsewhere.
(b) If any of Lessee's said personal property shall be assessed
with Lessor's real property, Lessee shall pay to Lessor the taxes attributed to
Lessee within ten (10) days after receipt of written statement setting forth the
taxes applicable to Lessee's property.
11. UTILITIES.
11.1 SERVICES PROVIDED BY LESSOR. Lessor shall provide healing,
ventilation, air conditioning, and janitorial service as reasonably required,
reasonable amounts of electricity for normal lighting and office machines, water
for reasonable and normal drinking and lavatory use, and replacement light bulbs
and/or fluorescent tubes and ballasts for standard overhead fixtures. CONTINUED
ON ADDENDUM.
11.2 SERVICES EXCLUSIVE TO LESSEE. Lessee shall pay for all water, gas,
heat, light, power, telephone and other utilities and services specially
exclusively supplied and/or metered exclusively to the Premises or to Lessee,
together with any taxes thereon. If any such services are not separately metered
to the Premises, Lessee shall pay at Lessor's option, either Lessee's Share or a
reasonable proportion to be determined by Lessor of charges jointly metered with
other premises in the Building. CONTINUED ON ADDENDUM.
11.3 HOURS OF SERVICE. Said services and utilities shall be provided
during generally accepted business days and hours or such other days or hours as
may hereafter be set forth. Utilities and services required at other times shall
be shall be subject to advance request and reimbursement by Lessee to Lessor of
the cost thereof. Continued on Addendum.
11.4 EXCESS USAGE BY LESSEE. Lessee shall not make connection to the
utilities except by or through existing outlets and shall not install or use
machinery or equipment in or about the Premises that uses excess water, lighting
or power, or suffer or permit any act that causes extra burden upon the
utilities or services, including but not limited to security services, over
standard office usage for the Office Building Project Lessor shall require
Lessee to reimburse Lessor for any excess expenses or costs that may arise out
of a breach of this subparagraph by Lessee. Lessor may, in its sole discretion,
install at Lessee's expense supplemental equipment and/or separate metering
applicable to Lessee's excess usage or loading.
11.5 INTERRUPTIONS. There shall be no abatement of rent and Lessor
shall not be liable in any respect whatsoever for the inadequacy, stoppage,
interruption or discontinuance of any utility or service due to riot, strike,
labor dispute, breakdown, accident, repair or other cause beyond Lessor's
reasonable control or in cooperation with governmental request or directors.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's interest in the Lease or in the Premises,
without Lessor's prior written consent, which Lessor shall not unreasonably
withhold Lessor shall respond to Lessee's request for consent hereunder in a
timely manner and any attempted assignment, transfer, mortgage, encumbrance or
subletting without such consent shall be void, and shall constitute a material
default and breach of this Lease without the need for notice to Lessee under
paragraph 13.1. "Transfer" within the meaning of this paragraph 12 shall include
the transfer or transfers aggregating: (a) if Lessee is a corporation, more than
twenty-five percent (25%) of the voting stock of such corporation, or (b) if
Lessee is a partnership, more than twenty-five percent (25%) of the profit and
loss participation in such partnership.
12.2 LESSEE AFFILIATE. Notwithstanding the provisions of paragraph 12.1
hereof, Lessee may assign or sublet the Premises, or any portion thereof,
without Lessor" consent, to any corporation which controls, is controlled by or
is under common control with Lessee, or to any corporation resulting from the
merger or consolidation with Lessee, or to any person or entity which acquires
all the assets of Lessee as a going concern of the business that is being
conducted on the Premises, all of which are referred to as "Lessee Affiliate",
provided that before such assignment shall be effective, (a) said assignee shall
assume, in full, the obligations of Lessee under this Lease and (b) Lessor shall
be given written notice of such assignment and assumption. Any such assignment
shall not, in any way, affect or limit the liability of Lessee under the terms
of this Lease event if after such assignment or subletting the terms of this
Lease are materially changed or altered without the consent of Lessee, the
consent of whom shall not be necessary.
12.3 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(a) Regardless of Lessor's consent, no assignment or subletting
shall release Lessee of Lessee's obligations hereunder or alter the primary
liability of Lessee to pay the rent and other sums due Lessor hereunder
including Lessee's Share of Operating Expense Increase, and to perform all other
obligations to be performed by Lessee hereunder.
(b) Lessor may accept rent from any person other than Lessee
pending approval or disapproval of such assignment.
(c) Neither a delay in the approval or disapproval of such
assignment or subletting, nor the acceptance of rent, shall constitute a waiver
or estoppel of Lessor's right to exercise its remedies for the breach of any of
the terms or conditions of this paragraph 12 or this Lease.
(d) If Lessee's obligations under this Lease have been guaranteed
by third parties, then an assignment or sublease, and Lessor's consent thereto,
shall not be effective unless said guarantor's give their written consent to
such sublease and the terms thereof.
(e) The consent by Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the sublessee. However,
Lessor may consent to subsequent sublettings and assignments of the sublease or
any amendments or modifications thereto without notifying Lessee or anyone else
liable on the Lease or sublease and without obtaining their consent and such
action shall not relieve such persons from liability under this Lease or said
sublease; however, such persons shall not be responsible to the extent any such
amendment or modification enlarges or increases the obligations of the Lessee or
sublessee under this Lease or such sublease.
(f) In the event of any default under this Lease, Lessor may
proceed directly against Lessee, any guarantors or any one else responsible for
the performance of this Lease, including the sublessee, without first exhausting
Lessor's remedies against any other person or entity responsible therefore to
Lessor, or any security held by Lessor or Lessee.
(g) Lessor's written consent to any assignment or subletting of the
Premises by Lessee shall not constitute an acknowledgement that no default then
exists under this Lease of the obligations to be performed by Lessee nor shall
such consent be deemed a waiver of any then existing default, except as may be
otherwise stated by Lessor at the time.
(h) The discovery of the fact that any financial statement relied
upon by Lessor in giving its consent to an assignment or subletting was
materially false shall, at Lessor's election, render Lessor's said consent null
and void.
12.4 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING.
Regardless of Lessor's consent, the following terms and conditions shall apply
to any subletting by Lessee of all or any part of the Premises and shall be
deemed included in all subleases under this Lease whether or not expressly
incorporated therein.
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(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease heretofore or
hereafter made by Lessee, and Lessor may collect such rent and income and apply
same toward Lessee's obligations under this Lease; provided, however, that until
a default shall occur in the performance of Lessee's obligations under this
Lease, Lessee may receive, collect and enjoy the rents accruing under such
sublease. Lessor shall not, by reason of this or any other assignment of such
sublease to Lessor not by reason of the collection of the rents from a
sublessee, be deemed liable to the sublessee for any failure of Lessee to
perform and comply with any of Lessee's obligations to such sublessee under such
sublease. Lessee hereby irrevocably authorizes and directs any such sublessee,
upon receipt of a written notice from Lessor stating that a default exists in
the performance of Lessee's obligations under this Lease, to pay to Lessor the
rents due and to become due under the sublease. Lessee agrees that such
sublessee shall have the right to rely upon any such statement and request from
Lessor, and that such sublessee shall pay such rents to Lessor without any
obligation or right to inquire as to whether such default exists and
notwithstanding any notice from or claim from Lessee to the contrary. Lessee
shall have no right or claim against said sublessee or Lessor for any such rents
so paid by said sublessee to Lessor.
(b) No sublease entered into by Lessee shall be effective unless
and until it has been approved in writing by Lessor. In entering into any
sublease, Lessee shall use only such form of sublessee as is satisfactory to
Lessor, and once approved by Lessor, such sublease shall not be changed or
modified without Lessor's prior written consent. Any sublease shall, by reason
of entering into a sublease under this Lease, be deemed, for the benefit of
Lessor, to have assumed and agreed to conform and comply with each and every
obligation herein to be performed by Lessee other than such obligations as are
contrary to or inconsistent with provisions contained in a sublease to which
Lessor has expressly consented in writing.
(c) In the event Lessee shall default in the performance of its
obligations under this Lease, Lessor at its option and without any obligation to
do so, may require any sublessee to attorn to Lessor, in which event Lessor
shall undertake the obligations of Lessee under such sublease from the time of
the exercise of said option to the termination of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to Lessee or for any other prior defaults or Lessee under
such sublease.
(d) No sublessee shall further assign or sublet all or any part of
the Premises without Lessor's prior written consent.
(e) With respect to any subletting to which Lessor has consented,
Lessor agrees to deliver a copy of any notice of default by Lessee to the
sublessee. Such sublessee shall have the right to cure a default of Lessee
within three (3) days after service of said notice of default upon such
sublessee, and the sublessee shall have a right of reimbursement and offset from
and against Lessee for any such defaults cured by the sublessee, lessee, and the
sublessee shall have a right of reimbursement and offset from and against Lessee
for any such defaults cured by the sublessee,
12.5 LESSOR'S EXPENSES. In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment or subletting or if
Lessee shall request the consent of Lessor for any act Lessee proposes to do
then Lessee shall pay Lessor's reasonable costs and expense incurred in
connection therewith, including attorneys', architects', engineers', or other
consultants' fees.
12.6 CONDITIONS TO CONSENT. Lessor reserves the right to condition any
approval to assign or sublet upon Lessor's determination that (a) the proposed
assignee or sublessee shall conduct a business on the Premises of a quality
substantially equal to that of Lessee and consistent with the general character
of the other occupants of the Office Building Project and not in violation of
any exclusives or rights then held by other tenants, and (b) the proposed
assignee or sublessee be at least as financially responsible as Lessee was
expected to be at the time of the execution of this Lease or of such assignment
or subletting, whichever is greater. Continued on Addendum. SEE ADDENDUM (NEW
12.7)
13. DEFAULT; REMEDIES.
13.1 DEFAULT. The occurrence of any one or more of the following events
shall constitute a material default of this Lease by Lessee:
(a) The vacation or abandonment of the Premises by Lessee. Vacation
of the Premises shall include the failure to occupy the Premises for continuous
period of sixty (60) days or more, whether or not the rent is paid.
(b) The breach by Lessee of any of the covenants, conditions or
provisions of paragraph 7.3(a), (b) or (d) (alterations), 12.1 (assignment or
subletting), 13.1(a) (vacation or abandonment), 13.1(e) (insolvency), 13.1(f)
(false statement), 16(a) (estoppel certificate), 30(b) (subordination), 33
(auctions), or 41.1 (easements), all of which are hereby deemed to be material,
non-curable defaults without the necessity of any notice by Lessor to Lessee
thereof.
(c) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due where such
failure shall continue for a period of three (3) days after written notice
thereof from Lessor to Lessee. In the event that Lessor serves Lessee with a
Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes
such Notice to Pay Rent or Quit shall also constitute the notice required by
this subparagraph. **CONTINUED ON ADDENDUM.
(d) The failure by lessee to observe or perform any of the
covenants, conditions or provisions of this lease to be observed or performed by
Lessee other than those referenced in subparagraphs (b) and (c), above, where
such failure shall continue for a period of thirty (30) days after written
notice thereof from Lessor to Lessee; provided, however, that if the nature of
Lessee's noncompliance is such that more than thirty (30) days are reasonably
required for its cure, then Lessee shall not be deemed to be in default if
Lessee commenced such cure within said thirty (30) day period and thereafter
diligently pursues such cure to completion. To the extent permitted by law, such
thirty (30) day notice shall constitute the sole and exclusive notice required
to be given to Lessee under applicable Unlawful Detainer statutes.
(e) (i) The making by Lessee of any general assignment for the
benefit of creditors; (ii) Lessee becoming a "debtor" as defined in 11 U.S.C.
ss. 101 or any successor statute thereto (unless, in the case of a petition
filed against Lessee, the same is dismissed within sixty (60) days; (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of Lessee's
assets located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days. In the event that any
provision of this paragraph 13.1(e) is contrary to any applicable law, such
provision shall be of no force or effect.
(f) The discovery by Lessor that any financial statement given to
Lessor by Lessee, or its successor in interest or by any guarantor of Lessee's
obligation hereunder, was materially false.
13.2 REMEDIES. In the event of any material default or breach of this
Lease by Lessee, Lessor may at any time thereafter, with or without notice or
demand and without limiting Lessor in the exercise of any right or remedy which
Lessor may have by reason of such default:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor. In such
event Lessor shall be entitled to recover from Lessee all damages incurred by
Lessor by reason of Lessee's default including, but not limited to, the cost of
recovering possession of the Premises; expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys' fees,
and any real estate commission actually paid; the worth at the time of award by
the court having jurisdiction thereof of the amount by which the unpaid rent for
the balance of the term after the time of such award exceeds the amount of such
rental loss for the same period that Lessee proves could be reasonably avoided;
that portion of the leasing commission paid by Lessor pursuant to paragraph 15
applicable to the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this Lease
shall continue in effect whether or not Lessee shall have vacated or abandoned
the Premises. In such event Lessor shall be entitled to enforce all of Lessor's
rights and remedies under this Lease, including the right to recover the rent as
it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises are
located. Unpaid installments of rent and other unpaid monetary obligations of
Lessee under the terms of this Lease shall bear interest from the date due at
the maximum rate then allowable by law.
13.3 DEFAULT BY LESSOR. Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time, but in
no event later than thirty (30) days after written notice by Lessee to Lessor
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have theretofore been furnished to Lessee in
writing, specifying wherein Lessor has failed to perform such obligation;
provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required for performance then Lessor shall not be in
default if Lessor commences performance within such 30-day period and thereafter
diligently pursues the same to completion.
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13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee to Lessor of Base Rent, Lessee's Share of Operating Expense Increase or
other sums due hereunder will cause Lessor to incur costs not contemplated by
this Lease, the exact amount of which will be extremely difficult to ascertain.
Such costs include, but are not limited to, processing and accounting charges,
and late charges which may be imposed on Lessor by the terms of any mortgage or
trust deed covering the Office Building Project. Accordingly, if any installment
of Base Rent, Operating Expense Increase, or any other sum due from Lessee shall
not be received by Lessor or Lessor's designee within ten (10) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to 6% of such overdue amount. The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of late payment by Lessee.
Acceptance of such late charge by Lessor shall in no event constitute a waiver
of Lessee's default with respect to such overdue amount, nor prevent Lessor from
exercising any of the other rights and remedies granted hereunder.
14. CONDEMNATION. If the Premises or any portion thereof or the Office Building
Project are taken under the power of eminent domain, or sold under the threat of
the exercise of said power (all of which are herein called "condemnation"), this
Lease shall terminate as to the part so taken as of the date the condemning
authority takes title or possession, whichever first occurs; provided that if so
much of the Premises or the Office Building Project are taken by such
condemnation as would substantially and adversely affect the operation and
profitability of Lessee's business conducted from the Premises, Lessee shall
have the option, to be exercised only in writing within thirty (30) days after
Lessor shall have given Lessee written notice of such taking (or in the absence
of such notice, within thirty (30) days after the condemning authority shall
have taken possession), to terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the rent and Lessee's
Share of Operating Expense Increase shall be reduced in the proportion that the
floor area of the Premises taken bears to the total floor area of the Premises.
Common Areas taken shall be excluded from the Common Areas usable by Lessee and
no reduction of rent shall occur with respect thereto or by reason thereof.
Lessor shall have the option in its sole discretion to terminate this Lease as
of the taking of possession by the condemning authority, by giving written
notice to Lessee of such election within thirty (30) days after receipt of
notice of a taking by condemnation of any part of the Premises or the Office
Building Project. Any award for the taking of all or any part of the Premises or
the Office Building Project under the power of eminent domain or any payment
made under threat of the exercise of such power shall be the property of Lessor,
whether such award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance damages; provided,
however, that Lessee shall be entitled to any separate award for loss of or
damage to Lessee's trade fixtures, removable personal property and unamortized
tenant improvements that have been paid for by Lessee. For that purpose the cost
of such improvements shall be amortized over the original term of this Lease
excluding any options. In the event that this Lease is not terminated by reason
of such condemnation, Lessor shall to the extent of severance damages received
by Lessor in connection with such condemnation, repair any damage to the
Premises caused by such condemnation except to the extent that Lessee has been
reimbursed therefor by the condemning authority. Lessee shall pay any amount in
excess of such severance damages required to complete such repair.
15. BROKER'S FEE. [DELETED] FEES SUBJECT TO A SEPARATE AGREEMENT OUTSIDE OF THIS
LEASE.
16. ESTOPPEL CERTIFICATE.
(a) Each party (as "responding party") shall at any time upon not
less than ten (10) days' prior written notice from the other party ("requesting
party") execute, acknowledge and deliver to the requesting party a statement in
writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect) and the date to
which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to the responding party's knowledge, any
uncured defaults on the part of the requesting party, or specifying such
defaults if any are claimed. Any such statement may be conclusively relied upon
by any prospective purchaser or encumbrancer of the Office Building Project or
of the business of Lessee.
(b) At the requesting party's option, the failure to deliver such
statement within such time shall be a material default of this Lease by the
party who is to respond, without any further notice to such party, or it shall
be conclusive upon such party that (i) this Lease is in full force and effect,
without modification except as may be represented by the requesting party, (ii)
there are no uncured defaults in the requesting party's performance, and (iii)
if Lessor is the requesting party, not more than one month's rent has been paid
in advance.
(c) Lessor desires to finance, refinance, or sell the Office
Building Project, or any part thereof, Lessee hereby agrees to deliver to any
lender or purchaser designated by Lessor such financial statements of Lessee as
may be reasonably required by such lender or purchaser. Such statements shall
include the past three (3) years' financial statements of Lessee. All such
financial statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. LESSOR'S LIABILITY. The term "Lessor" as used herein shall mean only the
owner or owners, at the time in question, of the fee title or a lessee's
interest in a ground lease of the Office Building Project, and except as
expressly provided in paragraph 15, in the event of any transfer of such title
of interest, Lessor herein named (and in case of any subsequent transfers then
the grantor) shall be relieved from and after the date of such transfer of all
liability as respects Lessor's obligations thereafter to be performed, provided
that any funds in the hands of Lessor or the then grantor at the time of such
transfer, in which Lessee has an interest, shall be delivered to the grantee.
The obligations contained in this Lease to be performed by Lessor shall, subject
as aforesaid, be binding on Lessor's successors and assigns, only during their
respective periods of ownership.
18. SEVERABILITY. The invalidity of any provision of this Lease as determined by
a court of competent jurisdiction shall be in no way affect the validity of any
other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided, any
amount due to Lessor not paid when due shall bear interest at the maximum rate
then allowable by law or judgments from the date due. Payment of such interest
shall not excuse or cure any default by Lessee under this Lease; provided,
however, that interest shall not be payable on late charged incurred by Lessee
nor on any amounts upon which late charges are paid by Lessee.
20. TIME OF ESSENCE. Time is of the essence with respect to the obligations to
be performed under this Lease.
21. ADDITIONAL RENT. All monetary obligations of Lessee to Lessor under the
terms of this Lease, including but not limited to Lessee's Share of Operating
Expense Increase and any other expense payable by Lessee hereunder shall be
deemed to be rent.
22. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No prior
or contemporaneous agreement or understanding pertaining to any such matter
shall be effective. This Lease may be modified in writing only, signed by the
parties in interest at the time of the modification. Except as otherwise stated
in this Lease, Lessee hereby acknowledges that neither the real estate broker
listed in paragraph 15 hereof nor any cooperating broker on this transaction nor
the Lessor or any employee or agents of any of said persons has made any oral or
written warranties or representations to Lessee relative to the condition or use
by Lessee of the Premises or the Office Building Project and Lessee acknowledges
that Lessee assumes all responsibility regarding the Occupational Safety Health
Act, the legal use and adaptability of the Premises and the compliance thereof
with all applicable laws and regulations in effect during the term of this
Lease.
23. NOTICES. Any notice required or permitted to be given hereunder shall be in
writing and may be given by personal delivery or by certified or registered
mail, and shall be deemed sufficiently given if delivered or addressed to Lessee
or to Lessor at the address noted below or adjacent to the signature of the
respective parties, as the case may be. Mailed notices shall be deemed given
upon actual receipt at the address required, or forty-eight hours following
deposit in the mail, postage prepaid, whichever first occurs. Either party may
by notice to the other specify a different address for notice purposes except
that upon Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for notice purposes. A copy of all notice required
or permitted to be given to Lessor hereunder shall be concurrently transmitted
to such party or parties at such addresses as Lessor may from time to time
hereafter designate by notice to Lessee.
24. WAIVERS. No waiver by Lessor of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by Lessee of any provision
hereof, other than the failure of Lessee to pay the particular rent so accepted,
regardless of Lessor's knowledge of such preceding breach at the time of
acceptance of such rent.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a "short form" memorandum of this
Lease for recording purposes.
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26. HOLDING OVER. If Lessee, with Lessor's consent, remains in possession of the
Premises or any part thereof after the expiration of the term hereof, such
occupancy shall be a tenancy from month to month upon all the provisions of this
Lease pertaining to the obligations of Lessee, except that the rent payable
shall be two hundred percent (200%) of the rent payable immediately preceding
the termination date of this Lease, and all Options, if any, granted under the
terms of this Lease shall be deemed terminated and be of no further effect
during said month to month tenancy.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. COVENANTS AND CONDITIONS. Each condition of this Lease performable by Lessee
shall be deemed both a covenant and a condition.
29. BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof restricting
assignment or subletting by Lessee and subject to the provisions of paragraph
17, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State
where the Office Building Project is located and any litigation concerning this
Lease between the parties hereto shall e initiated in the county in which the
Office Building Project is located.
30. SUBORDINATION.
(a) This Lease, and any Option or right of first refusal granted
hereby, at Lessor's option, shall be subordinate to any ground lease, mortgage,
deed of trust, or any other hypothecation or security now or hereafter placed
upon the Office Building Project and to any and all advances made on the
security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. Notwithstanding such subordination,
Lessee's right to quiet possession of the Premises shall not be disturbed if
Lessee is not in default and so long as Lessee shall pay the rent and observe
and perform all of the provisions of this Lease, unless this Lease is otherwise
terminated pursuant to its terms. If any mortgagee, trustee or ground lessor
shall elect to have this Lease and any Options granted hereby prior to the lien
of its mortgage, deed of trust or ground lease, and shall give written notice
thereof to Lessee, this Lease and such Options shall be deemed prior to such
mortgage, deed of trust or ground lease, whether this Lease or such Options are
dated prior or subsequent to the date of said mortgage, deed of trust or ground
lease or the date of recording thereof.
(b) Lessee agrees to execute any documents required to effectuate
an attornment, a subordination, or to make this Lease or any Option granted
herein prior to the lien of any mortgage, deed of trust or ground lease, as the
case may be. Lessee's failure to execute such documents within ten (10) days
after written demand shall constitute a material default by Lessee hereunder
without further notice to Lessee or, at Lessor's option, Lessor shall execute
such documents on behalf of Lessee as Lessee's attorney-in-fact. Lessee does
hereby make, constitute and irrevocably appoint Lessor as Lessee's
attorney-in-fact and in Lessee's name, place and stead, to execute such
documents in accordance with this paragraph 30(b).
31. ATTORNEYS' FEES.
31.1 If either party or the broker(s) named herein bring an action to
enforce the terms hereof or declare rights hereunder, the prevailing party in
any such action, trial or appeal thereon, shall be entitled to his reasonable
attorneys' fees to be paid by the losing party as fixed by the court in the same
or a separate suit, and whether or not such action is pursued to decision of
judgment. The provisions of this paragraph shall inure to the benefit of the
broker named herein who seeks to enforce a right hereunder.
31.2 The attorneys' fee award shall not be computed in accordance with
any court fee schedule, but shall be such as to fully reimburse all attorneys'
fees reasonably incurred in good faith.
31.3 Lessor shall be entitled to reasonable attorneys' fees and all
other costs and expenses incurred in the preparation and service of notice of
default and consultations in connection therewith, whether or not a legal
transaction is subsequently commenced in connection with such default.
32. LESSOR'S ACCESS.
32.1 Lessor and Lessor's agents shall have the right to enter the
Premises at reasonable times for the purposes of inspecting the same, performing
any services required of Lessor, showing the same to prospective purchasers,
lenders, or lessees, taking such safety measures, erecting such scaffolding or
other necessary structures, making such alterations, repairs, improvements or
additions to the Premises or to the Office Building Project as Lessor may
reasonably deem necessary or desirable and the erecting, using and maintaining
of utilities, services, pipes and conduits through the Premises and/or other
premises as long as there is no material adverse effect to Lessee's use of the
Premises. Lessor may at any time place on or about the Premises or the Building
any ordinary "For Sale" signs and Lessor may at any time during the last 120
days of the term hereof place on or about the Premises any ordinary "For Sale"
signs.
32.2 All activities of Lessor pursuant to this paragraph shall be
without abatement of rent, nor shall Lessor have any liability to Lessee for the
same.
32.3 Lessor shall have the right to retain keys to the Premises and to
unlock all doors in or upon the Premises other than to files, vaults and sales,
and in the case of emergency to enter the Premises by any reasonably appropriate
means, and any such entry shall not be deemed a forcible or unlawful entry or
detainer of the Premises or an eviction. Lessee waives any charges for damages
or injuries or interference with Lessee's property or business in connection
therewith.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the premises or the Common Areas
without first having obtained Lessor's prior written consent. Notwithstanding
anything to the contrary in this Lease, Lessor shall not be obligated to
exercise any standard of reasonableness in determining whether to grant such
consent. The holding of any auction on the Premises or Common Areas in violation
of this paragraph shall constitute a material default of this Lease.
34. SIGNS. Lessee shall not place any sign upon the Premises or the Office
Building Project without Lessor's prior written consent. Under no circumstances
shall Lessee place a sign on any roof of the Office Building Project. (CONTINUED
ON ADDENDUM)
35. MERGER. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination by Lessor, shall not work a merger
and shall at the option of Lessor, terminate all or any existing subtenancies or
may, at the option of Lessor, operate as an assignment to Lessor of any or all
of such subtenancies.
36. CONSENTS. Except for paragraphs 33 (auctions) and 34 (signs) hereof,
wherever in this Lease the consent of one party is required to an act of the
other party such consent shall not be unreasonably withheld or delayed.
37. GUARANTOR. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.
38. QUIET POSSESSION. Upon Lessee paying the rent for the Premises and observing
and performing all of the covenants, conditions and provisions on Lessee's part
to be observed and performed hereunder, Lessee shall have quiet possession of
the Premises for the entire term hereof subject to all of the provisions of this
Lease. The individuals executing this Lease on behalf of Lessor represent and
warrant to Lessee that they are fully authorized and legally capable of
executing this Lease on behalf of Lessor and that such execution is binding upon
all parties holding an ownership interest in the Office Building Project.
39. OPTIONS. SEE ADDENDUM (NEW 39.5)
39.1 DEFINITION. As used in this paragraph the word "Option" has the
following meaning: (1) the right or option to extend the term of this Lease or
to renew this Lease or to extend or renew any lease that Lessee has on the other
property of Lessor; (2) the option of right of first refusal to lease the
Premises or the right of first offer to lease the Premises or the right of first
refusal to lease other space within the Office Building Project or other
property of Lessor or the right of first offer to lease other space within the
Office Building Project or other property of Lessor; (3) the right or option to
purchase the Premises or the Office Building Project, or the right of first
refusal to purchase the Premises or the Office Building Project or the right of
first offer to purchase the Premises or the Office Building Project, or the
right or option to purchase other property of Lessor, or the right of first
refusal to purchase other property of Lessor or the right of first offer to
purchase other property of Lessor.
39.2 OPTIONS PERSONAL. Each Option granted to lessee in this Lease is
personal to the original Lessee and may be exercised only by the original Lessee
while occupying the Premises who does so without the intent of thereafter
assigning this Lease or subletting the Premises or any portion thereof, and may
not be exercised or be assigned, voluntarily or involuntarily, by or to any
person or entity other than Lessee; provided, however, that an Option may be
exercised by or assigned to any Lessee Affiliate as
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defined in paragraph 12.2 of this Lease. The Options, if any, herein granted to
Lessee are not assignable separate and apart from this Lease, nor may any Option
be separated from this Lease in any manner, either by reservation or otherwise.
39.3 MULTIPLE OPTIONS. In the event that Lessee has any multiple
options to extend or renew this Lease a later option cannot be exercised unless
the prior option to extend or renew this Lease has been so exercised.
39.4 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary, (i) during
the time commencing from the date Lessor gives to Lessee a notice of default
pursuant to paragraph 13.1(c) or 13.1(d) and continuing until the noncompliance
alleged in said notice of default is cured, or (ii) during the period of time
commencing on the day after a monetary obligation to Lessor is due from Lessee
and unpaid (without any necessity for notice thereof to Lessee) and continuing
until the obligation is paid, or (iii) in the event that Lessor has given to
Lessee three or more notices of default under paragraph 13.1(c), or paragraph
13.1(d), whether or not the defaults are cured, during the 12 month period of
time immediately prior to the time that Lessee attempts to exercise the subject
Option, (iv) if Lessee has committed any non-curable breach, including without
limitation those described in paragraph 13.1(b), or is otherwise in default of
any of the terms, covenants or conditions of this Lease.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
for a period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessee fails to
commence to cure a default specified in paragraph 13.1(d) within thirty (30)
days after the date that Lessor gives notice to Lessee of such default and/or
Lessee fails thereafter to diligently prosecute said cure to completion, or
(iii) Lessor gives to Lessee three or more notices of default under paragraph
13.1(c), or paragraph 13.1(d), whether or not the defaults are cured, or (iv) if
Lessee has committed any non-curable breach, including without limitation those
described in paragraph 13.1(b), or is otherwise in default of any of the terms,
covenants and conditions of this Lease.
40. SECURITY MEASURES - LESSOR'S RESERVATIONS.
40.1 Lessee hereby acknowledges that Lessor shall have no obligation
whatsoever to provide guard service or other security measures for the benefit
of the Premises or the Office Building Project. Lessee assumes all
responsibility for the protection of Lessee, its agents, and invitees and the
property of Lessee and of Lessor's agents and invitees from acts of third
parties. Nothing herein contained shall prevent Lessor, at Lessor's sole option,
from providing security protection for the Office Building Project or any part
thereof, in which event the cost thereof shall be included within the definition
of Operating Expenses, as set forth in paragraph 4.2(b).
40.2 Lessor shall have the following rights:
(a) To change the name, address or title of the Office Building
Project or building in which the Premises are located upon not less than 90 days
prior written notice;
(b) To, at Lessee's expense, provide and install Building standard
graphics on the door of the Premises and such portions of the Common Areas as
Lessor shall reasonably deem appropriate;
(c) To permit any lessee the exclusive right to conduct any
business as long as such exclusive does not conflict with any rights expressly
given herein;
(d) To place such signs, notices or displays as Lessor reasonably
deems necessary or advisable upon the roof, exterior of the building or the
Office Building Project or on pole signs in the Common Areas;
40.3 Lessee shall not:
(a) Use a representation (photographic or otherwise) of the
Building or the Office Building Project or their name(s) in connection with
Lessee's business;
(b) Suffer or permit anyone, except in emergency, to go upon the
roof of the Building.
41. EASEMENTS.
41.1 Lessor reserves to itself the right, from time to time, to grant
such easements, rights and dedications that Lessor deems necessary or desirable
and to cause the recordation of Parcel Maps and restrictions, so long as such
easements, rights, dedications, Maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee shall sign any of the
aforementioned documents upon request of Lessor and failure to do so shall
constitute a material default of this Lessee by Lessee without the need for
further notice to Lessee.
41.2 The obstruction of Lessee's view, air, or light by any structure
erected in the vicinity of the Building, whether by Lessor or third parties,
shall in no way affect this Lease or impose any liability upon Lessor.
42. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one party to the other under the provisions
hereof, the party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment, and there shall survive the right on the part
of said party to institute suit for recovery of such sum. If it shall be
adjudged that there was no legal obligation on the part of said party to pay
such sum or any part thereof, said party shall be entitled to recover such sum
or so much thereof as it was not legally required to pay under the provisions of
this Lease.
43. AUTHORITY. If Lessee is a corporation, trust, or general or limited
partnership, Lessee, and each individual executing this Lease on behalf of such
entity represent and warrant that such individual is duly authorized to execute
and deliver this Lease on behalf of said entity. If Lessee is a corporation,
trust or partnership, Lessee, upon execution hereof, deliver to Lessor evidence
of such authority satisfactory to Lessor.
44. CONFLICT. Any conflict between the printed provisions, Exhibits or Addenda
of this Lease and the typewritten or handwritten provisions, if any, shall be
controlled by the typewritten or handwritten provisions.
45. NO OFFER. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to Lessee to lease.
This Lease shall become binding upon Lessor and Lessee only when fully executed
by both parties.
46. LENDER MODIFICATION. Lessee agrees to make such reasonable modifications to
this Lease as may be reasonably required by an institutional lender in
connection with the obtaining of normal financing or refinancing of the Office
Building Project.
47. MULTIPLE PARTIES. If more than one person or entity is named as either
Lessor or Lessee herein, except as otherwise expressly provided herein the
obligations of the Lessor or Lessee herein shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee,
respectively.
48. WORK LETTER. This lease is supplemented by that certain Work Letter of even
date executed by Lessor and Lessee, attached hereto as Exhibit C, and
incorporated herein by this reference.
49. ATTACHMENT. Attached hereto are the following documents which constitute a
part of this Lease:
1. Addendum consisting of two (2) pages.
2. Exhibit "A" - Rules and Regulations of the Building.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
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<PAGE> 11
IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TO
YOUR ATTORNEY FOR HIS APPROVAL, NO REPRESENTATION OR RECOMMENDATION IS
MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL
ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OF THIS LEASE OR THE
TRANSACTION RELATING THERETO; THE PARTIES SHALL RELY SOLELY UPON THE
ADVICE THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF
THIS LEASE.
LESSOR LESSEE
SPECTOR WALDMAN COMPANY CORPAS INVESTMENTS, INC., A FLORIDA
CORPORATION
By /s/ Martin H. Waldman By /s/ Ross Love
------------------------------------ --------------------------------
Print Name: Martin H. Waldman Print Name: Ross Love
---------------------------- -----------------------
Its: Owner Its: Chief Executive Officer
----------------------------------- -------------------------------
By By
------------------------------------ --------------------------------
Print Name: Print Name:
---------------------------- -----------------------
Its: Its:
----------------------------------- -------------------------------
Executed at Executed at
--------------------------- -----------------------
on on
------------------------------------ --------------------------------
Address Address
------------------------------- ----------------------------
For these forms write or call the American Industrial Real Estate Association,
350 South Figueroa Street, Suite 275, Los Angeles, CA 90071, (213) 687-8777.
(C)1984-By American Industrial Real Estate Association. All rights reserved. No
part of these words may bE reproduced in any form without permission in writing.
11
<PAGE> 12
ADDENDUM TO STANDARD OFFICE LEASE
DATED FEBRUARY 22, 2000
BY AND BETWEEN SPECTOR-WALDMAN COMPANY, LESSOR
AND CORPAS INVESTMENTS, INC., A FLORIDA CORPORATION LEASE
1. BASIC LEASE PROVISIONS
1.8 RENT PAID UPON EXECUTION (CONTINUED). In addition to the payment of
rent and other rental obligations due hereunder upon execution of Lease, Lessee
shall pay a key deposit of the sum of $25 per key to Lessor for each key Lessee
requests for Suite 218. The key deposit shall be returned at the termination of
this Lease in the manner provided for in Paragraph 5 hereof if the key(s) are
returned to Lessor.
1.9 SECURITY DEPOSIT (CONTINUED). In lieu of requiring Lessee to
provide a personal guarantor for Lessee's lease obligation, the Lessee shall
deposit with Lessor as a security deposit, the sum of $26,182.60 which is
equivalent to four months initial base rent hereunder. Subject to all of the
provisions of this Lease, including, but not limited to, the requirement on the
part of the Lessee to deposit additional money from time to time with Lessor as
a security deposit so that the total amount of the security deposit shall at all
times bear the same proportion to the then current Base Rent as the initial
security deposit bears to the initial base rent, then, so long as the Lessee is
not in default of any obligation hereunder and Lessee has deposited with Lessor
the sum of $28,866.32 as a security deposit, on the 1st day of January, February
and March, 2002 respectively, Lessee shall have the right to direct Lessor to
apply the amount of $7,216.58 per month of the security deposit to be credited
as Lessee's prepaid rent for the months of January, February and March 2002
respectively, so that at the expiration of this Lease, the amount of the
security deposit shall be the sum of $7,216.58.
2. PARKING
2.2.2 (CONTINUED). Lessee shall rent a total of nine (9) reserved
parking space at the prevailing rate for parking (which is presently $75 per
month per single reserved parking space and $130 per month per one 2 car random
parking space). Lessee shall have the right to lease additional spaces on a
month to month basis at the building prevailing rate, subject to Lessor's
determination of availability. Upon execution hereof, Lessee shall pay the first
month's parking, together with a security deposit of $450 (which is $50 per
garage door opener), together with Lessee's other rental obligations hereunder.
The deposit for the garage door opener shall be returned at the termination of
this Lease in the manner provided for in Paragraph 5 hereof if the opener(s) is
returned in working order. In the event the opener(s) is lost or otherwise needs
to be replaced, Lessee will reinstate the opener deposit at the time Lessor
replaces the opener.
3. TERM
3.3 EARLY POSSESSION. (Continued). Concurrent with the execution of
this Lease, Lessee shall provide Lessor with its proposed tenant improvements
for Lessor's written approval. Upon Lessor's written approval thereof and upon
Lessee providing Lessor with the corporate resolution required under Paragraph
43 hereof and upon the tender of rent and other rental obligations by way of
cashier's check or money order pursuant to this lease, Lessee shall immediately
commence the construction of such tenant improvements and Lessee shall have the
right to early possession of the premises for the purpose of constructing such
tenant improvements, without the payment of any additional rent therefore. In
the event payment of the rent and other rental obligations is made by way of
personal or business check, early possession shall be granted only at such time
as the personal or business check(s) clear Lessor's bank.
4. RENT
4.2 OPERATING EXPENSES INCREASE
(d) (Continued). If, for a period of more than 90 consecutive days
during the Lease term, less than ninety-five percent (95%) of the rentable space
of the Office Building Project is occupied, the "Operating Expenses"
1-A
<PAGE> 13
ADDENDUM TO STANDARD OFFICE LEASE
DATED FEBRUARY 22, 2000
BY AND BETWEEN SPECTOR-WALDMAN COMPANY, LESSOR
AND CORPAS INVESTMENTS, INC., A FLORIDA CORPORATION LEASE
shall be adjusted by Lessor to reasonably approximate the Operating Expenses
which would have been incurred if the Office Building Project had been at least
ninety-five percent (95%) occupied. This amount shall be considered to have been
the amounts of Operating Expenses for that Comparison Year. For purposes of
calculating the Operating Expenses for the Base Year, the Office Building
Project will be considered 95% occupied.
4.3 RENT INCREASE (CONTINUED). The amount of the Lessee's base monthly
rental shall increase in accordance with the following schedule:
On April 1, 2001, the base monthly rent payable pursuant to
this Lease shall be increased to $6,872.93 per month for the
period from April 1, 2001 through March 31, 2002.
On April 1, 2002, the base monthly rent payable pursuant to
this Lease shall be increased to $7,216.58 per month for the
period from April 1, 2002 through March 31, 2003.
6. USE
6.4 HAZARDOUS MATERIALS (NEW). Lessor represents that to the best of
Lessor's knowledge, the following are not present in the Building or the land on
which the Building has been constructed: asbestos, any electrical transformers
containing PCB's, underground storage tanks, lead based paints or other toxic,
hazardous or contaminated substances.
7. MAINTENANCE, REPAIRS, ALTERATIONS AND COMMON AREA SERVICES
7.1 LESSOR'S OBLIGATIONS (CONTINUED). Prior to April 1, 2000, at
Lessor's expense, Lessor shall replace ceiling tiles in Suite 218, as necessary.
Lessor shall correct the faulty window frames on two of the ocean facing windows
in Suite 218. Additional work in Suite 218 shall be at Lessee's sole expense,
subject to the prior written approval of Lessor and provided a licensed, insured
and bonded California contractor performs such work.
7.3 LESSEE'S OBLIGATIONS
(a) (CONTINUED). Lessee, at Lessee's sole expense, shall maintain
the Premises in good order, condition and repair, including the walls and
floors, all doors, all interior windows, and special items and equipment
installed by or at the expense of Lessee. Lessee shall further be responsible
for all repairs and alterations in and to the Premises, building and the
facilities and systems thereof, the need for which arises out of:
(1) The installation, removal, use or operation
of Lessee's property in the Premises;
(2) The moving of Lessee's property into or out
of the Premises;
(3) The act, omission, misuse or negligence of
Lessee, its agents, contractors, employees,
invitees or assigns in connection with
Lessee's use or occupancy of the Premises.
2-A
<PAGE> 14
11. UTILITIES
11.1 SERVICES PROVIDED BY LESSOR. (Continued) Lessor shall provide
janitorial service in Lessee's premises five (5) days per week.
11.3 HOURS OF SERVICE. (Continued) Heating, ventilation and air
conditioning shall be provided to Lessee 24 hours per day, seven days per week,
unless due to circumstances outside the Lessor's control. Lessor shall maintain
HVAC and all other building services and systems. Lessee shall have access to
the Premises 24 hours per day, seven days per week, unless due to circumstances
outside the Lessor's control.
12. ASSIGNMENT AND SUBLETTING
12.4 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING.
(__) Lessee shall not sublease or assign the premises at a rate
less than the Lessee's then prevailing rental rate per square foot, which at the
inception of the Lease is $2.05 per rentable square foot. In the event of an
assignment or subletting for more than Lessee's base rent hereunder, Lessee and
Lessor shall share equally the Excess Rent in accordance with Para. 12.7 hereof.
12.7 LESSOR'S SHARE OF EXCESS RENT (NEW).
(a) In the event of an assignment or subletting, Lessee shall pay
to Lessor as Additional Rent ("Lessor's Share") under the Lease fifty percent
(50%) of the Excess Rent on such transaction(s) as and when received by Lessee,
unless Lessor gives written notice to Lessee and the assignee or subtenant that
Lessor's share shall be paid by the assignee or subtenant to Lessor directly.
(b) Lessee shall provide Lessor with a written statement certifying
all amounts to be paid from any assignment or sublease of the Premises within
thirty (30) days after the transaction documentation is signed, and Lessor may
inspect Lessee's books and records to verify the accuracy of such statement(s).
On written request, Lessee shall promptly furnish to Lessor copies of all the
transaction documentation, all of which shall be certified by Lessee to be
complete, true, and correct. Lessor's receipt of Lessor's Share shall not be a
consent to any further assignment or subletting. The breach of Lessee's
obligation under this paragraph 12.7 shall be a material default of the Lease.
34. SIGNS. (Continued). Lessee shall have the right to place its business
name on the building Directory according to building standards, as well as any
other identity allowed by the building.
60. PAYMENTS. (NEW)
Upon execution hereof, Lessee shall pay to Lessor the sum of $33,818.25
consisting of $6,545.65 (first month's rent), $26,182.60 (security deposit),
$615.00 (first month's parking), $450.00 (garage opener deposit), $25.00 (key
deposit for 1 key).
END
3-A
<PAGE> 15
EXHIBIT "A"
RULES AND REGULATIONS
1. Landlord may from time to time adopt appropriate systems and procedures for
the security or safety of the Building, any persons occupying, using or entering
the Building, or any equipment, furnishing or contents of the Building, and
Tenant will comply with the Landlord's requirements relative to such systems and
procedures.
2. The sidewalks, halls, passage, exists, entrances, elevators, and stairways of
the Building will not be obstructed by any Tenants or used by any of them for
any purpose other than for ingress to and egress from their respective Premises.
The halls, passages, exits, entrances, elevator and stairways are not for the
general public, and Landlord will in all cases retain the right to control and
prevent access to such halls, passages, exits, entrances, elevator and stairways
of all persons whose presence in the judgment of the Landlord would be
detrimental to the safety, character, reputation and interests of the Building
and its Tenants, provided that nothing contained in these Rules and Regulations
will be construed to prevent such access to persons with whom any Tenant
normally deals in the ordinary course of its business unless such persons are
engaged in illegal activities. No Tenant and no employee or invitee of any
Tenant will go upon the roof of the Building except such roof or portion of such
roof as may be contiguous to the premises of a particular Tenant and may be
designated in writing by Landlord as a roof deck or roof garden area.
3. No sign, placard, picture, name, advertisement or notice visible from the
exterior of Tenant's Premises will be inscribed, painted, affixed or otherwise
displayed by Tenant on any part of the Building or the Premises without the
prior written consent of Landlord. All approved signs or lettering in the lobby
Directory and on doors will be printed, painted, affixed or inscribed at the
expense of Tenant by a person approved by Landlord. Other than building standard
mini-blinds, material visible from outside the Building will not be permitted.
In the event of the violation of this Rule by Tenant. Landlord may remove the
violating items without any liability, and may charge the expense incurred by
such removal to the Tenant or Tenants violating this Rule.
4. Other than building standard mini-blinds, no curtains, draperies, blinds,
shutters, shades, screens or other coverings, hangings or decorations will be
attached to, hung or placed in, or used in connection with any window of the
Building or the Premises.
5. The sashes, sash doors, skylights, windows, heating, ventilating and air
conditioning vents and doors that reflect or admit light and air into the halls,
passageways or other public places in the Building will not be covered or
obstructed by any Tenant, nor will any bottles, parcels, or other articles be
placed on any window sills.
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<PAGE> 16
6. No showcases or other articles will be put in front of or affixed to any part
of the exterior of the Building, nor placed in the public halls, corridors or
vestibules without the prior written consent of Landlord.
7. No Tenant will occupy or permit any portion of the Premises to be occupied
for the possession, storage, manufacture, or sale of liquor or narcotics, in any
form, or as barber or manicure shop or as a public employment bureau or agency,
or for a public finance (personal loan) business. No Tenant will permit the
Premises to be used for lodging or sleeping or for any immoral or illegal
purpose. No Tenant will use or permit the use of the Premises in any manner
which involves an unusual risk of injury to any person. No Tenant will engage or
pay any non-salaried employees on the Premises, except those actually working
for Tenant on the Premises. No Tenant will advertise for laborers giving an
address of the Building. No cooking will be done or permitted by any Tenant on
the Premises, except in areas of the Premises that are specifically constructed
for cooking and except that use by Tenant of Underwriters' Laboratory approved
equipment for brewing coffee, tea hot chocolate and similar beverages will be
permitted, provided that such use is in accordance with all applicable federal,
state and city laws, codes ordinances, rules and regulations.
8. No Tenant will employ any person or persons other than the cleaning service
of Landlord for the purpose of cleaning the Premises, unless otherwise agreed to
by Landlord in writing. Except with the written consent of Landlord, no person
or persons other than those approved by Landlord will be permitted to enter the
building for the purpose of cleaning it. No Tenant will cause any unnecessary
labor by reason of such Tenant's carelessness or indifference in the
preservation of good order and cleanliness. Should Tenant's actions result in
any increased expense for any required cleaning, Landlord reserves the right to
assess Tenant for such expenses. Janitorial service will not be furnished on
nights to offices which are occupied after Business Hours on those nights
unless, by prior written agreement of Landlord and Tenant, services is extended
to a later hour for specifically designated offices.
9. The toilet rooms, toilets, urinals, wash bowls and other plumbing fixtures
will not be used for any purposes other than those for which they were
constructed, and no sweepings, rubbish, rags, or other foreign substances will
be thrown in such plumbing fixtures. All damages resulting from any misuse of
the fixtures will be borne by the Tenant who, or whose servants, employees,
agents, visitors or licensees, caused the same.
10. No Tenant will in any way deface any part of the Premises or the Building of
which they form a part. Without the prior written consent of Landlord, no Tenant
will lay linoleum, or other similar floor covering, so that the same will come
in direct contact with the floor of the Premises, and, if linoleum or other
similar floor covering is desired to be used, an interlining of builder's
deadening felt will be first affixed to the floor, by a paste or other material,
soluble in water, the use of cement or other similar adhesive material being
expressly prohibited. In those portions of the Premises where carpet has been
approved directly or indirectly by Landlord, Tenant will at its
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<PAGE> 17
own expense install and maintain pads to protect the carpet under all furniture
having casters other than carpet casters.
11. No Tenant will alter, change, replace or re-key any lock or install a new
lock or a knocker on any door of the Premises. Landlord, its agents or
employees, will retain a pass (master) key to all door locks on the Premises.
Any new doorlocks required by Tenant or any change in keying of existing lock
will be installed or changed by Landlord following Tenant's written request to
Landlord and will be a Tenant's expense. All new locks and re-keyed locks will
remain operable by Landlord's pass (master) key. Landlord will furnish each
Tenant, free of charge, with two (2) keys to each applicable door lock on the
Premises. Landlord will have the right to collect a reasonable charge for
additional keys requested by any Tenant. Each Tenant, upon termination of its
tenancy, will deliver to Landlord all keys for the Premises and Building which
have been furnished to such Tenant.
12. The persons employed to move Tenant's equipment, material, furniture or
other property in or out of the building must be acceptable to Landlord. The
moving company must be a locally recognized professional mover, whose primary
business is the performing of relocation professional mover, whose primary
business is the performing of relocation services and must be bonded and fully
insured. A certificate or other verification of such insurance must be received
and approved by Landlord prior to the start of any moving operations. Insurance
must be sufficient, in Landlord's sole opinion, to cover all personal liability,
theft or damage to the Project, including, but not limited to, floor coverings,
doors, walls, elevator and stairs. All moving operations will be conducted at
such times and in such a manner as Landlord will direct, and all moving will
take place during non-business hours unless Landlord agrees in writing
otherwise. Tenant will be responsible for the provision of Building security
during all moving operations, and will be liable for all losses and damages
sustained as a result of the failure to supply adequate safety and security
measures. Landlord will have the right to prescribe the weight, size and
position of all equipment, materials, furniture or other property brought into
the Building. Heavy objects will, if considered necessary by Landlord, stand on
wood strips of such thickness as is necessary to properly distribute the weight.
Landlord will not be responsible for loss of or damage to any such property from
any cause, and all damage done to the building by moving or maintaining such
property will be repaired at the expense of Tenant. Landlord reserves the right
to inspect all such property to be brought into the Building and to exclude from
the Building all such property which violates any of these Rules and Regulations
or the lease of which these Rules and Regulations are a part. Supplies, goods,
materials, packages, furniture and all other items of every kind delivered to or
taken from the Premises will be delivered or removed through the entrance and
route designed by Landlord, and Landlord will not be responsible for the loss or
damage of any such property unless such loss or damage results from negligence
of Landlord, its agents or employees.
13. No Tenant will use or keep in the Premises or the Building any kerosene,
gasoline or flammable or combustible or explosive fluid or material or chemical
substance other than limited quantities of such materials or substances
reasonably necessary for the operation or maintenance
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<PAGE> 18
of office equipment or limited quantities of cleaning fluids and solvents
required in such Tenant's normal operations in the Premises. Without Landlord's
prior written approval, no Tenant will use any method of heating or air
conditioning other than that supplied by Landlord. No Tenant will use or keep or
permit to be used or kept any foul or noxious gas or substance in the Premises,
or permit or suffer the Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Building by reason of noise,
orders or vibrations, or interfere in any way with other Tenants or those having
business in the Building. No Tenant will be permitted to place or install any
object (including, without limitation, radio and television antenna, loud
speakers, sound amplifiers, microwave dishes, solar devices, or similar devices)
on the exterior of the Building or non the roof of the Building.
14. Landlord will have the right to prohibit any advertising by Tenant
mentioning the Building, which, in Landlord's reasonable opinion, tends to
impair the reputation of the Building or its desirability as a building for
offices, and upon written notice from Landlord, Tenant will refrain from or
discontinue such advertising.
15. Tenant will not bring any animals or birds into the Building, and will not
permit bicycles or other vehicles inside or on the sidewalks outside the
Building except in areas designated from time to time by Landlord for such
purposes.
16. All persons entering or leaving the Building between the hours of 6 p.m. and
7 a.m. Monday through Friday, and at all hours on Saturdays, Sundays and
holidays will comply with such off-hour regulations as Landlord may establish
and modify from time to time. Landlord reserves the right to limit reasonably or
restrict access to the Building during such time periods.
17. Each Tenant will store all its trash and garbage within its Premises. No
material will be placed in the trash boxes or receptacles if such material is of
such nature that it may not be disposed of in the ordinary and customary manner
of removing and disposing of trash and garbage without being in violation of any
law or ordinance governing such disposal. All garbage and refuse disposal will
be made only through entryways and at such times as Landlord designates. Removal
of any furnishings, large equipment, packing materials and boxes will be the
responsibility of each Tenant and such items may not be disposed of in the
Building's trash receptacles nor will they be removed by the Building's
janitorial service, except at Landlord's sole option and at the Tenant's
expense. No furniture, appliances, equipment or flammable products of any type
may be disposed of in the Building's trash receptacles.
18. Canvassing, peddling, soliciting, and distribution of handbills or any other
written materials in the Building is prohibited, and each Tenant will cooperate
to prevent the same.
19. The requirements of the Tenants will be attended to only upon application by
written, or telephone notice at the office of the management: 3309 Pico Blvd.,
Suite A, Santa Monica, CA 90405, (310) 315-3515, FAX (310) 449-1106, ATTN: Paul
Rohrer, Employees of Landlord will
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<PAGE> 19
not perform any work or do anything outside of their regular duties unless under
special instructions from Landlord.
20. A directory of the Building will be provided for the display of the name and
location of Tenant" business only (not Tenant's officers, directors or
employees). Any additional business name(s) which Tenant desires to place in
such directory must first be approved by Landlord, and if so approved, Tenant
will pay to landlord a charge, set by Landlord, for each additional business
name. All entries on the Building directory display will conform to standards
set by the Landlord in its sole discretion. No Tenant will have any right to the
use of any exterior sign.
21. Tenant will see that the doors of the Premises are closed and locked and
that all water faucets, water apparatus and utilities are shut off before Tenant
or Tenant's employees leave the Premises, so as to prevent waste or damage, and
for any default or carelessness in this regard, Tenant will make good all
injuries sustained by other Tenants or occupants of the Building or Landlord.
All Tenants will keep the doors to their Premises closed at all times except for
ingress and egress.
22. Tenant will not conduct itself in any manner which will impair the conform
and convenience of other Tenants in the Building, nor will Tenant permit such
conduct by its servants, employees, visitors or licensees.
23. Landlord will not be liable for loss of or damage to any vehicle or any
contents of such vehicle or accessories to any such vehicle, or any property
left in any of the Parking Areas, resulting from fire, theft, vandalism,
accident, conduct of other users of the Parking Areas and other persons, or any
other casualty or cause. Further, Tenant understands and agrees that: a)
Landlord will not be obligated to provide any traffic control, security
protection or operator for the Parking Areas; b) Tenant uses the Parking Areas
at its own risk and c) Landlord will not be liable for personal injury or death,
or theft, loss of or damage to property. Tenant indemnifies and agrees to hold
Landlord and Landlord's employees and agents, harmless from and against any and
all claims demands, and action arising out of the use of the Parking Areas by
Tenant, its employees, agents, invitees, or visitors.
24. Tenant (including Tenant's employees, agents, invitees, and visitors) will
use the Parking Spaces solely for the purpose of parking passenger model cars,
small vans and small trucks and will comply in all respect with any rules and
regulations that may be promulgated by Landlord from time to time with respect
to the Parking Areas. The Parking Areas may not be used by Tenant, its agents or
employees, for overnight parking of vehicles without Landlord's written
permission. Tenant will ensure that any vehicle parked in any of the Parking
Spaces will be kept in proper repair and will not leak excessive amounts of oil
grease or any amount of gasoline. If any of the Parking Spaces are at any time
used; a) for any purpose other than parking as provided above; b) in any way or
manner reasonably objectionable to Landlord; or c) by Tenant after default by
Tenant under the Lease, Landlord, in addition to any other rights otherwise
available to Landlord, may consider such default an Event of Default under the
Lease.
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25. Tenant's right to use the Parking Areas will be in common with other Tenants
of the Building and with other parties permitted by Landlord to use the Parking
Areas. Landlord reserves the right to assign and reassign, from time to time,
particular Parking Spaces for use by persons selected by Landlord provided that
Tenant's rights under the Lease are preserved. Landlord will not be liable to
Tenant for any unavailability of Tenant's designated spaces, if any, nor will
any unavailability entitle Tenant to any refund, deduction, or allowance. Tenant
will not park in any space designated as: RESERVED, HANDICAPPED, VISITORS ONLY,
or LIMITED TIME PARKING (or similar designation).
26. If the Parking Areas are damaged or destroyed, or if the use of the Parking
Areas are limited or prohibited by any governmental authority, or the use or
operation of the Parking Areas is limited or prevented by strikes or other labor
difficulties or other causes beyond Landlord's control, Tenant's inability to
use the Parking Spaces will not subject Landlord to any liability to Tenant and
will not relieve Tenant of any of it of its obligations under the Lease and the
Lease will remain in full force and effect. Tenant will pay to Landlord upon
demand, and Tenant indemnifies Landlord against, any and all loss or damage to
the Parking Areas, or any equipment, fixtures, or signs used in connection with
the Parking Areas and any adjoining buildings or structures caused by Tenant or
any of its employees, agents, invitees, or visitors.
27. Tenant has no right to assign or sublicense any of its rights in the Parking
Spaces, except as part of a permitted assignment or sublease of the Lease;
however, Tenant may allocate the Parking Spaces among its employees.
28. No act or thing (other than initiation of eviction procedures) done or
omitted to be done by Landlord or Landlord's agent during the term of the Lease
in connection with the enforcement of these Rules and Regulation will constitute
an eviction by Landlord of any Tenant nor will it be deemed an acceptance of
surrender of the Premises by any Tenant, and no agreement to accept such
termination or surrender will be valid unless in writing signed by Landlord. The
delivery of keys to any employee or agent of Landlord will not constitute a
termination of the Lease or a surrender of the Premises unless such delivery of
keys is done in connection with a written instrument executed by Landlord
approving the termination or surrender.
29. In these Rules and Regulations, the word "Tenant" includes the employees,
agents, invitees, and licensees of Tenant and others permitted by Tenant to use
or occupy the Premises.
30. Tenant shall not suffer or permit smoking or carrying of lighted cigars or
cigarettes in areas reasonably designated by Landlord or by applicable
governmental agencies as non-smoking areas.
31. Tenant shall not install, maintain or operate any vending machines upon the
Premises without Landlord's written consent.
6
<PAGE> 21
32. The Tenant shall not do anything in the Premises, or bring or keep anything
therein, which will in any way increase or tend to increase the risk of fire or
the rate of fire insurance, or which shall conflict with the regulations of any
governing body or public authority the laws, rules or regulations thereof, or
with any insurance policy on the Building or any part thereof, or with any rules
or ordinances established by the Board of Health; and Tenant shall not use any
machinery therein which may cause any excessive noise or jar, or tremor to the
floors or walls, or which by its weight might injure the floors of the
Buildings.
33. The Landlord shall prescribe the weight, size and position of all safes used
in the Building. Articles of unusual size and weight are not permitted in the
Building.
34. The Tenant and the Tenant's officers, agents and employees, shall not throw
cigar or cigarette butts or other substances of any kind, out the windows or
doors, or down the passageways of the Building, or sit on, or place anything
upon the window sills or outside ledges.
35. The Tenant shall not conduct any auction on the Premises.
36. The central common patio of the Building shall not be used as a conference
room, party site, meeting place or recreation room. No furniture shall be
brought into the patio, nor shall existing furniture be relocated without prior
written consent of Building Management. All noise must be kept at a minimum in
patio area.
37. It is the Tenant's responsibility to securely latch the pedestrian gates
form parking levels G1 and G2 upon entering or exiting the Premises.
38. Landlord may waive any one or more of these Rules and Regulation for the
benefit of any particular Tenant or Tenants, but such waiver by Landlord shall
not be construed as a waiver of such Rules and Regulations against any or all of
the Tenants of the Building after such waiver.
39. These Rules and Regulations are in addition to, and will not be construed to
modify or amend, in whole or in part, the terms, agreements and conditions of
any lease of Premise in the Building.
40. No receptacle for outgoing mail is supplied by the Building but, for
convenience, the Post Office usually provides an open, plastic pick-up in the
lobby. This is definitely not a secure system; use of it is at the Tenant's own
risk.
7
<PAGE> 1
EXHIBIT 10.8
MONTH TO MONTH RENTAL AGREEMENT
Based upon the Santa Monica Rent Control Charter Amendment
(Prepared in accordance with general California Landlord-Tenant Law in effect
as of the revision date. Consult with your attorney about local technicalities
or subsequent changes in the law.)
OWNER: Stan Flinkman
- -------------------------------------------------------------------------------
RENTER: Corpas Investments, Inc.
- -------------------------------------------------------------------------------
PREMISES: 2931 3rd Street Santa Monica, California 90405
- -------------------------------------------------------------------------------
APT. NO. ADDRESS (ST., AVE., PL., BLVD., ETC.) ZIP CODE
Owner and Renter agree that Renter's performance of and compliance with each of
the terms hereof, and with Owner's House or Pool Rules (if any) which are
incorporated herein by reference, constitute a condition on Renter's right to
occupy the Premises. Any failure of compliance or performance by Renter shall
allow Owner to forfeit this agreement and terminate Renter's right to
possession.
<TABLE>
<S> <C> <C> <C>
A. Rent Start Date January 22, 2000 I. Maximum Occupancy
------------------------
B. Rent per Month $4,000 (1) per Agreement 5
----------------------- ------------------------
C. Day of Month Rent Due 1st (2) per Building Code
------------------------ ------------------------
D. Returned Check Charge $50 J. Named Renter Corpas Investments, Inc.
----------------------- ------------------------
E. Security Deposit $4,000 K. Added per Occupant Rent $100
----------------------- ------------------------
F. Owner Paid Utilities None L. Owner's Personal Property see additional terms
------------------------ ------------------------
G. Parking Space (Lic./Space #) 2 in garage M. Charitable Organization CLARE
------------------------ ------------------------
H. Storage Space None N. Pets one dog
------------------------ ------------------------
</TABLE>
1. RENT/LATE RENT CHARGE: Should the Rent Start Date (Section A) be other
than the first day of the month, Owner may prorate the rent to the first day of
the succeeding month. Renter shall pay owner the rent due for each rental month
in advance, on the date and in the amount set out in Sections B and C. If
Renter's check is returned "NSF," Renter shall pay a Returned Check Charge set
out in Section D and Owner may demand that future rent payments be by cashier's
check or money order. Such Late Charge and/or Returned Check Charge may be
deemed additional rent by inclusion in an eviction notice or may be deducted
from Renter's Security Deposit. Any Security Deposit refund-claim shall be
deemed compensated to the extent of any such deduction. All of Renter's
monetary obligations hereunder are deemed rent.
2. SECURITY DEPOSIT: Renter shall pay to Owner the total Security Deposit
set out in Section E to secure Renter's compliance with all terms of this
Agreement and Owner's Rules and Regulations. (In addition to the first month's
rent, Owner may demand a security deposit not to exceed to two times the
monthly rent for unfurnished apartments and three times the monthly rent for
furnished apartments.) No portion of the Security Deposit shall be deemed rent
for any rental month unless Owner so elects nor shall it constitute a measure
of Owner's damages. No interest is payable on the Security Deposit unless
required by law. Any refund of the Security Deposit to Renter shall be made in
an amount and manner in accordance with the provisions of California Civil Code
Section 1950.5.
3. UTILITIES: Renter shall pay for all utilities supplied to the Premises
except those set out in Section F. If Renter defaults in the payment of rent,
Owner may instruct any utility company to charge any utilities so designated,
henceforth, to Renter and place the same in Renter's name, and Renter is
obligated to pay for the same thereafter. Owner is authorized to get notice
from any utility company of any default in payment by Renter. If Owner is
charged with any such amount, Owner may recover it from Renter or deduct the
same from the Security Deposit as unpaid rent or damages. Renter shall not use
any common area utilities. To the extent allowed by law, the pro-rated amount
of any penalty for utility overuse allowable to the Premises shall be payable
by Renter as additional rent.
4. PARKING/STORAGE RULES: If Renter is assigned a parking space on
Owner's property, set out in Section G, Renter shall use such space only for
the parking of operable, licensed and currently registered passenger
automobiles and not for the washing, painting or repair of such vehicles.
Renter shall not park, or allow anyone else to park, in any other space on
Owner's property. Renter shall not assign or sublet any such parking space and
Owner may have unauthorized vehicles towed away. Upon seven (7) days written
notice to Renter, Owner may terminate Renter's parking privilege or change the
size and/or location of Renter's parking space or storage space described in
Section H.
1
<PAGE> 2
5. NAMED RENTER/ASSIGNMENT/SUBLETTING: The Premises shall not be occupied
by more than the maximum number of "Agreement" occupants set out in Section I,
unless required by law, nor by any person other than the Named Renter set out
in Section J without the advance written consent of the Owner and at the
additional rent set out in Section K or prescribed by law. Renter's right to
possession shall not be assigned nor the Premises sublet.
6. GOOD CONDITION RECEIPT: Renter has examined the Premises including,
but not limited to, the furniture, furnishings, fixtures, appliances and
equipment PROVIDED BY OWNER AND SET OUT IN SECTION L, windows, doors, plumbing
and electrical facilities, hot and cold water supply, building grounds and
appurtenances, accepts the same `AS IS' and acknowledges that the same are in
good, clean and sanitary order, condition and repair unless noted to the
contrary on Owner's copy of this Agreement. If an inventory is attached hereto
it shall be deemed incorporated herein by reference. Except as provided by law,
Owner shall not be required to make any improvements, replacements or repairs
to the Premises and, if allowed by law, any such work shall be at Renter's
expense. Upon termination of the tenancy, Renter shall return the Premises to
Owner in as good order, condition and repair as when received, ordinary wear
and tear excepted, and free of Renter's personal property. Trash and debris,
burns, stains, holes or tears, of any size or kind, in the carpeting,
draperies, walls, windows or doors among other conditions, shall not be deemed
ordinary wear and tear. Renter acknowledges that no representation as to the
condition or repair of the Premises, or as to Owner's intention with respect to
any improvement, alteration, decoration or repair thereof, has been made to
Renter unless noted on Owner's copy of this Agreement. Renter's "GOOD FAITH" in
the assertion of any habitability defense to eviction for nonpayment of rent
shall be established. Evidence of Renter's "good faith" shall include, but not
be limited to, written proof of Owner's knowledge and opportunity to repair any
claimed housing deficiency prior to service of an eviction notice, whether by a
copy of a request-for-maintenance-demand delivered to Owner or otherwise, and
lack of Renter-causation of the claimed housing deficiency.
7. MAINTENANCE AND REPAIR/ALTERATIONS: Renter shall: (a) keep the
Premises in a clean and sanitary condition; (b) dispose of all rubbish, garbage
and waste in a clean and sanitary manner; (c) properly use and operate all
electrical, gas and plumbing fixtures and keep the same in a clean condition;
(d) not permit any person, in or about the Premises with Renter's consent, to
deface, damage or remove any part of the structure in which the Premises are
located nor the facilities, equipment or appurtenances thereto or thereon, nor
himself do any such thing; (e) occupy and use the Premises in the manner in
which they are designated and intended to be occupied and used. Renter shall be
liable for the expense of any repair caused by Renter's failure to comply with
these conditions. Renter shall not alter the Premises or paint or wallpaper any
portion thereof. Renter shall not install or use any dishwasher, clothes
washer, clothes dryer or air conditioner in or about the Premises except those
which may be supplied by Owner. Renter is responsible for any telephone hook-up
fee, and shall carry any telephone or wire maintenance insurance offered by the
telephone company.
8. DAMAGE/DESTRUCTION: If the Premises, or structure in which they are
located, are totally or partially destroyed and become unavailable for
occupancy due to fire, earthquake, accident or other casualty beyond the
control of Owner and Renter, for a period of twenty (20) days or more, then,
and only then, any party hereto may terminate this Agreement with written
notice to all other parties. If this tenancy is not so terminated, or if the
period the Premises are unavailable for occupancy is less than twenty (20) days
for any of the above reasons or for reasons of Owner's maintenance, repair,
modification, alteration, remodeling, reconstruction, extermination, or the
like, the sole remedy of Renter shall be an abatement of the rent,
proportionate to the interference with full use and enjoyment, until the
Premises are again available for occupancy.
9. INSPECTION/ENTRY: Owner may enter and inspect the Premises, during
business hours and upon reasonable notice to Renter, without Renter's presence,
for any lawful purpose. Owner may enter the Premises without advance notice to
Renter in case of an emergency. Renter shall not add nor change any lock or
locking device, bolt or latch on the Premises and shall provide Owner with a
key to any such device, forthwith, on demand. Renter acknowledges that Owner is
entitled to a key to the Premises and may use the same for entry as provided
herein or by law.
10. RULES AND REGULATIONS: Renter, and all persons in or about the
Premises with Renter's consent, shall comply with all Rules and Regulations
made by Owner, from time to time, and delivered to Renter, including House and
Pool Rules. Owner shall not be obligated to enforce any such Rules and
Regulations, or the terms of any other Agreement, and Owner shall not be liable
to Renter for any violation of such Rules and Regulations or other Agreements
by any other Renter or person. All visitors to the Premises, forthwith on
Owner's demand, shall produce picture-identification and sign a visitor log
book or be prohibited from entry.
11. INSURANCE: In consideration of this rental, Renter shall obtain and
pay for any insurance coverage necessary to protect Renter from any loss or
expense due to personal injury or property damage, including but not limited to
that caused by any act or omission of any party, including Owner or co-tenants,
criminal act, war, riot, insurrection, fire or act of God. The amount of
monetary damage caused to Owner by Renter's breach of this agreement shall be
deemed to be an amount equal to the amount of any loss sustained by renter by
any such act or event and shall offset any claim by Renter against Owner.
12. COMPLIANCE WITH LAWS: Renter shall not violate any law or commit or
permit any waste, damage to, or nuisance in or about, the Premises, or in any
way annoy any other renter, or operate any business in or about the Premises,
or do or keep anything in or about the Premises that will obstruct the common
areas or usage thereof, or increase Owner's insurance premiums.
13. NOTICE OF TERMINATION/DEATH: Renter shall give Owner 30-days notice of
intent to vacate the Premises and shall be liable for payment of rent through
the date of expiration of the notice or until the Premises are vacated.
Renter's death shall be deemed notice of termination.
14. WAIVER OF DEFAULT: Owner's failure to require strict compliance with
the terms of this Agreement, or to exercise any right provided for herein,
shall not be deemed a waiver of such compliance or right, or waive such
compliance or right in the future, and Owner's acceptance of rent with
knowledge of any default by Renter shall not be deemed a waiver of such
default, nor limit Owner's rights with respect to that or any subsequent
default.
2
<PAGE> 3
15. SURRENDER OF PREMISES/PROPERTY: In addition to Renter's liability
under Paragraph 13, if Renter is absent from the Premises for thirty (30)
consecutive days during which rent is unpaid, and if Owner has a reasonable
belief that Renter does not intend to maintain occupancy of the Premises, the
Premises and all of Renter's personal property located therein shall be deemed
surrendered to Owner and Owner may re-enter and retake possession of the
Premises and dispose of Renter's personal property by delivering it to the
Charitable Organization set out in Section M, or to any like organization if
the named organization refuses the property. If neither method of disposal of
the property is effective, Owner may dispose of the property in any other
manner Owner chooses, in Owner's absolute discretion.
16. NON-CURABLE BREACH OF AGREEMENT: The following, by way of illustration
and not limitation, shall constitute a non-curable breach of this Agreement:
(a) Police raid upon the Premises; (b) Arrest of Renter for
possession/sale/storage of any narcotic/controlled substance/chemical or herbal
contraband in or about the Premises; (c) Failure to permit Owner's entry of the
Premises following receipt by Renter of written notice of Owner's intent to
enter the Premises; (d) Failure to cooperate with Owner or any pest
controller/fumigator/exterminator following receipt by Renter of notice that
such services will be performed in or about the Premises; (e) Defaults by
Renter causing Owner to serve more than two notices to pay or quit, or perform
or quit, in any twelve (12) month period, whether or not Renter subsequently
cures such defaults; (f) A misrepresentation on Renter's Rental Application;
(g) Delivery of any security door/gate key to anyone not a party to this
Agreement; or (h) Failure to comply with any demand by Owner concerning
Renter's parking privilege.
17. PEST CONTROL/FUMIGATION/EXTERMINATION: Upon demand by Owner, Renter
shall temporarily vacate the Premises, for a reasonable period required, to
allow cited or needed repairs, pest or vermin control work to be done. Rent
shall be abated during Renter's absence. Renter shall comply forthwith, with
all instructions from the pest controller, fumigator and/or exterminator
regarding the preparation of the Premises for the work, including the proper
bagging and storage of food, perishables and medicine.
18. PETS/WATER BEDS/MUSICAL INSTRUMENTS: Renter shall not bring or keep
any pet (dog, cat, bird, reptile, etc.), liquid-filled furniture or musical
instrument on the Premises, unless noted in Section N of Owner's copy of this
Agreement. Liquid-filled furniture shall be accepted only with proof of
$100,000 insurance.
19. DESIGNATION OF PARTIES: The term "Owner" includes a "manager," "agent
of the owner," "management company," "Trustee" of a Trust, or any other person
or entity acting on behalf of the owner as the Lessor of the premises entitled
to rent the premises, collect the rent for the premises, and prosecute eviction
actions.
20. PARTIAL INVALIDITY: If any portion of this Agreement is held invalid,
it shall not affect the validity of any other portion of this Agreement.
21. ATTORNEYS FEES: If any legal action or proceeding is brought by Owner
or Renter related to this Agreement, the prevailing party shall be entitled to
recover attorneys tees not to exceed $500.00.
22. PRE-TRIAL RENT DEPOSIT: In any action for unlawful detainer, Renter
shall deposit unpaid rent with the Court by cashier's check or money order, if
so required by law.
23. GUARANTOR(S): On demand by Owner, Renter shall obtain the execution of
a Continuing Guarantee Agreement provided by owner, by an agreed upon
Guarantor. Said agreement shall be deemed incorporated herein and subject
hereto.
24. RENT ACCEPTANCE: Rent tendered by a third person for Renter's benefit
may be accepted without creating any new tenancy.
25. CREDIT REPORT: As required by law, you are hereby notified that a
negative credit report reflecting on your credit record may be submitted to a
credit reporting agency and/or your credit may be checked periodically.
26. ENTIRE AGREEMENT: The foregoing constitutes the entire agreement
between the parties and supersedes any oral or written representation or
agreement contrary hereto. Renter represents that he has relied solely on his
own judgment, experience and expertise in entering into this Agreement.
27. ESTOPPEL CERTIFICATE: Within 10 days after written notice, Renter
agrees to execute and deliver an estoppel certificate as submitted by Owner
acknowledging that this Agreement is unmodified and in full force and effect or
in full force and effect as modified and stating the modifications. Failure to
comply shall be deemed Renter's acknowledgement that the certificate as
submitted by Owner is true and correct and may be relied upon by a lender or
purchaser.
28. LEAD DISCLOSURE: If checked, the Premises were built prior to 1978 and
the following must be completed by the Owner, Renter and Real Estate Agent, if
any.
LEAD WARNING STATEMENT
Housing built before 1978 may contain lead-based paint. Lead from paint, paint
chips, and dust can pose health hazards if not managed properly. Lead exposure
is especially harmful to young children and pregnant women. Before renting
pre-1978 housing, owners must disclose the presence of known lead-based paint
and/or lead-based paint hazards in the dwelling. Renters must also receive a
federally approved pamphlet on lead poisoning prevention.
3
<PAGE> 4
OWNER'S DISCLOSURE (initial where appropriate)
_____ Owner has no knowledge of lead-based paint and/or lead-based paint
hazards in the Premises. Owner has no reports or records pertaining to
lead-based paint and/or lead-based paint hazards in the Premises,
_____ See Attached. (A separate form is attached disclosing Owner's
information.)
RENTER'S ACKNOWLEDGMENT (initial)
__X__ Renter has received the pamphlet "Protect Your Family from Lead in Your
Home".
10. UNATTENDED PET: No pet shall be left unattended for more than
twenty-four hours. When tenant is on vacation or away from the premises for
more than twenty-four hours, the pet must be taken to a pet care facility.
Strangers to the tenancy shall not be allowed to enter the premises to care for
the pet.
11. ABANDONMENT OF PET: Any pet left at the premises following
either voluntary vacation by the tenant or lockout pursuant to court order
shall be deemed abandoned. The landlord has no responsibility for the care,
feeding, and maintenance of the pet, and may immediately turn the pet over to
any local animal control authority.
12. COMPLETE AGREEMENT: This is the complete agreement between the
parties concerning pet(s).
13. MODIFICATION OF AGREEMENT: This agreement may only be modified
by an agreement in writing signed by both parties.
14. WAIVER: The acceptance of rent by the landlord from the tenant
after a breach or purported breach of this agreement, shall not be considered a
waiver of any covenant herein.
15. INDEMNITY AND HOLD HARMLESS: The tenant shall indemnify the
landlord and hold the landlord harmless from any and all damages,
inconveniences, and nuisance which may be caused by the pet, and will reimburse
landlord for all expenses occasioned thereby.
16. LIABILITY insurance covering injuries or damages caused by
Renter's pet(s), with a minimum limit per incident as specified by Owner,
showing Owner as an additional insured, shall be purchased by Renter and kept
in effect during the tenancy on owner's demand.
17. OTHER:
Date: January 7, 2000 /s/ Ross Love
-------------------------------------
Chief Executive Officer,
Corpas Investments, Inc.
Tenant
Executed for Corpas Investments, Inc.
-------------------------------------
Date: January __, 2000 Tenant
/s/ Stan Flinkman
-------------------------------------
Landlord and/or Agent
4
<PAGE> 5
______ Renter agrees to promptly notify Owner in writing of any deteriorated
and/or peeling paint.
REAL ESTATE AGENT'S ACKNOWLEDGMENT (initial, if agent involved)
______ Real Estate Agent has informed the lessor of the lessor's obligations
under 42 U.S.C. 4852d and is aware of his/her responsibility to ensure
compliance.
NOTICE: The California Department of Justice, sheriff's departments, police
departments serving jurisdictions of 200,000 or more and many other local law
enforcement authorities maintain for public access a data base of the locations
of persons required to register pursuant to paragraph (1) of subdivision (a) of
Section 290.4 of the Penal Code. The data base is updated on a quarterly basis
and is a source of information about the presence of these individuals in any
neighborhood. The Department of Justice maintains a Sex Offender Identification
Line through which inquiries about individuals may be made. This is a "900"
telephone service. Callers must have specific information about individuals
they are checking. Information regarding neighborhoods is not available through
the "900" telephone service.
CERTIFICATION OF ACCURACY
The following parties have reviewed the information above and certify, to the
best of their knowledge, that the information they have provided is true and
accurate.
Owner /s/ Stan Flinkman Renter /s/ Ross Love
------------------------------ -------------------------------------
Chief Executive Officer,
Corpas Investments, Inc.
Real Estate Agent N/A Executed for Corpas Investments, Inc.
------------------
ADDITIONAL TERMS: ALL APPLIANCES INCLUDING TWO REFRIGERATORS, STOVE,
DISHWASHER, RANGE, WASHER AND DRYER ARE PROPERTY OF OWNER. RENTER WILL BE
PROVIDED TWO PARKING GARAGE REMOTES TO BE RETURNED IN GOOD WORKING ORDER AT END
OF TENANCY. ANY REMOTE NOT RETURNED IN WORKING ORDER WILL INCUR A $50 CHARGE TO
TENANT.
OWNER WILL PUT UTILITIES INCLUDING WATER, ELECTRIC, GAS, CABLE, MODEM FOR
INTERNET, TRASH IN OWNER'S NAME. RENTER WILL PAY AN ADDITIONAL $250 PER MONTH
WITH THE RENT AS THE ESTIMATED COST OF THESE ITEMS. ANY EXCESS ABOVE THE $250
ESTIMATE WILL BE PAYABLE ON DEMAND TO OWNER. OWNER WILL PAY THE COST OF CABLE
T.V. TO INCLUDE HBO, SHOWTIME, MOVIE CHANNEL.
DATED January 7, 2000 DATED January 7, 2000
------------------------- -------------------------
OWNER: RENTER:
/s/ Stan Flinkman Corpas Investments, Inc.
- ------------------------------ ------------------------------
by /s/
- ------------------------------ ------------------------------
3005 Main Street 3015 Main Street #360
- ------------------------------ ------------------------------
ADDRESS ADDRESS
Santa Monica Santa Monica
- ------------------------------ ------------------------------
CITY CITY
California 90405 California 90405
-------------------- ------------------------------
ZIP CODE ZIP CODE
5
<PAGE> 6
PET AGREEMENT
LANDLORD: Stan Flinkman
---------------------------------------
TENANT: Corpas Investments, Inc.
---------------------------------------
PREMISES: 2931 3rd Street
Santa Monica, California 90405
---------------------------------------
PET(S) Kind: Dog
---------------------------------------
Breed:
---------------------------------------
Name:
---------------------------------------
Tenant, in consideration of this agreement which is incorporated into the
rental agreement, shall abide by the following terms, each of which is
material:
1. PET(S) ALLOWED: The only pet(s) which the tenant shall keep
on the premises are described above.
2. REPAIR AND/OR REPLACEMENT: Tenant shall either, at the sole
election of the landlord, repair in a workmanlike manner or reimburse the
landlord for the costs of said repair, upon a demand contained in a three day
notice to perform or quit, any damages to the premises or its furnishings and
improvements, caused by the pet(s).
3. DOGS: Dogs must be neutered. Dogs must be leashed, at all
times, outside the premises. Dogs shall not be allowed to defecate on or about
the premises. Any such defecation must be immediately removed and either
wrapped or bagged. Unwrapped defecation shall not be placed in any trash
container. Dogs must not bark or howl or in any way become a nuisance or threat
to the other tenants of the premises. Dogs shall be kept free of fleas and
tenant is responsible for the costs of any and all flea infestation treatment
which may be required, at the sole discretion of the landlord. Tenant
represents that their dog(s) is/are housebroken.
4. CATS: Cats must be neutered. Cats must be kept inside the
premises at all times unless the premises is a single family dwelling. A litter
box must be maintained inside the premises and it must be kept clean. Litter
must be bagged before being placed into trash.
5. FEEDING: No pet may be fed outside the dwelling unit except
if the unit is a single family dwelling, or fed over any uncovered carpeting.
6. LAWS AND ORDINANCES: Tenant shall obey all pertinent laws and
ordinances.
7. FISH: Aquariums shall not exceed 10 gallons capacity.
8. BIRDS/HAMSTERS/CAVIES/MICE/SNAKES/LIZARDS: Shall be kept
caged at all times.
9. BREACH OF COVENANT. The breach of any covenant of this
agreement, following the service of a three day notice to perform or quit on
the tenant, shall be deemed a material breach of the rental agreement and will
entitle the landlord to restitution of the premises, and such other damages as
may be recoverable pursuant to the terms of the rental agreement.
6
<PAGE> 1
EXHIBIT 10.9
CONSULTING AND SERVICES AGREEMENT
THIS CONSULTING AND SERVICES AGREEMENT (this "Agreement") is made and
entered into on this _________________day of ________________and is effective as
of January 26, 2000 _______________________ by and between CORPAS INVESTMENTS,
INC, a Florida corporation (the "Company"), and Dr. Bob Goldman (the
"Consultant").
R E C I T A L S:
WHEREAS, the Company is a media web-cast company, distributing content
via the internet and television. (the "Business").
WHEREAS, the parties acknowledge that the Consultant's abilities and
services are unique and essential to the prospects of the Company;
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the Consultant will contribute to the growth and success of the Company,
and desires to assure the Company of the Consultant's services and to compensate
him therefore;
WHEREAS, the Board has determined that this Agreement will reinforce
and encourage the Consultant's attention and dedication to the Company; and
WHEREAS, the Consultant is willing to make his services available to
the Company and on the terms and conditions hereinafter set forth.
NOW, THEREFORE, for the reasons set forth hereinabove, and in
consideration of the mutual promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby covenant and agree as follows:
1. SERVICES.
1.1 Services and Term. The Company hereby agrees to accept the
Consultant's Services and the Consultant hereby agrees to serve the Company on
the terms and conditions set forth herein.
1.2 Duties of Consultant. During the Term of Services (defined
below) under this Agreement, the Consultant shall serve as Vice President of New
Business Development of the Company and shall serve to research, identify,
evaluate and provide content to be used by the Company in its capacity as a
distributor. It is expressly understood that Consultant will devote a
substantial portion of his professional time to other pursuits.
2. TERM.
2.1 Initial Term. The initial term of services under this
Agreement, and the services of the Consultant hereunder, have commenced on
January 26, 2000 (the "Effective Date") and shall expire two years thereafter,
unless sooner terminated in accordance with Section 5 hereof (the "Initial
Term").
<PAGE> 2
2.2 Renewal Terms. At the end of the Initial Term, the Term of
Services automatically shall renew for successive one year terms (subject to
earlier termination as provided in Section 2.3 hereof), unless the Company or
the Consultant delivers written notice to the other at least thirty (30) days
prior to the Expiration Date (defined below) of its election not to renew the
Term of Services.
2.3 Term of Services and Expiration. The period during which
the Consultant shall serve the Company pursuant to the terms of this Agreement
is sometimes referred to in this Agreement as the "Term of Services," and the
date on which the Term of Services shall expire (including the date on which any
renewal term shall expire), is sometimes referred to in this Agreement as the
"Expiration Date."
3. COMPENSATION.
3.1 Shares of Stock. The Consultant shall receive an aggregate
of 150,000 shares of common stock of the Company, to be received in equal
increments, monthly over a period of two (2) years. and which shall have been
registered pursuant to Security and Exchange Commission Form S-8. The Form S-8
shall specifically mention that the stock described in this section 3.1 is to be
registered.
3.2 Stock Options.
(a) The Consultant shall receive options for an aggregate of
200,000 shares of stock of the Company which options shall vest in equal
increments, monthly over a period of two (2) years and shall be subject to the
terms of the Company's 2000 Incentive Equity Compensation Plan (the "Plan",
which Plan is attached hereto as Attachment A). The strike price of exercising
these options is to reflect the market price of the stock on the Effective date
of this Agreement which is $2.75 (which price is subject to adjustment pursuant
to Attachment A).
(b) The Consultant shall receive options for an aggregate of
1,000,000 shares of stock of the Company which options shall vest as follows:
(i) Exclusive Series. Options for 50,000 shares of
stock of the Company shall vest upon delivery of every "Series" (as defined
below) brought in that, as pursuant to an executed contract, is exclusive to the
Company for a period of five (5) years or longer and is at least fifteen (15)
hours in length, including allocation for standard commercial breaks. A "Series"
is defined as related, sequential and usable video footage, and the Company
retains the right to determine whether or not content provided by Consultant
contains fifteen (15) hours of usable footage. Delivered content must contain at
least 15 hours of usable footage which shall be determined by the Company as
soon as possible after the time of delivery. If an exclusive Series is less than
this fifteen (15) hour minimum length, then a minimum of options for 15,000
shares will vest. Such determination of options which shall vest shall be
reasonable and be made as soon as possible after delivery. Exceptions and
increases will be implemented at the discretion of the Board. The strike price
of exercising these options is to reflect the market price of the stock on the
Effective date of this Agreement, which is $2.75 (which price is subject to
adjustment pursuant to Attachment A).
(ii) Non-Exclusive Series. Options for 25,000
additional shares of stock of the Company shall vest upon delivery of every
non-exclusive Series brought in that is for a period of five (5) years or longer
and is at least fifteen (15) hours in length, including allocation for standard
commercial breaks. The number of hours of usable footage shall be determined by
the Company as soon as possible after delivery by the Consultant to the Company.
If a non-exclusive Series runs for less than this fifteen (15) hour minimum,
then options for a minimum of 10,000 shares shall vest. Such determination of
options which shall vest shall be reasonable and be made as soon as possible
after delivery. Exceptions and increases will be implemented at the discretion
of the Board. The strike price of exercising these options is to reflect the
market price of the stock on the Effective date of this Agreement, which is
$2.75 (which price is subject to adjustment pursuant to Attachment A).
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<PAGE> 3
(iii) The sum of the options for shares of stock of
the Company that vest pursuant to provisions (b)(i) and (b)(ii) of this Section
3.2 may not exceed the grant of 1,000,000 options for shares under this Section
3.2 for the term of this Agreement. This Agreement, however, will not affect the
issuance of additional option shares agreed upon in additional contracts or
agreements now in existence or that may come into existence at any time during
the term of this Agreement.
(iv) Lapse. Subject to Section 3.2(b)(v), any of the
1,000,000 options granted pursuant to this Section 3.2 that have not vested
pursuant this Section 3.2 shall lapse on the Expiration Date of this Agreement.
(v) In the event that Consultant's efforts during
the term of this Agreement culminate in the acquisition of a Series after the
termination of the Term of Service of this Agreement, Consultant shall receive
compensation pursuant to this Section 3(b); provided, however that such
acquisition takes place no later than 90 days after termination of the Term of
Service of this Agreement, that the Company is given (30) days notice prior to
the termination of this Agreement of the pendancy of such acquisition, and
subject to provisions (b)(iii) and b(iv) of this Section 3.2. Subject to this
Section 3.2(b)(v), the Consultant shall have the ability to earn options under
this Section 3 for as long as this Agreement is in effect.
(vi) Any options vested at the time of termination
of this Agreement, whether by the Company or the Consultant, may still be
exercised by Consultant within thirty (30) days of termination.
(c) Consultant shall be invited to sit on the Board of the
Company and will receive compensation and benefits, if any, comparable to that
of other Board members, to be determined. The Company shall provide customary
Director and Officer Liability Insurance that is inclusive of all Board Members
within one month of the signing of this Agreement.
(d) The Consultant shall receive additional bonus or incentive
compensation, if any, as the Board may in its sole and absolute discretion
determine.
(e) Any and all bonuses or incentive compensation given
pursuant to this Section 3.3 are sometimes hereinafter referred to as "Incentive
Compensation."
4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
4.1 Reimbursement of Expenses. Upon the submission of proper
substantiation by the Consultant, and subject to such rules and guidelines as
the Company may from time to time adopt, the Company shall reimburse the
Consultant for all reasonable expenses actually paid or incurred by the
Consultant during the Term of Services in the course of and pursuant to the
business of the Company. The Consultant shall account to the Company in writing
for all expenses for which reimbursement is sought and shall supply to the
Company copies of all relevant invoices, receipts or other evidence reasonably
requested by the Company.
4.2 Advances on Expenses. The Company will provide Consultant
with monetary advances for traveling expenses to be incurred in the course of
and pursuant to the business of the Company. Such advances shall not exceed
$70,000 for the term of this Agreement. The Consultant shall account to the
Company in writing for all expenses for which advances are sought and shall
supply to the Company copies of all relevant invoices, receipts or other
evidence reasonably requested by the Company.
4.3 No Other Benefits. Consultant shall serve as an
Independent Contractor under this Agreement. Consultant understands and
acknowledges that he is not an employee of Company and that he is not entitled
to any of the benefits conferred upon Company employees. Consultant further
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acknowledges and understands that he will at no point during the term of this
Agreement become an employee of the Company.
5. TERMINATION.
5.1 Termination for Cause. The Company shall at all times have
the right, upon written notice to the Consultant, to terminate the Term of
Services, for Cause. For purposes of this Agreement, the term "Cause" shall
mean: (a) an action or omission of the Consultant which constitutes a material
breach of, or failure or refusal (other than by reason of his disability) to
perform services for which he was retained, which, if curable, is not cured
within fifteen (15) days after receipt by the Consultant of written notice of
same; (b) a final, non-appealable judgment of a court of competent jurisdiction
of the commission of any act which involves fraud, embezzlement,
misappropriation of funds, or breach of fiduciary duty in connection with the
performance of his services as a consultant of the Company; (c) a final,
non-appealable judgment of a court of competent jurisdiction of the commission
of any crime which involves moral turpitude; or (d) gross negligence in
connection with the performance of the Consultant's services hereunder, which,
if curable, is not cured within fifteen (15) days after written receipt by the
Consultant of written notice of same. Any termination for Cause shall be made in
writing to the Consultant, which notice shall set forth in detail all acts or
omissions upon which the Company is relying for such termination. The Consultant
shall have the right to address the Board regarding the acts set forth in the
notice of termination before the date of termination. The date of termination
shall be no less than 30 days after notice of termination is received by the
Consultant, assuming there has been reasonable opportunity to address the Board.
Upon any termination pursuant to this Section 5.1, the Company shall issue to
the Consultant his Compensation to the date of termination. The Company shall
have no further liability under this Agreement other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the Company's policy on reimbursements of business expenses.
5.2 Death. The Term of Services terminates upon the death of
Consultant. Upon the death of the Consultant during the Term of Services with
the Company, the Company shall issue to the estate of the deceased Consultant
any compensation due Consultant through Consultant's date of death. The Company
shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
death, subject, however, to the Company's policy on reimbursements of business
expenses.
5.3 Termination Without Cause. The Company shall at all times
have the right, upon written notice to Consultant, to terminate the Term of
Services. Upon any termination of the Consultant's services by the Company (that
is not a termination under any of Sections 5.1 or 5.2), the Company shall issue
to Consultant: (a) any compensation due through the effective date of
termination specified in such notice; and (b) an amount equal to one-half (1/2)
of the remaining unpaid compensation due under this Agreement ("Termination
Compensation") in six (6) equal monthly installments commencing one (1) month
after the effective date of termination specified in the termination notice
described above. The date of termination shall be no less than 30 days after
notice of termination is received by the Consultant. The Company shall have no
further liability under this Agreement other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the Company's policy on reimbursements of business expenses. As a
condition to receipt of the Termination Compensation: concurrent with the
receipt of the first monthly payment of the Termination Compensation, the
Consultant shall deliver to the Company a general release in form acceptable to
the Board releasing the Company from any and all rights, claims, demands,
judgments, obligations, liabilities and damages, whether accrued or unaccrued,
asserted or unasserted, and whether known or unknown, relating to the Company
which ever existed, then existed, or may thereafter exist, by reason of the
termination of this Agreement without cause, except payment of the Termination
Compensation.
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<PAGE> 5
5.4 Termination by the Consultant.
(a) The Consultant shall at all times have the right, upon
thirty (30) days written notice to the Company, to terminate the Term of
Services without adverse consequences to the Consultant.
(b) Upon termination of the Term of Services pursuant to this
Section 5.4(b) by the Consultant without Good Reason (defined below), the
Company shall issue to the Consultant any compensation due Consultant through
the effective date of termination specified in such notice. The Company shall
have no further liability under this Agreement other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the Company's policy on reimbursements of business expenses.
(c) Upon termination of the Term of Services pursuant to this
Section 5.4(c) by the Consultant for Good Reason, the Company shall pay to the
Consultant the same amount of compensation that would have been payable by the
Company to the Consultant under Section 5.3 of this Agreement if the Term of
Services had been terminated by the Company without Cause. The Company shall
have no further liability under this Agreement other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the Company's policy on reimbursements of business expenses.
(d) For purposes of this Agreement, "Good Reason" shall mean:
(i) the assignment to the Consultant of any duties materially inconsistent with
the Consultant's current position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Consultant; or (ii) any failure by the Company to issue
compensation consistent with the Company's normal schedule for the issuance of
such compensation, other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Consultant.
5.5 Resignation. Upon any termination of the Term of Services
pursuant to this Section 5, the Consultant, if he or she was then serving as an
officer of the Company, shall be deemed to have resigned as an officer, and if
he or she was then serving as a director of the Company, as a director, and if
required by the Board, the Consultant hereby agrees to immediately execute a
resignation letter to the Board.
5.6 Survival. The provisions of this Section 5 shall survive
the termination of this Agreement, as applicable.
6. RESTRICTIVE COVENANTS.
6.1 Confidential Information. The Consultant hereby
acknowledges and agrees that in the course of his services he will acquire
knowledge and will have access to Confidential Information (defined below) of
the Company. Confidential Information, whether in written, typed, oral, digital
or any other form, regarding the business operations of the Company shall not be
disclosed or used by the Consultant except by prior written authorization of the
Company. "Confidential Information" includes, but is not limited to: specific
prospective customers of the Company; specific existing customers of the
Company; other individuals and businesses with whom the Company does business;
proprietary information; trade secrets, financial or corporate records;
operational, sales, promotional, and marketing methods and techniques; computer
programs, including source codes and/or object codes; and/or any other
proprietary, competition sensitive, or technical information or secrets
developed with or without the help of the Consultant.
6.2 Nondisclosure. The Consultant shall not, during the term
of his services, or at any time thereafter, either directly or indirectly,
communicate, publish, disclose, divulge, or use, or authorize anyone else to
communicate, publish, disclose, divulge, or use, for the benefit of himself or
any
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<PAGE> 6
other person, persons, partnership, association, corporation, or other entity,
any Confidential Information which may be communicated to the Consultant or of
which the Consultant may be apprised by virtue of his services with the Company.
Any and all Confidential Information of the Company whether written, oral,
digital or in any form shall be deemed confidential for purposes of this
Agreement, except information which the Consultant can demonstrate came to his
attention prior to disclosure thereof by the Company; or which, at or after the
time of disclosure by the Company to the Consultant, lawfully had become a part
of the public domain through lawful publication or communication by others.
Notwithstanding the foregoing, Consultant may disclose Confidential Information
to the extent required by a court of competent jurisdiction or other
governmental authority or otherwise as required by law.
6.3 Non-competition. The Consultant covenants that, except as
otherwise approved in writing by the Company, the Consultant shall not, during
the term of this Agreement, individually, or jointly with others, either
directly or indirectly, for himself, or through, on behalf of, or in conjunction
with any person, persons, partnership, association, corporation, or other
entity, own, maintain, operate, engage in, or have any interest in any business
enterprise which is the same as, similar to or competitive with the Business,
regardless of the geographical location of such other business enterprise, and
shall not directly or indirectly act as an officer, director, employee, partner,
contractor, consultant, advisor, principal, agent, or proprietor, or in any
other capacity for, nor lend any assistance (financial, managerial, consulting
or otherwise) to or cooperate with, any such business enterprise; provided,
however, that such provision shall not apply to the Consultant's ownership of
Common Stock of the Company or the acquisition by the Consultant, solely as an
investment, of securities of any issuer that is registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and that are listed
or admitted for trading on any United States national securities exchange or
that are quoted on the National Association of Securities Dealers Automated
Quotations System, or any similar system or automated dissemination of
quotations of securities prices in common use, so long as the Consultant does
not control, acquire a controlling interest in or become a member of a group
which exercises direct or indirect control of more than ten percent of any class
of capital stock of such corporation.
6.4 Non-solicitation of Employees and Clients. The Consultant
specifically acknowledges that he will have access to Confidential Information,
including, without limitation, prospective and existing customers or customer
lists of the Company. The Consultant covenants and agrees that during the term
of this Agreement, and for a continuous uninterrupted period of eighteen (18)
months, commencing upon the expiration or termination of the Consultant's
relationship with the Company, except as otherwise approved in writing by the
Company, the Consultant shall not, either directly or indirectly, for himself,
or through, on behalf of, or in conjunction with any person, persons,
partnership, association, corporation, or entity:
(a) Divert or attempt to divert or solicit any prospective or
existing customer of the Company that was unknown to Consultant at the Effective
Date of this Agreement to any competitor by direct or indirect inducement or
otherwise; or
(b) Employ or seek to employ any person that was unknown to
Consultant at the Effective Date of this Agreement who is at that time employed
by the Company or otherwise directly or indirectly induce or solicit such person
to leave his or her services.
(c) Reasonably Necessary. The Company and the Consultant agree
that the Confidential Information set forth in Section 6.1 and the substantial
relationships with the Company's specific prospective and existing customers and
vendors: (i) are valuable, special, and a unique asset of the Company; (ii) have
provided and will hereafter provide the Company with a substantial competitive
advantage in the operation of its business; and (iii) are a legitimate business
interest of the Company. The Company and the Consultant also agree that the
existence of these legitimate business interests justifies the need for the
restrictive covenants set forth in this Section 6, and the restrictive covenants
are reasonably necessary to protect the Company's legitimate business interests.
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<PAGE> 7
6.5 Reasonable Restrictions. The Consultant agrees and
acknowledges; (a) that the geographical and time limitations contained in this
Agreement are reasonable and properly required for the adequate protection of
the business interests of the Company; and (b) the restrictions contained in
this Section 6 (including without limitation the length of the term of the
provisions of this Section 6) are not overbroad, overlong, or unfair and are not
the result of overreaching, duress or coercion of any kind. The Consultant
further acknowledges and confirms that his full, uninhibited and faithful
observance of each of the covenants contained in this Section 6 will not cause
him any undue hardship, financial or otherwise, and that enforcement of each of
the covenants contained herein will not impair his ability to obtain services
commensurate with his abilities and on terms fully acceptable to him or
otherwise to obtain income required for the comfortable support of him and his
family and the satisfaction of the needs of his creditors. The Consultant
acknowledges and confirms that his special knowledge of the business of the
Company is such as would cause the Company serious injury or loss if he were to
use such ability and knowledge to the benefit of a competitor or were to compete
with the Company in violation of the terms of this Section 6. It is agreed by
the Consultant that if any portion of the restrictions contained in this
Agreement are held to be unreasonable, arbitrary, or against public policy, then
the restriction shall be considered divisible, both as to the time and to the
geographical area, with each month of the specified period being deemed a
separate period of time, and each country or portion thereof of the specified
area being deemed a separate geographical area, so that the lesser period of
time or geographical area shall remain effective, so long as the same is not
unreasonable, arbitrary, or against public policy. The parties hereto agree that
in the event any court of competent jurisdiction determines the specified period
or the specified geographical area of the restricted territory to be
unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is determined to be reasonable, non-arbitrary, and not
against public policy may be enforced against Consultant.
6.6 Continuity of Restrictions. If the Consultant shall
violate any of the terms or covenants contained herein, and if any court action
is instituted by the Company to prevent or enjoin such violation, then the
period of time during which the terms or covenants of this Agreement shall
apply, as provided in this Agreement, shall be lengthened by a period of time
equal to the period between the date of the initial breach of the terms or
covenants contained in this Agreement, whether or not the Company had knowledge
of the breach, and the date on which the decree of the court disposing of the
issues upon the merits shall become final and not subject to further appeal;
provided however that such time period does not exceed a period of one (1) year
after the termination of this Agreement.
6.7 Books and Records. All notes, data, reference material,
sketches, drawings, memoranda, files, documents, specifications and any records,
written, oral digital or in any form, in any way relating to any of the
Confidential Information or to the Company's business, whether prepared by the
Consultant or otherwise coming into the Consultant's possession, shall remain
the exclusive property of the Company and shall not be removed from the premises
of the Company under any circumstances whatsoever without the prior written
consent of the Company. Upon the request of the Company, or absent such request,
upon the termination of the Consultant's services with the Company for any
reason, the Consultant shall immediately return the Company all such property,
materials and any and all copies thereof in the Consultant's possession.
6.8 Survival. The provisions of this Section 6 shall survive
the termination of this Agreement, as applicable.
7. REMEDIES.
7.1 Injunction. The Consultant agrees that a violation or a
breach of the terms, covenants, or provisions contained in this Agreement would
cause irreparable injury to the Company, and that the remedy at law for any
violation or breach would be inadequate and would be difficult to ascertain, and
therefore, in the event of the violation or breach, or threatened violation or
breach of any such terms, covenants, or provisions contained in this Agreement,
the Company shall have the independent right to enjoin the Consultant from any
threatened or actual activities in violation thereof. The Consultant hereby
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consents and agrees that temporary and permanent injunctive relief may be
granted in any proceedings which might be brought to enforce any such terms,
covenants, or provisions without the necessity of proof of actual damages or the
posting of a bond. In the event the Company does apply for such an injunction,
the Consultant shall not raise as a defense thereto that the Company has an
adequate remedy at law.
8. ASSIGNMENT. Consultant shall not have the right to assign or
delegate his rights or obligations hereunder, or any portion thereof, to any
other person. The Company shall have the right to freely assign all rights
conferred under this Agreement.
9. INDEPENDENT COVENANTS. The parties agree that each of the covenants
and provisions contained in this Agreement shall be deemed severable and
construed as independent of any other covenant or provision.
10. SEVERABILITY. If all or any portion of a covenant or provision in
this Agreement is held invalid, unreasonable or unenforceable by a court or
agency having valid jurisdiction in an unappealable final decision to which the
Company is a party, the remaining covenants and provisions shall remain valid
and enforceable. The Consultant expressly agrees to be bound by any lesser
covenant or provision subsumed within the terms of such covenant or provision
that imposes the maximum duty permitted by law, as if the resulting covenant or
provision were separately stated in, and made a part of this Agreement.
11. ARBITRATION. In the event of a dispute concerning this Agreement
between Consultant and Company concerning the interpretation of this Agreement
or a breach of this Agreement not involving the dissemination of Confidential
Information of the Company, the parties agree to submit such a dispute to
binding Arbitration before the American Arbitration Association in Los Angeles,
California. The Arbitration shall award reasonable attorney fees and costs
(including Arbitration costs) to the prevailing parties.
12. GOVERNING LAW. The validity, interpretation and enforcement of this
Agreement shall be governed by and construed in accordance with the local laws
of the State of California (without giving effect to its conflicts of laws
provisions), and to the exclusion of the law of any other forum, without regard
to the jurisdiction in which any action or special proceeding may be instituted.
13. ATTORNEYS' FEES. In the event of a dispute regarding, arising out
of, or in connection with the breach, enforcement, or interpretation of this
Agreement, including, without limitation, any action seeking declaratory relief,
equitable relief, injunctive relief, or damages, or any litigation or cause of
action, including, without limitation, any appeals, federal bankruptcy
proceedings, receivership or insolvency proceedings, reorganization, or other
proceedings, the prevailing party shall recover all costs; provided however that
each party will be solely responsible for its own attorney's fees, regardless of
the outcome.
14. EXCLUSIVE JURISDICTION; VENUE. EACH PARTY HERETO AGREES TO SUBMIT
TO THE PERSONAL JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS
LOCATED IN LOS ANGELES COUNTY, CALIFORNIA FOR RESOLUTION OF ALL DISPUTES ARISING
OUT OF, IN CONNECTION WITH, OR BY REASON OF THE INTERPRETATION, CONSTRUCTION,
AND ENFORCEMENT OF THIS AGREEMENT, AND HEREBY WAIVES THE CLAIM OR DEFENSE
THEREIN THAT SUCH COURTS CONSTITUTE AN INCONVENIENT FORUM.
15. WAIVER OF JURY TRIAL. AS A MATERIAL INDUCEMENT FOR THIS AGREEMENT,
EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES
ALL RIGHTS TO A TRIAL BY JURY OF ANY ISSUES SO TRIABLE.
16. ENTIRE AGREEMENT. This Agreement contains and represents the entire
and complete understanding and agreement concerning and in reference to the
consulting and services arrangement between the parties hereto. The parties
hereto agree that no prior statements, representations, promises,
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agreements, instructions, or understandings, written or oral, pertaining to this
Agreement, other than those specifically set forth and stated herein, shall be
of any force or effect.
17. MODIFICATIONS AND AMENDMENTS. This Agreement may not be, and shall
not be construed to have been modified, amended, rescinded, canceled, or waived,
in whole or in part, except if done so in writing and executed by the parties
hereto.
18. NOTICES. All notices required or permitted to be given hereunder
shall be in writing and shall be personally delivered by courier, sent by
registered or certified mail, return receipt requested or sent by confirmed
facsimile transmission addressed as set forth herein. Notices personally
delivered, sent by facsimile or sent by overnight courier shall be deemed given
on the date of delivery and notices mailed in accordance with the foregoing
shall be deemed given upon the earlier of receipt by the addressee, as
evidenced by the return receipt thereof, or three (3) days after deposit in the
U.S. mail. Notice shall be sent: (a) if to the Company, addressed at 2931 3rd
Street, Santa Monica, CA 90405, Attention: Chief Executive Officer; and (b) if
to the Consultant, to 1510 W. Montana, Chicago, Illinois 60614, or to such
other address as either party hereto may from time to time give notice of to
the other.
19. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where applicable,
assigns, including, without limitation, any successor to the Company, whether by
merger, consolidation, sale of stock, sale of assets or otherwise.
20. CONSTRUCTION. Each party to this Agreement had the opportunity to
consult with counsel of their choice and make comments concerning the Agreement.
No legal or other presumption against the party drafting this Agreement
concerning its construction, interpretation or otherwise accrue to the benefit
of any party to this Agreement and each party expressly waives the right to
assert such a presumption in any proceedings or disputes connected with, arising
out of, or involving this Agreement.
21. WAIVERS. The waiver by either party hereto of a breach or violation
of any term or provision of this Agreement shall not operate nor be construed as
a waiver of any subsequent breach or violation.
22. SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
23. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Consulting and
Services Agreement as of the date first above written.
COMPANY:
CORPAS INVESTMENTS, INC.,
a Florida corporation
By: /s/ Ross A. Love
---------------------------
Ross A. Love
Chief Executive Officer
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CONSULTANT:
/s/ Dr. Bob Goldman
---------------------------
Dr. Bob Goldman
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<PAGE> 1
EXHIBIT 10.10
FINANCIAL ADVISORY AGREEMENT
This Agreement is made and entered into as of the 28th day of February,
2000, between Corpas Investments, Inc. (the "Company") and D.R.F.W. Group, Inc.
(the "Financial Advisor").
W I T N E S S E T H:
WHEREAS, The Company is seeking certain financial advice regarding
business and financing activities; and
WHEREAS, the Financial Advisor is willing to furnish certain business
and financial related advice and services to the Company on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual terms and covenants
contained herein, and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties agree as follows:
1. PURPOSE. The Company hereby engages the Financial Advisor on a
non-exclusive basis for the term specified in this Agreement to render financial
advisory consulting advice to the company relating to financial and similar
matters upon the terms and conditions set forth herein.
2. DUTIES OF THE FINANCIAL ADVISOR. During the term of this Agreement,
the Financial Advisor will provide the Company with consulting advice as
specified below at the request of the Company, provided that the Financial
Advisor shall not be required to undertake duties not reasonably within the
scope of the consulting advisory service in which the Financial Advisor is
engaged generally. in performance of these duties, the Financial Advisor shall
provide the Company with the benefits of its best judgment and efforts, and the
Financial Advisor cannot and does not guarantee that its efforts will have any
impact on the business of the Company or that any subsequent improvement will
result from the efforts of the Financial Advisor. it is understood and
acknowledged by the parties that the value of the Financial Advisor's advice is
not measurable in any quantitative manner, and that the amount of time spent
rendering such consulting advice shall be determined according to the Financial
Advisor's discretion.
The Financial Advisor's duties shall include, but will not necessarily
be limited to, rendering the following services to the Company:
(a) Study and review the business, operations, and historical
financial performance of the Company (based upon management's forecast
of financial performance) so as to enable the Financial Advisor to
provide advice to the Company;.
(b) Assist the Company in attempting to formulate the optimum
strategy to meet the Company's working capital and capital resources
needs;
(c) Assist in the formulation of the terms and structure of
any reasonable proposed private placement equity or private placement
debt financing transaction involving the Company ("Transaction");
(d) Assist in any presentation to the Board of Directors of
the Company, as requested, in connection with a proposed Transaction;
and
(e) Advise the Company as to the expected reaction of the
financial community to any Transaction and assist in determining the
optimum means of communicating the pertinent aspects, such as strategic
considerations, benefits to the Company and financial impact, to the
financial community.
<PAGE> 2
3. TERM. The term of this Agreement shall be for one (1) year
commencing from the date of this Agreement ("Commencement Date,); provided,
however, that this Agreement may be renewed or extended upon ouch terms and
conditions as may be mutually agreed upon by the parties hereto.
4. FINANCIAL ADVISORY FEE. Upon the execution of this Agreement, the
Company shall sell to the Financial Advisor and/or persons designated by the
Financial Advisor ("holders"), for an aggregate purchase price of ten dollars
($10), Common Stock Purchase Warrants (the "Warrants") for the purchase of an
aggregate of 500,000 shares of the Company's Common Stock at exercise prices as
reflected below:
<TABLE>
<CAPTION>
NUMBER OF WARRANTS EXERCISE PRICE
------------------ --------------
<S> <C>
300,000 $1.00
100,000 $2.00
100,000 $4.00
</TABLE>
The Warrants may be exercised in whole or in part, at any time, and
from time to time, during the five (5) year period following the date of this
Agreement.
In the event the shares of common stock underlying the Warrants (the
"Shares") are not registered under the Securities Act of 1933, as amended (the
"Act") when exercised and issued, the certificates representing the Shares shall
bear the following legend;
The securities represented by this certificate may not be offered or
sold except pursuant to (i) an effective registration statement under
the Act, (ii) to the extent applicable, Rule 144 under the Act (or any
similar rule under such Act relating to the disposition of securities),
or (iii) an opinion of counsel, if such opinion shall be reasonably
satisfactory to counsel to the issuer, that an exemption from
registration under such Act and applicable state securities laws is
available.
If at any time after the date of this Agreement, the Company shall
register any of its securities or securities of selling stockholders for sale
pursuant to a Registration Statement under the Act, or file a Notification on
Form 1-A, or otherwise register securities under the Act (collectively the
"Registration Documents"), the Company shall be required to register all 500,000
Shares by offering all of the holders of the Warrants and/or the Shares the
opportunity to register the Shares without cost to the holders thereof, except
for costs of brokerage commissions and costs of any counsel to the holders. In
connection with these registration rights, the Company shall give all of the
holders of the Warrants and/or Shares notice by certified or registered mail,
return receipt requested, at least twenty (20) business days prior to the filing
of such Registration Document, of the Company's intent to register the Shares.
The Company agrees to periodically advise the holders of the status of the
Registration Statement, and the effective date of the registration statement. In
addition, the Company agrees to deliver copies of the final prospectus to each
of the holders.
If during the period for two (2) years from the date of this Agreement,
the Company shall subsequently register any of its securities or securities of
selling stockholders for sale pursuant to a Registration Statement under the
Act, or file a Notification on Form 1-A, or otherwise register securities under
the Act (collectively the "Subsequent Registration Documents"), other than
under a Registration Statement pursuant to Form S-4 or S-8, and the holders
still own any Warrants and/or Shares, the Company shall be required to offer all
of such holders of the Warrants and/or the Shares the opportunity to. register
the Shares without cost to the holders thereof, except for coats of brokerage
commissions and/or costs counsel to such holders. In connection with these
piggyback registration rights, the Company shall give all of the holders of the
Warrants and/or Shares notice by certified or registered mail, return receipt
requested, at least twenty (20) business days prior to the filing of each such
Registration Document. If the Financial Advisor and/or such holders of the
Warrants and/or Shares notify the Company within fifteen (15) days after receipt
of any such notice of its or their desire to include any of such Shares in such
proposed Subsequent Registration Documents, the Company shall afford the
Financial Advisor and such holders of such Warrants and/or Shares the
opportunity to have any Shares registered under such Registration Documents.
<PAGE> 3
In connection with any registration filed pursuant to Subsequent
Registration Documents pursuant to this Section 4 involving an underwritten
offering, if the managing underwriter or underwriters advise the Company in
writing that, in its or their opinion, the number of Shares requested to be
included in such registration would have a material adverse effect on such
offering (including, without limitation, a material decrease in the price at
which such securities can be sold), then the amount of Shares included in the
offering shall be reduced and the Shares and the other securities to be offered
shall participate in such offering as follows: (i) securities to sold by the
Company shall have priority over all securities to offered by stockholders of
the Company, including the Holders and (ii) if securities in the excess of the
Company's securities can, in the good faith judgment of such managing
underwriter or underwriters, successfully be marketed in such offering, the
Shares and the other securities to be offered by stockholders of the Company,
including the Holders, shall be included in such offering, subject to reduction
pro rata in proportion to the number of securities proposed to be included in
such offering by the Holders and other stockholders (based on underlying numbers
of shares of Common Stock).
During such time as the Warrants are outstanding, the Company agrees
not to merge, reorganize, or take any action which would terminate the Warrants
without first making adequate provisions for the Warrants and Shares. other
terms regarding the rights of the holders of the Warrants are included in the
Warrant Certificate to be issued pursuant to this paragraph.
In addition, as further compensation for the financial services
provided pursuant to this Agreement, the Company agrees to pay to the Financial
Advisor an aggregate of $200,000, Such funds shall be payable at the rate of
$40,000 per month for five (5) months, and the initial payment shall be due on
the first day of the month following the date of this Agreement. The remaining
four (4) payments shall be due an the first day of each successive month after
the date of the initial payment.
5. FINANCING FEE. In the event the Financial Advisor introduces, or
otherwise participate in effecting a Financing for the Company in a public debt
and/or equity transaction, pursuant to which the Company obtain financing or
other consideration, the Financial Advisor shall receive a Financing Fee in
addition to the Financial Advisory Fee and any other fee to be received pursuant
to this Agreement, which shall be mutually determined between the Company and
the Financial Advisor at the time of any such Financing.
6. INDEMNIFICATION. In the performance of its services, the Financial
Advisor shall be obligated to act only in good faith, and shall not be liable to
the Company for errors in judgment not the result of willful misconduct. The
Company shall indemnify and hold harmless the Financial Advisor against any and
all liabilities, claims, lawsuits, including any and all awards and/or judgments
to which it may become subject under the Act, the Securities Exchange Act of
1934, as amended (the "1934 Act") or any other federal or state statute, at
common law or otherwise, insofar as said liabilities, claims and lawsuits
(including costs, expenses, awards and/or judgments) arise out of or are in
connection with the services rendered by the Financial Advisor or any
transactions in connection with this Agreement, except for any liabilities,
claims and lawsuits (including awards and/or judgments), arising out of illegal
acts, willful misconduct or willful omissions of the Financial Advisor. In
addition, the Company shall also indemnify and hold harmless the Financial
Advisor against any and all reasonable costs and expenses incurred relating to
the foregoing.
The Financial Advisor shall give the Company prompt notice of any such
liability, claim or lawsuit which the Financial Advisor contends is the subject
matter of the company's indemnification and the Company thereupon shall be
granted the right to take any and all necessary and proper action, at its sole
cost and expense, with respect to such liability, claim and lawsuit, including
the right to settle, compromise and dispose of such liability, claim or lawsuit,
excepting therefrom any and all proceedings or hearings before any regulatory
bodies and/or authorities.
The Financial Advisor shall indemnify and hold the Company harmless
against any and all liabilities, claims and lawsuits, including any and all
awards and/or judgments to which it may become subject under the Act, the 1934
Act or any other federal or state statute, at common law or otherwise, insofar
as said liabilities, claims and lawsuits (including costs, expenses, awards
and/or judgments) arising out of or are based upon illegal acts, willful
misconduct or willful omissions of the Financial Advisor. in addition, the
Financial Advisor shall also indemnify
<PAGE> 4
and hold the Company harmless against any and all reasonable costs and expenses
incurred relating to the foregoing.
The Company shall give the Financial Advisor prompt notice of any such
liability, claim or lawsuit which the Company contends is the subject matter of
the Financial Advisor's indemnification and the Financial Advisor thereupon
shall be granted the right to take any and all necessary and proper action, at
its sole cost and expense, with respect to such liability, claim and lawsuit,
including the right to settle, compromise or dispose of such liability, claim or
lawsuit, excepting therefrom any and all proceedings or hearings before any
regulatory bodies and/or authorities.
7. THE FINANCIAL ADVISOR AS AN INDEPENDENT CONTRACTOR. The Financial
Advisor shall perform its services hereunder as an independent contractor and
not as an employee of the Company or an affiliate thereof. It is expressly
understood and agreed to by the parties hereto that the Financial Advisor shall
have no authority to act for, represent or bind the Company or any affiliate
thereof in any manner, except as may be agreed to expressly by the Company in
writing from time to time.
8. Miscellaneous.
(a) This Agreement between the Company and the Financial Advisor
constitutes the entire agreement and understanding of the parties hereto, and
supersedes any and all previous agreements and understandings, whether oral or
written, between the parties with respect to the matters set forth herein.
(b) Any notice or communication permitted or required hereunder shall
be in writing and shall be deemed sufficiently given if hand-delivered or sent
postage prepaid by certified or registered mail, return receipt requested, to
the respective parties as set forth below, or to such other address as either
party may notify the other in writing:
If to the Company: Ross Love, President
Corpas Investments, Inc.
2931 Third Street
Santa Monica, CA 90405
If to the Financial Advisor: Glenn Desort, President
D.R.F.W. Group, Inc.
1041 Boca Cove Lane
Highland Beach, FL 33487
(c) This Agreement shall be binding upon and inure to the benefit of
each of the parties hereto and their respective successors, legal
representatives and assigns.
(d) This Agreement may be executed in any number of counterparts, each
of which together shall constitute one and the same original document.
(e) No provision of this Agreement may be amended, modified or waived,
except in a writing signed by all of the parties hereto.
(f) This Agreement shall be construed in accordance with and governed
by the laws of the state of Florida, without giving effect to conflict of law
principles. The parties hereby agree that any dispute which may arise between
them arising out of or in connection with this Agreement shall be adjudicated
before a court located in Palm Beach County, Florida, and they hereby submit to
the exclusive jurisdiction of the courts of the State of Florida located in Palm
Beach County, Florida and of the federal courts in the Southern District of
Florida with respect to any action or legal proceeding commenced by any party,
and irrevocably waive any objection they now or hereafter may have respecting
the venue of any such action or proceeding brought in such a court or respecting
the fact that such court is an inconvenient forum, relating to or arising out of
this Agreement, and consent to the
<PAGE> 5
service of process in any such action or legal proceeding by means of registered
or certified mail, return receipt requested, in care of the address set forth in
sub-paragraph (b) above.
(g) This Agreement has been duly authorized, executed and delivered by
and on behalf of the Company and the Financial Advisor.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
Very truly yours,
CORPAS INVESTMENTS, INC.
By: /s/ Ross Love
----------------------------------------
Ross Love, President
D.R.F.W. GROUP, INC.
By: /s/ Glenn Desort
----------------------------------------
Glenn Desort, President
<PAGE> 1
EXHIBIT 10.11
- --------------------------------------------------------------------------------
1301 York Road o Suite 400 o Lutherville, MD 21093
Tel: (410) 321-1799 o Fax: (410) 321-1753 o 888-301-6271
www.cfgstocks.com
CONSULTANT AGREEMENT
Columbia Financial Group is an investor relations, direct marketing,
publishing, public relations and advertising firm with expertise in the
dissemination of information about publicly traded companies. Also in the
business of providing investor relations services, public relations services,
publishing, advertising services, fulfillment services, as well as Internet
related services.
Agreement made this 15th day of November, 1999, between Corpas
Investments, Inc. (hereinafter referred to as "Corporation"), and Columbia
Financial Group, Inc. (hereinafter referred to as "Consultant", (collectively
referred to as the "Parties"):
RECITALS:
The Corporation desires to engage the services of the Consultant to
perform for the Corporation consulting services regarding all phases of the
Corporation's "Investor Relations" to include direct investor relations and
broker/dealer relations as such may pertain to the operation of the
Corporation's business.
The Consultant desires to consult with the Board of Directors, the
Officers of the Corporation, and certain administrative staff members of the
Corporation, and to undertake for the Corporation consultation as to the
company's investor relations activities involving corporate relations and
relationships with various broker/dealers involved in the regulated securities
industry.
AGREEMENT
1. The respective duties and obligations of the contracting
Parties shall be for a period of twelve (12) months commencing
on the date first appearing above. This Agreement may be
terminated by either parties only in accordance with the terms
and conditions set forth in Paragraph 8.
SERVICES PROVIDED BY CONSULTANT
2. Consultant will provide consulting services in connection with
the Corporation's "investor relations" dealings with NASD
broker/dealers and the investing public. (At no time shall the
Consultant provide services which would require Consultant to
be registered and licensed with any federal or state
regulatory body or self-regulating agency.) During the term of
this Agreement, Consultant will provide those services
customarily provided by an investor relations firm to a
Corporation, including but not limited to the following:
-1-
<PAGE> 2
COLUMBIA FINANCIAL GROUP
(a) Aiding the Corporation in developing a marketing plan
directed at informing the investing public as to the
business of the Corporation; and
(b) Providing assistance and expertise in devising an
advertising campaign in conjunction with the
marketing campaign as set forth in (1) above; and
(c) Advise the Corporation and provide assistance in
dealing with institutional investors as it pertains
to the Corporation's offerings of its securities; and
(d) Aid and assist the Corporation in the Corporation's
efforts to secure "market makers" which will trade
the Corporation's stock to the public by providing
such information as may be required; and
(e) Aid and advise the Corporation in establishing a
means of securing nationwide interest in the
Corporation's securities; and
(f) Aid and assist the Corporation in creating an
"institutional site program" to provide ongoing and
continuous information to fund managers; and
(g) Aid and consult with the Corporation in the
preparation and dissemination of press releases and
news announcements; and
(h) Aid and consult with the corporation in the
preparation and dissemination of all "due diligence"
packages requested by and furnished to NASD
registered broker/dealers, the investing public,
and/or other institutional and/or fund managers
requesting such information from the Corporation.
COMPENSATION
3. In consideration for the services provided by Consultant to
the Corporation, the Corporation shall on behalf of the
Consultant caused to be vested, (hereinafter "delivered") at
the signing of this Agreement 25% or one-quarter of the
warrants as set forth below, and the balance of the warrants
will be delivered on or before the beginning of the third
quarter of the Agreement. All such warrants delivered shall
have a term of five years and shall have preferred, "piggy
back" registration rights. The warrants shall be issued at the
following exercise price:
100,000 warrants at $12.00 per share.
100,000 warrants at $15.00 per share.
100,000 warrants at $18.00 per share.
-2-
<PAGE> 3
COLUMBIA FINANCIAL GROUP
COMPLIANCE
4. At the time consultants give notice to the Company or
execution of the Warrants referred to in #3, Compensation
above, common share underlying the warrants, delivered by
Corporation to Consultant will, at that particular time be fee
trading, or if not, the shares shall be incorporated in the
next registration statement filed by the Corporation. The
warrants shall have "piggy back" registration rights and will,
at the expense of the Corporation, be included in said
registration statement in a timely manner.
REPRESENTATION OF CORPORATION
5. (a). The Corporation, upon entering this Agreement, hereby
warrants and guarantees to the Consultant that to the best
knowledge of the Officers and Directors of the Corporation,
all statements, either written or oral, made by the
Corporation to the Consultant are true and accurate, and
contain no misstatements of a material fact. Consultant
acknowledges that estimates of performance made by Corporation
are based upon the best information available to Corporation
officers at the time of said estimates of performance. The
Corporation acknowledges that the information it delivers to
the Consultant will be used by the Consultant in preparing
materials regarding the Company's business, including but not
necessarily limited to, its financial condition, for
dissemination to the public. Therefore, in accordance with
Paragraph 6, below, the Corporation shall hold harmless the
Consultant from any and all errors, omissions, misstatements,
except those made in a negligent or intentionally misleading
manner in connection with all information furnished by
Corporation to Consultant.
(b). Consultant shall agree to release information only with
written or verbal approval of the company.
6.
Corpas Investments, Inc.
1. Authorized: _______ shares
2. Issued: ________ shares
3. Outstanding: _______ shares
4. Free trading (float): ______ shares (approx.)
5. Shares subject to Rule 144 restrictions: _________ shares
(approx.)
-3-
<PAGE> 4
COLUMBIA FINANCIAL GROUP
LIMITED LIABILITY
7. With regard to the services to be performed by the Consultant
pursuant to the terms of this Agreement, the Consultant shall
not be liable to the Corporation, or to anyone who may claim
any right due to any relationship with the Corporation, for
any acts or omissions in the performance of services on the
part of the Consultant, except when said acts or omissions of
the Consultant are due to its willful misconduct or culpable
negligence.
TERMINATION
8. This Agreement may be terminated by either party upon the
giving of not less than thirty (30) days written notice,
delivered to the parties at such address or addresses as set
forth in Paragraph 9, below. In the event this Agreement is
terminated by the Cooperation, compensation paid by
Corporation pursuant to paragraph 3 above, to the Consultant
to the date of termination (or through the end of the month
during which notice of termination is delivered). In the event
this Agreement is terminated by consultant, compensation shall
be reimbursed to Corporation as follows:
The Agreement will be divided into four equal quarters. If termination
occurs within the first quarter or initial ninety (90) days of the Agreement,
the Consultants will have no obligation to return any of the initial
compensation of the contract pursuant to paragraph 3 above. Each and every
subsequent quarter of the Agreement will have an equal amount of compensation.
If termination occurs within any quarter of the Agreement, the Consultants will
return a pro rata amount based on a 90 day quarter.
The valuation of said shares for purposes of repayment of shares, shall
be the bid price of said shares as of the date shares are tendered back to the
Corporation. If there is no bid price, then the price shall be agreed to, by
separate writing to be determined by the parties upon the execution of this
agreement.
NOTICES
9. Notices to be sent pursuant to the terms and conditions of
this Agreement, shall be sent as follows:
Timothy J. Rieu Ross Love
Columbia Financial Group, Inc. Corpas Investments, Inc.
1301 York Road, Ste. 400 171 Pier Avenue, # 352
Lutherville, Maryland 21093 Santa Monica, CA 90405
-4-
<PAGE> 5
COLUMBIA FINANCIAL GROUP
ATTORNEY'S FEES
In the event any litigation or controversy, including arbitration,
arises out of or in connection with this Agreement between the Parties hereto,
the prevailing party in such litigation, arbitration or controversy, shall be
entitled to recover from the other party or parties, all reasonable attorney's
fees, expenses and suit costs, including those associated within the appellate
or post-judgment collections proceedings.
ARBITRATION
10. In connection with any controversy or claim arising out of or
relating to this Agreement, the Parties hereto agree that such
controversy shall be submitted to arbitration, in conformity
with the Federal Arbitration Act (Section 9 U.S. Code Section
901 et seq), and shall be conducted in accordance with the
Rules of the American Arbitration Association. Any judgment
rendered as a result of the arbitration of any dispute herein,
shall upon being rendered by the arbitrators be submitted to a
Court of competent jurisdiction with the State of Maryland, if
initiated by Consultant, or in the State of California if
initiated by the Corporation.
GOVERNING LAW
11. This Agreement shall be construed under and in accordance with
the laws of the State of California, and all parties hereby
consent to California as the proper jurisdiction for said
proceeding provided herein.
PARTIES BOUND
12. This Agreement shall be binding on and inure to the benefit of
the contracting parties and their respective heirs, executors,
administrators, legal representatives, successors, and assigns
when permitted by this Agreement.
LEGAL CONSTRUCTION
13. In case any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal,
or unenforceable in any respect, the invalidity, illegality,
or unenforceability shall not affect any other provision, and
this Agreement shall be construed as if the invalid, illegal,
or unenforceable provision had never been contained in it.
PRIOR AGREEMENTS SUPERSEDED
14. This Agreement constitutes the sole and only Agreement of the
contracting parties and supersedes any prior understandings or
written or oral agreements between the respective parties.
Further, this Agreement may only be modified or changed by
written agreement signed by all the parties hereto.
-5-
<PAGE> 6
COLUMBIA FINANCIAL GROUP
MULTIPLE COPIES OR COUNTERPARTS OF AGREEMENT
15. The original and one or more copies of this Agreement may be
executed by one or more of the parties hereto. In such event,
all of such executed copies shall have the same force and
effect as the executed original, and all of such counterparts
taken together shall have the effect of a fully executed
original. Further, this Agreement may be signed by the parties
and copies hereof delivered to each party by way of facsimile
transmission, and such facsimile copies shall be deemed
original copies for all purposes if original copies of the
parties' signatures are not delivered.
LIABILITY OF MISCELLANEOUS EXPENSES
16. The Corporation shall be responsible to any miscellaneous fees
and costs approved in writing prior by the Corporation or its
agents to commitment that are unrelated to the agreement made
between the Parties.
HEADINGS
17. Headings used throughout this Agreement are for reference and
convenience, and in no way define, limit or describe the scope
or intent of this Agreement or effect its provisions.
IN WITNESS WHEREOF, the Parties have set their hands and seal as of the
date written above.
BY: /s/
----------------------------------
Timothy J. Rieu, President
Columbia Financial Group, Inc.
BY: /s/ Ross Love
----------------------------------
Ross Love
Corpas Investments, Inc.
-6-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF OPERATIONS FOR CORPAS INVESTMENTS, INC. A DEVELOPMENT
STAGE COMPANY, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 385,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 340,000
<CURRENT-ASSETS> 790,000
<PP&E> 182,000
<DEPRECIATION> 85,000
<TOTAL-ASSETS> 18,614,000
<CURRENT-LIABILITIES> 798,000
<BONDS> 0
0
0
<COMMON> 14,000
<OTHER-SE> 17,816,000
<TOTAL-LIABILITY-AND-EQUITY> 18,614,000
<SALES> 8,000
<TOTAL-REVENUES> 8,000
<CGS> 0
<TOTAL-COSTS> 970,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,000
<INCOME-PRETAX> (968,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (968,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (968,000)
<EPS-BASIC> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
