U.S. 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
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
For the quarter ended: January 31, 2000
Commission file no.: 0-28155
NATURAL SOLUTIONS CORPORATION
--------------------------------------------
(Name of small business issuer as specified in its charter)
Nevada 88-0367024
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
100 Volvo Parkway, Suite 200
Chesapeake, Virginia 23320
- --------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number : (757) 548-4242
Securities registered under Section 12(b) of the Exchange Act:
Name of each exchange on
Title of each class which registered
None None
- ------------------------ ---------------------
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
-----------------------------------
(Title of class)
Copies of Communications Sent to:
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Tel: (561) 832-5696 Fax: (561) 659-5371
<PAGE>
Indicate by Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
State the number of shares outstanding of each of the issuers classes of common
equity, as of the latest practicable date: As of January 31, 2000, there are
19,996,540 shares of voting common stock of the registrant issued and
outstanding.
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of January 31, 2000
and 1999, and July 31, 1999..................................................F-2
Consolidated Statements of Operations for the Three
and Six Months Ended January 31, 2000 and 1999...............................F-3
Statements of Consolidated Cash Flows for the Six
Months Ended January 31, 2000 and 1999.......................................F-4
Notes to the Consolidated Financial Statements...............................F-5
<PAGE>
<TABLE>
<CAPTION>
NATURAL SOLUTIONS CORPORATION
Consolidated Balance Sheets
(Unaudited) (Unaudited)
January 31, 2000 January 31, 1999 July 31, 1999
----------------- ---------------- ---------------
<S> <C> <C> <C>
Current Assets:
Cash and Cash Equivalents $146,596 $65,559 $0
Accounts Receivable - Trade 731,302 642,124 86,339
Other Receivables 187,431 74,643 5,375
Inventories 727,660 405,358 626,872
Prepaid Expenses 102,249 106,693 62,736
Total Current Assets 1,895,238 1,294,377 781,322
Property and Equipment, net 103,453 127,488 112,453
Investment in Affiliate 18,750 110,000 18,750
Licensing Agreement, net 386,118 470,980 419,620
Other 3,686 221,292 3,686
$2,407,245 $2,224,137 $1,335,831
================= ================ ===============
Current Liabilities:
Accounts Payable - Trade 1,106,215 552,839 1,115,754
Accrued Expenses 259,923 13,444 180,856
Note Payable 60,000 - -
Current Portion of Long Term Debt 82,000 82,000 82,000
Current Portion of Related Party Debt - 61,951 124,968
Total Current Liabilities 1,508,138 710,234 1,503,578
Long Term Debt to Related Parties 257,000 195,049 132,032
Convertible Debenture 750,000
Stockholders' Equity:
Preferred Stock, $0.01 par value,
20,000,000 shares authorized, no shares
have been issued or are outstanding - - -
Common Stock, $0.01 par value,
55,000,000 shares authorized,
19,996,540 issued and outstanding 19,997 15,993 15,997
Additional Paid-in Capital 5,935,124 4,907,158 4,939,124
Other Comprehensive Income (121,727) - (121,727)
Accumulated Deficit (5,941,287) (3,604,297) (5,133,173)
Total Stockholders' Equity (107,893) 1,318,854 (299,779)
$2,407,245 $2,224,137 $1,335,831
================= ================ ===============
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
NATURAL SOLUTIONS CORPORATION
Consolidated Statements of Operations
(Unaudited)
For the Three Months For the Six Months
Ended January 31, Ended January 31,
2000 1999 2000 1999
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Net Sales $939,396 $914,492 $1,132,733 $1,542,799
Costs Applicable to Sales 647,081 551,406 843,524 1,017,823
Gross Profit 292,315 363,086 289,209 524,976
Selling and Administrative Expenses 580,968 717,204 1,065,352 1,266,736
-------------- ------------- -------------- -------------
Losses from Operations (288,653) (354,118) (776,143) (741,760)
Other Expense, net (19,095) - (31,984) -
Net Loss Before Taxes (307,748) (354,118) (808,127) (741,760)
Income Taxes - - - -
Net Loss ($307,748) ($354,118) ($808,127) ($741,760)
============== ============= ============== =============
Weighted Average Common Shares
Outstanding 17,923,733 15,929,306 17,923,733 15,915,827
Loss per Share ($0.02) ($0.02) ($0.05) ($0.05)
============== ============= ============== =============
</TABLE>
The accompanying notes are an
integral part of these financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
NATURAL SOLUTIONS CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months Ended January 31,
2000 1999
----------------- --------------
<S> <C> <C>
Operating Activities:
Net Loss ($808,127) ($741,760)
Non-Cash Expenses Included in Net Loss:
Depreciation and Amortization 42,515 60,360
Bad Debts - 289,481
Product and Services Pruchased for Stock
and Options - 370,463
Adjustments to Reconcile Net Loss to Cash
Provided (Consumed) by Operating Activities:
(Increase) in Accounts Receivable (644,963) (479,951)
(Increase) in Other Receivables (182,056)
(Increase) Decrease in Inventories (100,788) 293,224
(Increase) in Prepaid Expenses (39,513) (9,128)
Increase in Accounts Payable and
Accrued Expenses 69,528 118,366
----------------- --------------
Cash Consumed by Operating Activities (1,663,404) (98,945)
Financing Activities:
Proceeds from Issuance of Note Payable 60,000 -
Proceeds from Issuance of Long Term Debt 750,000 -
Proceeds from Issuance of Common Stock 1,000,000 -
----------------- --------------
Cash Generated by Financing Activities 1,810,000 -
Investing Activities:
Acquisition of Equipment - (16,813)
Advances to Related Parties - (4,943)
Payments Recevied on Advances to Related
Parties - 60,995
----------------- --------------
Cash Provided (Used) in Investing Activities - 39,239
Net Increase (Decrease) in Cash 146,596 (59,706)
Cash and Cash Equivalents - Beginning - 125,265
----------------- --------------
Cash and Cash Equivalents - Ending $146,596 $65,559
================= ==============
</TABLE>
The accompanying notes are an
intregal part of these financial statements.
F-4
<PAGE>
NATURAL SOLUTIONS CORPORATION
Notes to Interim Financial Statements
Form 10-QSB
January 31, 2000
Note 1. The interim financial statements include all adjustments, which, in
the opinion of management, are necessary in order to make the
financial statements not misleading. The unaudited consolidated
financial statements and notes are presented as permitted by Form
10-QSB. Accordingly, certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been omitted. The
accompanying consolidated financial statements and notes should be
read in conjunction with the audited financial statements and notes of
the Company for the year ended July 31, 1999. The results of
operations for the three-month and six-month periods ended January 31,
2000 are not necessarily indicative of those to be expected for the
entire year.
Note 2. The financial statements as of January 31, 1999 and for the periods
ended January 31, 1999 have been restated to reflect year end
adjustments to provide an additional allowance for doubtful accounts
totaling $259,912, which have been allocated back to the applicable
quarters. The result of this adjustment is to increase the loss per
weighted average common share outstanding by $0.016 for the three
months and six months ended January 31, 1999.
Note 3. On September 15, 1999 the Company signed an unsecured short-term note
payable for $60,000. The note is due in twelve installments of $5,000
plus interest at 7% per annum.
Note 4. On August 11, 1999, the Company borrowed $750,000 from a related party
in the form of a convertible debenture bearing interest at 10% per
annum and maturing on August 11, 2001. Prior to repayment, the
principal and accrued and unpaid interest may be converted into the
Company's common stock at a price of $0.75 per share. The debenture
includes two detachable warrants entitling the holder to purchase up
to three million shares of the Company s common stock at a price of
$0.75 per share. The warrants expire as follows: one million shares on
July 28, 2000 and two million shares on August 9, 2004.
Note 5. On October 31, 1999, the Company sold four million shares of common
stock to a related party for $1 million. As a part of the transaction,
the purchaser acquired, among other rights, the right to name up to
three of seven of the directors of the Company.
F-5
<PAGE>
Item 2. Management's Discussion and Analysis
Forward Looking Statements:
This Form 10-QSB includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in this
Form 10-QSB which address activities, events or developments which the Company
expects or anticipates will or may occur in the future, including such things as
future capital expenditures (including the amount and nature thereof), expansion
and growth of the Company's business and operations, and other such matters are
forward-looking statements. These statements are based on certain assumptions
and analyses made by the Company in light of its experience and its perception
of historical trends, current conditions and expected future developments as
well as other factors it believes are appropriate in the circumstances. However,
whether actual results or developments will conform with the Company's
expectations and predictions is subject to a number of risks and uncertainties,
general economic market and business conditions; the business opportunities (or
lack thereof) that may be presented to and pursued by the Company; changes in
laws or regulation; and other factors, most of which are beyond the control of
the Company. Consequently, all of the forward-looking statements made in this
Form 10-QSB are qualified by these cautionary statements and there can be no
assurance that the actual results or developments anticipated by the Company
will be realized or, even if substantially realized, that they will have the
expected consequence to or effects on the Company or its business or operations.
The Company assumes no obligations to update any such forward-looking
statements.
Overview:
The Company was formed to exploit in the United States certain patents, rights
to patents, and other proprietary products covered under a licensing agreement
to market agricultural co-products such as road de-icing and anti-icing, dust
suppressant and road stabilization products. The products are marketed under the
protected trade names of ICE BAN (R) and Roadbind (TM) . These products are sold
through a network of direct sales representatives and licensed distributors
throughout the United States.
Results of Operations - The Six Months Ended January 2000 Compared to the Six
Months Ended January 1999:
Net sales for the six months ended January 31, 2000 for continuing operations by
the Company were $1,132,733 compared to $1,542,799 for the same period last
year; resulting in a decline of $410,111. The reduction in sales from the prior
year is primarily due to the Company s decision to restructure its sales
organization and reduce its dependence on a limited number of specific
customers. In doing so, the Company established its own sales force, recruited
new distributors, and reduced the size of new and existing distributor
territories. The gross profit for the current period totaled $288,339, or 25% of
sales, compared to $524,976, or 34% for the comparable period in the prior year.
The decline in profit margin is due to increased price competition from former
Ice Ban distributors.
<PAGE>
Selling and administrative expenses totaled $1,065,352 compared to $1,266,736
for the same period last year. Increases in personnel costs, advertising, and
travel were more than off-set by a reduction in bad debt expense of $259,912,
resulting in a reduction in expenses in the current period in the amount of
$210,384.
Losses from operations totaled $776,143 compared to losses in the prior year of
$746,760, an increase of $34,383. Other expenses totaled $31,984 bringing the
net loss to $808,127 compared to a net loss of $741,760 for the same period last
year.
While the new management is in the process of implementing a wide-ranging
assessment of each item of cost, marketing and sales efforts, it is too early in
the process to predict the steps management will institute as a result. But
management will seek to increase sales, lower fixed costs as a percentage of
sales and either settle or see through to successful conclusion the
non-productive litigation, which this year has burdened the Company s bottom
line. There can be no assurances that such efforts will be successful.
Liquidity and Capital Resources:
In the six months ended January 31, 2000, operating activities consumed
$1,603,404 in cash as compared to $98,945 of cash consumed in the comparable
period in 1999. This increase in cash consumed from fiscal year 1999 to 2000 is
largely due to increases in receivables, inventories, and prepaid expenses
associated with the timing of sales, which occurred later in the current year
winter selling season compared to the same period last year. In addition, cash
consumed by operations in the prior year was reduced by the payment of stock and
options to purchase product and services totaling $370,463. That practice was
discontinued in the current year.
The Company has recorded an infusion of $1,750,000 from financing activities
since the end of its fiscal year. The infusion of funds took place in two
separate transactions with a related party. The first was a $750,000 convertible
debenture bearing interest at 10% per annum and maturing on August 11, 2001.
Prior to repayment, the principal and accrued and unpaid interest may be
converted into the Company s common stock at a price of $0.75 per share. The
debenture includes two detachable warrants entitling the holder to purchase up
to three million shares of the Company s common stock at a price of $0.75 per
share. The warrants expire as follows: one million shares on July 28, 2000 and
two million shares on August 9, 2004. As a part of the transaction a director
and significant shareholder has agreed to vote his shares consistent with the
desires of this investor. The remaining capital was raised through the sale of
four million shares of common stock to a related party for $1 million. As a part
of the transaction, the purchaser acquired, among other rights, the right to
name up to three of seven of the directors of the Company.
The Company believes that it will probably be necessary to raise additional debt
or equity capital in order to meet its short-term liquidity and solvency needs
over the next twelve months while maintaining operations and supporting the
further expansion of the Roadbind sales force to the eastern half of the United
States. Currently, sales volumes of the dust suppressant and road stabilization
products do not produce sufficient profits to support the expansion planned for
the remainder of the current fiscal year.
The Company also believes that increased sales are necessary in order to achieve
adequate liquidity and solvency in the short-term as well as the long-term.
<PAGE>
Impact of the Year 2000 Issue:
The Year 2000 Issue is the result of potential problems with computer systems or
any equipment with computer chips that use dates where the date has been stored
as just two digits (e.g. 98 for 1998). On January 1, 2000, any clock or date
recording mechanism including date sensitive software which uses only two digits
to represent the year, may have recognize the date using 00 as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculations causing disruption of operations, including among other things,
a temporary inability to process transactions, send invoices, or engage in
similar activities.
To date, the Company has not experienced any noticeable Year 2000 difficulties.
The Company intends to continue to monitor its Year 2000 compliance and to
correct any noncompliance as it is discovered.
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
1. Jeffrey Johnson vs. Natural Solutions, Case No. CL-99-3185, in the Circuit
Court in and for Palm Beach County, Florida. This was a lawsuit by Mr. Johnson
filed on March 26, 1999, seeking to enforce his employment agreement. The
employment agreement called for arbitration and the Company successfully moved
to have the case arbitrated. Johnson has filed an arbitration proceeding and the
Company has responded with an answer and defenses. The Company expects that this
matter will be arbitrated sometime in June, 2000.
2. Dianne Johnson and Johnson Family vs. Ice Ban America, IBAC Corporation, Case
No. 99-8228, United States District Court, Southern District of Florida. This
lawsuit was filed on March 26, 1999. It is a lawsuit for securities fraud by the
Johnson family seeking damages for breach of various security regulations and
laws due to alleged violations by Natural Solutions Corporation and IBAC, Inc.
Natural Solutions Corporation has successfully filed two Motions to Dismiss. The
Johnson family is filing a second amended complaint. Natural Solutions and IBAC
filed a counterclaim to rescind the sale of the founders stock. The stock owned
by the Johnson family is founders stock for which the Johnson family paid
approximately $4,000 to Natural Solutions Corporation and $6,000 to IBAC.
Recently Natural Solutions Corporation and IBAC have filed a substantial
counterclaim, alleging breach of fiduciary duty, breach of securities acts,
RICO, fraud, etc. against the Johnson family arising out of the actions of
Warren D. Johnson, Jr., and the Johnson family in selling restricted founders
shares of stock in private sales before the restrictions were lifted. Initial
discovery has been done in this case.
3. Dianne Johnson and the Johnson Family vs. Natural Solutions Corporation, Ice
Ban USA, Inc. and George Janke, Case No. 99-5305, in the Circuit Court in and
for Palm Beach County. This is a lawsuit by the Johnson family seeking to
rescind the sale of Ice Ban, Inc., (New York) to the Company, which sale
occurred in the summer of 1997, based upon alleged fraudulent misrepresentations
surrounding the ownership of the so-called Toth patent. The Company has filed an
answer, affirmative defenses, and a counterclaim similar to the counterclaim in
item #2. Discovery is proceeding, but the case is not set for trial.
4. Natural Solutions Corporation and Ice Ban USA, Inc. vs. Sears Oil, Sears
Petroleum, et al., Case No. 99-3344. In the Circuit Court in and for Palm Beach
County. This is a lawsuit filed on April 6, 1999, by the Company and Ice Ban USA
for tortious interference with the Company s rights to the so- called Toth
patent acquired by Mr. George Janke from the Hungarian inventors. This action
<PAGE>
also claims breach of fiduciary duty, breach of a confidentiality agreement by
Sears and others acting in concert with Sears. Service has been obtained on most
of the Defendants, and motions to dismiss, motions for lack of personal
jurisdiction, and motions to transfer to New York are scheduled. Some limited
discovery on jurisdiction has been undertaken in this case.
5. Sears Oil Company vs. Natural Solutions Corporation, Ice Ban USA, George
Janke ,et al., Case No. 99-CV-704-DNH. This is an action filed on January 25,
1999, in New York State Court, but removed to the United States District Court
for the Northern District of New York. This action alleges fraudulent
misrepresentations based upon the ownership of the Toth patent and fraudulent
inducement into a certain contract for the distribution of product in New
England based upon misrepresentations regarding ownership of the Toth patent.
The Plaintiff amended their Complaint to allege patent infringement of the Toth
patent. In October 1999 Sears Oil and Sears Petroleum sought a temporary
restraining order that SeaCo, LLC was the exclusive distributor for Ice Ban
products in the New England States. The Judge denied the Plaintiff s request for
a TRO and Sears withdrew its claim for injunctive relief. Natural Solutions will
answer the complaint and file a counterclaim in the next twenty days. The case
is not set for trial.
6. Ice Ban America, Inc. vs. Innovative Municipal Products, Inc., Case No.
99-00710, State Court of New York. This lawsuit was filed on March 24, 1999, by
Natural Solutions Corporation to recover two hundred fifty-thousand dollars
($250,000) owed to it by its New York distributor, Innovative Municipal
Products. Innovative has filed affirmative defenses and counterclaims based upon
the misrepresentation regarding the Toth patent. Natural Solutions has answered
and filed affirmative defenses to the counterclaim. Discovery is ongoing in this
case, and it has not been set for trial.
Item 2. Changes in Securities and Use of Proceeds
On August 11, 1999, the Company borrowed $750,000 from a related party in the
form of a convertible debenture bearing interest at 10% per annum and maturing
on August 11, 2001. Prior to repayment, the principal and accrued and unpaid
interest may be converted into the Company s common stock at a price of $0.75
per share. The debenture includes two detachable warrants entitling the holder
to purchase up to three million shares of the Company s common stock at a price
of $0.75 per share. The warrants expire as follows: one million shares on July
28, 2000 and two million shares on August 9, 2004. These funds were primarily
used to fund the operations of the Company.
On October 31, 1999, the Company sold four million shares of common stock to a
related party for $1 million. As a part of the transaction, the purchaser
acquired, among other rights, the right to name up to three of seven of the
directors of the Company.
Item 3. Defaults in Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders.
At the annual meeting of the shareholders held on December 10, 1999, the
shareholders of the Company voted to approve the following:
The 1999 Non-statutory Stock Option Plan for non-employee members of the Board
of Directors, key personnel, consultants, or independent contractors; 11,100,821
votes were cast on this resolution. 10,254,518 votes were cast in favor of the
resolution. 823,081 were cast against the resolution. 23,122 votes abstained on
the resolution. Accordingly, the resolution was adopted.
<PAGE>
The 1999 Incentive Option Plan for employees, and key personnel who render
services which contribute to the success of the growth of the Company;
11,100,821 votes were cast on this resolution. 10,254,518 votes were cast in
favor of the resolution. 823,081 were cast against the resolution. 23,122 votes
abstained on the resolution. Accordingly, the resolution was adopted.
PriceWaterhouse Coopers or another nationally recognized accounting firm, or as
an alternative, Durland and Company of Palm Beach to serve as the independent
public accountants of Natural Solutions Corporation for its fiscal year ending
July 31, 2000; 13,594,01 votes were cast on this resolution. 12,844,448 votes
were cast in favor of the resolution. 4,810 were cast against the resolution.
744,923 votes abstained on the resolution. Accordingly, the resolution was
adopted.
Election of three Class I Directors as follows: Dr. M.G. Robertson, receiving
13,550,224 votes for and 43,857 votes withheld, Dr. J. Nelson Happy, receiving
13,546,016 votes for and 48,065 votes withheld, and Lowell Morse receiving
13,554,934 votes for and 39,147 votes withheld. Class II Directors whose initial
terms will expire at the 2001 annual meeting of the shareholders include Richard
Jurgenson, Hon. J. Carter Beese, Jr. and George A. Janke. Class III Directors
whose initial terms will expire at the 2000 annual meeting of the shareholders
include William Dannhausen and Robert E. Freer, Jr. Subsequent to the annual
meeting of the shareholders Richard Jurgenson and William Dannhausen resigned
their positions as Directors of the Company. There have been no replacement
Directors nominated at this date.
Item 5. Other Information
On March 17th, 2000, Joseph S. Kroll, voluntarily resigned his position with the
Company as Vice President and Chief Operating Officer. His duties have been
assigned to the President, Jim W. Foshee, and Chief Financial Officer, Michael
D. Klansek, among others. The Company believes there will be no material impact
to its operations as a result of Mr. Kroll's resignation.
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits required to be filed herewith by Item 601 of Regulation S-B, as
described in the following index of exhibits, are incorporated herein by
reference, as follows:
Exhibit No. Description
- ----------- -------------------------------
4.1* Stock Purchase Agreement dated October 31, 1999
10.24* Office Lease dated January 10, 2000
27* Financial Data Schedule
- --------------------------------------
* Filed herewith
(b) No Reports on Form 8-K were filed during the quarter ended January 31, 2000
<PAGE>
SIGNATURES
---------------------
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Natural Solutions Corporation (Registrant)
Date: March 23, 2000 By: /s/ Jimmy W. Foshee
------------------------
Jimmy W. Foshee, President
By: /s/ Michael D. Klansek
-------------------------
Michael D. Klansek, Treasurer
and Chief Financial Officer
Exhibit 4.1
STOCK PURCHASE AGREEMENT
--------------------------------------
NATURAL SOLUTIONS CORPORATION
OCTOBER 29, 1999
----------------------------------------
THIS STOCK PURCHASE AGREEMENT ("Agreement") is executed effective as
of October 29, 1999, by and between M.G. ROBERTSON ("Purchaser"), NATURAL
SOLUTIONS CORPORATION, a Nevada corporation (the "Company") and as to Paragraphs
eight (8) and nine (9) hereof George A. Janke individually and on behalf of IBAC
Corporation, ICE BAN AMERI- CAN and ICE BAN USA collectively the "ICE BAN
Parties."
INTRODUCTION
Pursuant to Purchaser's desire to participate in the capital funding
of the Company and the Company's desire to have Purchaser participate in such
funding, the Company and Purchaser have agreed that Company will sell to
Purchaser Four Million (4,000,000) shares (the "Shares") of the $.001 par value
common stock ("Common Stock"), the only series of securities issued by the
Company.
TO MORE FULLY CARRY SUCH AGREEMENT INTO EFFECT, THEREFORE, THE
PARTIES AGREE AS FOLLOWS:
1. Sale and Purchase. The Company hereby agrees to sell and issue to Purchaser
the Shares, and Purchaser agrees to purchase such Shares on the terms and
conditions set forth herein.
2. Purchase Price; Payment. The purchase price (the "Purchase Price") which
Purchaser agrees to pay to the Company for the Shares is an aggregate
purchase price of One Million Dollars ($1,000,000.00) at the Closing (as
defined below). The Purchase Price shall be paid by wire transfer or other
readily available funds to the Company at the Closing.
3. Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place on November 1, 1999. At the Closing the
Company shall deliver to Purchaser a certificate representing the Shares
and Purchaser shall deliver to the Company the Purchase Price.
4. Representations and Warranties of the Company. The Company represents,
warrants, and covenants to Purchaser as follows:
1
<PAGE>
Natural Solutions Corporation October 29, 1999
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the state of Nevada, and has all
requisite corporate power and authority to execute and deliver this
Agreement and to carry out the provisions of this Agreement.
(b) All corporate action on the part of the Company necessary for the
authorization, execution, and delivery of this Agreement, the
performance of all the obligations of the Company hereunder and the
authorization, issuance and delivery of the Shares have been taken,
and this Agreement, when executed and delivered, will constitute the
valid and legally binding obligation of the Company, enforceable in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting creditor's rights generally, and as limited by
laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
(c) The Shares when sold and issued in accordance with the terms of
this Agreement will be duly and validly issued, fully paid and
nonassessable.
(d) As of the date hereof, the Company has 55,000,000 shares of Common
Stock authorized, of which 15, 996,540 are issued and outstanding.
(e) As of the date hereof, the material identified in Paragraph 5(e)
below upon which the Purchaser has relied is true, accurate and
complete.
5. Representations and Warranties of Purchaser. Purchaser represents, warrants
and covenants to the Company as follows:
(a) Purchaser has the full power and authority to make and enter into
this Agreement.
(b) There is no agreement or understanding of any sort which prohibits
Purchaser from entering into or carrying out this Agreement.
(c) Purchaser (i) is acquiring the Shares for his own account for
investment, not as nominee or agent, and not with a view to or for
sale in connection with any distribution or any part thereof and (ii)
has no present intention of selling, granting participation in, or
otherwise distributing the same. Purchaser understands that the Shares
have not been registered under the Securities Act of 1933, as amended
(the "Securities Act") by reason of the reliance by the Company on
exemptions from the registration requirements of the Securities Act
pursuant to Section 4(2) thereof or under any "Blue Sky" law of any
state by reason of the reliance by the Company on exemptions
thereunder, and that the Company's reliance is predicated in part on
2
<PAGE>
Natural Solutions Corporation October 29, 1999
Purchaser's representations set forth herein. By reason of his
business and financial experience, Purchaser has the capacity to
protect his own interests in connection with the transactions
contemplated hereby and is able to bear the economic risk thereof.
(d) Purchaser is an accredited investor as such term is defined in
Regulation D.
(e) Purchaser acknowledges that he has been given an opportunity to
examine such instruments, documents and other information relating to
the Company as he has deemed necessary or advisable in order to make
an informed decision relating to his purchase of the Shares that he
has been afforded an opportunity to ask questions and to obtain any
additional information necessary in order to verify the accuracy of
the information furnished and that he has, in fact, asked all such
questions and reviewed all such instruments, documents and other
information as he deems necessary under the circumstances.
(f) Purchaser understands that the Shares may not be sold,
transferred, or otherwise disposed of without registration under
applicable securities laws or an exemption therefrom, and that in the
absence of an effective registration statement covering the Shares and
the Warrants (or the Common Stock issued on exercise thereof) or an
available exemption from registration under applicable securities
laws, the Shares and the Warrants (and any Common Stock issued on
exercise thereof) must be held indefinitely.
(g) To the extent applicable, each certificate or other document
evidencing any of the Shares shall be endorsed with the legend
substantially as set forth below:
"The shares represented by this certificate have not been Registered
under the Securities Act of 1933. The Shares have been acquired for
investment and may not be offered, sold or otherwise transferred in
the absence of an effective Registration Statement for the shares
under the Securities Act of 1933, or a prior opinion of counsel
satisfactory to the Issuer, that registration is not required under
that Act."
(h) The Company shall be obligated to reissue promptly unlegended
certificates at the request of any holder thereof if the holder shall
have obtained an opinion of counsel at such holder's expense (which
counsel may be counsel for the Company) reasonably acceptable to the
Company to the effect that the securities proposed to be disposed of
may lawfully be so disposed of without registration, qualification or
legend.
6. The Company's Conditions Precedent. The obligations of Company hereunder
are subject to the representations and warranties of the Purchaser
contained herein being true and correct as of Closing.
3
<PAGE>
Natural Solutions Corporation October 29, 1999
7. Purchaser's Conditions Precedent. The obligations of the Purchaser
hereunder are subject to the representations and warranties of Company
contained herein being true and correct as of Closing and further subject
to the right of the Purchaser to assure from and after settlement
Purchaser's selection of three of seven or four of nine members of the
Board of Directors so long as the Company owes purchaser any money under
all or a part of the note from the corporation dated August 11, 1999.
8. No Outstanding Inter-Corporate Claims. The Company and the ICE BAN Parties
represent and warrant that there are no outstanding claims or disputes
between the Company and the ICE BAN Parties and that all prior claims or
disputes have been resolved and fully released without any consideration
being paid or due by the Company to any of the Ice Ban Parties.
9. Note Deferral. ICE Ban USA, for one dollar ($1.00) and such other
consideration satisfactory to it through the signature below of its Chief
Executive Officer agrees to defer any demand for payment on the note by the
Company to it for approximately $237,000.00 until the Company in its sole
discretion has achieved sufficient reliable cash flow to satisfy the note
without jeopardizing the Company's ability to pay its budgeted
expenditures.
10. Separate Account. Funds from the sale to Purchaser shall be placed in a
Company account at Crestar Bank or such other institution satisfactory to
both the corporation and Purchaser and from which funds may be withdrawn
for general corporate expenses only upon the signature of both an
authorized corporate officer and Purchaser or Purchaser's designee or such
other options as Purchaser may determine. Requests for disbursement from
such account shall not unreasonably be denied.
11. Registration Rights.
(a) For purposes of this Section 11:
(i) The term "Registrable Securities" means any Common Stock of
the Company owned by the Purchaser;
(ii) The term "Purchaser" means the Purchaser or any assignee of
Purchaser's Registrable Securities and registration rights.
(b) Company Registration. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a
registration effected by the Company for shareholders often than the
Purchaser) any of its stock under the Securities Act of 1933 (the
"Act") in connection with the public offering of such securities
solely for cash (other than a registration relating solely to the sale
of securities to employees of the Company pursuant to a stock option,
stock purchaser or similar plan, relating to a Rule 145 transaction or
a registration on any form which
4
<PAGE>
Natural Solutions Corporation October 29, 1999
does not include substantially the same information as would be
required to be included in a registration statement covering the sale
of the Registrable Securities), the Company shall, at such time,
promptly give the Purchaser written notice of such registration. Upon
the written request of the Purchaser given within twenty (20) days
after mailing of such notice by the Company in accordance with Section
8 hereof, the Company shall, subject to the underwriting requirements
and limitations set forth herein, cause to be registered under the Act
all of the Registrable Securities that Purchaser has requested to be
registered.
(c) Expenses of Registration. The Company shall bear and pay all costs
of and incidental to any registration, filing or qualification of
Registrable Securities with respect to the registrations pursuant to
this Section 11 for the Purchaser, including (without limitation) all
registration, filing, and qualification fee, printers' and accounting
fees relating or apportionable thereto, and the Purchaser will bear
and pay his prorata portion of any underwriting discounts and
commissions.
(d) Underwriting Requirements. In connection with any offering
involving an underwriting of shares, the Company shall not be required
under Section 11 to include any of the Purchaser's securities in such
underwriting unless Purchaser accepts the terms of the underwriting as
agreed upon between the Company and the underwriters selected by it,
and then only in such quantity as will not, in the opinion of the
underwriters, jeopardize the success of the offering by the Company or
the Company shareholders demanding such registration.
(e) Information. Purchaser shall furnish such information as shall be
required to effect and keep current the registration of Purchaser's
Shares.
(f) Assignment of Registration Rights. The rights to register
Registrable Securities pursuant to this Section 11 may be assigned by
Purchaser provided that (a) the Company is, within a reasonable time
after such transfer, furnished with written notice of the name and
address of such transferee of assignee and the securities with
respects to which such registration rights are being assigned, (b)
such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee
or assignee is restricted under the Act, and (c) such rights may not
be assigned to any person or entity which, in the Company's reasonable
judgment, is a competitor of the Company. Purchaser may assign such
rights to separate purchasers in the case of the Warrants or the
Common Stock, but may assign only as to all (not less than all) of
either.
(g) Reconsideration. Notwithstanding any other provision of this
Section 11, if at any time after giving written notice of its proposal
to file a registration statement pursuant to subsection (b) above and
prior to the effective date of such registration statement,
5
<PAGE>
Natural Solutions Corporation October 29, 1999
the Company shall determine not to register the securities proposed to
be covered thereby, the Company may, at its election, give written
notice of such determination to the Purchaser and thereupon shall be
relieved of its obligation to register any Shares in connection with
such registration.
12. Notices. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if
delivered or mailed by certified mail, postage prepaid, return receipt
requested and addressed as follows:
If to Purchaser: M.G. Robertson
977 Centerville Turnpike
Virginia Beach, Virginia 23463
with copy to: Louis Isakoff, Esq.
Robertson Asset Management Inc.
977 Centerville Turnpike - SHB 202
Virginia Beach, Virginia 23463
If to the Company: 1201 U.S. Highway One, Suite 205
North Palm Beach, Florida 33408
Attn: Richard Jurgenson, President
with copy to: Robert E. Freer, Jr., Esq.
Baise, Miller & Freer, P.C.
1020 19th Street, N.W.
Suite 400
Washington, D.C. 20036
Either party may change his or its address by written notice thereof
to the other party pursuant to this Paragraph 12.
13. Counterparts. This Agreement may be executed in two or more identical
counterparts. Each such counterpart shall be deemed an original, but
together all such counterparts shall constitute one in the same instrument.
14. Governing Law. This Agreement shall be construed under and in accordance
with the laws of the State of Nevada, unless and until the Company's state
of domicile shall change, in which event this Agreement shall be construed
under and in accordance with the laws of the state of such new domicile.
15. Amendment. This Agreement contains the entire agreement between the parties
hereto and cannot be amended or altered except in writing executed by the
parties hereto.
6
<PAGE>
Natural Solutions Corporation October 29, 1999
16. Disputes. Any dispute between or among the Parties or any of them arising
out of or in any way relating to this Agreement shall be submitted to
arbitration in Washington, D.C., under the auspices of the American
Arbitration Association. A decision of an arbitrator or a panel of
arbitrators, as the case may be, shall be legally binding on the Parties
and shall not be subject to appeal to any court of law. The costs of
arbitration shall be borne by the Party instigating such arbitration, if he
or it shall not prevail in the principal relief sought, and by the Party or
Parties against whom such arbitration is brought, if the Party instigating
such arbitration shall prevail in the principal relief sought.
17. Entire Agreement. This Agreement is intended to implement the letter of
intent between the parties dated October 27, 1999 and accepted by Purchaser
on October 29, 1999, which letter of intent is incorporated herein by
reference. This Agreement constitutes the sole, complete and only agreement
between the parties hereto as to the subject matter hereof, and supersedes
any prior understandings or written or oral agreements between the parties
respecting the within subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the day first written above:
NATURAL SOLUTIONS CORPORATION
/s/M.G. Robertson By: /s/ Richard Jurgenson
- ---------------------------- ---------------------------
M.G. Robertson Richard Jurgenson, President
As to Paragraph 8 and 9 hereof on behalf of
The ICE BAN Parties
By: /s/ George A. Janke
-------------------------
George A. Janke, Individually and as
President
7
Exhibit 10.24
AGREEMENT OF LEASE
between
SUNTRUST BANK
as Landlord
and
NATURAL SOLUTIONS CORPORATION
as Tenant
<PAGE>
<TABLE>
<CAPTION>
Crestar Bank Building
100 Volvo Parkway
Chesapeake, Virginia
Table of Contents Page
<S> <C>
1. Basic Lease Provisions 1
2. Premises 2
3. Term 2
4. Rent 3
5. Acceptance of Premises 4
6. Use of Premises 4
7. Parking Spaces 4
8. Common Areas 4
9. Services and Utilities 5
10. Tenant's Equipment and Alterations 6
11. Mechanics' and Other Liens 7
12. Insurance 7
13. Building Repairs and Alterations 8
14. Maintenance of Premises; Surrender 8
15. Tenant's Property 8
16. Rules and Regulations 9
17. Indemnification; Waiver of Subrogation 9
18. Estoppel Certificate 10
19. Subordination 10
20. Assignment and Subletting 10
</TABLE>
<PAGE>
<TABLE>
<S> <C>
21. Damage or Destruction 11
22. Eminent Domain 12
23. Hazardous Materials 12
24. Default; Remedies 13
25. Access 15
26. Force Majeure 15
27. Quiet Enjoyment 16
28. Miscellaneous Provisions 16
29. Expansion Space 18
List of Exhibits
Floor Plan of Premises and Expansion Space EXHIBIT A
Rules and Regulations EXHIBIT B
Janitorial Services EXHIBIT C
</TABLE>
<PAGE>
AGREEMENT OF LEASE
THIS AGREEMENT OF LEASE ("this Lease"), dated as of the 10th day of
January, 2000, by and between SUNTRUST BANK, a Georgia banking corporation (the
"Landlord"), and NATURAL SOLUTIONS CORPORATION, a Nevada corporation (the
"Tenant"), provides:
THAT for and in consideration of the mutual covenants and conditions
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Landlord and the Tenant hereby agree
as follows:
1. Basic Lease Provisions. The following shall constitute the basic terms,
definitions and provisions of this Lease:
(a) Premises: Approximately 2,399 rentable square feet of office space
designated as Suite 200 and located on the second (2nd) floor of the Building,
as more particularly shown in red on the floor plan attached hereto as Exhibit A
(the "Premises").
(b) Building: Crestar Bank Building located at 100 Volvo Parkway,
Chesapeake, Virginia 23320 (the "Building").
(c) Term: Initial Term: Five (5) Lease Years and four (4) months. Renewal
Term: Five (5) Lease Years.
(d) Commencement January 15, 2000 (the "Commencement Date").
Date:
(e) Expiration May 14, 2005 (the "Expiration Date").
Date:
(f) Rent: $33,586.00 per year (which equates to $14.00 per rentable square
foot in the Premises)(the "Rent"), payable in equal monthly installments of
$2,798.83 per month, subject to an annual escalation of three percent (3%) each
Lease Year (the "Annual Escalation").
Based upon the foregoing, the Rent payable hereunder during the
initial Term of this Lease shall be as follows:
<TABLE>
<S> <C> <C>
Lease Year Annual Rent Monthly Installment
- ---------------- --------------- -----------------------
First $33,586.00 $2,798.83
Second $34,593.58 $2,882.80
Third $35,631.39 $2,969.28
Fourth $36,700.33 $3,058.36
Fifth $37,801.34 $3,150.11
Sixth (Partial) $38,935.38 $3,244.62
</TABLE>
<PAGE>
(g) Landlord's SunTrust Bank
Notice Address: 919 East Main Street
Richmond, Virginia 23219
Attn: SunTrust Real Estate Corporation
(h) Tenant's Natural Solutions Corporation
Notice Address: 977 Centerville Turnpike, SHB 202
Virginia Beach, Virginia 23463
Attn: Michael Klansek, CFO
(i) Security Deposit: $8,396.49.
2. Premises. The Landlord leases to the Tenant, and the Tenant rents from the
Landlord, the Premises, together with the non-exclusive license to use, in
common with others, all common areas of the Building, including the
lobbies, stairways, restrooms, parking areas and sidewalks that serve the
tenants of the Building (the "Common Areas"), subject to the terms and
conditions set forth herein.
3. Term.
(a) Initial Term. The term of this Lease shall be for the number of Lease
Years and calendar months indicated in Section 1(c) hereof (the "Term") and
shall commence on the Commencement Date and expire on the Expiration Date. The
term "Lease Year," as used herein, shall mean a period of twelve (12)
consecutive full calendar months. The first Lease Year shall begin on the
Commencement Date and end on the last day of the twelfth (12th) full calendar
month after the Commencement Date. Each succeeding Lease Year shall commence on
each successive anniversary of the first Lease Year. If the Commencement Date
occurs on a date other than the first (1st) day of a calendar month, (i) the
first (1st) Lease Year shall include the remainder of the month in which the
Commencement Date occurs and the following twelve (12) successive full calendar
months and (ii) each succeeding Lease Year shall commence on each successive
anniversary of the first (1st) day of the first (1st) calendar month immediately
succeeding the month in which the Commencement Date occurs.
(b) Renewal Term. Provided the Tenant is not in default under the terms and
provisions of this Lease and this Lease is in full force and effect, the Tenant
shall have the option to renew the Term of this Lease for the renewal term set
forth in Section 1(c) above. The Tenant may exercise the foregoing option to
renew by providing the Landlord with written notice thereof no later than ninety
(90) days prior to the expiration date of the initial Term of this Lease. In the
event the Tenant exercises the foregoing option to renew the Term of this Lease,
all of the terms and provisions of this Lease shall apply for such renewal term,
with the exception that (i) the Tenant shall not have the right to further renew
the Term hereof, and (ii) the annual Rent payable during such renewal term shall
continue to be adjusted annually during such renewal term as set forth in
Section 4(a) below.
4. Rent.
(a) Amount of Rent. The Tenant shall pay the Rent for the Premises in the
amount set forth in Section 1(f) hereof. On the first day of the second (2nd)
<PAGE>
Lease Year and annually thereafter during the initial and any renewal Term of
this Lease, the annual Rent payable by the Tenant hereunder shall be increased
by the amount of the Annual Escalation set forth in Section 1(f) hereof. If the
Commencement Date occurs on a date other than the first (1st) day of a calendar
month, the Tenant shall pay to the Landlord a pro-rated portion of the Rent for
the number of days between the Commencement Date and the last day of the
calendar month in which the Commencement Date occurs, both dates being
inclusive.
(b) Payment. Monthly installments of the Rent shall be payable in advance
on the first day of each calendar month during the Term hereof without notice or
demand and without setoff or deduction.
(c) Place of Payment. The Tenant shall pay the Rent and other charges to be
paid by the Tenant hereunder to the Landlord at SunTrust Bank, Tenant Rent HDQ
8614, P.O. Box 26665, Richmond, Virginia 23261-6665, or to such other
individual, firm or corporation and at such other place as may be designated in
writing by the Landlord.
(d) Additional Rent. All amounts and charges (if any) in addition to the
Rent required to be paid by the Tenant under this Lease shall be deemed to be
additional rent (the "Additional Rent"). The Additional Rent shall be due and
payable along with the next monthly installment of Rent due and payable
hereunder; provided, however, that nothing herein contained shall be deemed to
suspend or delay the time for any payment to be made by the Tenant hereunder or
to limit any other remedy of the Landlord.
(e) Late Charge. If any payment of Rent or Additional Rent is not received
by the Landlord within ten (10) days after the same is due, the Tenant shall pay
a late charge of five percent (5%) of the overdue amount to the Landlord.
(f) Rent Abatement. Notwithstanding anything to the contrary contained
herein, the Rent shall be abated for a period of four (4) months after the
Commencement Date and the Tenant shall have no obligation to pay Rent during
such period. It is the intent of the parties hereto that in the event the
Commencement Date occurs on January 15, 2000, the Tenant's obligation to pay
Rent hereunder shall not commence until May 15, 2000. The first installment of
Rent payable hereunder by the Tenant shall be due and payable on June 1, 2000
and shall be comprised of a pro-rated portion of the Rent for the period from
May 15, 2000 to May 31, 2000 and the entire monthly installment of Rent for the
month of June, 2000.
5. Acceptance of Premises. The Tenant hereby acknowledges and agrees that the
Premises are being rented to the Tenant in their "AS IS, WHERE IS"
condition and without any representation or warranty. To the actual
knowledge of William B. Corbin, Vice President of the Landlord, the
Landlord has not received any written notice that the Building does not
comply with the applicable building and occupancy codes from any local
governmental authority having jurisdiction over the Building.
6. Use of Premises. The Tenant shall use the Premises solely for general
office purposes. The Tenant shall not use or permit or suffer the Premises
to be used for any other purpose without the prior written consent of the
<PAGE>
Landlord, which may be withheld in the Landlord's sole discretion. In addition
to the foregoing, the Tenant's use of the Premises and the Common Areas shall
not impair or interfere with the Landlord's operation of the branch banking
facility in the Building.
7. Parking Spaces. The parking spaces located adjacent to the Building
(specifically excluding, however, the parking spaces reserved for the
branch banking facility located in the Building) are for the use in common
by the tenants of the Building on a non-exclusive basis. The Landlord and
the Tenant agree that as of the date hereof the number of available parking
spaces are sufficient for the tenants of the Building and their employees
and clients/customers. However, the Landlord reserves the right at any time
and from time to time after the date hereof to (i) allocate the parking
spaces among the tenants or for any one tenant of the Building and their
employees and clients/customers, in which event nine (9) such spaces will
be allocated to the Tenant, and (ii) designate employee parking areas.
8. Common Areas. All of the Common Areas shall at all times be subject to the
exclusive control and management of the Landlord. As provided in Section
16, the Landlord has established, and shall have the right from time to
time to modify (upon reasonable prior notice to the Tenant), reasonable
rules and regulations with respect to the Building and the Common Areas. In
addition, the Landlord shall have the right to construct, maintain and
operate lighting facilities in or on the Common Areas; to police the Common
Areas; from time to time to change the area and arrangement of the Common
Areas; to close temporarily all or any portion of the Common Areas; and to
do and perform such other acts in and to the Common Areas as the Landlord,
in its sole reasonable discretion, shall deem advisable. In the event of a
diminution of the Common Areas, the Landlord shall not be subject to any
liability nor shall the Tenant be entitled to any compensation or
diminution or abatement in the payment of the Rent hereunder. The Landlord
agrees to exercise reasonable efforts to minimize any disruption to the
Tenant's access to or use and enjoyment of the Premises in connection with
the exercise of the Landlord's rights under this Section.
9. Services and Utilities.
(a) Services. The Landlord agrees to provide (at the Landlord's expense
unless otherwise provided) the following services to the Tenant during the Term:
(i) Hot and cold water and lavatory supplies, it being understood and
agreed that hot and cold water shall be furnished by the Landlord only at
those points of supply provided for the general use of the Building.
(ii) Heating and air conditioning, in season, controlled by the
Tenant, provided that both parties acknowledge and agree that the Tenant's
normal hours of operation shall be Monday through Friday from 8:00 a.m. to
6:00 p.m. and on Saturday from 8:00 a.m. to 1:00 p.m., but not on Sundays
or legal holidays, but that the Tenant shall have the right to use the
Premises at all times during the Term.
(iii) Maintenance, painting and electric lighting service for the
Common Areas.
<PAGE>
(iv) Electricity in such capacities to furnish sufficient electricity
for the ordinary office equipment and lighting requirements of the Tenant.
If any element of the Tenant's equipment shall cause the Tenant's demand
for electricity to exceed ordinary business usage (as determined in the
reasonable discretion of the Landlord), the Tenant shall pay for the cost
of such excess electricity at the rate charged by the public utility for
furnishing such excess.
(v) Janitorial services as described on Exhibit C attached hereto.
(b) Reduction of Electricity. If any law, regulation, executive or
administrative order requires that the Landlord or the Tenant reduce or maintain
at a certain level the consumption of electricity for the Premises or the
Building which affects the heating, air conditioning, lighting or hours of
operation of the Premises or the Building, the Landlord and the Tenant shall
each adhere to and abide by such laws, regulations or executive or
administrative orders without any reduction in the Rent hereunder.
(c) Failure to Provide Services. Failure by the Landlord to any extent to
furnish the services provided above, or any cessation thereof resulting from
causes beyond the control of the Landlord, shall not render the Landlord liable
for damages to either person or property, be construed as an eviction of the
Tenant, work an abatement of rent, or relieve the Tenant from fulfillment of any
covenant or agreement hereof. If any equipment or machinery provided by the
Landlord ceases to function properly and the Tenant has actual knowledge
thereof, the Tenant shall provide written notice thereof to the Landlord and the
Landlord shall use reasonable diligence to thereafter repair the same promptly,
but the Tenant shall have no claim for abatement of rent or damages on account
of any interruption in service occasioned thereby or resulting therefrom. The
Landlord agrees to exercise reasonable efforts to minimize any disruption to the
Tenant's access to or use and enjoyment of the Premises during the repair of
such equipment or machinery.
10. Tenant's Equipment and Alterations.
(a) Equipment. The Tenant shall not install in the Premises any additional
electrically operated equipment or other machinery, other than ordinary and
customary office equipment, without first obtaining the prior written consent of
the Landlord, not to be unreasonably withheld. The Landlord may withhold its
consent in its reasonable discretion or may condition its consent upon payment
by the Tenant of Additional Rent as compensation for additional consumption of
electricity or water. The Tenant shall not install any additional equipment
which will necessitate any changes, replacements or additions to, or changes in
the use of, the water system, heating system, plumbing system, air-conditioning
system, or electrical system in the Premises or the Building without first
obtaining the prior written consent of the Landlord, which the Landlord may
withhold in its reasonable discretion.
(b) Alterations. The Tenant shall not make any alterations, additions, or
improvements to the Premises without the Landlord's prior written consent of
such alterations, additions or improvements and the contractor or contractors
engaged by the Tenant to perform such work. All alterations, additions, and
improvements made to the Premises whether by the Landlord or by the Tenant,
except movable office furniture and equipment installed at the Tenant's expense,
shall be the property of the Landlord and shall remain upon and be surrendered
with the Premises at the termination or expiration of this Lease.
<PAGE>
(c) Signage. The Landlord reserves the right to determine the number of
letters allocated to the Tenant on the tenant directory maintained by the
Landlord on the first floor of the Building, provided such directory shall
contain at a minimum the name of the Tenant. No sign, advertisement or notice
shall be used in the Building other than building standard tenant signage
located on office doors or immediately adjacent thereto on the walls in the
interior hallways, and then shall be of such color, size and style, and be
installed at the Tenant's expense by such party, as the Landlord may approve. If
the Tenant violates the foregoing, the Landlord may remove the violation without
liability, and may charge all reasonable costs and expenses incurred in so doing
to the Tenant as Additional Rent hereunder.
(d) Removal. Upon the termination or expiration of the Term, the Tenant
shall (at the Tenant's sole expense) remove all trade fixtures and furnishings
installed by the Tenant in the Premises which are not a part of the real estate
and surrender the Premises as provided hereinafter. The Tenant shall repair all
damage to the Premises caused by the installation or removal of any trade
fixtures or other furnishings or any such alterations or improvements,
reasonable wear and tear and casualty loss excepted. All trade fixtures and
furnishings which the Tenant has not removed prior to the expiration of the Term
shall, at the option of the Landlord, (i) become the property of the Landlord or
(ii) be removed from the Premises and sold or stored at the election of the
Landlord, and the Tenant agrees to reimburse the Landlord upon demand for all
reasonable costs and expenses incurred by the Landlord in moving, removing,
selling or storing such personal property.
11. Mechanics' and Other Liens. The Tenant shall pay or cause to be paid all
costs for work done by the Tenant or caused to be done by the Tenant on the
Premises of a character which will or may result in liens on the Landlord's
interest therein and the Tenant shall keep the Premises free and clear of
all mechanic's liens and other liens on account of work done for the Tenant
or persons claiming under the Tenant. The Tenant hereby agrees to
indemnify, defend and save the Landlord harmless of and from all liability,
loss, damage, costs or expenses (including reasonable attorneys' fees)
incurred on account of any claims of any nature whatsoever for work
contracted for by the Tenant, or materials or supplies furnished to the
Tenant, including any lien claims of laborers, materialmen or others. In
the event any such liens are recorded against the Premises or the Building
with respect to work contracted for by the Tenant or materials supplied to
or on behalf of the Tenant, the Tenant shall cause any such liens to be
removed of record within ten (10) business days after notice from the
Landlord.
12. Insurance.
(a) Tenant's Insurance. During the Term of this Lease, the Tenant shall, at
the Tenant's expense, insure the Premises and all activities conducted by the
Tenant in the Building under a general liability insurance policy with a
combined property damage, bodily injury and death liability limit of at least
$1,000,000.00 per occurrence and property damage insurance in an amount not less
than $300,000.00. Such policy of insurance shall name the Landlord and any
person or entity having an interest in the Building and designated in writing by
the Landlord as additional insured parties and shall contain a clause that the
insurer shall not cancel or change the terms of such insurance policy without
<PAGE>
first giving the Landlord and such other person or entity at least thirty (30)
days' prior written notice thereof. A copy of such insurance policy or a
certificate of such insurance shall be delivered by the Tenant to the Landlord.
(b) Prohibited Acts; Compliance with Laws. The Tenant shall not do or allow
to be done in or about the Premises anything which is prohibited under any
policy of insurance carried by the Landlord insuring against loss or damage by
fire or other hazards. The Tenant agrees that if the Tenant's use or occupancy
of the Premises causes the premium for such fire or other insurance carried by
the Landlord to be higher than the reasonable premium applicable for such
insurance, the Tenant shall pay the difference promptly upon demand therefor by
the Landlord. The Tenant covenants and agrees that the Tenant shall comply with
all laws, statutes, ordinances, notices, orders, rules, regulations or
requirements of any federal, state or municipal government or any department,
commission or board thereof or of the National Board of Fire Underwriters or any
body exercising similar functions relating to the Tenant's use or manner of use
of the Premises.
(c) Landlord's Insurance. The Landlord agrees to maintain, at its expense,
an appropriate policy of casualty insurance on the Building. The Tenant
acknowledges that the Landlord shall not be responsible for carrying insurance
of any kind on the Tenant's furniture and furnishings or the Tenant's equipment,
improvements or trade fixtures and that the Landlord shall not be obligated to
repair or replace the same in the event of a fire or other casualty affecting
the Premises.
13. Building Repairs and Alterations. The Landlord reserves the right at any
time to make repairs and alterations to the Building, and to enter the
Premises to take all necessary action to make such repairs and alterations.
Such entry shall not be deemed to constitute an eviction of the Tenant or
to give the Tenant any right to abatement of rent for loss or interruption
of the business of the Tenant. The Landlord agrees to exercise reasonable
efforts to minimize any disruption to the Tenant's access to or use and
enjoyment of the Premises during any such entry.
14. Maintenance of Premises; Surrender. The Tenant shall maintain the Premises
and the fixtures and equipment located therein and keep the same in good
condition and repair throughout the Term hereof, reasonable wear and tear
and casualty loss excepted, and at the expiration of the Term or earlier
termination of this Lease, the Tenant shall quit and surrender the Premises
broom clean and in good order and condition, ordinary wear and tear and
casualty loss excepted. The Tenant shall surrender to the Landlord all keys
used in connection with the Premises. All damage to the Premises or the
Building, other than reasonable wear and tear, caused by any act or
omission of the Tenant, and Tenant's agents, employees and contractors,
shall be repaired, restored and replaced by the Tenant, at the Tenant's
sole expense, to the Landlord's reasonable satisfaction.
15. Tenant's Property.
(a) Tenant's Sole Risk. All property of the Tenant kept or stored in the
Premises shall be kept or stored at the sole risk of the Tenant, and the Tenant
shall hold the Landlord harmless from any claims, loss, cost or expense
(including reasonable attorneys' fees) arising out of damage to such property,
except any damage caused by the willful act or gross negligence of the Landlord,
its agents or employees. The Landlord shall not be liable for any injury or
damage occurring in the Premises to any person or any property of the Tenant,
arising from any cause whatever.
<PAGE>
(b) Notification of Fire or Accident. The Tenant agrees to notify the
Landlord immediately of any fire or accident in the Premises or in the Building
and of any defects therein or in any of the fixtures or equipment located
therein of which the Tenant has actual knowledge.
(c) Taxes. The Tenant shall be responsible for and shall pay when due all
municipal, county or state taxes assessed during the Term against any personal
property of any kind, owned by or placed in the Premises by the Tenant.
16. Rules and Regulations. The rules and regulations attached to this Lease as
Exhibit B, as amended and supplemented from time to time as provided below,
are hereby made a part of this Lease. The Tenant agrees to comply with and
to observe all such rules and regulations. Failure by the Tenant to comply
with such rules and regulations shall constitute a default by the Tenant
under this Lease. The Landlord reserves the right to make reasonable
amendments and supplements to such rules and regulations. The Landlord
shall give the Tenant notice in writing of any such amendments or
supplements and the Tenant agrees to comply with all such rules and
regulations, as amended and supplemented.
17. Indemnification; Waiver of Subrogation.
(a) Indemnification. The Tenant agrees to indemnify and hold the Landlord
harmless from all claims, actions, damages, liability and expense (including
reasonable attorneys' fees) as a result of (i) any loss of life, personal injury
and damage to property arising from or out of any occurrence in or about the
Premises, or the occupancy or use of the Premises, or any part thereof, by the
Tenant, and to the extent occasioned wholly or in part by any act or failure to
act by the Tenant, its agents, contractors, employees or lessees, or (ii) any
failure by the Tenant to perform the Tenant's obligations under this Lease. If
the Landlord, without fault on its part, is made a party to any litigation
commenced by or against the Tenant, the Tenant shall pay, and hold the Landlord
harmless from, all out of pocket costs and expenses (including reasonable
attorneys' fees) incurred by the Landlord in connection with such litigation.
The Tenant shall also pay all out of pocket costs, expenses and reasonable
attorneys' fees that may be incurred by the Landlord in enforcing or attempting
to enforce the covenants in this Lease. The provisions of this Section 17(a)
shall survive the expiration or earlier termination of this Lease. The Landlord
agrees to indemnify and hold the Tenant harmless from all claims, actions,
damages, liability and expense (including reasonable attorneys' fees) as a
result of any loss of life, personal injury and damage to property at the
Building to the extent caused by the willful act or gross negligence of the
Landlord, its agents and employees.
(b) Waiver of Subrogation. Notwithstanding any provision hereof to the
contrary, the Landlord and the Tenant (on behalf of themselves and any insurer)
waive all claims, demands or rights of indemnity which either of them may have
against the other on account of damage to the Premises, the Building or to any
personal property located therein resulting from fire or other casualties, no
matter what the cause thereof may be, to the extent the loss or damage is
covered by the insurance required to be carried hereunder and such insurance
proceeds are actually received. The parties waive their respective rights, as
set forth herein, because adequate insurance is to be maintained by each of them
to protect themselves against all such casualties and they have obtained or
agree to obtain from their insurance carriers appropriate "waiver of
subrogation" provisions in all such policies of insurance.
<PAGE>
18. Estoppel Certificate. Within ten (10) days after the Landlord's request
therefor, the Tenant shall deliver in recordable form to the Landlord, or
to any party designated by the Landlord, a statement in writing certifying:
(i) the commencement and expiration dates of this Lease; (ii) that this
Lease is or is not in full force and effect; (iii) that the Tenant has or
has not accepted the Premises and is or is not in complete possession
thereof; (iv) that this Lease has not been modified or amended, or if it
has been, stating the specific modifications or amendments thereto; (v)
that all improvements to the Premises to be made by the Landlord have been
fully completed in accordance with the applicable plans and specifications
or stating specifically any failure to complete such improvements; (vi)
that, as of the date of certification, the Tenant has not paid rent for
more than the current month or stating the amount of rent so paid; and
(vii) that, to the best of the Tenant's knowledge, there are no defaults
under this Lease, nor defenses or offsets, or, if there are any defaults,
defenses or offsets claimed, stating the specific defaults, defenses or
offsets so claimed by the Tenant. Such statement shall include any other
certification reasonably requested.
19. Subordination. This Lease is subject and subordinate to all ground or
underlying leases (if any) and to all mortgages or deeds of trust and to
all sale-leaseback or lease-leaseback financing which may now or hereafter
affect this Lease, the Premises or the Building, and to all renewals,
replacements, modifications and extensions thereof. Although no writing
shall be necessary to effect such subordination, the Tenant agrees, within
ten (10) days after the Landlord's request therefor, without charge
therefor, to execute such written acknowledgment of such subordination as
the Landlord may from time to time request. In the event of the termination
of any ground or underlying lease or the exercise of any power of sale
under the provisions of any mortgage or deed of trust now or hereafter
encumbering the Premises, the Tenant agrees that the Tenant shall attorn to
the lessor under the terminated lease or the purchaser at such sale and the
Tenant shall recognize such lessor or purchaser as the Landlord under the
terms of this Lease.
20. Assignment and Subletting.
(a) Consent Required. The Tenant shall not mortgage or assign this Lease,
in whole or in part, nor sublet or allow any other person or entity to use all
or any portion of the Premises, without the prior written consent of the
Landlord. It is agreed that the Landlord may withhold its consent to an
assignment or sublease if the proposed assignee or sublessee, by the nature of
its business or clientele, will: (i) increase the utilization of the Common
Areas; (ii) affect the other tenants of the Building in a material adverse way;
(iii) require more parking facilities than the Tenant requires; (iv) require
specialized equipment making necessary alterations in the electric, plumbing,
heating or other utility systems in the Premises or the Building; (v) if the
first mortgagee of the Building does not consent to such assignment or sublease;
or (vi) any other reason in the Landlord's discretion. If the rent the Tenant
receives from any such assignee or subtenant for a given portion of the Premises
is greater than that paid by the Tenant to the Landlord for the same portion of
the Premises, the Tenant shall pay to the Landlord, as Additional Rent, fifty
percent (50%) of such difference. Such Additional Rent shall be due and payable
on the first of each month. The foregoing prohibition on assignment and
subletting shall be construed to include a prohibition against any assignment or
subletting by operation of law. The consent by the Landlord to any mortgage,
assignment or subletting by the Tenant shall not constitute a waiver of the
requirement for the Tenant to obtain the Landlord's consent to any subsequent
mortgage, assignment or subletting. If this Lease is assigned or if the Premises
or any portion thereof is sublet or occupied by any party other than the Tenent,
<PAGE>
the Landlord may collect rent from such party and apply the amount collected to
the payment of Rent in accordance with the provisions hereof; provided, however,
that no such assignment, subletting, occupancy or collection shall be deemed to
constitute a waiver of the prohibition against assignment or subletting without
the prior written consent of the Landlord or the acceptance of any assignee,
subtenant or occupant as a tenant or a release of the Tenant from the terms
hereof, and the Tenant shall not be released from performing any of the terms of
this Lease. Notwithstanding any assignment or sublease with the consent of the
Landlord, the Tenant shall remain liable in accordance with the terms and
conditions hereof and the Tenant shall not be released from performing any of
the terms, covenants and conditions of this Lease.
(b) Operation of Law. Any transfer of the beneficial ownership of the
Tenant by sale, bequest, inheritance, merger, operation of law or otherwise,
that results in a change in the present effective control of the Tenant by any
person or persons owning a majority of such beneficial ownership of the Tenant
as of the date hereof, shall constitute an assignment of this Lease and shall
require the Landlord's prior written consent as provided above.
21. Damage or Destruction. If the Premises are damaged by fire, the elements or
by accident, but are not thereby rendered untenantable, the Landlord shall,
at its option, cause such damage to be repaired and the Rent shall not be
abated. If by reason of such occurrence, the Premises are rendered
untenantable in part only and the remaining portion of the Premises are
reasonably adequate for the Tenant's business, the Landlord shall, at its
option, cause such damage to be repaired, and the Rent hereunder shall be
abated proportionately based upon the portion of the Premises rendered
untenantable until such damage is repaired. In no event shall the Landlord
be obligated to repair or replace any of the Tenant's furniture,
furnishings, equipment, improvements or trade fixtures in the event of any
such occurrence. If the Premises are rendered wholly untenantable by reason
of such occurrence, the Landlord shall, at its option, cause such damage to
be repaired, and the Rent shall be abated in full until the Premises have
been restored and rendered tenantable, unless within sixty (60) days after
such occurrence, the Landlord gives the Tenant written notice that it has
elected not to cause such damage to be repaired, in which event this Lease
and the tenancy hereby created shall terminate as of the date of such
occurrence, and the Rent shall be adjusted as of such date. In the event
the Landlord elects to cause any such damage to be repaired as provided
above and such repairs are not substantially completed within one hundred
twenty (120) days after the date of the Landlord's election to proceed with
such repairs, subject to delays permitted under Section 26, the Tenant's
sole remedy as a result thereof shall be to elect to terminate this Lease
by providing written notice thereof to the Landlord no later than ten (10)
days after the expiration of such period.
22. Eminent Domain. If all or part of the Premises is taken or condemned by any
authority or in the event of any purchase in lieu of any such taking or
condemnation, this Lease shall terminate as of the date on which the Tenant
is deprived of possession of the Premises. Any award for the land and
buildings of which the Premises are a part and for damages to the residue,
or any negotiated payment by sale in lieu thereof, shall be the sole
property of the Landlord, and the Tenant hereby assigns to the Landlord any
and all right, title and interest the Tenant may have in and to any such
award or payment. The Tenant, however, shall be entitled to claim, prove
and receive in any condemnation proceeding, or negotiated sale in lieu
thereof, such separate awards or amounts as may be allowed or paid, if any,
for moving expenses and for fixtures and other equipment installed by the
Tenant, at the Tenant's expense, provided that any such awards or amounts
are made by the condemnation court or paid by the condemning authority in
<PAGE>
addition to the award made or amount paid to the Landlord for all land and
buildings, or parts thereof, taken, condemned or purchased.
23. Hazardous Materials. The Tenant shall not cause or permit the escape,
disposal or release of any biologically or chemically active or other
hazardous substances or materials. The Tenant shall not allow the storage
or use of such substances or materials in any manner not sanctioned by law
or by the highest standards prevailing in the industry for the storage and
use of such substances or materials, nor allow to be brought into the
Premises or the Building any such materials or substances except to use in
the ordinary course of the Tenant's business, and then only after the
Tenant's receipt of prior written approval thereof from the Landlord.
Without limitation, hazardous substances and materials shall include those
described in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq., the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901
et seq., any applicable state or local laws and the regulations promulgated
under those laws. If any lender or governmental agency shall ever require
testing to ascertain whether or not there has been any release of hazardous
substances or materials and if such requirement applies to the Premises,
then the costs thereof shall be reimbursed by the Tenant to the Landlord
upon demand as Additional Rent. In addition, the Tenant shall execute
affidavits, representations and the like from time to time at the
Landlord's request concerning the Tenant's best knowledge and belief
regarding the presence of hazardous substances or materials in the Premises
and the Building. The provisions of this Section 23 shall survive the
expiration or earlier termination of this Lease.
24. Default; Remedies.
(a) Defaults. The occurrence of any of the following events shall
constitute a default hereunder:
(i)If the Tenant fails to pay any Rent or Additional Rent on the date
on which such payment is due;
(ii) If the Tenant fails to perform any of the Tenant's other
obligations under this Lease for a period of more than fifteen (15) days
after written notice of such default is given by the Landlord to the
Tenant;
(iii)If the Tenant voluntarily petitions for relief under, or
otherwise seeks the benefit of, any bankruptcy, reorganization, or
insolvency law, or makes an assignment of this Lease for the benefit of
creditors;
(iv) If a person or entity other than the Tenant files a bankruptcy
case or seeks the benefit of any bankruptcy, reorganization or insolvency
law against the Tenant which is not dismissed within sixty (60) days after
filing;
(v) If the Tenant makes any sale, transfer, assignment, sublease,
concession, license, or other disposition prohibited under Section 20
hereof;
(vi) If the Tenant shall do or permit to be done anything that creates
a lien upon the Premises, the Building or the Common Areas and shall fail
to obtain the release of any such lien or bond off any such lien as
required herein; or
<PAGE>
(vii) The death or disability of the Tenant, if the Tenant is an
individual, or the dissolution or termination of the Tenant, if the Tenant
is a corporation, partnership or any other entity.
(b) Remedies. Upon the Tenant's default hereunder and expiration of any
applicable cure period, the Landlord may exercise any one or all of the
following remedies:
(i) Terminate the Tenant's right to possession under this Lease and
reenter and take possession of the Premises, remove all persons and
property therefrom and store such property in a public warehouse or
elsewhere at the cost of, and for the account of, the Tenant, and relet or
attempt to relet the Premises on behalf of the Tenant, at such rental and
upon such terms and conditions as the Landlord may, in the exercise of the
Landlord's reasonable discretion, deem best under the circumstances. The
Landlord shall not be deemed to have thereby accepted a surrender of the
Premises and the Tenant shall remain liable for all rental and other
charges due under this Lease and for all damages suffered by the Landlord
because of the Tenant's breach of any of the covenants of this Lease and
all cost and expenses incurred by the Landlord in connection with any
repossessing and reletting of the Premises, including without limitation
attorneys' fees, leasing commissions and the costs of any repairs or
alterations to the Premises. The Tenant shall pay to the Landlord the
difference between the foregoing damages and expenses incurred by the
Landlord and the net proceeds (if any) received by the Landlord from any
reletting of the Premises on the first day of each month during the
remainder of the Term. Any suit brought by the Landlord to enforce
collection of such difference for any one month shall not prejudice the
Landlord's right to enforce the collection of any such difference for any
subsequent month. No re-entry or taking possession of the Premises by the
Landlord shall be construed as an election by the Landlord to terminate
this Lease unless written notice of such intention is given by the Landlord
to the Tenant or this Lease is terminated by an order or a decree of a
court of competent jurisdiction, and no re-entry or taking possession of
the Premises by the Landlord or any other action taken by the Landlord, as
a result of any default of the Tenant, shall relieve the Tenant of any of
the Tenant's liabilities and obligations under this Lease whether or not
the Premises are relet. At any time during such repossession or reletting,
the Landlord may, by delivering written notice to the Tenant, elect to
exercise its option under the following subparagraph to accept a surrender
of the Premises, terminate and cancel this Lease and retake possession and
occupancy of the Premises on behalf of the Landlord.
(ii) Declare this Lease to be terminated, and reenter upon and take
possession of the Premises with notice to the Tenant, whereupon the Term
hereof and all right, title, and interest of the Tenant in and to the
Premises shall terminate. Upon such termination, an amount equal to the
present value (as of the date of such termination) of the difference
between all Rent that otherwise would have been payable throughout the
remainder of the Term and the fair market rental value of the Premises
during the same period shall be accelerated and become immediately due and
payable in full by the Tenant to the Landlord as Additional Rent. For
purposes of the preceding sentence, present value shall be computed by
discounting at a rate equal to one (1) whole percentage point above the
discount rate then in effect at the Federal Reserve Bank of New York, and
fair market rental value shall be determined by a real estate broker
engaged by the Landlord (provided, however, that in the event the Landlord
<PAGE>
relets the Premises, the rental rate provided therein shall be deemed to be
the fair market rental value). Such termination shall be without prejudice
to the Landlord's right to collect from the Tenant any and all damages
suffered by the Landlord because of the Tenant's breach of any covenant
contained in this Lease.
(iii) Exercise any and all rights, remedies, and privileges that the
Landlord may have under applicable law or this Lease.
(c) WAIVER OF JURY. INSOFAR AS PERMITTED BY LAW, THE LANDLORD AND THE
TENANT HEREBY EXPRESSLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING OR COUNTERCLAIM BETWEEN THE PARTIES HERETO, OR THEIR SUCCESSORS OR
PERMITTED ASSIGNS, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE OR ANY
OF ITS PROVISIONS, THE TENANT'S USE OR OCCUPANCY OF THE PREMISES, AND/OR CLAIM
OF INJURY OR DAMAGE.
(d) Landlord's Right to Cure. If the Tenant shall default in the observance
or performance of any provision or covenant on the Tenant's part to be observed
or performed under this Lease, the Landlord (in addition to all other remedies
herein or by law provided) may, immediately or at any time thereafter and
without notice to the Tenant, perform the same for the account of the Tenant,
and if the Landlord makes any reasonable expenditures or incurs any obligations
for the payment of money in connection therewith including, but not limited to,
attorneys' fees in instituting, prosecuting or defending any action or
proceedings, such sums paid or obligations incurred, with interest at twelve
percent (12%) per annum, shall be deemed to be Additional Rent hereunder and
shall be payable by the Tenant to the Landlord upon demand.
25. Access. The Landlord and the Landlord's agents, employees and independent
contractors shall have the right to enter the Premises, at all times after
reasonable notice (except in the event of an emergency), to examine the
same and to show them to prospective purchasers of the Building, or during
the last six (6) months of the Term to prospective lessees of the Building,
or any portion thereof. If the Tenant is not present to open and permit
entry to the Premises at any time when for any reason entry is necessary or
permissible hereunder, the Landlord may use a master key to enter the
Premises.
26. Force Majeure. If either party shall be delayed or hindered in or prevented
from performing any act required hereunder by reason of Act of God, labor
problems, inability to procure materials, failure of power, restrictive
governmental laws or regulations, riots, insurrection, war or other reason
of a like nature not the fault of such party, then the performance of such
act by such party shall be excused for the period of the delay and the
period for the performance of any such act shall be extended for a period
equivalent to the period of such delay; provided, however, that the
foregoing shall not apply to any monetary obligations of the Tenant
hereunder including, without limitation, the payment of the Rent.
27. Quiet Enjoyment. Provided the Tenant is not in default in the performance
of any of the Tenant's obligations under this Lease, the Tenant shall have
quiet and peaceful possession and enjoyment of the Premises for the Term
hereof subject, however, to the terms and provisions of this Lease.
<PAGE>
28. Miscellaneous Provisions.
(a) Successors. Subject to the restrictions on assignment and subletting
set forth above, this Lease and the terms hereof shall be binding upon and inure
to the benefit of the Landlord and the Tenant and their respective heirs,
personal representatives, successors and assigns.
(b) Non-Waiver. The failure of either party to insist upon the strict
performance of any of the terms hereof shall not constitute or be construed as a
waiver of the other party's right to insist upon the strict performance of any
such terms thereafter, and such terms shall continue in full force and effect.
The payment of Rent by the Tenant or the receipt of Rent by the Landlord, with
knowledge of the breach of any term herein contained, shall not be deemed a
waiver of such breach. No waiver of any provision hereof shall be effective
unless set forth in a written instrument signed by the Landlord and the Tenant.
(c) Notices. All notices required or permitted by any provision of this
Lease shall be in writing and shall be hand delivered or sent by certified mail,
return receipt requested, or by an express overnight delivery service to the
addressees set forth in Section 1 hereof. Either party may, at any time,
designate in writing a substitute address for the address set forth above, and
thereafter notices shall be directed to such substitute address.
(d) Exculpation. In the event the Landlord sells, transfers, assigns or
otherwise disposes of its interest in the Premises, the Landlord shall have no
liability to the Tenant under this Lease for any breaches arising after such
disposition, all of which shall remain the liability of the transferee. In the
event of a breach by the Landlord of any of its obligations hereunder and, as a
result thereof, the Tenant recovers a monetary judgment against the Landlord,
such judgment shall be satisfied solely from the equity of the Landlord in the
Building.
(e) Titles. The titles and paragraph headings used herein are for purposes
of convenience only and shall not be construed to limit or extend the meaning of
any part of this Lease.
(f) Applicable Law. This Lease shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia without regard to
conflict of laws principles.
(g) Entire Agreement. This Lease contains the entire agreement between the
Landlord and the Tenant relating to the Premises and supersedes all
negotiations, understandings and agreements, written or oral, between the
parties. Except for amendments and supplements to the rules and regulations as
permitted by Section 16, this Lease shall not be amended or modified unless set
forth in a written instrument signed by the Landlord and the Tenant.
(h) Brokers. The Landlord and the Tenant represent and warrant that they
have not engaged the services of, and are not liable to, any real estate agent,
broker, finder or any other person or entity for any brokerage or finder's fee,
commission or other amount with respect to this Lease, except for Harvey Lindsay
<PAGE>
Real Estate (the "Broker") and Robinson Sigma (the "Cooperating Broker"). The
Landlord agrees to pay any commission due to the Broker as a result of this
Lease pursuant to the terms of a separate agreement between the landlord and the
Broker. The Broker shall be solely responsible for the payment of any commission
due to the Cooperating Broker as a result of this Lease. The Landlord and the
Tenant each agree to indemnify, defend and hold the other harmless against all
loss, liability and expense (including reasonable attorneys' fees and related
legal costs) suffered by either party due to a breach of the foregoing
representation, covenant and warranty.
(i) Holding Over. If the Tenant should remain in possession of the Premises
after the expiration of the Term or other termination of this Lease without the
execution by the Landlord and the Tenant of a new lease or a written
modification of this Lease, then the Tenant shall be deemed to be occupying the
Premises as a tenant-at-sufferance, subject to all the covenants and obligations
of this Lease and at an annual rent of 150% of the Rent in effect immediately
prior to such expiration or termination. Such holding over shall not extend the
Term.
(j) Partial Invalidity. If any provision of this Lease is invalid or
unenforceable to any extent, then the remainder of this Lease shall continue in
full force and effect and be enforceable to the fullest extent permitted by law.
(k) Authority. Each of the parties hereto represents and warrants that it
is authorized to enter into this Lease, that the person executing this Lease on
its behalf is duly authorized to execute and deliver this Lease, and that no
additional approvals or consents are necessary or required to enter into this
Lease.
(l) Liability. If the definition of the "Tenant" hereunder is comprised of
more than one person, corporation, partnership or other entity, then each and
every person, corporation, partnership, and other entity so comprising the
Tenant shall be jointly and severally liable hereunder for the full and faithful
performance of all the provisions, conditions and covenants binding upon the
Tenant hereunder.
(m) Security Deposit. Upon the execution of this Lease, the Tenant agrees
to deposit with the Landlord the Security Deposit to be held by the Landlord,
without interest, as security for the payment of the Rent and the performance
and observance by the Tenant of all the covenants, agreements and conditions of
this Lease on the part of the Tenant to be performed and observed. If an event
of default occurs hereunder, the Landlord may use, apply or retain the whole or
any part of the Security Deposit, for the payment of (i) any Rent or additional
charges due hereunder which the Tenant may not have paid or which may become due
after the occurrence of such event of default, (ii) any sum expended by the
Landlord on the Tenant's behalf in accordance with the provisions of this Lease,
or (iii) any reasonable sum which the Landlord may expend or be required to
expend by reason of the Tenant's default, including damages or deficiency in the
reletting of the Premises. The use, application or retention of the Security
Deposit, or any portion thereof, by the Landlord shall not prevent the Landlord
from exercising any other right or remedy provided by this Lease or by law and
shall not operate as a limitation on any recovery to which the Landlord may
otherwise be entitled. If any portion of the Security Deposit is used, applied
or retained by the Landlord for the purpose set forth above, the Tenant agrees,
<PAGE>
within ten (10) days after a written demand therefor is made by the Landlord, to
deposit cash with the Landlord in an amount sufficient to restore the Security
Deposit to its original amount. If the Tenant shall fully and faithfully comply
with all of the provisions of this Lease, the Security Deposit, or any balance
thereof, shall be returned to the Tenant within thirty (30) days after the
expiration of the Term hereof, without interest. In the absence of evidence
satisfactory to the Landlord or any permitted assignment of the right to receive
the Security Deposit, or the remaining balance thereof, the Landlord may return
the same to the original Tenant regardless of one or more assignments of the
Tenant's interest in this Lease or the Security Deposit. In such event, upon the
return of the Security Deposit (or balance thereof) to the original Tenant, the
Landlord shall be completely relieved of liability under this Section. In the
event of a transfer of the Landlord's interest in the Premises, the Landlord
shall have the right to transfer the Security Deposit to the transferee thereof.
In such event, upon the delivery by the Landlord to the Tenant of such
transferee's written acknowledgement of its receipt of such Security Deposit,
the Landlord shall be deemed to have been released by the Tenant from all
liability or obligation for the return of the Security Deposit and the
transferee shall be bound by all provisions of this Lease relating to the return
of the Security Deposit.
29. Expansion Space.
(i) Right of First Refusal. The Landlord agrees that in the event the
Landlord receives a bona fide offer from a third party that the Landlord
intends to accept (an "Offer") to rent all (but not a portion) of that
certain office space containing approximately 1,570 rentable square feet of
space on the second floor of the Building, as more particularly shown in
green on the floor plan attached hereto as Exhibit A (the "Expansion
Space"), and provided the Tenant is not in default under the terms and
provisions of this Lease and this Lease is in full force and effect, the
Tenant shall have the one time right of first refusal to lease the
Expansion Space on the same terms and conditions as set forth in this Lease
(including, without limitation, at an annual rent equal to the Rent per
rentable square foot then being paid by the Tenant under this Lease for the
Premises). The Landlord shall notify the Tenant in writing of the
Landlord's receipt of an Offer and the Tenant shall have a period of five
(5) business days after receipt of such notice to elect to exercise its
right of first refusal by providing written notice thereof to the Landlord.
In the event the Landlord has not received such written notice of exercise
from the Tenant prior to the expiration of such five (5) business day
period, the Tenant's right of first refusal hereunder shall automatically
terminate and be null and void.
(ii) Option to Lease. Provided (i) the Tenant's right of first refusal
with respect to the Expansion Space has not been terminated as provided in
subsections (a) or (c) hereof and (ii) the Tenant is not in default under
the terms and provisions of this Lease and this Lease is in full force and
effect, the Tenant shall have the one time option to lease the Expansion
Space on the same terms and conditions as set forth in this Lease
(including, without limitation, at an annual rent equal to the Rent per
rentable square feet then being paid by the Tenant under this Lease for the
Premises), by providing five (5) business days prior written notice thereof
to the Landlord at any time during the Term. The Tenant expressly
acknowledges and agrees that its option to lease the Expansion Space
pursuant to this subsection (b) shall automatically terminate and be null
and void upon any termination of the Tenant's right of first refusal under
subsections (a) or (c) hereof or as otherwise provided in subsection (c)
below.
<PAGE>
(iii) Amendment to Lease. In the event the Tenant properly exercises
its right of first refusal or its option to lease the Expansion Space
hereunder, the Landlord shall prepare and the Tenant shall promptly execute
an amendment to this Lease which shall provide as follows: (i) the
incorporation of the Expansion Space into the Premises leased hereunder;
(ii) an increase in the amount of the Rent payable under this Lease as
provided above; (iii) a tenant improvement allowance by the Landlord for
the Expansion Space in the amount of $10.00 per rentable square foot in the
Expansion Space in the event the remaining Term of this Lease is four (4)
or more Lease Years or in the amount of $8.00 per rentable square foot in
the event the remaining Term is at least three (3) but less than four (4)
Lease Years or in the amount of $6.00 per rentable square foot in the event
the remaining Term is at least two (2) but less than three (3) Lease Years
or in the amount of $4.00 per rentable square foot in the event the
remaining Term is at least one (1) but less than two (2) Lease Years; (iv)
the commencement date for the lease of the Expansion Space shall be upon
the substantial completion and acceptance by the Tenant, which acceptance
shall not be unreasonably withheld or delayed, of the tenant improvements
(if any) to the Expansion Space; and (v) such other provisions as may be
required by the Landlord that are consistent with the provisions hereof.
The Landlord shall have the right to rescind and cancel the Tenant's
exercise of its right of first refusal or option hereunder if the Tenant
fails to execute and return the foregoing amendment to the Landlord within
twenty (20) business days after receipt thereof, in which event such right
of first refusal and option granted hereby shall automatically terminate
and be null and void.
NOTICE: THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OR AN ACCEPTANCE OF AN OFFER
TO LEASE THE PREMISES. THIS DOCUMENT SHALL NOT BE BINDING ON ANY PERSON OR
ENTITY UNLESS AND UNTIL IT IS DULY EXECUTED BY, DELIVERED TO AND ACCEPTED BY
EACH PARTY TO THIS DOCUMENT.
IN WITNESS WHEREOF, the Landlord and the Tenant have caused this
Lease to be executed on their behalf by their duly authorized representatives as
of the date set forth above.
LANDLORD:
SUNTRUST BANK
By: /s/ William B. Corbin
- ---------------------------------
William B. Corbin
Vice President
Federal ID No.: 58-0466330
TENANT:
NATURAL SOLUTIONS CORPORATION
By:/s/ Michael Klansek
- --------------------------------
Title: Chief Financial Officer
Federal ID No.: 88-0367024
<PAGE>
EXHIBIT A
[Attach Floor Plan Showing Premises in Red and
Expansion Space in Green]
<PAGE>
EXHIBIT B
Rules and Regulations
1. The Common Areas shall be under the exclusive control of the Landlord and
shall not be obstructed or used by the Tenant for any purpose other than
their intended purposes.
2. The Tenant shall not bring into the Premises or operate therein any engine,
boiler, dynamo or machinery of any kind (except for small business machines
and equipment), or carry on any mechanical operations in the Premises, or
place any explosive therein, or use any kerosene, oils or burning fluids
therein, without first obtaining the written consent of the Landlord.
3. If the Tenant desires a safe for depositing valuables or securities, the
Landlord shall have the right to prescribe its weight, size and proper
position. Nothing whatsoever shall be brought into the Building by the
Tenant, its agents, employees or visitors which has a weight of more than
70 pounds per square foot, unless the Landlord approves same and its proper
position.
4. The Premises are not to be defaced in any way, no boring or cutting for
wires or other purposes is to be done, and no change in electric fixtures
or other appurtenances of the Premises is to be made, without prior written
consent of the Landlord.
5. If the Tenant desires telephonic or electronic connections, the Landlord
will direct the electricians as to where and how the wires are to be
introduced, and without such written directions no boring for wires will be
permitted.
6. The Premises shall not be used for the purpose of lodging or sleeping
rooms, nor in any way to damage the reputation of the Building; and the
Tenant shall not disturb or permit the disturbance of other tenants of the
Building by the use of musical instruments or other noises, nor by any
interface whatsoever. Nothing shall be placed or permitted upon the outside
window sills of the Building.
7. No person or persons, other than employees of the Building, shall be
employed by the Tenant for the purpose of cleaning or taking care of the
Premises without the written consent of the Landlord. Any person or persons
so employed by the Tenant (with the written consent of the Landlord) shall
be subject to, and under the control and direction of the Landlord in the
use of the Building and its facilities.
8. The Landlord shall have the right to exclude or eject from the Building
animals of every kind and all canvassers and other persons who conduct
themselves in such a manner as to be, in the judgment of the Landlord, an
annoyance to the tenants or a detriment to the Building.
9. The Landlord will furnish the Tenant with one key to the Premises.
Additional keys will be provided upon payment of out of pocket costs
therefor. No locks shall be placed upon any doors of the Premises without
first obtaining the written consent of the Landlord and furnishing the
<PAGE>
Landlord with keys to same. Upon termination of this Lease, the Tenant
shall surrender to the Landlord all keys to the Premises.
10. The toilet rooms, water-closets and other water apparatus shall not be used
for any purpose other than those for which they are intended, and no
sweepings, rubbish, rags or other injurious substances shall be placed
therein. The cost of repair of any damage resulting from misuse or abuse by
the Tenant, the Tenant's employees or guests shall be borne by the Tenant.
11. The Landlord reserves all vending rights in areas not leased by the Tenant
under the Lease.
12. The Landlord will post on the directory of the Building the name of the
Tenant at no charge. All additional names which the Tenant shall desire
posted on such directory must be approved by the Landlord, and if so
approved a reasonable charge may be made for such additional listings.
13. If there are any glass entry doors to the Premises located on the first
floor of the Building, the Tenant must obtain the Landlord's prior written
approval, which the Landlord may give or withhold in its reasonable
discretion, of all furniture, interior finishes and other objects visible
through such glass door(s).
14. Any window treatment, including curtains, blinds, shades and screens, must
be of a quality, type, design, color and attached in a manner approved by
the Landlord, not to unreasonably be withheld.
15. No bicycles or vehicles of any kind shall be brought into or kept in or
about the Premises or the lobby or halls of the Building, and no cooking
shall be done or permitted by the Tenant on the Premises. The Tenant shall
not cause or permit any unusual or objectionable odors to be produced upon
or emanate from the Premises. The Tenant shall be permitted to have a
microwave oven, coffee maker and refrigerator in the Premises for use by
the Tenant's employees and guests.
<PAGE>
EXHIBIT C
JANITORIAL SERVICES
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001096594
<NAME> Natural Solutions Corporation
<MULTIPLIER> 1
<CURRENCY> U.S. Currency
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Jul-31-1999
<PERIOD-START> Aug-01-1999
<PERIOD-END> Jan-31-2000
<EXCHANGE-RATE> 1
<CASH> 146,596
<SECURITIES> 0
<RECEIVABLES> 918,733
<ALLOWANCES> 0
<INVENTORY> 727,660
<CURRENT-ASSETS> 1,895,238
<PP&E> 103,453
<DEPRECIATION> 42,515
<TOTAL-ASSETS> 2,407,245
<CURRENT-LIABILITIES> 1,508,138
<BONDS> 0
0
0
<COMMON> 19,997
<OTHER-SE> (107,893)
<TOTAL-LIABILITY-AND-EQUITY> 2,407,245
<SALES> 1,132,733
<TOTAL-REVENUES> 289,209
<CGS> 843,524
<TOTAL-COSTS> 1,908,876
<OTHER-EXPENSES> (31,984)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (808,127)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (837,792)
<NET-INCOME> (808,127)
<EPS-BASIC> (0.05)
<EPS-DILUTED> 0
</TABLE>
