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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
iNETVISIONZ.COM, INC.
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(Name of Small Business Issuer in its charter)
Delaware 33-0285179
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(State or Other Jurisdiction (IRS Employer Identification No.)
of Incorporation or Organization)
19951 Mariner Ave., Torrance, CA 90503
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(Address of principal executive offices) (Zip Code)
(310) 921-1999
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(Issuer's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None None
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Securities to be registered pursuant to section 12(g) of the Act:
Common Stock, par value $.001
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(Title of Class)
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PART I
ITEM 1: DESCRIPTION OF BUSINESS
The letters and numbers set forth in Item 1 of this Amendment No. 1
to Form 10-SB correspond to each of the letters and numbers set forth in Item
101 of Regulation S-K.
(a) GENERAL DEVELOPMENT OF THE BUSINESS
(1) ORGANIZATION AND MATERIAL TRANSACTIONS.
iNetvisionz.com., Inc. (unless otherwise indicated, all references
to the "Company" and iNet include iNetvisionz. com, Inc., a Delaware
corporation, and its wholly owned subsidiary iNetversity, Inc., a California
corporation) was first incorporated as Martinique Ventures Corporation, a
Delaware corporation on February 18, 1988. On August 13, 1997, it filed an
amendment to its articles of incorporation changing its name to Zebulon
Enterprises, Inc. On April 21, 1998, a subsequent amendment to its articles
of incorporation was filed changing Zebulon Enterprises, Inc. to Tao Partners
Inc. In September, 1998 the Company acquired certain assets from NovaQuest
InfoSystems, Inc., in exchange for $500,000 and 520,000 of Tao Partners
shares of common stock. These assets were eventually transferred to the
Company's wholly owned subsidiary iNetversity, Inc. These assets constituted
less than 1% of the aggregate assets of NovaQuest at the time of the
acquisition. NovaQuest did not separately account for the revenues and
expenses associated with the operations of these assets and there was no
separate subsidiary or division through which these assets were operated
while controlled by NovaQuest. Finally, on April 30, 1999, Tao Partners Inc.
filed an amendment to its articles of incorporation changing its name to
Inetvisionz.com, Inc. (the "Company" or "iNet"). iNet presently trades on the
over-the-counter Bulletin Board as "INVZ". The Company has not had any
bankruptcies, receiverships or similar proceedings. As set forth below, the
Company commenced the implementation of a new business plan on October 1,
1999.
(2) BUSINESS OF ISSUER
The Company is in the business of providing Education Services and
Consulting and Placement Services. The Company intends to expand its services
as an internet incubator but there is no guarantee that the Company will be
able to implement this business plan. Many factors may prevent the
implementation of the Company's business plan. These factors include
substantial financial commitments, the need to develop effective internal
process and systems, the ability to attract and retain high-quality
employees, changes in overall technology, changes in the law and the mix of
product and services offered in the Company's target markets.
(1) ITEM 101(a)(2)(B)(1) IS NOT APPLICABLE IN THAT THE
SUBJECT FILING IS NOT AN S-1.
(2) MATERIAL PRODUCTS AND RESEARCH AND DEVELOPMENT.
The Company has never had a formal research and development
department. Since October 1, 1999 the Company attempts to continuously
monitor developments on the Internet (through information provided by
iNetproz (defined below) corporate clients and through its iNetcommerce
(defined below) internet site development and then adjusts the course
offerings of iNetversity according to the provided information. While these
divisions are currently at an extremely early juncture, since their inception
on October 1, 1999 these divisions have provided information to iNetversity
which iNetversity has begun to incorporate into its course offerings.
(3) MATERIAL ACQUISITION OF PLANT AND EQUIPMENT.
As noted below, during the month of December 1999, the Company
completed a debt offering of $250,000.
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The Company used approximately 60% of these funds to acquire additional
computer equipment and hardware and software required to access the internet
(collectively, "Hardware and Software").
(4) NUMBER OF EMPLOYEES.
As noted below, prior to June 30, 1999 the Company was in the
exclusive business of providing Education Services (defined below). As of
December 15, 1999 the Company had sixty employees divided as follows: ten in
general administration, 24 providing Education Services through iNetversity,
18 providing Consulting and Placement Services through iNetproz and 8
developing Internal and External Business Plans through iNetcommerce. All of
the Company's employees work on a full-time basis.
On or about October 1, 1999 the Company elected to divide its
operations into three separate divisions: (a) iNetversity; (b) iNetproz; and
(c) iNetcommerce. The business plan for each of these divisions is set forth
below under (C) Description of Business. Only iNetversity is operated as a
separate corporation, the other two divisions operate within the Company. The
Company intends to provide all of the divisions' services to minority
communities through its Out-of-the-Box solutions tradename. At this time, no
revenues have been generated through the Out-of-the-Box tradename or business
plan. The Company anticipates that during calendar 2000 it shall add an
average of one employee during each month to iNetversity, three employees
each month to iNetproz and two employees each month to iNetcommerce. There is
no assurance that the Company will grow at the rate set forth above; further,
in the event the Company is unsuccessful in raising outside capital it may be
forced to curtail the growth set forth above.
(5) OTHER BUSINESS PECULIARITIES
In the opinion of management, the key to understanding the Company
is to understand the strategic information provided by each of the divisions
to the other divisions. For example, if a number of iNetproz corporate
customers began demanding a certain type of programming expertise, iNetproz
would advise iNetversity to adjust its course composition accordingly. In
summary, the Company is not a "dot com" firm, relying upon an Internet site
to provide its primary source of revenues. Instead it is a company which
trains, educates, consults and develops primarily for other companies,
utilizing computer software/hardware and/or internet based assistance.
(B) FINANCIAL INFORMATION.
Prior to June 30, 1999 100% of the Company's revenues and expenses
were generated through providing Education Services. Between July 1, 1999 and
September 30, 1999, 90% of the Company's revenues and expenses were generated
through providing Education Services and 10% of the Company's revenues and
expenses were generated through providing Consulting and Placement Services.
During 1999, the Company's revenue and expenses were generated primarily
through providing Education Services. (See MD&A and financial statements
attached hereto.) As a result of the uncertainties arising from operating in
the Internet industry it is difficult to project the amount and areas of
growth that the Company will experience during the year 2000. In this regard,
while there is no assurance, the Company anticipates that the Consulting and
Placement Services provided by the iNetproz division will experience the
greatest degree of growth. The Company bases this conclusion upon the
following: (a) the increasing demand for software programmers capable and
experienced in operating internet based programs and sites; and (b)
iNetversity's "graduates" which will provide a ready source of talent for
both consulting and placement services.
(C) DESCRIPTION OF THE BUSINESS.
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(i) and (ii) PRINCIPAL PRODUCTS AND SERVICES
iNet's business during most of 1999 consisted of the provision of
classroom based education. These classes primarily taught either computer
software programming or training of a customer's employees in the utilization
of the customer's computer system ("Education Services") and the provision of
consulting services in connection with the operation of a customer's computer
system and the permanent and temporary placement of iNet's students as
employees of its customers ("Consulting and Placement Services").
In October 1999, the Company began the implementation of a business
plan pursuant to which the Company would operate through three separate
divisions: (a) iNetversity; (b) iNetproz; and (c) iNetcommerce (only
iNetversity is formed as a separate corporation, iNetproz and iNetcommerce
operate as part of the Company, but constitute unincorporated divisions
within the Company). A graphical overview of this business plan may be
reviewed at www.inetvisionz.com. While the Company currently intends to
implement the business plan set forth below, there is no assurance that the
Company will be successful in implementing this plan. Further, Company
management may materially revise this plan based upon the business
environment, market conditions and capital requirements.
iNetversity currently intends to continue to provide Education
Services and has developed a series of Internet based education programs
allowing students to move at their own pace by accessing information over the
Internet which is based upon iNet's classroom programs. While some of these
Internet based programs have been deployed, as of December 1, 1999, the
Company has not generated material revenues through the utilization of these
internet programs. The offline courses offered by iNet have been offered in
connection with: (a) retraining laid-off employers generally from the
aerospace industry and Fortune 500 companies; (b) providing on the job
training for iNetproz and iNetcommerce employees (discussed below) and (c)
participating internship programs for disadvantaged individuals (for example,
the Company was recently awarded a $488,000 grant by the state of
California's Employment Training Program to provide scholarships for
disadvantaged individuals to take the Company's courses). The Company
anticipates that it will add an average of one employee per month during the
year 2000 to iNetversity's operations. The Company also utilizes independent
contractors to teach courses outside the scope of iNetversity's expertise.
iNetversity is a wholly owned subsidiary of the Company. The Company
estimates that 20% of its aggregate services are provided by independent
contractors. Virtually all of its independent contractors are teachers
operating through the Inetversity division providing specialized education
services in classroom settings. The identity and number of independent
contractors utilized by the Company fluctuates according to the demands of
the market place and the availability of instructors.
iNetproz currently intends to expand the Consulting and Placement
Services initially provided by the Company during the third quarter of 1999.
These services are primarily comprised of the following: (a) consulting
services, typically billed on an hourly basis, for technical aspects
associated with internal computer network (sometimes referred to as an
intranet) and internet operations; (b) temporary placement of technical
personnel, in exchange for a percentage of their hourly wage; and (c)
permanent placement of technical personnel with the Company's customers. The
Company anticipates that it will add approximately two employees to this
division each month during calendar year 2000. These employees will be
divided almost equally between sales and marketing employees (who will
present the iNetproz's program to potential customers) and technical
employees (who will do the actual consulting and temporary and permanent
placement). iNetproz is a tradename of the Company, but it is not a separate
corporation.
The Company's Education Consulting and Placement Services customers
include Xerox Corporation, Boeing North America, Inc., Honda R&D North
America, Inc., Transamerica, Ernst & Young, Mobil Oil, Lexus Motor
Corporation, Toyota Motor Sales and UCLA Medical Center which collectively
accounted for approximately 15% of revenues in 1999. Approximately 23% and
19% of
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the Company's revenues in calendar year 1999 and 1998 respectively were
generated through the South Bay Private Industry Council.
iNetcommerce is what is increasingly characterized in the internet
industry as an "internet incubator". This division will implement primarily
internet based business plans developed either internally by the Company
("Internal Business Plans") or by third parties ("External Business Plans").
While the Company is considering a number of Internal Business Plans, it does
not anticipate implementing any Internal Business Plan during calendar year
1999. In October, 1999 the Company entered into three separate agreements
with RxAlternative.com. In summary, these agreements provided for the
development of a test website (Beta Website Development Agreement) and if
this test website proved successful, then the Company would develop two
additional websites (Permanent Website Development Agreement) and a website
maintenance agreement (Website Maintenance Agreement). The initial website
was successfully deployed and the Company received $27,000 in cash and a
nominal number of shares in RxAlternative pursuant to the Beta Website
Development Agreement. The Permanent Website Development Agreement provides
that the Company shall develop two websites for RxAlternative in exchange for
a 4.17% nondilutive interest in RxAlternative (this percentage shall be not
be diluted unless and until RxAlternative completes a public offering) The
agreement to develop two new web sites provides for iNetVisionz to construct
two new In the event of a material breach, the agreement is terminable by the
non-breaching party if the breaching party is not able to cure the breach in
ten days. Neither party may unilaterally terminate the contract absent a
material breach. If the agreement is terminated for any reason before
iNetVisionz has completed the work, iNetVisionz is entitled to retain the
number of shares necessary to compensate it as the rate of $125 per "man
hour" at a share price of $1.25 per share.
The Website Maintenance Agreement provides that the Company shall be
paid $10,000 per month for its initial 40 hours of monthly maintenance
services and $150 per hour for all services provided over this initial 40
hours. iNetcommerce is operated as a separate unincorporated division within
the Company. In the event of a material breach, the Website Maintenance
Agreement is terminable by the non-breaching party if the breaching party is
not able to cure the breach in ten days. Absent a breach, this agreement is
terminable by either party with sixty days notice.
During the fourth quarter of 1999, the Company secured a 50%
interest in Liquidationbid.com. While development of LiquidationBid's website
has not yet commenced, Liquidation Bid is currently intended to be an
internet based company which provides on-line auctions for excess merchandise
in a variety of industries. There is no assurance that the Company will
complete development of LiquidationBid's website or that is such website is
completed, that LiquidationBid will successfully implement its business plan.
The Company intends to provide the Company's core services to the
minority community through its Out-of-the-Box Solutions tradename. The
Company has focused on historically black colleges located throughout the
United States as an avenue to provide technology, education and training. At
this time, no revenues have been generated through this tradename or business
plan.
(iii) SOURCES OF RAW MATERIALS.
While this section is not applicable to the Company, clearly the
Company will have a continuous need during the foreseeable future for
computer equipment and hardware and software which facilitate internet access.
(iv) EFFECT OF PATENTS AND TRADEMARKS.
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Currently, the Company does not hold patents on any of its products
or processes under development. The Company does, however, treat its
technical data as confidential and relies on internal nondisclosure
safeguards, as well as on laws protecting trade secrets, to protect its
proprietary information. There can be no assurance that these measures will
adequately protect the confidentiality of the Company's proprietary
information or that others will not independently develop products or
technology that are equivalent or superior to those of the Company. The
Company may receive, in the future, communications from third parties
asserting that the Company's products infringe the proprietary rights of
third parties. There can be no assurance that any such claims would not
result in protracted and costly litigation.
The Company has filed the following trademarks with the United
States Patent and Trademark Office on the following dates: "Business
Visioneer" was filed by the company on November 1, 1999; "Synergistic Minds @
Work" was filed on September 9, 1999; "Out of the Box Solutions" was filed on
January 20, 2000; "Breaking the Barriers, Creating Opportunities, Filling the
Need" was filed on September 9, 1999 and, "The Job You Want, The Education
You Need, The Career You Earn" was filed on September 9, 1999. These
applications are all pending.
The Company currently utilizes many of these slogans in its
marketing materials summarizing the education and training programs offered
by the Company. Company management believes that these slogans focus upon the
Company's business plan of not just functioning as a technical education
center, but in fact providing on the job training for its students and
eventual permanent placement.
(v) SEASONALITY OF THE BUSINESS
The Company has only provided Education Services for a little over
one year. The iNetproz and iNetcommerce divisions were launched on October 1,
1999. As a result it is difficult to predict whether the Company's revenues
will materially fluctuate during its calendar year. Company management is not
aware of any factor which might give rise to such a fluctuation.
(vi) WORKING CAPITAL ITEMS
The Company is a service company and as a result it does not have
any trade inventory that it carries. In the event an iNetversity student is
dissatisfied with his/her class, she/he is provided with a one-time
opportunity to take the class again. The Company's providing of Consulting
and Placement Services is at a very early juncture. As of the date of this
filing the Company has not provided any warranty or guarantee associated with
its Consulting or Placement Services.
(vii) DEPENDENCE UPON LARGE CUSTOMERS
The Company is not currently dependent upon any one customer, as of
the date of this filing. As noted above, the Company does provide Education
and Consulting and Placement Services to a number of large corporations,
however, none of these customer's provided in excess of 10% of the Company's
gross revenues. Under the JTPA currently one customer, South Bay Private
Industry Council, accounted for approximately 23% and 19% during the years
ending December 31, 1999 and 1998 respectively. The iNetcommerce division is
currently dependent upon the RxAlternative transaction (discussed above) to
generate approximately 100% of its revenues through the first quarter of
2000. In the event RxAlternative were to cease performing under its Agreement
with iNetvisionz, iNetvisionz would redeploy the iNetcommerce personnel into:
(a) other iNetproz consulting projects; (b) other internally or exteriorly
generated business plans developed through its iNetcommerce division or (c)
outsource such individuals on a temporary or permanent basis through its
iNetproz division.
(viii) BACKLOG ORDERS
The Company's "backlog" is not comprised of what would traditionally
be characterized as a backlog of orders by a manufacturing company. The
Company does believe that the combination of its agreements with
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RxAlternative (discussed above) and its agreement with ETP (discussed below)
provide the Company with contractual commitments for certain revenues through
at least January, 2000.
(ix) GOVERNMENT CONTRACTS
The Company participates in both state and federal government
programs providing financing for technical training and education primarily
through its iNetversity subsidiary. Most of these programs require that
students qualify under Title III of the federally promulgated Job Training
Placement Act. These requirements provide that a student must be eligible for
or has exhausted his/her unemployment benefits through the state of
California.
The Company currently has nine contracts with various organizations
throughout Southern California which are financed by the federally financed
Job Training Placement Act ("JTPA"). The following is a list of these
organizations: Los Angeles City Private Industry Counsel; Los Angeles County
PIC; South Bay PIC; Beach Cities One-Stop; Career Partners, Inc.; Anaheim
PIC;; Carson/Lomita/Torrance PIC; Orange County PIC; and San Ana PIC (the
"Local Referring Agencies"). Each of the Company's contracts with these
organizations are for a one year term and terminate on June 30, 2000. These
Local Referring Agencies provide the Company with recently unemployed
individuals interested in securing technical Education Services. Upon the
Company accepting a student, his/her tuition is provided by JTPA. In the
event the Company's contracts with these various Local Referring Agencies
were not renewed, the Company would attempt to secure alternative sources of
financing for its students. This would result in a substantial material delay
in the Company obtaining tuition revenues. In the event the Company were
unable to secure a source of funding as an alternative to JTPA, the Company's
financial prospects would materially and adversely effected.
The Company has also entered into an Agreement with the state of
California financed Employment Training Panel ("ETP") to provide financing
for iNetversity students. This contract is in an amount up to $488,000 and is
terminable in the event the Company fails to meet ETP's performance criteria
or misapplies the applicable FUNDING. In order to qualify for funding: (a) a
student must be unemployed or prove that he will lose his employment unless
he receives new technical skills provided by the Company and (b) the Company
must place the student and the student must remain employed for 91
consecutive days following such placement. As of December 13, 1999, the
Company has enrolled 13 students in the ETP program. It is currently the
Company's intention to enroll an additional 29 students through the end of
January, 2000. Under the ETP contract the Company is paid approximately
$8,500 per student, with 20% payable upon commencement of Education Services
by the Company and 80% payable upon the student completing 90 days of
employment. The Company anticipates submitting at least three ETP
applications during the year 2000, with its second ETP application submitted
in March 2000. In the event the Company is unable to secure ETP financing, it
will continue to consider other state and federal government programs
providing financing for technical training and education. If the Company is
unable to secure additional ETP funding or is unable to successfully apply
for other government funded contracts, the Company's future operations may be
materially and adversely effected.
(x) COMPETITIVE CONDITIONS.
The Company believes that the business plan which it commenced
implementing in October, 1999 places it in the following markets:
(1) TECHNICAL EDUCATION. According to Forrester Research, a leading
market research firm, the market for corporate on-line recruiting is growing.
Over the next four years, the market is expected to grow almost 60% annually
moving up to an estimated $1.7 billion in 2003 from $245 million in 1999. The
Company's competitors include 7th Street.Com which provides interactive
on-line technical training and Pinnacle Multimedia which provides training
and education for companies' management and technical teams. The Company will
provide instruction in developing software and installing hardware and on the
job training primarily, although not always, associated with internet
applications ("Technical Applications") through its iNetversity subsidiary.
While the Company's historical focus
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has been upon the traditional classroom setting, it is now deploying a series
of internet based classes (which the Company calls "courseware) allowing
students to work at their own pace, but still assimilate the same information
as if attending traditional classroom settings. There are thousands of
companies, junior colleges and universities throughout the United States
which provide Technical Application education to their students.
The Company is a certified solutions provider for Microsoft, Novell
and Lotus. Virtually, all competitors of the Company in Education Services
have one or all of these certifications. These certifications identify that
the Company offers all classes necessary to be a Microsoft/Novell/Lotus
solutions provider. The number and complexity of the classes required for
such certifications is determined by the certifying company. The significance
of such certification is primarily two-fold: (a) it provides potential
employers with a readily recognized level of education which prospective
employees have obtained and (b) it provides individuals with such
certifications the background to take more advanced classes in the various
applications in which they are certified (many of which are offered by the
Company).
(2) TECHNICAL PLACEMENT. The Company will provide temporary
outplacement employees and permanent employment (sometimes referred to as
"headhunting") for iNetversity's students, as well as third parties with a
background in Technical Applications through its iNetproz division. The
Company believes that there are thousands of companies throughout the United
States providing temporary and permanent employment placement for individuals
skilled in Internet Applications.
(3) TECHNICAL CONSULTING. The Company will consult with primarily
large corporations in connection with a number of their Technical
Applications through its iNetproz division. A December 20, 1999 Los Angeles
Times article reports that IDC (an internet data tracking firm) projects that
the market for Internet consulting and developing online businesses is
expected to grow from $4.6 billion in 1998 to $43.7 billion in 2002. The
Technical Applications provided by the Company have included a broad range,
from a simple "help desk" to answer basic questions to the design and
development of a company-wide "intranet". The Company believes that it has
thousands of competitors in this industry. The largest competitors in this
field include: Chicago based Whitman-Hart, Inc., which recently announced
that it is acquiring USWEB/CKS Corp. in a six billion dollar transaction to
create the largest Internet professional services firm in the world and IXL
Enterprises, headquartered in Atlanta, has over 2000 employees providing
internet consulting and support services.
(4) INTERNET COMMERCE. The Company's iNetcommerce division
implements Internal Business Plans (developed primarily by the Company) and
External Business Plans (developed primarily by third parties). As the scope
of iNetcommerce's mission is very broad, it is difficult to define its
competitors other than to state that its competition is immense. Virtually
every company on the internet is a potential customer of the iNetcommerce
division. RxAlternative, the initial External Business Plan project
implemented by iNetcommerce (discussed above) is deploying into the
healthcare sector of the internet which has major competitors such as
Healtheon, Inc. and Dr.Koop.com.
Prior to October, 1999 virtually all of the Company's revenues were
generated through the providing of Education Services through its iNetversity
subsidiary. The Company has designed a series of career tracks defined by the
classes an individual should take in order to achieve a particular career
objective. The Company's Education Services focus primarily upon advanced
Technical Applications and most entrance level classes providing for the
first tier of Microsoft, Lotus and Novel certification are offered by other
competitor's programs. The Company is currently developing a series of
classes providing for Internet development utilizing the Linux platform.
While the Company believes that it has a number of better financed and larger
competitors in the field of Education Services, the Company has not
identified a competitor which primarily focuses upon advanced level classes
with the objective of achieving a specifically defined career objective.
As noted previously, the Company only commenced its iNetproz and
iNetcommerce divisions in October, 1999 thus virtually all of its competitors
are better financed and more advanced in the implementation of their business
plan. As noted above, industries associated with the providing of Technical
Placement and Consulting contain literally thousands of competitors, ranging
from small one man operations to multi-billion dollar conglomerates
specializing in support for their proprietary products. The iNetcommerce
division's potential competitors are contingent upon the eventual business
plan it elects to commence. Clearly, its initial project, RxAlternative has
many potential offline and online competitors.
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The Company believes that the principal methods of competition in
all three of iNet's divisions involve: (a) the ability to provide advanced
technology; (b) identifying at an early stage technological trends and (c)
customer satisfaction.
The Company's ability to compete in applying these methods may be
divided into negative and positive factors:
(1) NEGATIVE COMPETITIVE FACTORS. The Company believes that
virtually all of its major competitors are better financed and have a longer
operating history. Further, many of these competitors have readily
recognizable industry trade names thereby causing it to be more difficult for
the Company to penetrate the marketplace. Finally, the primary negative
competitive factor is that there is tremendous international economic
activity in connection with virtually all facets of the Internet and as a
result, not only will the Company be faced with better financed competitors,
but the Company believes that just in the United States the number of
competitors will be in the thousands.
(2) POSITIVE COMPETITIVE FACTORS. Since its inception during the
fourth quarter of 1998, the Company has focused upon providing advanced level
Education Services for Technical Applications (addressing factor (a) under
principal methods of competition above). This has provided a "pool" of
technologically advanced individuals to eventually staff the iNetproz and
iNetcommerce divisions. Thus, rather than be forced to hire people with which
the Company has no history, it has increasingly looked to iNetversity's
students to fill its other divisions. Further, iNetproz and iNetcommerce
provide: (a) on the job training for iNetversity students (something most
technical education schools cannot provide); and, (b) information to
iNetversity regarding technological trends, thus allowing iNetversity to
accordingly adjust its course offerings. These last two items address the
second factor set forth above under principal methods of competition: early
identification of technological trends. The Company believes that if it is to
be successful and provide a high level of customer satisfaction (the third
principal method of competition set forth above) then there must be a
continuous flow of information between its various divisions. For example,
iNetcommerce and iNetproz must identify employment needs in the marketplace
and iNetversity must then educate and train to address these needs.
(xi) RESEARCH AND DEVELOPMENT.
The Company has never had a formal research and development
department. Since October 1, 1999 the Company has attempted to continuously
monitor developments on the Internet (through information provided by it
iNetproz (defined below) corporate clients and through its iNetcommerce
(defined below) internet site development) and then adjusts the course
offerings of iNetversity according to the provided information. While these
divisions are currently at an extremely early juncture, since their inception
on October 1, 1999 these divisions have provided information to iNetversity
which iNetversity has begun to incorporate into its course offerings.
(xii) ENVIRONMENTAL LAWS.
The Company's operations do not give rise to any material issues
arising from state or federal environmental laws.
(xiii) EMPLOYEES.
As noted below, prior to June 30, 1999 the Company was in the
exclusive business of providing Education Services (defined below). As of
December 15, 1999 the Company had sixty employees divided as follows: ten in
general administration, 24 providing Education Services through iNetversity,
18 providing Consulting and Placement Services through iNetproz and 8
developing Internal and External Business Plans through iNetcommerce. All of
the Company's employees are full-time employees.
On or about October 1, 1999 the Company elected to divide its
operations into three separate divisions: (a) iNetversity; (b) iNetproz; and
(c) iNetcommerce. The business plan for each of these divisions is set forth
below under (C) Description of Business. Only iNetversity is
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operated as a separate corporation, the other two divisions operate within
the Company. The Company anticipates that during calendar 2000 it shall add
an average of one employee during each month to iNetversity (90% of which
shall be instructors and 10% of which shall assist in class-room set-up and
administration), three employees each month to iNetproz (approximately
divided 33% to temporary and permanent placement and 66% to Technical
Application consulting) and two employees each month to iNetcommerce
(approximately divided 50% to the development of Internal Business Plans and
50% to the development of External Business Plans). The Company also
anticipates that it will add 5-10 general accounting and administration
employees during calendar year 2000. There is no assurance that the Company
will grow at the rate set forth above; further, in the event the Company is
unsuccessful in raising outside capital it may be forced to curtail the
growth set forth above.
(D) GEOGRAPHIC AREA FINANCIAL INFORMATION.
As noted below, 100% of the Company's revenues are generated either
through its Torrance, California facility or its Irvine, California facility.
As these two facilities are within 40 miles, there is no material distinction
between the two operations arising from geographical location. Further, the
Company currently has not operations outside the United States.
(E) AVAILABLE INFORMATION.
The Company intends to file its first Form 10Q-SB for the first
quarter of the calendar year 2000. Once the Company begin filing under the
Exchange Act the public may read and copy materials filed by the Company at
the Security Exchange Commission's Public Reference Room, 450 Fifth Street,
N.W., Washington, D.C. 20549. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
Once the Company commences filing under the Exchange Act it will file
electronic reports, proxy and information statements that maybe accessed at
http:\\www.sec.gov. The primary internet address of the Company is
www.iNetvisionz.com.
(F) REPORTS TO SECURITY HOLDERS.
As noted above, the Company's initial Exchange Act filing shall be
its Form 10-QSB for the first quarter of 2000. Thus, it shall not file a Form
10K-SB for the year 1999 nor shall it file a related Annual Report to
Shareholders. The Company intends to become a Reporting Company 60 days after
the filing of this Form 10Q-SB. As a result, it shall comply with all proxy,
quarterly and annual reporting requirements thereafter. The quarterly reports
shall contain financial statements reviewed by an independent certified
public accountant and the annual report shall contain financial statements
audited by an independent certified public accountant.
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is management's discussion and analysis of the
Company's financial condition and results of operations. Detailed information
is contained in the financials included in this document. This section
contains forward-looking statements that involve risks and uncertainties,
such as statements of the Company's plans, objectives, expectations and
intentions. The cautionary statements made in this document should be read as
being applicable to all related forward-looking statements wherever they
appear in this document.
In order to implement its business plan, the Company believes that
it will need to raise a minimum of $1 million in equity capital during
calendar year 2000. In excess of 50% of this amount would be expended to
acquire new computer hardware and software. The balance of such capital would
be utilized as working capital, primarily to finance the Inetcommerce
division. This is not based upon a formal set of projections, but rather
estimates calculated by the Company's management based upon expenditures
during the fourth quarter of 1999. If the Company is unable to raise such
capital, it is the intention of the Company to reduce, delay, eliminate or
sell all or a portion of the Inetcommerce division, as the revenues generated
by this division, the Company believes, will require a longer marketing and
development cycle, relative to the more established Inetversity (Education
Services) and Inetproz (computer consulting and employment placement)
divisions. The Company believes that its current cash flow would be
sufficient to support such a reduced or delayed implementation of the
business plan.
During the fourth quarter of 1999, the Company acquired computer
equipment, hardware and software for use in its daily operations in the
amount of approximately $150,000. These assets were acquired using cash
proceeds from operations and from issuance of debt and equity securities
during November and December 1999, which are as follows: (i) The Company
entered into a Subscription Agreement with a Floyd Horwitz, father of
Lawrence W. Horwitz, to sell 200,000 shares under Rule 506 of Regulation D of
the Securities Act of 1933 at the price of $0.25 per share. The total cash
proceeds of $50,000 went to the Company. (ii) The Company commenced an
offering of up to $500,000 in Units. The price of each Unit was $25,000 and
each Unit was comprised of one prommisory note with a six month term at 8%
interest and a five-year warrant with an exercise price of $0.80 per share.
As of the date of this filing, the Company has raised $250,000 from this
offering of Units.
During March 2000, the Company received $250,000 from Winthrop
Venture Fund, Ltd., an accredited investor, from the issuance of two
securities in exchange for this investment, which are as follows: (i)
Promissory note payable, bears interest at 9% per annum, unsecured and all
interest and principal due by March 2001 (ii) 75,000 warrants were also
granted with an exercise price of $0.80 per share, which expire in three
years from the date of grant. Pursuant to this agreement, in the event the
Company completes a registration statement under the Securities Act of 1933,
the Company shall be obligated to register the shares underlying the warrants.
Finally, the Company is currently delinquent in the payment of its
payroll taxes. Revenues generated from operations and financing activities
have not been sufficient to pay this debt. The Company has entered into
negotiations with the IRS to pay the outstanding obligations. The Company
anticipates it will pay the full amount of the delinquency by September 2000.
The following information was derived from the Company's historical
financials statements incorporated herein.
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1999 December 31, 1998
(audited) (audited)
----------------- ------------------
<S> <C> <C>
Statement of Operations Data
Revenue $ 2,280,489 $ 1,016,663
<PAGE>
<CAPTION>
Year Ended Year Ended
December 31, 1999 December 31, 1998
(audited) (audited)
----------------- ------------------
<S> <C> <C>
(Net Loss)/Net Profit (1,746,041) (1,455,100)
(Net Loss)/ Net Profit per share (0.23) (0.40)
Balance Sheet Data
Current Assets 515,816 544,432
Total Property and Equipment, net 402,396 400,839
Total Assets 1,356,508 1,486,817
Total Current Liabilities 1,604,923 631,203
Accumulated Deficit (3,311,832) (1,565,791)
Stockholder's Equity(deficiency) (248,415) 514,139
</TABLE>
<PAGE>
YEAR ENDED DECEMBER 31, 1999 AS COMPARED TO YEAR ENDED DECEMBER 31, 1998
REVENUES. The Company generated $2,280,489 in revenues during the
year ended December 31, 1999, derived primarily from training revenues at its
iNetVersity subsidiary level, as compared to $1,016,633 in revenues for the
year ended December 31,
<PAGE>
1998. Revenues during 1998 reflected four months of revenues of the training
subsidiary, as the Company had only acquired the assets of the training
division that were transferred to iNetversity on September 1, 1998.
GENERAL, ADMINISTRATIVE, AND SELLING EXPENSES. The Company had
$2,927,540 in general, administrative and selling expenses for the year ended
December 31, 1999, as compared to $2,013,718 of such expenses for the same
period in 1998. As substantially all expenses are incurred by the Company's
subsidiary, the 45% increase was significantly attributable to the
subsidiary's expenses, which included rent expense from two training
locations, increase in number of employees and key personnel to accommodate
the growing needs of the Company, depreciation and amortization of property,
equipment and intangible assets, and increase in professional fees. The
amounts at December 31, 1999 include twelve months of expenses of the
subsidiary, as compared to only four months of expenses at December 31, 1998.
During the years ended December 31, 1999 and 1998, the Company wrote off
approximately $105,000 and $160,000, respectively, as bad debt expense as the
amounts were deemed not collectible by management. Also included in the
December 31, 1998 expenses is a $754,000 charge to compensation for stock
issued in exchange for services during the start-up stages of the Company as
compared to $148,000 during the year ended December 31, 1999. A breakdown of
the components of the general, administrative and/or selling expenses for the
years ended December 31, 1999 and 1998 are as follows:
<PAGE>
<TABLE>
<CAPTION>
1998 1999
---- ----
<S> <C> <C>
Advertising and marketing $ 177,645 $ 76,346
Bad debt expense 201,618 104,644
Depreciation and amortization 92,798 293,611
General operation expenses 69,274 318,840
Office expenses 42,416 27,121
Payroll expense 1,267,267 1,439,777
Professional fees 47,418 211,000
Rent 77,205 259,800
Telephone and Utilities 37,078 96,401
-------------------------
$2,013,719 $2,927,540
-------------------------
-------------------------
</TABLE>
ITEM 3: PROPERTIES AND YEAR 2000 COMPLIANCE.
The Company currently operates out of two facilities: it leases
approximately 11,561 square feet of space at 19950 Mariner Avenue, Torrance,
CA 90503 and approximately 6000 square feet at 19772 MacArthur Blvd., Irvine,
California 92615. The Company's primary administrative operations are
conducted at the Torrance facility. The Irvine facility is primarily composed
of additional classrooms to provide Education Services. The Torrance facility
is subleased from NovaQuest Info Systems, Inc. Under the terms of the
sublease, the monthly rental is $11,395.80. The sublease expires December 31,
2000. The Irvine lease requires monthly payments of $8,236.20 per month and
expires in September, 2000.
The Company has developed and acquired its computer systems with an
objective to be Year 2000 compliant. To date, the Company has not suffered
any consequences arising out of the Year 2000 compliance issues. The Company
does not believe it will suffer any material adverse consequences from Year
2000 issues.
<PAGE>
ITEM 4: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of March 31, 2000: (i) each
stockholder known by the Company to be the beneficial owner of more than five
percent of the outstanding Common Stock; (ii) each director of the Company;
and (iii) all directors and officers as a group.
<TABLE>
<CAPTION>
TITLE OF CLASS(4) NAME AND ADDRESS(5) AMOUNT AND NATURE OF OWNERSHIP PERCENT(6)
- ----------------- ---------------------- ------------------------------ ----------
<S> <C> <C> <C>
Common Stock Ramsey Hakim, Director 453,000 3.87%
Common Stock Noreen Khan, President, 1,417,435(1) 12.11%
Director
Common Stock Lawrence W. Horwitz 500,000(2) 4.27%
Secretary, Director
Common Stock Tariq Khan 4,391,667(3) 37.51%
Common Stock Mahin Samadani, Director 110,000(1) .94%
Total Shares held by
officers, directors
and 5% shareholders: 6,872,102 58.70%
</TABLE>
- ------------------------------------
(1) This amount includes 13,000, 199,000, 10,000 options exercisable at $1.00
per share, issued to Mr. Hakim, Ms. Khan and Mr. Samadani respectively.
This amount does not include 15,000, 195,000, and 15,000 options to
purchase common stock exercisable at $1.00 per share granted to Mr. Hakim,
Ms. Khan, and Mr. Samadani respectively. on January 1, 2000.
(2) This amount includes up to 300,000 options exercisable at $1.75 and
200,000 shares acquired by Floyd Horwitz, the father of Lawrence W.
Horwitz. This amount does not include options to purchase 15,000 shares of
common stock at $1.00 per share granted to Mr. Horwitz on January 1, 2000.
(3) This amount includes 83,000 options exercisable at $1.00 per share but
does not include options to purchase 15,000 shares of common stock at
$1.00 per share granted on January 1, 2000.. Tariq Khan is the son of
Noreen Khan, the president of the Company.
(4) Except as otherwise indicated, the Company believes that the beneficial
owners of Common Stock listed above, based on information furnished by
such owners, have sole investment and voting power with respect to such
shares, subject to community property laws where applicable. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. Shares of Common Stock subject to options or
warrants currently exercisable, or exercisable within 60 days, are deemed
outstanding for purposes of computing the percentage of the person holding
such options or warrants, but are not deemed outstanding for purposes of
computing the percentage of any other person.
(5) c/o Company's address: 19950 Mariner Avenue, Torrance, CA 90503.
(6) The percentage calculation is based on 7,671,857 shares issued and
outstanding as of September 1, 1999 and 8,171,857 on a fully diluted
basis.
<PAGE>
ITEM 5: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The directors and officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
------ --- ----------
<S> <C> <C>
Noreen Khan 52 President , Treasurer, Director
Ramsey Hakim 36 Chairman of the Board
Lawrence W. Horwitz 40 Director, Secretary, General Counsel
Mahin Samadani 25 Director
</TABLE>
NOREEN KHAN, President and CEO of the Company since May of 1998 and a
member of the Board of Directors since October of 1998. Ms. Khan was employed
by Tansa Group as a business consultant from May, 1993 through August, 1996.
From September, 1996 through April, 1998 Ms. Khan was the financial officer
of United Golf Properties, Inc., a privately held real estate investment
trust specializing in the acquisition and operation of golf course
properties. Ms. Khan is responsible for the business development, financial
management and overall strategic planning and expansion of the Company.
RAMSEY HAKIM, Chairman of the Board since May of 1998. For the past 13
years, Mr. Hakim has held management positions in the Telecommunication and
Information Technology Industry. He is currently the General Manager for AT&T
Solutions Outsourcing where he is responsible for managing the annual budget
for client engagements and service delivery.
LAWRENCE W. HORWITZ, Director since November 1999, has been a founding
shareholder and officer of the Irvine, California law firm of Horwitz & Beam,
Inc. since 1992. Horwitz & Beam is currently comprised of 14 attorneys. He
specializes in the securities law aspects of private and public offerings. He
is currently a member of the Board of Directors of Beta Oil and Gas, Inc.
(NASDAQ Small Cap: BETA) and was involved in that company's initial public
offering in the Summer of 1999. Mr. Horwitz is also the president of
Strawberry Canyon Capital, Inc., the general partner of two bridge loan
funds: Westport Capital Partners, Ltd. and Laguna Pacific Partners, Ltd.
These bridge loan funds provide early stage financing for primarily
technology oriented companies positioning to complete a private or public
offering of securities. He is a graduate of the University of California,
Berkeley Haas School of Business (B.S.) and the Boalt Hall School of Law
(J.D.)
MAHIN SAMADANI, Director since May of 1998. Mr. Samadani currently works
for Scient, Corp., an E-commerce consulting group based in San Francisco.
Prior to joining Scient, Mr. Samadani worked with the Enterprise Server Group
at Intel Corporation where he was responsible for identifying and promoting
emerging Internet Software. Prior to joining Intel, Mr. Samadani was employed
by Apple Computer.
ITEM 6: EXECUTIVE COMPENSATION
Set forth below is a summary of compensation for the Company's officers
for fiscal years 1999. There are no annuity, pension or retirement benefits
proposed to be paid to officers, directors or employees of the Company in the
event of retirement at normal retirement date pursuant to any presently
existing plan provided or contributed to by the Company or its subsidiary.
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------
Name and Principal Position Year Salary Stock Options
- ---------------------------- ------ --------- -------------
<S> <C> <C> <C>
Noreen Khan 1999 $66,000 199,000
CEO, President,
Secretary & CFO
Meenaz Hudani 1999 $60,000 30,000
CIO
Ralph Hutchinson 1999 $60,000 -0-
VP, Marketing
Linda Ruby
VP, Professional 1999 $54,000 25,000
Placement
</TABLE>
All of the foregoing options are at an exercise price of $1.00.
The Company's By-laws state that Directors of the Company shall not
receive any stated salary for their services, but, by resolution of the Board
of Directors, a fixed sum and expense of attendance, if any, may be allowed
for attendance at each regular and special meeting of the Board of Directors.
The Company maintains directors and officers liability insurance. To date,
the Company has not paid any fixed sum for expenses to board members for
attendance at Board of Director meetings or in discharging their obligations
as Board members.
ITEM 7: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is in the development stage of the new business plan it
launched in October 1999. Further, the Company has never conducted profitable
operations. Based upon the foregoing, the Company believes that it has had
difficulty in attracting substantial investment capital, outside its present
management team and principal shareholders. As a result, the Company believes
that each of the transactions set forth in this section were on terms
<PAGE>
that were as favorable as those that could have been obtained from
unaffiliated parties, in that the Company has attracted limited capital from
unaffiliated parties as of the date of this filing, and those transactions
were conducted on terms similar or identical to the terms set forth below.
Noreen Khan, the president of the Company, has entered into the
following transactions with the Company:
(1) In May, 1998 she entered into a Subscription Agreement pursuant
to which she provided $53,487 in debt financing which was
converted into equity during the fourth quarter of 1999 at the
rate of $.20 per share, in accordance with the original terms of
the Subscription Agreement;
(2) In April, 1998 she acquired 50,000 shares of the Company under
Rule 504 of Regulation D at the price of $.15 per share;
(3) In July, 1998 she acquired 100,000 shares of the Company under
Rule 506 of Regulation D at the price of $.15 per share;
(4) During calendar year 1999 Ms. Khan received 800,000 shares as
additional compensation for services rendered to the Company.
(5) On January 1, 1999, Ms. Khan was issued options to purchase
199,000 shares of common stock of the Company at $1.00 per share.
(6) On January 1, 2000, Ms. Khan was issued options to purchase
195,000 shares of common stock of the Company at $1.00 per share.
Tariq Khan, the son of the President of the Company, has entered into
the following transactions with the Company:
(1) In May, 1998, he entered into a Subscription Agreement pursuant
to which he provided $640,000 in debt financing which was
converted into equity during the fourth quarter of 1999 at the
price of $.20 per share, in accordance with the original terms of
the Subscription Agreement;
(2) In November, 1998, Manhattan West, Inc., a corporation controlled
by Mr. Khan entered into a Consulting Agreement with the Company
for marketing, general business and public relations services for
a one year period of time. Manhattan West was eventually paid
$30,000 in stock at the price of $.45 per share (66,667 shares in
the aggregate);
(3) On January 1, 1999 the Company issued Mr. Khan 125,000 options
exercisable at $1.00 per share in accordance with the Company's
annual issuance of options to key employees, consultants, officer
and directors of the company;
(4) During 1999 Mr. Khan received 500,000 shares for consulting
services provided to the Company. These services included
strategic planning of the business plan which commenced
implementation in October, 1999, identification of key personnel
to implement this business plan, budgeting and capitalization
planning and general business consulting and advice; and
(5) On January 1, 2000 the Company issued Mr. Khan 120,000 options
exercisable at $1.00 per share in accordance with the Company's
annual issuance of options to key employees, consultants, officer
and directors of the company.
Ramsey Hakim, the Chairman of the Board of the Company entered into the
following transactions with the Company:
(1) In January, 1999 Mr. Hakim received 90,000 options to acquire
stock at $1.00 per Share;
<PAGE>
(2) During 1999, Mr. Hakim received 250,000 shares for services
provided as the Chairman of the Board of the Company;
(3) In November, 1998 the Company entered into a one year Consulting
Agreement with Mr. Hakim pursuant to which he was to be paid
$3,750 per month. The aggregate amount due under this Consulting
Agreement ($45,000) was eventually converted into restricted
shares of stock during the fourth quarter of 1999 at the price of
.45 per share (100,000 shares in the aggregate);
(4) On January 1, 1999 the Company issued Mr. Hakim 13,000 options
exercisable at $1.00 per share in accordance with the Company's
annual issuance of options to key employees, consultants, officer
and directors of the company; and
(5) On January 1, 2000 the Company issued Mr. Hakim 15,000 options
exercisable at $1.00 per share in accordance with the Company's
annual issuance of options to key employees, consultants, officer
and directors of the company.
Lawrence W. Horwitz, a member of the Board of the Directors of the
Company and its General Counsel and Secretary and his father Floyd Horwitz
entered into the following transactions with the Company:
(1) Mr. Horwitz received 300,000 options exercisable at $1.75 per
share;
(2) Floyd Horwitz, the father of Lawrence Horwitz, acquired 200,000
shares of the Company at the price of $0.25 per share; and
(3) On January 1, 2000 the Company issued Mr. Horwitz 15,000 options
exercisable at $1.00 per share in accordance with the Company's
annual issuance of options to key employees, consultants, officer
and directors of the company.
Mahin Samadani, a member of the Board of Directors, entered into the
following transactions with the Company:
(1) On January 1, 1999 Mr. Samadani received 10,000 options
exercisable at $1.00 per share;
(2) During 1999 Mr. Samadani received 100,000 shares for services
provided as a member of the Board of Directors of the Company;
and
(3) On January 1, 2000, Mr. Samadani received 15,000 options
exercisable at $1.00 per share.
ITEM 8: LEGAL PROCEEDINGS
The Company is not a plaintiff or a defendant in any legal proceedings.
<PAGE>
ITEM 9: MARKET PRICE OF COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
A. MARKET INFORMATION
The Company's Common Stock is currently quoted on the Over-The-Counter
Market under the Symbol "INVZ". Set forth below is the trading history of the
Company's Common Stock without retail mark up, mark-down or commissions
provided by the quote in system displayed by Yahoo Finance at
www.YahooFinance.com:
<TABLE>
<CAPTION>
HIGH ASK LOW BID
1999 -------- --------
----
<S> <C> <C>
January 1 - January 31 2.06 1.25
February 1 - February 28 2.06 1.31
March 1 - March 31 2.25 1.37
April 1 - April 30 5.37 1.75
May 1 - May 31 5.00 1.50
June 1 - June 30 3.31 1.43
July 1 - July 31 1.87 1.03
August 1 - August 31 1.56 0.69
September 1 - September 30 1.25 0.69
October 1 - October 31 1.25 0.72
November 1 - November 30 1.06 0.69
December 1 - December 31 1.03 0.69
2000
----
January 1 - January 31 1.31 .75
February 1 - February 28 1.22 .69
March 1 - March 31 1.19 .66
</TABLE>
On April 26, 2000, the closing bid price for the Company's common
stock was $.25.
The above quotations are inter-dealer quotations, and the actual
retail transactions may involve dealer retail mark ups, mark downs, or
commissions for market makers of the Company's stock.
Except for 2,932,917 free trading shares, all shares issued by the
Company are "restricted securities" within the meaning of Rule 144 under the
1933 Act. Ordinarily, under Rule 144, a person holding restricted securities
for a period of one year may, every three months, sell in ordinary brokerage
transactions or in transactions directly with a market maker an amount equal
to the greater of one percent of the Company's then-outstanding Common Stock
or the average weekly trading volume during the four calendar weeks prior to
such sale. Future sales of such shares and sales of shares purchased by
holders of options or warrants could have an adverse effect on the market
price of the Common Stock.
IN THE ABSENCE OF A SECURITY BEING QUOTED ON THE NASDAQ STOCK
MARKET, OR THE COMPANY HAVING $2,000,000 IN NET TANGIBLE ASSETS, TRADING IN
THE COMPANY WOULD BE COVERED BY RULE 15C2-6 OF THE EXCHANGE ACT FOR
NON-NASDAQ AND NON-EXCHANGE LISTED SECURITIES. UNDER SUCH RULE,
BROKER/DEALERS WHO RECOMMEND SUCH SECURITIES TO PERSONS OTHER THAN
ESTABLISHED CUSTOMERS AND ACCREDITED INVESTORS (GENERALLY INSTITUTIONS WITH
ASSETS IN EXCESS OF $5,000,000 OR INDIVIDUALS WITH A NEW WORTH IN EXCESS OF
$1,000,000 OR AN ANNUAL INCOME EXCEEDING $200,000 OR $300,000, JOINTLY WITH
THEIR SPOUSE) MUST MAKE A SPECIAL WRITTEN SUITABILITY DETERMINATION FOR THE
PURCHASER AND RECEIVE THE PURCHASER'S WRITTEN AGREEMENT TO A TRANSACTION
PRIOR TO SALE. SECURITIES ARE ALSO EXEMPT FROM THIS RULE IF THE MARKET PRICE
IS AT LEAST $5.00 PER SHARE.
<PAGE>
THE SECURITIES ENFORCEMENT AND PENNY STOCK REFORM ACT OF 1990
REQUIRES ADDITIONAL DISCLOSURE RELATED TO THE MARKET FOR PENNY STOCKS AND FOR
TRADES IN ANY STOCK DEFINED AS A PENNY STOCK. UNDER SEC RULES, "PENNY STOCK"
IS ANY SECURITY THAT HAS A MARKET PRICE OR EXERCISE PRICE OF LESS THAN $5.00
PER SHARE. IN ADDITION, UNLESS EXEMPT, THE RULES REQUIRE THE BROKER/DEALER TO
DELIVER, PRIOR TO ANY TRANSACTION INVOLVING A PENNY STOCK, A DISCLOSURE
SCHEDULE EXPLAINING IMPORTANT CONCEPTS INVOLVING THE PENNY STOCK MARKET, THE
NATURE OF SUCH MARKET, TERMS USED IN SUCH MARKET, THE BROKER/DEALER'S DUTIES
TO THE CUSTOMER, A TOLL-FREE TELEPHONE NUMBER FOR INQUIRIES ABOUT THE
BROKER/DEALER'S DISCIPLINARY HISTORY, AND THE CUSTOMER'S RIGHTS AND REMEDIES
IN CASE OF FRAUD OR ABUSE IN THE SALE. THE BROKER/DEALER MUST DISCLOSE
COMMISSIONS PAYABLE TO BOTH THE BROKER/DEALER AND THE REGISTERED
REPRESENTATIVE, CURRENT QUOTATIONS FOR THE SECURITIES, AND IF THE
BROKER/DEALER IS THE SOLE MARKET-MAKER. FINALLY, MONTHLY STATEMENTS HAVE TO
BE SENT DISCLOSING RECENT PRICE INFORMATION FOR A PENNY STOCK HELD IN THE
ACCOUNT AND INFORMATION ON THE LIMITED MARKET IN PENNY STOCKS.
THESE RULES HAVE A SUBSTANTIAL EFFECT ON THE LIQUIDATION OF THE
COMPANY'S COMMON STOCK.
B. HOLDERS
As of March 31, 2000, there were approximately 49 registered holders
of the Company's restricted Common Stock, as reported by the Company's
transfer agent. These registered holders include both individuals, as well as
corporations. This figure does not include shares which have been placed into
street name through the Depository Trust Company system.
C. DIVIDENDS
The Company has not paid any dividends on its Common Stock. The
Company currently intends to retain any earnings for use in its business, and
therefore does not anticipate paying cash dividends in the foreseeable future.
<PAGE>
D. OPTIONS
On January 1, 1999 the Company issued 500,000 options exercisable at
$1.00 per share. These options have a three year term, and a percentage of
which is exercisable on a quarterly basis commencing April 1, 1999. These
options were issued to various employees, consultants and board of director
members of the Company.
ON JANUARY 1, 2000, THE COMPANY ISSUED 1,000,000 OPTIONS EXERCISABLE
AT $1.00 PER SHARE. THESE OPTIONS HAVE A THREE YEAR TERM AND A PERCENTAGE OF
THE OPTIONS ARE EXERCISABLE ON A QUARTERLY BASIS COMMENCING APRIL 1, 2000.
THESE OPTIONS WERE ISSUED TO VARIOUS EMPLOYEES, CONSULTANTS AND BOARD OF
DIRECTOR MEMBERS OF THE COMPANY.
Also, in November, 1999 the Company issued 300,000 options to
Lawrence W. Horwitz at an exercise price of $1.75. These options are entitled
to S-8 registration rights in the event the Company becomes a Reporting
Company within the meaning of the Securities Exchange Act of 1934. Currently
the Company does not have any employment agreements with any of its employees
E. TRANSFER AGENT
The Company's transfer agent is Alpha Tech Stock Transfer, 929 East
Fires Lane, Drapers, Utah 84020. The agent's telephone number is (801) 571-5118.
ITEM 10: RECENT SALES OF UNREGISTERED SECURITIES
THE COMPANY HAS OFFERED SECURITIES TO INVESTORS WHO HAVE A PREVIOUS
BUSINESS RELATIONSHIP WITH EITHER AN OFFICER, DIRECTOR OR GREATER THAN 5%
SHAREHOLDER OF THE COMPANY. THERE HAS BEEN NO SOLICITATION OF ACCREDITED OR
NON-ACCREDITED INVESTORS WHO DO NOT MEET THIS STANDARD.
On April 3, 1998 the Company (which was then known as Zebulon
Enterprises) had 1,142,857 shares issued and outstanding, all of which were
free-trading. These shares were issued for nominal consideration in a private
placement that was conducted in 1990.
Simultaneous with the closing of the Zebulon acquisition, the
Company sold 1,114,000 shares of common stock to six accredited investors at
$.085 per share under Rule 504 of Regulation D (aggregate proceeds of
$94,600).
In May 1998, the Company entered into two Subscription Agreements
with accredited investors providing for up to $850,000 in debt convertible
into common stock at the price of $0.20 during the 18 month period of time
following the date of the Subscription Agreement. One of these investors was
the President of the Company. As of the date of this filing, 100% of the debt
obtained ($693,487 in the aggregate) was converted into 3,467,435 restricted
shares of common stock pursuant to Rule 506 of Regulation D.
<PAGE>
During 1998, the Company issued 800,000, 500,000 and 250,000 shares
to Noreen Khan (President of the Company), Tariq Khan (Noreen Khan's son and
Marketing/Public Relations Consultant), and Ramsey Hakim (Chairman of the
Board of the Company), respectively and the Company recorded compensation
expense in the amount of $737,000 during the year ended December 31, 1998.
See Item 7 "Certain Relationships and Related Party Transactions" for
additional information regarding these transactions.
During May to July 1998, the Company sold 1,400,000 shares of
restricted common stock under Rule 506 at the price of $.15 per share. There
were 13 accredited investors in this transaction and 100% of the proceeds,
$210,000, was provided directly to the Company. All offers and sales were
made only to accredited investors.
In September, 1998, the Company issued 520,000 shares of its common
stock in connection with the acquisition of certain assets from NovaQuest
InfoSystems, Inc. ("Novaquest"). 200,000 of these shares were issued directly
to NovaQuest and 320,000 of these shares were issued directly to certain
employees of NovaQuest. All of these issuances were of restricted shares
under Rule 505 of Regulation D.
During November 1998, the Company entered into three Consulting
Agreements providing for marketing, general business and public relations
services. These agreements were with Ramsey Hakim, a member of the Company's
board of directors ($3,750 per month), Manhattan West, Inc. ($2,500 per
month) and Winthrop Venture Management, Ltd. ($2,500 per month). These
Consulting Agreements provided that all amounts due could be converted into
common stock shares at the rate of $0.45 per share. On November 12, 1999, all
such amounts due were collectively converted into 233,334 shares. In March,
2000, the Company received
<PAGE>
$250,000 from a single accredited investor in exchange for a promissory note
due March 1, 2001, bearing interest at the rate of 9% per annum and warrants
to purchase 75,000 shares of commons tock at the price of $.80 per share.
Those shares were sold based on an exemption from registration available
under 4(6) of the Act.
During December 1998, the Company sold 180,000 shares of common
stock at $1.00 per share, under Rule 506 of Regulation D, to five accredited
investors and 100% of the proceeds were provided directly to the Company. All
offers and sales were made only to accredited investors.
In December 1998, the Company received $250,000 from a single
accredited investor at the price of $0.625 per share. These shares were
issued under Rule 506 of Regulation D.
Effective January 1, 1999, the Company issued 500,000 options
exercisable at $1.00 per share to certain key employees, directors, officers
and consultants.
In March 1999, the Company issued 500,000 shares at the price of
$0.15 to a single accredited investor under Rule 504 of Regulation D and the
Company received 100% of the proceeds of this offering.
On November 12, 1999, the Company entered into two agreements: (a)
it entered into a stock option agreement with Lawrence W. Horwitz, a member
of the Company's legal firm, to acquire up to 300,000 shares of stock at
$1.75 per share and (b) it entered into a subscription agreement with a Floyd
Horwitz, father of Lawrence W. Horwitz, to sell 200,000 shares under Rule 506
at the price of $.25 per share. See Item 7 "Certain Relationships and Related
Party Transactions" for additional information regarding this transaction.
In December 1999, the Company commenced an offering of up to
$500,000 in units. The price of each unit was $25,000 and each unit was
comprised of one promissory note with a six month term at 8% interest and a
five-year warrant with an exercise price of $0.80 per share. As of the date
of this filing, the Company has raised $250,000 from this offering of units.
In March, 2000, the Company received $250,000 from a single
accredited investor in exchange for a promissory note due March 1, 2001,
bearing interest at the rate of 9% per annum and warrants to purchase 75,000
shares of commons tock at the price of $.80 per share. Those shares were sold
based on an exemption from registration available under 4(6) of the Act.
ITEM 11: DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The Company's Articles of Incorporation authorize the issuance of
71,428,572 shares of Common Stock, $.001 par value per share, of which
11,207,626 shares were issued and outstanding as of December 31, 1999.
Holders of Common Stock are entitled to one vote for each share held
of record on all matters submitted to a vote of the stockholders. Holders of
Common Stock are entitled to receive ratably such dividends as may be
declared by the Board of Directors out of funds legally available therefor.
In the event of a liquidation, dissolution or winding up of the Company,
holders of Common Stock are entitled to share ratably in all assets remaining
after payment of liabilities. Holders of Common Stock have no right to
convert their Common Stock into any other securities. The Common Stock has no
preemptive or other subscription rights. There are no redemption or sinking
fund provisions applicable to the Common Stock. All outstanding shares of
Common Stock are duly authorized, validly issued, fully paid and
nonassessable.
<PAGE>
ITEM 12: INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has adopted provisions in its Articles of Incorporation
and bylaws that limit the liability of its directors and provide for
indemnification of its directors and officers to the full extent permitted
under the Delaware General Corporation Law. Under the Company's Articles of
Incorporation, and as permitted under the Delaware General Corporation Law,
directors are not liable to the Company or its stockholders for monetary
damages arising from a breach of their fiduciary duty of care as directors.
Such provisions do not, however, relieve liability for breach of a director's
duty of loyalty to the Company or its stockholders, liability for acts or
omissions not in good faith or involving intentional misconduct or knowing
violations of law, liability for transactions in which the director derived
as improper personal benefit or liability for the payment of a dividend in
violation of Delaware law. Further, the provisions do not relieve a
director's liability for violation of, or otherwise relieve the Company or
its directors from the necessity of complying with, federal or state
securities laws or affect the availability of equitable remedies such as
injunctive relief or recession.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of the Company where indemnification
will be required or permitted. The Company is not aware of any threatened
litigation or proceeding that may result in a claim for indemnification by
any director or officer.
ITEM 13: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Attached as Exhibits to this Form 10 are the financial statements
required by this Item.
ITEM 14: ACCOUNTANTS AND FINANCIAL DISCLOSURES
The Company has engaged Stonefield Josephson ("SJ") as its principal
accountants. SJ's business address is 1620 26th Street, Suite 400 South Santa
Monica, CA 90401-4041 SJ conducted both the 1999 and 1998 which are attached.
Neither the Company nor anyone on its behalf has consulted any former
accountants during the two most recent past fiscal years regarding any matter
for which reporting is required under Regulation S-B, Item 304(a)(2)(i) or
(ii) and the related instructions. The decision to engage SJ was approved by
the Board of Directors.
<PAGE>
ITEM 15: FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENTS
The following financial statements are included herein:
Audited Financial Statements for the Fiscal Years ended 1998 and 1999
<PAGE>
PART II
ITEM 1 AND
ITEM 2. INDEX TO EXHIBITS AND DESCRIPTION OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit Document Description
No. --------------------
- -------
<S> <C>
3.1 Articles of Incorporation of Martinique Ventures Corporation, dated
February 18, 1988*
3.2 Certificate of Amendment to Articles of Incorporation of Martinique
Ventures Corporation changing name to Zebulon Enterprises, Inc., dated
August 13, 1997*
3.3 Certificate of Amendment to the Articles of Incorporation of Zebulon
Enterprises, Inc. changing name to Tao Partners Inc. dated April 21,
1998*
3.5 Certificate of Amendment to the Articles of Incorporation of Tao
Partners Inc. changing name to Inetvisionz.com, Inc. dated April 30,
1999*
3.6 Bylaws of Martinique Ventures Corporation*
10.1 Form Independent Contractor Agreement
10.2 Web Maintenance Agreement for RxAlternative.com, dated October 25,
1999
10.3 Web Site Development Agreement for the Creation of Two New Web Sites
for RxAlternative.com, dated October 25, 1999
10.4 South Bay Private Industry Council Agreement Entitled Amendment No.
4 to Agreement No. 96-67 by and between the Company and the city of
Inglewood
10.5 Job Training Partnership Act ("JTPA") Off-the-shelf Vendor/Voucher
Training Agreement dated July 1, 1999
10.6 Employment Training Panel Agreement dated November 30, 1999
10.7 Lease for the property located at 19950 Mariner Avenue, Torrance
California 90503, dated December 1, 1994
10.8 Lease for the property located at 19972 MacArthur Blvd., Irvine, CA
92615, dated November 18, 1997
10.9 Schedule of Receivables as of December 31, 1999
24.1 Power of Attorney (see signature page)*
27.0 Financial Data Schedule*
</TABLE>
* Previously Filed
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.
Dated: April 27, 2000 iNetVisionz.com, Inc.
By: /s/ Noreen Khan
------------------------------------
Noreen Khan
Its: Chief Executive Officer, President
Chief Financial Officer
<PAGE>
EXHIBIT 10.1
FORM INDEPENDENT CONTRACTORS AGREEMENT
1
<PAGE>
INDEPENDENT CONTRACTOR AGREEMENT
THIS INDEPENDENT CONTRACTOR AGREEMENT (this "Agreement") is entered
into as of ____, ____, between iNetVersity., a California corporation,
("Company") and __________________________, an individual, ("Independent
Contractor") with reference to the following.
RECITALS
A. The Company is engaged in the business of providing training and
education and related services.
B. Independent Contractor wishes to provide certain services
necessary to assist the Company in its business.
C. The Company desires to retain Independent Contractor to provide
certain services as more fully described herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the
provisions set forth below and other good and valuable consideration, the
parties agree as follows.
1. ENGAGEMENT. The Company hereby engages Independent Contractor,
and Independent Contractor hereby agrees to hold himself available to render,
and to render at the request of the Company, services for the Company to the
best of his or her ability, upon the terms and conditions set forth herein.
2. SERVICES TO BE PERFORMED BY INDEPENDENT CONTRACTOR.
a. Independent Contractor shall be available to render, and
shall render at the request of the Company services for the Company, as more
particularly described in EXHIBIT "A," attached hereto and incorporated
herein by reference (the "Services").
b. Independent Contractor shall render the Services
conscientiously and shall devote his or her best efforts and abilities
thereto, in such manner, as the Company and Independent Contractor shall
mutually agree, it being acknowledged that Independent Contractor's Services
shall be non-exclusive and performed at such places and at such times as are
reasonably convenient to Independent Contractor and the Company.
3. COMPENSATION. Compensation for all Services rendered by
Independent Contractor shall be that set forth in EXHIBIT "A," attached
hereto and incorporated herein by this reference. All such compensation shall
be payable to Independent Contractor without withholding, including no
withholding for federal income, social security, or state income taxes.
4. TERMINATION. Either of Independent Contractor or the Company
may terminate this Agreement at any time upon five (5) days advance notice
provided, however, that such termination shall not effect or terminate
sections 6, 7, 9 and 10 hereof.
2
<PAGE>
5. INDEPENDENT CONTRACTOR. Independent Contractor is acting as an
independent contractor in performing the Services hereunder. The Company
shall carry no Workers' Compensation Insurance or any health or accident
insurance to cover Independent Contractor. The Company shall not pay any
contributions to Social Security, unemployment insurance, federal or state
withholding taxes, nor provide any other contributions or benefits which
might be expected in an employer/employee relationship. Independent
Contractor warrants that he or she will pay all required Worker's
Compensation Insurance, health or accident insurance to cover Independent
Contractor. Further, Independent Contractor warrants that he or she will pay
all Social Security, unemployment insurance, federal or state withholding
taxes and any other contributions or benefits required. Should the Company be
subsequently required to pay any of these contributions, Independent
Contractor agrees to indemnify the Company for the costs incurred, including
reasonable attorney's fees and accountant's fees, as well as the amount of
contributions required to be paid by the Company.
6. CONFIDENTIALITY. During the course of the Relationship between
the Company and Independent Contractor, Independent Contractor will be
exposed or otherwise have access to information and data which is
confidential or proprietary to the Company. Independent Contractor agrees
that all such information and data, including, without limitation, any
information or data pertaining to customers, clients, prospective customers
or clients, prospective customer lists, pricing lists, promotional material,
policies or procedures, designs, plans and/or schematics or samples, and
software (collectively, "Proprietary Information"), shall at all times be and
remain the sole and exclusive property of the Company, regardless of
modifications made by Independent Contractor. Independent Contractor shall
keep and maintain all Proprietary Information disclosed to Independent
Contractor, or otherwise in Independent Contractor's possession in connection
with or related to this Agreement, or which is learned or discovered in
relation to this Agreement, in complete confidence and will not disclose any
Proprietary Information to any other person or entity, nor use any
Proprietary Information for its own benefit or for the benefit of others
without the prior written consent of the Company. The Company retains for
itself exclusively, all proprietary rights in and to its Proprietary
Information developed, maintained, published, disclosed or sold by it or
Independent Contractor, including the exclusive right to modify or sell the
Proprietary Information. Upon the termination of this Agreement, Independent
Contractor shall return to the Company any and all Proprietary Information in
Independent Contractor's possession or control, together with all copies or
duplicates of such material.
7. NON-CIRCUMVENTION. Independent Contractor specifically agrees,
warrants, represents and covenants that he or she shall not in any way
whatsoever circumvent, or attempt to circumvent, the Company regarding the
ownership use or the Proprietary Information. Such agreement shall extend to
holding in confidence and not improperly circumventing the use of contacts
(whether they be potential joint venturers, customers, clients, investors, or
others who may have similar interests in assisting with the exploitation of
the Proprietary Information).
8. COVENANT NOT TO COMPETE. Independent Contractor covenants and
agrees that, at no time during the duration of this Agreement and for a
period of three years thereafter, will Independent Contractor engage in any
activity in competition with the business conducted by the Company,
including, without limitation, the Services or otherwise, that engages in
activities similar to or in competition with the Company, in the territory
described in EXHIBIT "B." As consideration for this covenant, 15% of all
consideration paid to Independent Contractor under this Agreement shall be
allocated to this covenant.
3
<PAGE>
9. INJUNCTIVE RELIEF. Independent Contractor acknowledges that the
Company will be irreparably harmed if Independent Contractor's obligations
under this Agreement are not specifically enforced and that the Company would
not have a remedy at law in the event of potential or certain violations by
Independent Contractor of its obligations under this Agreement. Therefore,
Independent Contractor agrees that the Company will be entitled to an
injunction or any appropriate degree of specific performance for any actual
or threatened violations or breaches by Independent Contractor, its employees
or agents, without the necessity of the Company showing actual damages or
that monetary damage does not afford an adequate remedy. Therefore, upon an
actual or impending violation of this Agreement, Independent Contractor
consents to issuance by the courts of the County of Orange, California or, or
any other court of competent jurisdiction, of a restraining order,
preliminary and special or permanent injunction, without bond, restraining or
enjoining such potential or certain violation by Independent Contractor or
any entity or person acting in concert with Independent Contractor.
Independent Contractor understands that such orders are additional to, and do
not limit the availability to the Company of any other remedy.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement between Independent Contractor and the Company
with respect to the transactions contemplated herein and supersedes any and
all prior or contemporaneous oral or written communications with respect to
the subject matter hereof, all of which are merged herein. It is expressly
understood and agreed that, there being no expectations to the contrary
between the parties hereto, no usage of trade or other regular practice or
method of dealing between the parties hereto shall be used to modify,
interpret, supplement or alter in any manner the express terms of this
Agreement or any part hereof. This Agreement shall not be modified, amended
or in any way altered except by an instrument in writing signed by both of
the parties hereto.
11. CUMULATIVE REMEDIES. No remedy made available to Independent
Contractor or the Company by any of the provisions of this Agreement is
intended to be exclusive of any other remedy, and each and every remedy shall
be cumulative and shall be in addition to every other remedy given hereunder
or now or hereafter existing at law or in equity or by statute or otherwise.
12. WAIVER. No waiver of any provision of this Agreement or any
rights or obligations of either party hereunder shall be effective, except
pursuant to a written instrument signed by the party or parties waiving
compliance, and any such waiver shall be effective only in the specific
instance and for the specific purpose stated in such writing.
13. GOVERNING LAW; CHOICE OF FORUM. This Agreement shall be
interpreted in accordance with the internal laws of the State of California,
including all matters of construction, validity, performance and enforcement,
without giving any effect to any principles of conflict of laws. The parties
irrevocably consent to the jurisdiction of the courts in Orange County,
California.
14. SEVERABILITY. Each provision of this Agreement is intended to
be severable and if any term or provision herein is determined invalid or
unenforceable for any reason, such illegality or invalidity will not affect
the validity of the remainder of this Agreement and, wherever possible,
intent will be given to the invalid or unenforceable provision.
4
<PAGE>
15. INTERPRETATION. The language in all parts of this Agreement
will be in all cases construed simply according to its fair meaning and not
strictly for or against any party. Whenever the context requires, all words
used in the singular will be construed to have been used in the plural, and
vice versa, and each gender will include any other gender. The captions of
the sections of this Agreement are for convenience only and will not affect
the construction or interpretation of any of the provisions herein.
16. ATTORNEYS' FEES. If any arbitration, litigation, action, suit
or other proceeding is instituted to remedy, prevent or obtain relief from a
breach of this Agreement, in relation to a breach of this Agreement or
pertaining to a declaration of rights under this Agreement, the prevailing
party will recover all such party's attorneys' fees incurred in each and
every such action, suit or other proceeding, including any and all appeals or
petitions therefrom. As used in this Agreement, attorneys' fees will be
deemed to be the full and actual cost of any legal services actually
performed in connection with the matters involved, including those related to
any appeal or the enforcement of any judgment, calculated on the basis of the
usual fee charged by attorneys performing such services, and will not be
limited to "reasonable attorneys' fees" as defined in any statute or rule of
court.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
"THE COMPANY" "INDEPENDENT CONTRACTOR"
iNetVersity
a California corporation
By:
-------------------------------- ---------------------------
Its:
------------------------------
5
<PAGE>
EXHIBIT "A"
JOB DESCRIPTION:
DUTIES:
COMPENSATION:
EXHIBIT "B"
TERRITORY
The California counties and cities listed below.
COUNTIES:
6
<PAGE>
EXHIBIT 10.2
WEB MAINTENANCE AGREEMENT FOR
RXALTERNATIVE.COM
DATED OCTOBER 25, 1999
<PAGE>
WEB SITE MAINTENANCE AGREEMENT
FOR RXALTERNATIVE.COM
This Web Site Maintenance Agreement (this "Agreement") is made this
25th day of October, 1999, (the "Effective Date) by and between
iNetVisionz.com, Inc. (the "Developer") and RxAlternative.com, Inc. (the
"Customer").
A G R E E M E N T:
1. SERVICES TO BE RENDERED. The Developer will perform the web
site maintenance for the Customer as more particularly described in Exhibit
A, which is attached hereto and incorporated into this Agreement. All
services provided by the Developer to the Customer are defined as the
"Services," any and all resulting work product is the "Product," and any task
discretely listed on Exhibit A, attached hereto, is the "Task")
2. PAYMENT OF FEES. In consideration of the Services, the Customer
shall pay Developer, the fees (the "Fees") more particularly described in
Exhibit B, which is attached hereto and incorporated into this Agreement. The
Customer will purchase or advance all the expenses associated with
acquisition, setup, installation and hosting of the necessary software and
hardware for the maintenance of the Web Site.
3. INDEMNIFICATION.
(a) INDEMNIFICATION BY CUSTOMER. The Customer agrees to
indemnify, defend and hold the Developer, it's owners and its agents,
officers, directors, lawyers, accountants, and employees, harmless from and
against any and all losses, claims, demands, damages, liabilities, costs and
expenses, including but not limited to reasonable attorneys' fees and the
costs of any legal action arising from Customer's web site(s) or Customer's
use of the Services. Such indemnification shall include, but not be limited
to, claims for libel, slander, infringement of copyright, theft of
misappropriation of intellectual property, or unauthorized use of any
trademark, trade name, or service mark.
(b) INDEMNIFICATION BY DEVELOPER. Except as otherwise herein
provided, the Developer agrees to indemnify, defend and hold the Customer and
its agents, officers, directors, lawyers, and accountants harmless from and
against any and all losses, claims, demands, damages, liabilities, costs and
expenses, including but not limited to, reasonable attorneys' fees and costs
of any legal action (but excluding consequential damages) arising from the
Developer's gross negligence in the course of providing the Services under
this agreement. In no event will the Developer be liable for lost or damaged
data, loss of business, or anticipatory profits, or any other consequential
or incidental damages resulting from the use or operation of the Services or
the maintenance thereof.
Page 8 of 145
<PAGE>
4. LIMITATION OF DAMAGES. The Developer will endeavor to provide
high quality Services and a high quality Product. However, the Developer is
not, and will not be responsible for any consequential or incidental damages
resulting from any malfunctioning of Customer's web site resulting form
Developer's Services, including, but not limited to, any interruptions of
service, or data loss (including lost transactions) regardless of whether
such damages arose from Developer's negligence. Although the Developer will
endeavor to safeguard any data provided by the Customer, the Customer agrees
that it is responsible for safeguarding its data, including maintaining
backup data sets.
5. TERMINATION OF AGREEMENT.
(a) MATERIAL BREACH. If either party is in material breach this
Agreement, the non-breaching party may serve the breaching party with a
written notice specifying the material breach and requesting the breaching
party to cure it. If the breaching party fails to cure the material breach
within ten (10) days after its receipt of the notice, the non-breaching party
may terminate this Agreement by sending a written notice of termination to
the breaching party. The termination of this Agreement shall take effect
immediately on the receipt of such notice of termination by the breaching
party.
(b) TERMINATION ABSENT A BREACH. Either party shall have the
ability to unilaterally terminate the Agreement by sending the other party a
written notice stating that it is terminating the Agreement. The termination
of this agreement shall take effect sixty (60) days following the other
party's receipt of this notice. This sub-paragraph shall not apply to any
termination arising from a material breach.
(c) EFFECT OF TERMINATION. On any termination of this Agreement
pursuant to this paragraph, the Developer may immediately cease providing
Services to the Customer, and neither party shall have any further obligation
to the other under the Agreement, provided that neither party shall be
relieved from any obligations or liabilities arising under the Agreement
prior to its termination.
6. WARRANTIES; LIMITATIONS ON LIABILITY. THE DEVELOPER MAKES NO
WARRANTY, REPRESENTATION, OR PROMISE NOT EXPRESSLY SET FORTH IN THIS
AGREEMENT. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN THE SERVICES ARE
PROVIDED "AS IS." THE DEVELOPER DISCLAIMS AND EXCLUDES ANY AND ALL IMPLIED
WARRANTIES OF MERCHANTABILITY, TITLE AND FITNESS OF THE SERVICES FOR A
PARTICULAR PURPOSE. THE DEVELOPER DOES NOT WARRANT THAT THE SERVICES OR
RELATED MATERIALS WILL SATISFY CUSTOMER'S REQUIREMENTS OR THAT THE SERVICES
AND RELATED SERVICES WILL BE WITHOUT DEFECT OR ERROR.
7. ENTIRE AGREEMENT. This Agreement supersedes all previous
agreements between the parties, contains the entire understanding between the
parties, and may not be changed, except in writing, duly executed by each of
the parties.
Page 9 of 145
<PAGE>
8. INDEPENDENT CONTRACTOR. The Developer is an independent
contractor relative to the Customer and nothing contained herein shall be
deemed to create a partnership or agency relationship.
9. ASSIGNMENT. This agreement may not be assigned without the
express written consent of the non-assigning party.
10. NOTICES. All notices required by this Agreement shall be in
writing and sent by Facsimile, Electronic Mail, Federal Express, or U.S.
Mail, Return Receipt Requested as provided below. Such notice shall be
sufficient for the purposes of this Agreement only if sent to the party's
"Address for Service" as listed below. Such Address for Service may be
changed by any party by serving notice (in compliance with the paragraph) on
the other party. No notice sent by facsimile shall be sufficient without a
confirmation receipt. No notice sent by electronic mail shall be sufficient
unless sent to an address included in the recipient's Address for Service and
acknowledged by a human-generated response.
Developer's Address for Service:
Address: Attn: Meenaz Hudani
19951 Mariner Ave., Suite 100
Torrance, CA 90503
Fax: (310) 370-2205
E-mail: [email protected]
Customer's Address for Service:
Address: Attn: David Lafaille
864 S. Robertson Blvd., Suite 211
Los Angeles, California 90035
Fax: (310) 854-9092
E-mail: [email protected]
Page 10 of 145
<PAGE>
11. DISPUTE RESOLUTION. If a dispute or claim shall arise with
respect to any of the terms or provisions of this Agreement, then either
party may, by notice as herein provided, require that the dispute be
submitted under the Commercial Arbitration Rules of the American Arbitration
Association to an arbitrator in good standing with the American Arbitration
Association within fifteen (15) days after such notice is given. Any such
arbitrator so selected is to be mutually acceptable to both parties. If both
parties are unable to agree upon a single arbitrator, each party shall
appoint one (1) arbitrator. If either party does not appoint an arbitrator
within five (5) days after the other party has given notice of the name of
its arbitrator, the single arbitrator appointed by the party giving notice
shall be the sole arbitrator and such arbitrator's decision shall be binding
upon both parties. If two (2) arbitrators are appointed, these two (2)
arbitrators shall appoint a third arbitrator who shall proceed to resolve the
question. The written decision of the single arbitrator ultimately appointed
by or for both parties shall be binding and conclusive on the parties.
Judgment may be entered on such written decision by the single arbitrator in
any court having jurisdiction and the parties consent to the jurisdiction of
Orange County, California for this purpose. Any arbitration undertaken
pursuant to the terms of this section shall occur in Orange County,
California.
12. ATTORNEYS' FEES. In the event of any legal, equitable or
administrative action or proceeding brought by any party against another
party under this Agreement, the prevailing party shall be entitled to recover
the reasonable fees of its attorneys and any costs incurred in such action or
proceeding including costs of appeal, if any, in such amount that the court
or administrative body having jurisdiction over such action may award.
13. GOVERNING LAW. This Agreement will be construed and enforced in
accordance with, and governed by, the laws of the State of California in the
United States of America without giving effect to any conflict of laws
principles. The parties hereby consent to the personal jurisdiction of the
courts of the County of Orange, California, and waive any rights to change
venue.
14. CURRENCY DENOMINATIONS. All currency denominations are in
United States dollars.
SIGNATURE PAGE FOLLOWS
Page 11 of 145
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first written above.
The Developer
INETVISIONZ.COM, INC.
By: /s/ N. Khan
----------------------------
Its: President/CEO
---------------------------
The Customer
RxAlternative.com, Inc.
By: /s/ David Lafaille
---------------------------
David Lafaille
President/CEO
EXHIBIT A
SERVICES
The Developer shall provide maintenance services for the Customer's
web site, http://www.rxalternative.com, as follows:
1. Database Maintenance. The Developer will re-index the database
and making Minor Modifications (as defined below) to the database structures
as needed. ("Minor Modifications" are defined as adding not more than four
fields and not more than two tables to the database in any one month. Any
other modifications are outside the scope of this Agreement).
2. Technical Support. From 8:00 AM to 11:00 PM Pacific Standard (or
Daylight) Time excluding weekends and Holidays (as defined below), the
Developer will be available to provide technical support by telephone and
e-mail. ("Holidays" include New Year's Day, Presidents' Day, Easter, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, the day after
Thanksgiving, and Christmas Day.) On weekends and Holidays, designated
employees of the Developer will be available to be paged by the Customer for
Emergencies (as defined below). (An "Emergency" is defined as the failure of
a major component of the Web Site that prevents users from purchasing any
products, or preventing users from accessing a substantial portion of the Web
Site's content.)
3. During emergencies and critical updates, the Developer's
designated Network Administrators will be available for troubleshooting on
site of the Customer. (An "Emergency" is defined as the failure of a major
component of the Web Site that prevents users from
Page 12 of 145
<PAGE>
purchasing any products, or preventing users from accessing a substantial
portion of the Web Site's content. "Critical update" is a crucial security or
other software patch provided by the original software vendor or legislated
by the government authorities. "Substantial portion of the Web Site" being
defined as no less than forty percent (40%) of the Web site content.)
4. Updates/Changes. The Developer will make any requested updates or
changes to existing components of the Web Site. The Developer will use best
efforts to respond to requests by the Customer to update or change the Web
Site within twenty-four (24) hours, acknowledging receipt of the request and
providing an estimated time-frame within which the Customer should expect the
request will be fulfilled. The Customer agrees that adding any new components
is outside the scope of this Agreement.
13
<PAGE>
EXHIBIT B
FEES
In consideration of the Services, the Customer shall pay Developer
Fees in the amount of Ten Thousand Dollars ($10,000) per month, starting
first (1) date of January, year two thousand A.D. (2000), for the first forty
(40) "man hours" of Services provided by the Developer. For any Services
rendered in excess of these initial forty (40) hours each month, the Customer
shall pay Two Hundred Dollars for each additional "man hour," rounded to the
nearest hour.
The Customer will purchase or advance all the expenses associated
with acquisition, setup, installation and hosting of the necessary software
and hardware for the maintenance of the Web Site.
The Developer shall mail the Customer an invoice for each month and
the Fees listed on such invoice shall be paid by the Customer within thirty
(30) days of its receipt of the invoice.
14
<PAGE>
EXHIBIT 10.3
WEB SITE DEVELOPMENT AGREEMENT FOR THE
CREATION OF TWO NEW WEB SITES FOR
RXALTERNATIVE.COM
DATED OCTOBER 25, 1999
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WEB SITE DEVELOPMENT AGREEMENT
FOR THE CREATION OF TWO NEW WEB SITES
FOR RXALTERNATIVE.COM
This Web Site Development Agreement (this "Agreement") is made this
25th day of October, 1999, (the "Effective Date) by and between iNetVisionz.com,
Inc. (the "Developer" ) and RxAlternative.com, Inc. (the "Customer").
A G R E E M E N T:
1. SERVICES TO BE RENDERED. The Developer will perform web development
work for the Customer as more particularly described in Exhibit A, which is
attached hereto and incorporated into this Agreement. All services provided by
the Developer to the Customer are defined as the "Services," any and all
resulting work product is the "Product," and any task discretely listed on
Exhibit A, attached hereto, is the "Task") If Exhibit A lists an estimated date
or time for completion ("Estimated Completion Date") for any Task, the Developer
shall use best efforts to complete the Task by such Estimated Completion Date.
However, the Developer cannot guarantee that any Task will be complete on the
Estimated Completion Date. If Exhibit A does not list any Estimated Completion
Date for any Task, the Developer will use best efforts to complete such Task
within a reasonable period of time.
2. PAYMENT OF FEES. In consideration of the Services, the Customer
shall pay Developer, the fees (the "Fees") more particularly described in
Exhibit B, which is attached hereto and incorporated into this Agreement.
3. INDEMNIFICATION.
(a) INDEMNIFICATION BY CUSTOMER. The Customer agrees to
indemnify, defend and hold the Developer, it's owners and its agents,
officers, directors, lawyers, accountants, and employees, harmless from and
against any and all losses, claims, demands, damages, liabilities, costs and
expenses, including but not limited to reasonable attorneys' fees and the
costs of any legal action arising from Customer's web site(s) or Customer's
use of the Services. Such indemnification shall include, but not be limited
to, claims for libel, slander, infringement of copyright, theft of
misappropriation of intellectual property, or unauthorized use of any
trademark, trade name, or service mark.
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(b) INDEMNIFICATION BY DEVELOPER. Except as otherwise herein
provided, the Developer agrees to indemnify, defend and hold the Customer and
its agents, officers, directors, lawyers, and accountants harmless from and
against any and all losses, claims, demands, damages, liabilities, costs and
expenses, including but not limited to, reasonable attorneys' fees and costs of
any legal action (but excluding consequential damages) arising from the
Developer's gross negligence in the course of providing the Services under this
agreement. In no event will the Developer be liable for lost or damaged data,
loss of business, or anticipatory profits, or any other consequential or
incidental damages resulting from the use or operation of the Services or the
maintenance thereof.
4. LIMITATION OF DAMAGES. The Developer will endeavor to
provide high quality Services and a high quality Product. However, the
Developer is not, and will not be responsible for any consequential or
incidental damages resulting from any malfunctioning of Customer's web site
resulting form Developer's Services, including, but not limited to, any
interruptions of service, or data loss (including lost transactions), unless
such damages arose from Developer's gross negligence. In an event involving
gross negligence on the part of the Developer, the liability shall be limited
to the sum of three thousand dollars ($3,000.00) per day. Although the
Developer will endeavor to safeguard any data provided by the Customer, the
Customer agrees that it is responsible for safeguarding its data, including
maintaining backup data sets.
5. TERMINATION OF AGREEMENT.
(a) MATERIAL BREACH. If either party is in material breach
this Agreement, the non-breaching party may serve the breaching party with a
written notice specifying the material breach and requesting the breaching party
to cure it. If the breaching party fails to cure the material breach within ten
(10) days after its receipt of the notice, the non-breaching party may terminate
this Agreement by sending a written notice of termination to the breaching
party. The termination of this Agreement shall take effect immediately on the
receipt of such notice of termination by the breaching party.
(b) TERMINATION ABSENT A BREACH. Neither party shall have the
ability to unilaterally terminate the Agreement, except as specifically
permitted by provisions of this Agreement. A party specifically granted the
ability to terminate this Agreement for any reason not covered by subsection (a)
of this Paragraph , may exercise this right by sending the other party a written
notice stating that it is terminating the Agreement and citing the specific
paragraph and subparagraph providing the party with the ability to terminate the
Agreement. The termination of this agreement shall take effect thirty (30) days
following the other party's receipt of this notice. This sub-paragraph shall not
apply to any termination arising from a material breach.
(c) EFFECT OF TERMINATION. On any termination of this
Agreement, the Developer may immediately cease providing Services to the
Customer, and neither party shall have any further obligation to the other under
the Agreement, provided that neither party shall be relieved from any
obligations or liabilities arising under the Agreement prior to its termination.
If the Developer has not provided substantially all of the Services listed in
Exhibit A prior to the termination of this Agreement, the Developer shall be
entitled to retain not less than the number
18
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<PAGE>
of Shares (as defined in Exhibit B) necessary to compensate the Developer at
the rate one hundred twenty-five dollars ($125.) per man hour for the
Services actually rendered, based on a price of one dollar and twenty-five
cents ($1.25) per Share, which the parties agree is the fair market value of
the Customer's common stock on the date this Agreement is signed.
6. WARRANTIES; LIMITATIONS ON LIABILITY. THE DEVELOPER MAKES NO
WARRANTY, REPRESENTATION, OR PROMISE NOT EXPRESSLY SET FORTH IN THIS AGREEMENT.
EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN THE SERVICES ARE PROVIDED "AS
IS." THE DEVELOPER DISCLAIMS AND EXCLUDES ANY AND ALL IMPLIED WARRANTIES OF
MERCHANTABILITY, TITLE AND FITNESS OF THE SERVICES FOR A PARTICULAR PURPOSE. THE
DEVELOPER DOES NOT WARRANT THAT THE SERVICES OR RELATED MATERIALS WILL SATISFY
CUSTOMER'S REQUIREMENTS OR THAT THE SERVICES AND RELATED SERVICES WILL BE
WITHOUT DEFECT OR ERROR.
7. ENTIRE AGREEMENT. This Agreement supersedes all previous agreements
between the parties, contains the entire understanding between the parties, and
may not be changed, except in writing, duly executed by each of the parties.
8. INDEPENDENT CONTRACTOR. The Developer is an independent contractor
relative to the Customer and nothing contained herein shall be deemed to create
a partnership or agency relationship.
9. ASSIGNMENT. This agreement may not be assigned without the express
written consent of the non-assigning party.
10. NOTICES. All notices required by this Agreement shall be in writing
and sent by Facsimile, Electronic Mail, Federal Express, or U.S. Mail, Return
Receipt Requested as provided below. Such notice shall be sufficient for the
purposes of this Agreement only if sent to the party's "Address for Service" as
listed below. Such Address for Service may be changed by any party by serving
notice (in compliance with the paragraph) on the other party. No notice sent by
facsimile shall be sufficient without a confirmation receipt. No notice sent by
electronic mail shall be sufficient unless sent to an address included in the
recipient's Address for Service and acknowledged by a human-generated response.
Developer's Address for Service:
Address: Attn: Meenaz Hudani
19951 Mariner Ave., Suite 100
Torrance, CA 90503
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<PAGE>
Fax: (310) 370-2205
E-mail: [email protected]
Customer's Address for Service:
Address: Attn: David Lafaille
864 S. Robertson Blvd., Suite 211
Los Angeles, California 90035
Fax: (310) 854-9092
E-mail: [email protected]
11. DISPUTE RESOLUTION. If a dispute or claim shall arise with respect
to any of the terms or provisions of this Agreement, then either party may, by
notice as herein provided, require that the dispute be submitted under the
Commercial Arbitration Rules of the American Arbitration Association to an
arbitrator in good standing with the American Arbitration Association within
fifteen (15) days after such notice is given. Any such arbitrator so selected is
to be mutually acceptable to both parties. If both parties are unable to agree
upon a single arbitrator, each party shall appoint one (1) arbitrator. If either
party does not appoint an arbitrator within five (5) days after the other party
has given notice of the name of its arbitrator, the single arbitrator appointed
by the party giving notice shall be the sole arbitrator and such arbitrator's
decision shall be binding upon both parties. If two (2) arbitrators are
appointed, these two (2) arbitrators shall appoint a third arbitrator who shall
proceed to resolve the question. The written decision of the single arbitrator
ultimately appointed by or for both parties shall be binding and conclusive on
the parties. Judgment may be entered on such written decision by the single
arbitrator in any court having jurisdiction and the parties consent to the
jurisdiction of Orange County, California for this purpose. Any arbitration
undertaken pursuant to the terms of this section shall occur in Orange County,
California.
12. ATTORNEYS' FEES. In the event of any legal, equitable or
administrative action or proceeding brought by any party against another party
under this Agreement, the prevailing party shall be entitled to recover the
reasonable fees of its attorneys and any costs incurred in such action or
proceeding including costs of appeal, if any, in such amount that the court or
administrative body having jurisdiction over such action may award.
13. GOVERNING LAW. This Agreement will be construed and enforced in
accordance with, and governed by, the laws of the State of California in the
United States of America without giving effect to any conflict of laws
principles. The parties hereby consent to the personal jurisdiction of the
courts of the County of Orange, California, and waive any rights to change
venue.
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<PAGE>
14. CURRENCY DENOMINATIONS. All currency denominations are in United
States dollars.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first written above.
The Developer
INETVISIONZ.COM, INC.
By: /s/ N. KHAN
------------------------------------
Its: CEO/PRESIDENT
-----------------------------------
The Customer
RxAlternative.com, Inc.
By: /s/ DAVID LAFAILLE
------------------------------------
David Lafaille
President/CEO
21
<PAGE>
EXHIBIT A
SERVICES
The Developer will create a new web site to replace the Customer's
existing web site at http://www.rxalternative.com (the "RxAlternative Site") and
a new web site to be hosted as http://www.internatural.com. (the "InterNatural
Site"). (These sites are also referred to as the "Web Sites")
A. The Developer shall construct the RxAlternativeWeb Sites in three phases as
follows:
Phase I. Inception Phase.
In Phase I, the Developer will work with the Customer to analyze the
Customer's requirements for the Web Site. Based on the Customer's requirements,
the Developer will determine what data will need to be gathered and what
processes will be needed for the Web Site. After performing data modeling and
analysis, the Developer will design any needed databases for the Web Site. The
Developer will work with the Customer to develop a "Demo" site, displaying the
"look and feel" of the Web Site.
Phase II. Development Phase.
In Phase II, the Developer will construct the Web Site, coding the
HTML, developing graphics, and installing the following services: (a) a shopping
cart, (b) a search engine, (c) a client survey, (d) a discussion board, (e)
e-mail automation (enabling the Web Site to automatically send out email
notifications to users), (g) registration and member validation processes, (h)
an automatic payment solution, and (i) Virtual MD (a database configured to
function as an online medical advisor to users).
Phase III. Testing and Hosting
In Phase III, the Developer will perform (a) Alpha testing, (b) Beta
testing, and (c) Site Testing.
B. The Developer shall construct the InterNatural Site, coding the HTML,
developing graphics, and installing the following services: (a) a shopping cart,
(b) a search engine, (c) registration and member validation processes, and (d)
an automatic payment solution.
22
<PAGE>
LIST OF iNetVisionz.com REQUIREMENTS FROM RXALTERNATIVE Page 1 of 8
EXHIBIT A
<TABLE>
<CAPTION>
NO REQUIREMENTS DESCRIPTION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
I DATABASE
1 Product Containing detailed product data, department (See page 11)
2 News Containing news data
3 Articles Library Containing articles data
4 Encyclopedia Containing related library of definitions, symptoms, etc.
5 Books Containing books database related to Rx Products
6 Referral Containing Data of Doctors
7 Artificial Intelligence Containing Question and Answer + keywords that point to certain product +
product to product relationship + other criteria
8 Survey Survey Contents
II BUSINESS PROCESS
1 Data Flow for Contents Flowchart of the contents flow when customers visit the site and go to
library of articles, news, encyclopedia and books.
2 Data Flow for Shopping Cart Flowchart of the product navigation, purchase, and other processes,
when customers visit the site and purchase the product
3 Data Flow for Search Engine Flowchart of the product, news, articles, books, other subjects,
when customers visit the site
4 Data Flow for Virtual Doctor Flowchart of the virtual doctor using questions/special keywords/
product to product relationships/etc
5 Data Flow for Email Account Flowchart of the email account assignments
6 Data Flow for Discussion Board Flowchart of discussion board for customers (general topics)
7 Data Flow for 'AskDoctor' Flowchart of discussion board for customers to discuss their problem
doctors/specialists
8 Data Flow for Help Desk Flowchart of help desk that contains FAQ, explanation to certain words, etc
9 Data Flow for Chat Room Flowchart of real time discussion between doctors, consumers,
customer support, etc.
10 Data Flow for Site Map Flowchart of site map
III SITE LAYOUT & GRAPHICS
LOGO
New logo based on Site Layout (for presentation)
COLOR SCHEME
Color Scheme based on Site Layout (for presentation)
SITE FUNCTIONALITIES
Functionality of the site for ex: product, library, etc.
LAYOUT
The basic layout of the site (with top frame, left and right frame, and
bottom frame and the contents in the center)
GRAPHICS
Graphic animation for logo, virtual doctor, and other still pictures for
buttons
</TABLE>
23
<PAGE>
EXHIBIT A Page 2 of 8
PRODUCT DATABASE SPECIFICATION
RxAlternative is expected to provide a product database based on the
specifications provided below.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
TABLE NAME FIELDS NAME NOTE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CATEGORY category_id ID of Product Category
cat_title Category Title
cat_description Category Description
- ----------------------------------------------------------------------------------------------------------
SUBCATEGORY subcategory_id ID of Product Sub-Category
subcat_title Sub-Category Title
subcat_description Sub-Category Description
- ----------------------------------------------------------------------------------------------------------
VENDOR vendor_id ID of Vendor
vendor_title Vendor Title
vendor_description Vendor Description
- ----------------------------------------------------------------------------------------------------------
PRODUCT product_id ID of product (to uniquely identify the product)
product_title Title of product (formally)
product_shortdesc Product Short Description
product_longdesc Product Long Description
price Retail Price
dsicount_price Discount Price (if any)
smallimage Small image the product (put file name)
largeimage Large image the product (put file name)
quantity The total number of products in the inventory
availability The availability of product, ex: 'usually 24 hours,'
usually 2-3 days,' etc.)
type Type of the product: BOOK, VIDEO, AUDIO, MEDICINE, other
category?)
subcategory_id Sub-Category ID based on SUBCATEGORY Table)
keywords All important words associated to the product that could
speed up and focus the search.
- ----------------------------------------------------------------------------------------------------------
AUDIO product_id ID of product (to uniquely identify the product)
time_length length in minutes of the audio
performer performer's name
format Cassette or CD
- ----------------------------------------------------------------------------------------------------------
VIDEO product_id ID of product (to uniquely identify the product)
time_length length in minutes of the audio
performer performer's name
format DVD/VHS/other?
- ----------------------------------------------------------------------------------------------------------
BOOK product_id ID of product (to uniquely identify the product)
author_fname First Name of Author
author_lname Last Name of Author
publisher Publisher Name
ISBN ISBN (Number to uniquely identify the book)
edition The Edition (1st, 2nd, etc)
pub_date Book Publishing Date
format Format of book whether: hardcopy, softcopy, large size, etc.
- ----------------------------------------------------------------------------------------------------------
MEDICINE product_id ID of product (to uniquely identify the product)
sale_unit See 'Sale Unit' in the Book (internatural.com)
case_lot See 'Case Lot' in the Book (internatural.com)
ingredients Ingredients of each product
product_interactions interaction between one product to other products
product symptoms relationship between products and symptoms
- ----------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
EXHIBIT A
PRODUCT DATABASE DIAGRAM
<TABLE>
<S> <C> <C> <C>
B category_id B product_id B product_id
cat_title minute_length sale_unit
cat_description peformer case_lot
format ingredients
product_interaction
product_symptoms
B product_id
product_title
B category_id B subcategory_id product_shortdesc
B subcategory_id product_longdesc
B vendor_id subcat_description price
discount_price
smallimage
largeimage
quantity
B product_id availability
author_lname category
author_fname subcategory_id B product_id
publisher keywords time_length
B vendor_id sbn performer
vendor_title edition format
vendor_description pubdate
format
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
REQUIRED SOFTWARE AND HARDWARE LIST Page 4 of 8
EXHIBIT A
- ---------------------------------------- ------------------------------ ------------------------------------------ ---------------
SOFTWARE PURPOSE VENDOR
------------------------------------------ ---------------
ALT 1 ALT 2 ALT 3 ALT 4
- ---------------------------------------- ------------------------------ --------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
SYSTEM SOFTWARE X X X X Microsoft
Windows NT Server 4.0 for the Operating System
Enterprise
Internet Information Server 4.0 Web Server
Microsoft Back Office Server 4.5
- ---------------------------------------- ------------------------------ --------- ---------- ---------- ---------- ---------------
DATABASE SOFTWARE
SQL server 7.0 for the Enterprise Database Server X
Microsoft
Oracle 8I Enterprise Edition Database Server
2 yrs license with 500 MHz Processor X Oracle
4 yrs license with 500 MHz Processor X
Lifetime with 500 MHz Processor
X
- ---------------------------------------- ------------------------------ --------- ---------- ---------- ---------- ---------------
WEB APPLICATION SERVER
ColdFusion Application Server Web Application Server X X X X Allaire
4.5 Enterprise Edition
Allaire Spectra 1.0 Content X X X X Allaire
Management/Personalization
Macromedia Generator 2.0 Generate/automate Flash content X X X X Macromedia
Macromedia Drumbeat 2000 e-commerce Generate Active Server
Edition Pages X X X X Macromedia
NetObject Fusion Authoring Content Contributor X X X X NetObjects
Server Server
- ---------------------------------------- ------------------------------ --------- ---------- ---------- ---------- ---------------
HTML/COLDFUSION EDITORS
ColdFusion Studio 4.0 Create ColdFusion X X X X Allaire
applications
Dreamweaver 3.0 Create Dynamic HTML content X X X X Macromedia
NetObject Fusion 4.0 Create HTML, ASP, JSP pages X X X X NetObjects
- ---------------------------------------- ------------------------------ --------- ---------- ---------- ---------- ---------------
2D GRAPHIC SOFTWARE
Adobe Photoshop Create/Edit 2D graphic X X X X Adobe
content
Adobe Illustrator Create/Edit 2D Vector X X X X Adobe
graphics
Fireworks 3.0 Optimize graphics for web X X X X Macromedia
KPT Vector Effects 1.5 Creative Plug-in for Adobe X X X X Metacreations
Illustrator
- ---------------------------------------- ------------------------------ --------- ---------- ---------- ---------- ---------------
<PAGE>
- ---------------------------------------- ------------------------------ --------- ---------- ---------- ---------- ---------------
3D GRAPHIC SOFTWARE
Metacreation Poser 4.0 Create 3D human figures X X X X Metacreations
Metacreations Bryce 4.0 Create 3D environments X X X X Metacreations
3Dstudio Max Release 3.0 Create/Edit/Design/Animate X X X X Kinetix
3D Graphics
Character Studio Release 2.2 Animate 3D human figures X X X X Kinetix
Canoma Convert 2D photos to 3D X X X X Metacreations
designs
- ---------------------------------------- ------------------------------ --------- ---------- ---------- ---------- ---------------
STREAMING MEDIA
Flash 4.0 create streaming media X X X X Macromedia
(vector)
Director 7.0 create streaming media X X X X Macromedia
(raster)
VivoActiveVideoNow 3.0 create/serve streaming X VivoSoftware
videos
RealServer Professional create/serve streaming X X X RealNetworks
videos
- ---------------------------------------- ------------------------------ --------- ---------- ---------- ---------- ---------------
WEB APPLICATIONS
AbleCommerce Developer 2.9 Shopping Cart X X X X AbleCommerce
Allaire Forums Bulletin/Discussion Board X X X X Allaire
Ebrain Artificial Intelligence X X X X pdv
Chat Chat Room X X X X Chatspace
Survey Online Survey X X X X
Global Site Plus Service 128-bit SSL, $250K X X X X Verisign
Netsure, free security and
site performance audits
Automate Payment Services Online Credit Card X X X X Verisign
Authorization
Setup Fee X X X X
- ---------------------------------------- ------------------------------ --------- ---------- ---------- ---------- ---------------
WEB STATISTIC ANALYSIS
WebTrends Enterprise Suite Traffic Analysis X X X X WebTrends
- ---------------------------------------- ------------------------------ --------- ---------- ---------- ---------- ---------------
HARDWARE: SERVERS
Dual-Processor Pentium III Xeon Data Server X X X X SAG Electronics
550 MHz
Dual-Processor Pentium III 600 Web Hosting Server X X X X SAG Electronics
MHz
- ---------------------------------------- ------------------------------ --------- ---------- ---------- ---------- ---------------
</TABLE>
The Customer will purchase or advance all the expenses associated with
acquisition, setup, installation and hosting of the above software and hardware
for the development and maintenance of the Web Site.
<PAGE>
CHART OMITTED
<PAGE>
CHART OMITTED
<PAGE>
<TABLE>
<CAPTION>
NEW RXALTERNATIVE SITE FEATURES
EXHIBIT A
- --------- ------------------------------------- ----------------------------------------------------------------------------------
NO DESCRIPTION NOTE
- --------- ------------------------------------- ----------------------------------------------------------------------------------
I VIRTUAL DOCTOR (VD)
- --------- ------------------------------------- ----------------------------------------------------------------------------------
<S> <C> <C>
1 Graphic Animation Using Flash 4.0 Virtual Doctor Picture
and DHTML
- --------- ------------------------------------- ----------------------------------------------------------------------------------
2 Personalization - Customizing VD according to user profiles
- Maintaining User Personal Data
- --------- ------------------------------------- ----------------------------------------------------------------------------------
3 Artificial Intelligence behind the Logic that controls the behavior of VD supported by database. The database
scene Q/A, product to product interaction, product to symptom relationship, or product
to medical problem relationship.
- --------- ------------------------------------- ----------------------------------------------------------------------------------
II SHOPPING CART
- --------- ------------------------------------- ----------------------------------------------------------------------------------
1 Product Naviation Product Catalog with description, pictures, price.
- --------- ------------------------------------- ----------------------------------------------------------------------------------
2 Product Cart Cart of Products when customer decides to buy.
- --------- ------------------------------------- ----------------------------------------------------------------------------------
3 Product Search Engine The ability to search the products.
- --------- ------------------------------------- ----------------------------------------------------------------------------------
4 Processing The processafter customer decides t check-out: customer data, credit card, and
shopping basket will be inserted to database.
- --------- ------------------------------------- ----------------------------------------------------------------------------------
5 Automate Payment Verification Credit Card will be verified by Credit Card Verification Company like: Cybercash,
PaymentNet, etc.
- --------- ------------------------------------- ----------------------------------------------------------------------------------
6 Data Encryption/Security Using Security Software provided by Verisign or other vendors to secure the
transaction processing
- --------- ------------------------------------- ----------------------------------------------------------------------------------
7 Account History The ability to keep User's History in the database, and keep track of them.
- --------- ------------------------------------- ----------------------------------------------------------------------------------
8 Personalization The ability to offer certain customers with special products, or same products
that they have ordered, or other related products.
- --------- ------------------------------------- ----------------------------------------------------------------------------------
III SEARCH ENGINE
- --------- ------------------------------------- ----------------------------------------------------------------------------------
1 Search Product based on keywords, The ability to search products based nkeywords, department, or product name
department, or product name.
- --------- ------------------------------------- ----------------------------------------------------------------------------------
2 Search News The ability to search News based on keywords
- --------- ------------------------------------- ----------------------------------------------------------------------------------
3 Search Article/Library The ability to search Articles based on keywords
- --------- ------------------------------------- ----------------------------------------------------------------------------------
4 Search in Encyclopedia The ability to search Encyclopedia based on keywords
- --------- ------------------------------------- ----------------------------------------------------------------------------------
5 Search Referrals The ability to search Referrals based on keywords
- --------- ------------------------------------- ----------------------------------------------------------------------------------
IV DISCUSSION BOARD
- --------- ------------------------------------- ----------------------------------------------------------------------------------
1 General Discussion Topics The general discussion forum with general topics
- --------- ------------------------------------- ----------------------------------------------------------------------------------
2 'ASK DOCTOR' Discussion Board The customized discussion board for doctors/specialist with customers.
- --------- ------------------------------------- ----------------------------------------------------------------------------------
V CHAT ROOM
- --------- ------------------------------------- ----------------------------------------------------------------------------------
1 Real Time Discussion between Real time general discussion with general topics.
customers, doctors, specialists,
and customers supports.
- --------- ------------------------------------- ----------------------------------------------------------------------------------
VI REGISTRATION AND VALIDATION PROCESS
- --------- ------------------------------------- ----------------------------------------------------------------------------------
1 Registration Page Customers need to register before log-in.
- --------- ------------------------------------- ----------------------------------------------------------------------------------
2 Log-in Page Customers need to log-in before proceeding.
- --------- ------------------------------------- ----------------------------------------------------------------------------------
3 Validation Message (OK/Error) Error Message or OK Message after log-in.
- --------- ------------------------------------- ----------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
- --------- ------------------------------------- ----------------------------------------------------------------------------------
VII EMAIL
- --------- ------------------------------------- ----------------------------------------------------------------------------------
<S> <C> <C>
1 Mass automate mailing with certain RxAlternative can automate the mass mailing capability to certain customers or to
target the all customers in the database.
- --------- ------------------------------------- ----------------------------------------------------------------------------------
VIII FEATURED PRODUCT DISPLAY Display the Feature Products in certain pages
- --------- ------------------------------------- ----------------------------------------------------------------------------------
IX CONTENTS
- --------- ------------------------------------- ----------------------------------------------------------------------------------
1 Article Library Contains Articles
- --------- ------------------------------------- ----------------------------------------------------------------------------------
2 News Contains News
- --------- ------------------------------------- ----------------------------------------------------------------------------------
3 Encyclopedia Contains Encyclopedia
- --------- ------------------------------------- ----------------------------------------------------------------------------------
4 Books Library Contains Books Library
- --------- ------------------------------------- ----------------------------------------------------------------------------------
X SURVEY Survey the customer preferences or other things based on the requirements
- --------- ------------------------------------- ----------------------------------------------------------------------------------
XI CUSTOMER SUPPORT Using Forms, customers can contact customer support via email.
- --------- ------------------------------------- ----------------------------------------------------------------------------------
XII REFERRAL The ability to insert new doctors/specialists into database, customer can search
the referrals based on their zip code.
- --------- ------------------------------------- ----------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
EXHIBIT B
FEES
In consideration of the Services, the Customer shall issue 750,000
shares (the "Shares") of the Customer's Common Stock to the Developer on a fully
diluted basis based on the number of shares issued and outstanding as of the
date of this Agreement which are approximately 20,000,000 shares. Therefore, the
Shares will represent 4.17% (four and seventeen hundredths percent =
750,000/20,000,000) of the Customer's outstanding common stock for dilution
purposes on the date this Agreement is signed and said equity position of 4.17%
shall be maintained at no additional cost to the Developer regardless of future
new issues of Common Stock or other diluting equity, until the sooner to occur
of (i) the Customer's Initial Public Offering (as defined below) or (ii) the
fifth anniversary of the date of this Agreement. (An "Initial Public Offering"
is any public offering of the Customer's common stock of at least ten million
(10,000,000) shares and/or resulting in a market capitalization of at least one
hundred million dollars ($100,000,000)).
The Customer is obligated to register the Shares in any registration
statement filed by the Customer with the Securities and Exchange Commission, so
that holders of the Shares shall be entitled to sell the same simultaneously
with and upon the terms and conditions as the securities sold for the account of
the Customer are being sold pursuant to any such registration statement, subject
to such lock-up provisions as may be proposed by the underwriter of said
registration statement and agreed to by the investors.
3
<PAGE>
EXHIBIT 10.4
SOUTH BAY PRIVATE INDUSTRY COUNCIL AGREEMENT
ENTITLED AMENDMENT NO. 4 TO AGREEMENT NO. 96-67
BY AND BETWEEN THE COMPANY AND THE CITY
OF INGLEWOOD
<PAGE>
AMENDMENT NO. 4 TO AGREEMENT NO. 96-67
THIS AMENDMENT is made and entered into this 29TH day of JUNE, 1999 by
and between the CITY OF INGLEWOOD, a municipal corporation, hereinafter referred
to as "CITY" and INETVERSITY, INC, a private for profit California Corporation,
hereinafter referred to as "Vendor."
WHEREAS, on MARCH 5, 1996, City and Vendor entered into Agreement No.
96-67 to provide Classroom Training Individual Referral services under the Job
Training Partnership Act; and
WHEREAS, Vendor has requested an amendment to Agreement No. 96-67 to
extend the "Term of Agreement" in Section III from June 30, 1999 to June 30,
2000; and
WHEREAS, Vendor has agreed to provide said services at the rate set
forth herein below; and
NOW THEREFORE, in consideration of the premises the
parties hereto have agreed as follows:
1. Section 1A and B: Shall read as follows:
A. Further Responsibilities
Vendor shall:
1. Provide services funded under this agreement only to
individuals determined eligible under JTPA guidelines as designated by the SBSDA
and City.
2. Provide facilities which are adequate to fulfill the
requirements of this contract.
3. Provide documents as set forth in Exhibit "C", before this
contract can be implemented.
4. Provide services as described in Program Plan, Exhibit "D".
B. REPORTS AND RECORDS
1. Vendor agrees to provide reports, books, records and data
related to program activities funded by this Agreement, in addition to those
expressly required by other provisions of this Agreement, as may be requested by
the City its agents or designees. Upon written request, attendance records shall
be submitted to case manager(s), or other responsible party(s) on a monthly
basis, and/or every two (2) weeks if participant is receiving needs-based, or
needs-related payments.
2. Confidentiality
All data and information provided in such reports and records shall be
subject to applicable provisions of State and/or Federal law concerning
confidentiality of documents and records.
3. Retention of Records
Vendor agrees to retain all records pertinent to all grants, funds or
agreements under the Job Training Partnership Act, including financial,
statistical, property, and participant records and supporting documentation for
a period of three years from the date of submission to the State of the final
expenditure report for the program year's allotment. Records for non-expendable
property shall be retained for a period of three years after final disposition
of the property. Records described herein shall be retained beyond the
prescribed period if any litigation or audit is begun or if a claim is
instituted involving the grant or agreement covered by the records. In these
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<PAGE>
instances, Vendor will retain the records until the litigation, audit, or claim
has been finally resolved. Records must be retained locally to be accessible to
the City, the SBSDA, its agents or designees.
4. Inspection
Such records, reports, books, financial statements, and other documents
required herein shall be opened to inspection by and permitted access to City,
the South Bay SDA, its designees or agents, the State, independent auditor(s),
and/or the United States Department of Labor, or designees of any of these
agencies at any time during Vendor's normal business hours.
2. Section II. A. shall be amended and is to be read as follows:
II - COMPENSATION
A. The parties agree that this shall be a tuition reimbursement
contract. Compensation for the services covered by this Agreement shall be at a
rate less than or equal to the published tuition rate of Vendor, and shall be
disbursed in accordance with tuition reimbursement and refund policies agreed to
by Vendor. City shall be reimbursed any amount of Pell or other Education
Assistance payments made to Vendor for training costs on behalf of JTPA
participants or, if needed, City may renegotiate the use of the Pell grant to
meet the supportive service(s) needs of participant(s). Fifty percent (50%) of
tuition is paid upon verification that participant has completed one half of
total training hours as stipulated herein. The remaining 50% payment is made
upon verification of completion of training, or on a prorata basis in accordance
with vendor's tuition refund policy. The City shall be entitled to the same
refund policy and procedures as applied to all other students. City shall
process the billing as received and issue payment therefore as soon as
reasonably practicable and in the ordinary course of City business. Compensation
shall be made as stipulated herein and in accordance with SBSDA/JTPA directives,
and tuition reimbursement procedures.
3. Section II.C. through F; NO CHANGES
D. The City reserves the right to withhold or refuse payment
for late forms, including invoices, required from the Vendor and/or referring
entity(s). City/SBSDA reserves the right to withhold or refuse payment for any
portion of service(s) or consideration not rendered by Vendor and/or received by
participant as stipulated herein. In accordance with Vendor's tuition refund
policies, applicable State tuition refund requirements, and/or as mutually
agreed and stipulated herein, the payable costs shall be reimbursed to vendor
upon verification of completion of training or on a prorata basis per training
hour completed for those participants who do not complete the training. In every
case, the more restrictive of these provisions shall prevail.
E. City also reserves the right to make compensation payment
to vendor at anytime during the Agreement period. City reserves the right in
order to comply with Federal or State expenditure guidelines to make
compensation payments to vendor for services obligated to be performed, but not
yet completed.
F. The sum(s) agreed to in Section II.C. shall include all
costs associated with training and placement services which are to be provided
under this agreement. Vendor shall make no additional claims for costs, charges,
or fees, nor shall Vendor receive additional payment or any form of
reimbursement from the City, SBSDA, individual participants or any other party,
other than as specifically detailed in this Agreement.
4. Section III; shall be amended and is to be read as follows
SECTION III - TERM OF AGREEMENT
Vendor shall commence performance under the terms of this agreement as
of the date of the City's notice to proceed. Unless sooner terminated as
provided herein, this agreement shall expire on June 30, 2000. However, Vendor
may continue to perform, complete and be
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compensated for services rendered after June 30, 2000 for those activities
covered by this Agreement and begun prior to said expiration date.
5. Section IV; shall be amended and is to be read as follows
SECTION IV - MODIFICATIONS
This contract fully expresses the agreement of the parties. Any
modification or amendment of the terms or conditions of this contract must be by
means of a separate written document approved by the City. No oral conversation
between any officer or employee of the parties shall modify this contract in any
way.
6. Section V; shall be amended and is to be read as follows
SECTION V - DISPUTES AND BREACH
A. DISPUTES
Any dispute arising from this contract shall be reviewable in
accordance with procedures set forth in 20 C.F.R. subpart E.
B. BREACH
In the event any party fails to perform, in whole or in part,
any promise, covenant, or agreement herein, or should any representation made by
it be untrue, any aggrieved party may avail itself of all rights and remedies,
at law or equity, in the courts of law. Said rights and remedies are cumulative
of those provided for herein with respect to termination, if any, except that in
no event shall any party recover more than once, suffer a penalty or forfeiture,
or be unjustly compensated.
7. Section XIV; shall be amended and is to be read as follows
SECTION XIV - NOTICES
All notices to be given in accordance with this Agreement shall be
deemed served by (1) enclosing same in a sealed envelope addressed to the party
intended to receive the same at the address indicated herein and deposited
postage prepaid in the United States Postal Service, or by (2) personal service.
For these purposes, the addresses of the parties shall be as follows:
CITY
City of Inglewood
One Manchester Blvd.
Inglewood, California 90301
Contact: Peggy Aldridge
Phone: 310/412-5558 FAX: 310/412-4252
VENDOR
I-NetVersity, Inc.
19951 Mariner Ave.
Torrance, CA 90503
Contact: N. Khan
Phone: (310) 793-4581
8. Exhibit "A through D": NO CHANGE
9. Exhibit E: Statement of Business Ownership for vendor (New).
10. Exhibit F: Debarment and Suspension Certification (New).
11. Exhibit G: Lobbying Certification (New).
12. Exhibit H: Non Discrimination Clause
Except as otherwise specifically amended herein, all terms and
conditions contained in Agreement No. 96-67 and subsequent amendment(s) shall
remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have agreed on this date and
year first above written
VENDOR
By: I-NetVersity, Inc.
------------------------------------------------------------
Signature: /s/ N. Khan
------------------------------------------------------------
Name:
------------------------------------------------------------
Title:
------------------------------------------------------------
CITY OF INGLEWOOD
/s/ Roosevelt Dorn
- ------------------------------------------------------------------------------
MAYOR
ATTEST:
/s/ Hermanita V. Harris
- ------------------------------------------------------------------------------
CITY CLERK
APPROVED AS TO FORM:
/s/ Not legible
- ------------------------------------------------------------------------------
CITY ATTORNEY
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<PAGE>
EXHIBITS
1. EXHIBIT "E" - STATEMENT OF BUSINESS OWNERSHIP FOR VENDOR (NEW)
2. EXHIBIT "F" - DEBARMENT AND SUSPENSION CERTIFICATION (NEW)
3. EXHIBIT "G" - LOBBYING CERTIFICATION (NEW)
4. EXHIBIT "H" - NON-DISCRIMINATION CLAUSE
9
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
EXHIBIT E
STATEMENT OF BUSINESS OWNERSHIP FOR VENDOR
- ------------------------------- --------------------------------------------------------------------------------------
<S><C>
Business Name: INETVERSITY TRAINING CENTER
--------------------------------------------------------------------------------------
Business Address: 19951 MARINER AVE., SUITE #100
--------------------------------------------------------------------------------------
TORRANCE CA 90503
----------------------------- ---------------------------- ---------------------------
(City) (State) (Zip Code)
Contact Persons: NOREEN KHAN No. of employees: 36
-------------------------------- -------------------------
Telephones: (1) (310) 921-1999 (2) FAX: (310) 370-9629
------------------------ --------------------- ------------------------
Primary Alternate
Type of Organization: Public (Govt.) Local Education Agency (LEA)
-----
----
X Private for-profit Private not-for-profit
---- ----
Other:
Structure: Public Agency If so: Local State Federal
----- ----- ----
----
X Corporation Sole Proprietorship Partnership
---- ---- -----
Federal Tax ID: 95-470-6140 Project Name: REGIONAL TRAINING VENDOR DIRECTORY (RTVD)
------------------- --------------------------------------------------------------
State ID: 444-7195-1 Contract Amount INDEFINITE QUANTITY
------------------- --------------------------------------------------------
- ------------------------------------------- -----------------------------------------
SIGNATURE DATE
NOREEN KHAN - CHIEF EXECUTIVE OFFICER
- -------------------------------------------------------------------------------------------------------
NAME and TITLE of AUTHORIZED REPRESENTATIVE
INETVERSITY TRAINING CENTER
- -------------------------------------------------------------------------------------------------------
ORGANIZATION
</TABLE>
EXHIBIT "E"
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT F
DEBARMENT AND SUSPENSION CERTIFICATION
- --------------------------------------------------------------------------------
INSTRUCTIONS FOR CERTIFICATION
1. By signing and submitting this proposal, the prospective recipient of
Federal assistance funds is providing the certification as set out
below.
2. The certification in this clause is a material representation of fact
upon which reliance was placed when this transaction was entered into.
If it is later determined that the prospective recipient of Federal
assistance funds knowingly rendered an erroneous certification, in
addition to other remedies to the Federal Government, the Department of
Labor (DOL) may pursue available remedies, including suspension and/or
debarment.
3. The prospective recipient of Federal assistance funds shall provide
immediate written notice to the person to which this proposal is
submitted if at any time the prospective recipient of Federal
assistance funds learns that its certification was erroneous when
submitted or has become erroneous by reason of changed circumstances.
4. The terms "covered transaction," "debarred," "suspending,"
"ineligible," "lower tier covered transaction," "participant,"
"person," "primary covered transaction," "principal," "proposal," and
"voluntarily excluded," as used in this clause, have the meanings set
out in the Definitions and Coverage sections of rules implementing
Executive Order 12549. You may contact the person to which this
proposal is submitted for assistance in obtaining a copy of those
regulations.
5. The prospective recipient of Federal assistance funds agrees by
submitting this proposal that, should the proposed covered transaction
be entered into, it shall not knowingly enter into any lower tier
covered transaction with a person who is debarred, suspended, declared
ineligible, or voluntarily excluded from participation in this covered
transaction, unless authorized by the DOL.
6. The prospective recipient of Federal assistance funds further agrees
by submitting this proposal that it will include the clause titled
"Certification Regarding Debarment, Suspension, Ineligibility and
Voluntary Exclusion - Lower Tier Covered Transaction," without
modification, in all lower tier covered transactions and in all
solicitations for lower tier covered transactions.
7. A participant in a covered transaction may rely upon a certification
of a prospective participant in a lower tier covered transaction that
it is not debarred, suspended, ineligible, or voluntarily excluded
from the covered transaction, unless it knows that the certification
is erroneous. A participant may decide the method and frequency by
which it determines the eligibility of its principals. Each
participant may but is not required to check the LIST OF PARTIES
EXCLUDED FROM PROCUREMENT OR NON-PROCUREMENT PROGRAMS.
EXHIBIT "F"
<PAGE>
8. Nothing contained in the foregoing shall be construed to require
establishment of a system of records in order to render in good faith
the certification required by this clause. The knowledge and
information of a participant is not required to exceed that which is
normally possessed by a prudent person in the ordinary course of
business dealings.
9. Except for transactions authorized under paragraph 5 of these
instructions, if a participant in a covered transaction knowingly
enters into a lower tier covered transaction with a person who is
suspended, debarred, ineligible, or voluntary excluded from
participation in this transaction, in addition to other remedies
available to the Federal Government, the DOL may pursue available
remedies, including suspension and/or debarment.
EXHIBIT "F"
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT F (CONTINUED)
CERTIFICATION REGARDING
DEBARMENT, SUSPENSION, INELIGIBILITY AND VOLUNTARY EXCLUSION
LOWER TIER COVERED TRANSACTIONS
- --------------------------------------------------------------------------------
This certification is required by the regulations implementing
Executive Order 12549, Debarment and Suspension, 29 CFR Part 98,
Section 98.510, Participants' responsibilities. The regulations were
published as Part VII of the May 26, 1988 FEDERAL REGISTER (pages
19160-19211).
(BEFORE COMPLETING CERTIFICATION, READ INSTRUCTIONS FOR CERTIFICATION)
(1) The prospective recipient of federal assistance funds certifies, by
submission of this proposal, that neither it nor its principals are
presently debarred, suspended, proposed for debarment, declared
ineligible, or voluntarily excluded from participation in this
transaction by any Federal department or agency.
(2) Where the prospective recipient of Federal assistance funds is unable
to certify to any of the statements in this certification, such
prospective participant shall attach an explanation to this proposal.
/s/ N. Khan 12 April 99
- ----------------------------------------- ----------------------------
SIGNATURE DATE
NOREEN KHAN - CHIEF EXECUTIVE OFFICER
- -------------------------------------------------------------------------
NAME and TITLE of AUTHORIZED REPRESENTATIVE
INETVERSITY TRAINING CENTER
- -------------------------------------------------------------------------
ORGANIZATION
EXHIBIT "F"
<PAGE>
- ------------------------------------------------------------------------------
EXHIBIT G
LOBBYING CERTIFICATION
(FOR CONTRACTS, GRANTS, LOANS AND COOPERATIVE AGREEMENTS)
- ------------------------------------------------------------------------------
The undersigned certifies, to the best of his/her knowledge and belief, that:
1. No Federal appropriated funds have been paid or will be paid, by or on
behalf of the undersigned, to any person for influencing or attempting
to influence an officer or employee of a Member of Congress in
connection with the awarding of any Federal contract, the making of any
Federal grant, the making of any Federal loan, the entering into of any
cooperative agreement, and the extension, continuation, renewal,
amendment, or modification of any Federal contract, grant, loan or
cooperative agreement.
2. If any funds other than Federal appropriated funds have been paid or
will be paid to any person for influencing or attempting to influence
an officer or employee of any agency, a Member of Congress, an officer
or employee of Congress, or an employee of a Member of Congress in
connection with this Federal contract, grant, loan, or cooperative
agreement, the undersigned shall complete and submit Standard Form-LLL
"Disclosure Form to Report Lobbying" in accordance with its
instructions.
3. The undersigned shall require that the language of this certification
be included in the award documents for all sub-awards at all tiers
(including subcontracts, subgrants, and contracts under grants, loans,
and cooperative agreements) and that all subrecipients shall certify
and disclose accordingly.
4. This certification is a material representation of fact upon which
reliance was placed when this transaction was made or entered into.
Submission of this certification is a prerequisite for making or
entering into this transaction imposed by Section 1352 Title 31, U.S.
Code. Any person who fails to file the required certification shall be
subject to a civil penalty of not less than $10,000 and not more than
$100,000 for each such failure.
/s/ N. Khan April 12, 1999
- ----------------------------------------------------------- ----------------
SIGNATURE DATE
NOREEN KHAN - CHIEF EXECUTIVE OFFICER
- ------------------------------------------------------------------------------
NAME and TITLE of AUTHORIZED REPRESENTATIVE
INETVERSITY TRAINING CENTER
- ------------------------------------------------------------------------------
ORGANIZATION
<PAGE>
- ------------------------------------------------------------------------------
EXHIBIT H
NON-DISCRIMINATION CLAUSE
- ------------------------------------------------------------------------------
During the performance of this contract, the contractor/vendor agrees as
follows:
I. The contractor/vendor will not discriminate against any employee or
applicant for employment because of race, religious creed, color, national
origin, ancestry, physical handicap, medical condition, marital status or
sex. The contractor/vendor will take affirmative action to assure that
applicants are employed, and that employees are treated during their
employment, without regard to their race, religious creed, color, national
origin, ancestry, physical handicap, medical condition, marital status or
sex. Such affirmative action shall be designed to insure against
discrimination in the following: employment, upgrading, demotion or
transfer, recruitment or recruitment advertising; layoff or termination;
rates of pay or other forms of compensation, and selection for training,
including apprenticeships or any other change or proposed change in
employment conditions.
II. The contractor/vendor will cause the foregoing to be inserted in all
subcontracts for any work covered by this contract so that such provisions
will be binding upon each subcontractor, provided that the foregoing
provisions shall not apply to contracts or subcontracts for standard
commercial supplies or raw materials.
/s/ N. Khan June 3, 1999
- ------------------------------------------------------ --------------------
AUTHORIZED SIGNATURE DATE
CEO/President
- ------------------------------------------------------ --------------------
TITLE ORGANIZATION
2
<PAGE>
EXHIBIT 10.5
JOB TRAINING PARTNERSHIP ACT ("JTPA") OFF-THE-SHELF
VENDOR/VOUCHER TRAINING AGREEMENT
DATED JULY 1, 1999
3
<PAGE>
STANDARD TERMS AND CONDITIONS FOR JTPA
OFF-THE-SHELF VENDOR/VOUCHER TRAINING CONTRACTS
DEFINITIONS.
For purposes of this Agreement, including all Exhibits thereto, the
following definitions shall govern its interpretation. In the event of any
omission or conflict in the definition or interpretation of any term defined
herein, the parties agree that such term or interpretation shall be made in a
manner consistent with said terms as defined or explained in the Job Training
Partnership Act (29 USC Section 1501, et seq), as amended, or implementing
regulations.
"ACT" OR "JTPA" shall mean the Job Training Partnership Act (29 USC
Section 1501 et seq.), as amended, and implementing regulations (20 CFR Section
626 et seq.), as amended.
"AGREEMENT" shall mean the agreement by and between the Contractor and
the County of Los Angeles, which agreement shall include the main document and
all exhibits referenced thereto within the Agreement.
"ALLOWABLE COSTS" shall have the same meaning as that provided in 20
CFR Section 627.435.
"CLASSROOM TRAINING" shall include competency based training conducted
in an institutional setting for vocational education which is designed to
provide individuals with the technical skills and information required to
perform a specific job or group of jobs.
"CLIENT" OR "PARTICIPANT" shall have the same meaning as that provided
in 20 CFR Section 626.5.
"COMMERCIALLY AVAILABLE OFF-THE-SHELF TRAINING PACKAGE" shall mean a
training package sold or traded to the general public in the course of normal
business operations, at prices based on established catalog or market prices.
(20 CFR Section 626.5)
"CONTRACTOR" shall mean the agency or individual contracting with the
County of Los Angeles under the terms of this Agreement.
"COUNTY" shall mean the County of Los Angeles, a recipient of federal
job training funds through the California Employment Development Department.
"DOL" shall mean the United States Department of Labor, including
without limitation, its Employment and Training Division and other divisions and
units administering the Act.
"DOT CODES" shall mean the nine-digit Dictionary of Occupational Titles
("DOT") codes designating a job or occupational title. DOT Codes are available
at EDD offices or at a public library.
4
<PAGE>
"EDD" shall mean the Employment Development Department of the State of
California, including its Employment and Training Division and other divisions
and units administering the Act.
"EMPLOYMENT & TRAINING DIRECTOR" shall mean the Employment and Training
director of the County of Los Angeles.
"ISS" shall mean an individual service strategy which shall have the
same meaning and limitations as set forth in 20 CFR Section 628.520.
"OBJECTIVE ASSESSMENT" shall have the same meaning and limitations as
set forth in 20 CFR Section 628.515.
"PIC" shall mean the Private Industry Council of the County of Los
Angeles, organized and existing pursuant to the Act.
"STAND-IN COSTS" shall mean cost paid from non-federal sources that are
proposed to be substituted for federal costs that have been disallowed as a
result of an audit or other review. Limitations to use of stand-in costs are set
forth in 20 CFR Section 626.5.
"SUPPORTIVE SERVICES" shall mean services which are necessary to enable
an individual eligible for training under the JTPA, but who cannot afford to pay
for such services, to participate in a training program funded under the Act.
Such supportive services may include transportation, health care, financial
assistance drug and alcohol abuse counseling and referral, individual and family
counseling, special services and materials for individuals with disabilities,
job coaches, child care and dependent care, meals, temporary shelter, financial
counseling, and other reasonable expenses required for participation in the
training program and may be provided in-kind or through cash assistance.
ASSURANCES/CERTIFICATIONS.
The Contractor provides the following assurances and certifications, and
agrees to the following terms:
COMPLIANCE WITH LAWS.
The Contractor certifies and agrees that it will fully comply
with all applicable requirements of the JTPA, all State and federal regulations
issued pursuant to the Act, and all applicable ordinances, rules, policies,
directives, and procedures for which the Contractor is provided actual or
constructive notice. The County reserves the right to review the Contractor's
procedures to ensure compliance with the statutes, ordinances, regulations,
rules, rulings, policies and procedures of the State and the federal government.
5
<PAGE>
The Contractor certifies and agrees that it shall comply with
all applicable federal, State and local laws, rules, regulations, ordinances,
and directives, and all provisions required to be included in this Agreement are
incorporated by this reference. The Contractor shall indemnify and hold the
County harmless from any loss, damage or liability resulting from a violation by
the Contractor, its agents, officers and employees of any such laws, rules,
regulations, ordinances, and directives.
DEBARMENT AND SUSPENSION. The Contractor certifies that it has
not been subject to debarment and suspension and will immediately inform the
County of any future debarment or suspension. Said certification, which shall be
in the form attached hereto as Exhibit A-1, shall be submitted to the County no
later than execution of this Agreement by Contractor.
6
<PAGE>
RELOCATION.
The Contractor certifies that no funds, materials, property or
services provided directly or indirectly under the terms of this Agreement shall
be used, or proposed for use, to encourage or to induce the relocation of an
establishment to a new labor market area that results in loss of employment of
any employee of the company at the original site. The contractor further
certifies that funds shall not be used to assist in relocating a company for the
first 120 days after commencement of operations.
If Contractor has relocated within the last 120 days of the
effective date of this Agreement, Contractor shall certify that such relocation
has not resulted in the loss of employment for any employee at the original
location. Said certification, which shall be in the form attached hereto as
Exhibit A-2, shall be submitted to the County no later than execution of this
Agreement by the Contractor.
DUPLICATION OF SERVICES.
The Contractor assures that Pell, SEOG and/or other federal,
State, or local grants available to the student and JTPA funds will not be
obligated, authorized or used for the same expenses.
The Contractor shall fully disclose to the JTPA Client the
total financial obligations of the training, the investment being made by JTPA,
grants, Work Study, and any and all other contributions to the education of the
client. The contractor will furnish a copy of the written disclosure to the
County.
Should there be a financial aid package developed and
supported by the Contractor for the JTPA Client, it may include student loans
so long as there is documentation that the JTPA client is informed in writing
that JTPA funds will not be available to repay the loans. The client must
further be informed that the decision to secure a student loan is an
independent act of the client and not a part of the authorized JTPA
commitment. Involuntary and/or duplicative loans are deemed to violate the
JTPA.
7
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ADMINISTRATIVE AND PERSONNEL PROCEDURES. Contractor warrants
that it has adopted, shall retain, and make available upon request from the
County, the following documents and amendments thereto:
Contractor's financial and accounting procedures, which
incorporate Generally Accepted Accounting Principles (GAAP). Contractor shall
also adhere to applicable requirements of OMB Circular A-128 and A-133.
Contractor's personnel policy, which incorporates due process
protection of standard personnel procedures, and which the Contractor agrees to
abide by in the performance of this Agreement.
A grievance procedures available to participants which is
consistent with applicable JTPA rules and regulations (e.g., 20 CFR 627.504).
OTHER AGREEMENTS.
A copy of any agreements between the Contractor and other
public or private organizations which directly impact activities funded under
this Agreement shall be kept on file at the Contractor's offices and shall be
provided to the County upon request. The Contractor shall also notify the County
of any default, termination, or finding of disallowed costs under these
agreements.
8
<PAGE>
The Contractor warrants that no other funding source will be
billed for services that are provided and paid for by the County under this
Agreement.
EEO/AFFIRMATIVE ACTION. The Contractor, in performing all
obligations under the terms of the Agreement, assures that it will administer
the program with safeguards against fraud and abuse as set forth in the Act and
JTPA regulations; that no portion of this Agreement will in any way discriminate
against, deny benefits to, deny employment to, or exclude from participation any
person on the grounds of race, color, national origin, religion, sex, handicap,
or political affiliation or belief.
NONDISCRIMINATION IN EMPLOYMENT.
The Contractor certifies that all persons employed by the
Contractor, its affiliates, subsidiaries, or holding companies are and will be
treated equally without regard to race, religion, ancestry, national origin,
sex, age, condition of physical disability, marital status or political
affiliation, and in compliance with all applicable federal and State
anti-discrimination laws, regulations, and directives.
The Contractor shall take affirmative action to ensure that
qualified applicants are employed and that employees are treated during
employment without regard to race, religion, ancestry, national origin, sex,
age, condition of physical disability, marital status or political affiliation.
Such action shall include, but not be limited to the following: employment,
upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or
termination, rates of pay or other forms of compensation and selection for
training, including apprenticeship.
The Contractor shall deal with its subcontractors, bidders, or
vendors without regard to race, religion, ancestry, national origin, sex, age,
condition of physical disability, marital status or political affiliations.
The Contractor shall allow County representatives access to
its employment records during regular business hours to verify compliance with
the provisions of this Agreement when the County requests. If the County finds
that any of these provisions have been violated,
9
<PAGE>
such violation shall constitute a material breach upon which the County may
terminate or suspend this Agreement. While the County retains the right to
determine independently that the anti-discrimination provisions of this
Agreement have been violated, in addition, any determination by the
California Fair Employment and Housing Commission or the federal Equal
Employment Opportunity Commission that the Contractor has violated State or
federal anti-discrimination laws or regulations shall also constitute a
finding by the County that the Contractor has violated the
anti-discrimination provision of this Agreement.
CIVIL RIGHTS LAWS. The Contractor assures and certifies that
it shall comply with all applicable federal and State statutes to the end that
no person shall, on the grounds of race, religion, ancestry, national origin,
sex, age, condition of physical disability, marital status or political
affiliation, be excluded from participation in, be denied the benefits or, be
otherwise subjected to discrimination under this Agreement or under any project,
program or activity supported by this Agreement.
WAGE AND HOUR LAWS. The Contractor shall indemnify, defend,
and hold harmless the County, its agents, officers and employees from any and
all liability including, but not limited to, wages, overtime pay, liquidated
damages, penalties, court costs, and attorneys' fees arising under any wage and
hour law including, but not limited to, the federal Fair Labor Standards Act, as
amended, for
10
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services performed by the Contractor's employees for which the County may be
found jointly or solely liable.
SAFETY AND WORKING CONDITIONS. Applicable local, State and
federal health and safety standards shall be observed. If a JTPA participant or
Contractor employee is in a position not covered under the Occupational Health
and Safety Act of 2070, as amended (29 USC Section 651 ET SEQ.), Contractor
assures that such participant or employee will not be required or permitted to
work, be trained, or receive services under working conditions which are
unsanitary, hazardous or otherwise detrimental to the person's health or safety.
EMPLOYMENT ELIGIBILITY VERIFICATION.
The Contractor warrants and certifies that it fully complies
with all federal, state and local statutes, ordinances, and regulations
regarding the employment eligibility of aliens and others, and that all persons
performing services under the Agreement are eligible for employment in the
United States.
The Contractor shall indemnify, defend and hold the County
harmless from any employer sanctions or other liability which may be assessed
against the County by reasons of the Contractor's failure to comply with the
foregoing.
The Contractor represents that it has secured and retained all
required documentation verifying employment eligibility of its personnel. The
Contractor shall secure and retain verification of employment eligibility from
any new personnel and, to the extent applicable, JTPA Clients participating in
or receiving services under this Agreement, in accordance with applicable
provisions of law.
DRUG FREE WORKPLACE COMPLIANCE. The Contractor hereby warrants
and certifies that it shall comply with California Drug-Free Workplace Act of
2090 (CAL. GOV. CODE SECTION 8350 ET SEQ.), as amended, including provision of
the requisite certification as set forth therein.
CONFLICT OF INTEREST/CONTRACTS PROHIBITED.
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The Contractor represents and warrants that no county employee
whose position enables him/her to influence the award of this Agreement, and no
spouse or economic dependent of such employee, is or shall be employed in any
capacity by the Contractor, or shall have any direct or indirect financial
interest in this Agreement.
The Contractor represents and warrants that it is aware of,
and its authorized officers have read, the provisions of Los Angeles County Code
Chapter 2.180 entitled "Contracting With Current or Former County Employees,"
and that execution of this Agreement will not violate those provisions. Anyone
who is a former employee of the County at the time of execution of this
Agreement or who subsequently becomes affiliated with the Contractor in any
capacity shall not participate in the provision of Services provided under this
Agreement or share in the profits of Contractor earned for a period of one year
from the date he/she separated from County employment.
LOBBYING.
The Contractor certifies that none of the funds, materials,
property or services provided directly or indirectly under the terms of this
Agreement shall be used for or to promote any partisan or non-partisan political
activity; support or defeat any pending legislation or administrative
regulation; or for any sectarian purpose or activity.
The Contractor certifies that each County lobbyist as defined
in Los Angeles County Code Section 2.160.010, retained by Contractor, shall
fully comply with the County Lobbyist Ordinance, Los Angeles County Code Chapter
2.160. Failure on the part of any County lobbyist retained by Contractor to
fully comply with the County Lobbyist Ordinance shall constitute a material
breach of this Agreement upon which County may immediately terminate or suspend
this Agreement.
LEGAL AUTHORITY.
The Contractor gives assurance and certifies that it possesses
the legal authority to execute the proposed program, that a resolution, motion,
or similar action has been duly adopted
12
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or passed as an official act of the Contractor's governing body, authorizing
receipt of the funds, and directing and designating the authorized
representative(s) of the Contractor to act in connection with the program
specified and to provide such additional information as may be required by
the County, State, or any agency of the federal government.
The Contractor represents and warrants that its signatory to
this Agreement is fully authorized to obligate or otherwise bind the Contractor.
LIMITATION ON CORPORATE ACTS. The Contractor shall not amend
its articles of incorporation or bylaws, move to dissolve or transfer any assets
derived from funds provided under Section 3 of the foregoing Agreement, or take
any other steps which may materially affect the performance of this Agreement
without first notifying the County in writing. The Contractor shall notify the
County immediately in writing of any change in the Contractor's corporate name.
TERMINATION FOR IMPROPER CONSIDERATION. County may, by written
notice to Contractor, immediately terminate the right of Contractor to proceed
under this agreement if it is found that consideration, in any form, was offered
or given by Contractor, either directly or through an intermediary, to any
County officer, employee or agent with the intent of securing the Agreement or
securing favorable treatment with respect to the award, amendment or extension
of the Agreement or the making of any determinations with respect to the
Contractor's performance pursuant to the Agreement. In the event of such
termination, County shall be entitled to pursue the same remedies against
Contractor as it could pursue in the event of default by the Contractor.
Contractor shall immediately report any attempt by a County officer or
employee to solicit such improper consideration. The report shall be made either
to the County manager charged with the supervision of the employee or to the
County Auditor-Controllers Employee Fraud Hotline at (213) 974-0914 or (800)
544-6861.
Among other items, such improper consideration may take the form of
cash, discounts, service, the provision of travel, entertainment, or tangible
gifts.
PROVISION OF SERVICES
13
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SERVICES. The Contractor shall perform all Services under the
terms of this Agreement in accordance with the Statement of Work, attached to
the Agreement as Exhibit B and incorporated herein by this reference, at a level
of performance as determined by the County.
14
<PAGE>
NON-AUTHORIZED PARTICIPANTS. The Contractor agrees that all
costs incurred which are related to a participant who is enrolled without
written authorization from the County prior to enrollment shall be the sole
responsibility of the Contractor.
PARTICIPANT COMPLETION. The Contractor shall provide each
participant who completes the program a certificate of successful completion and
competency achievement and maintain copies of completed and scored tests
described in Exhibit C (Completion Competencies) in participant files.
JOB PLACEMENT. The Contractor shall provide placement services
to JTPA participants that are comparable to services provided to all other
Contractor students.
Placement wages must, at a minimum, be:
- - $7 per hour for training costs of $3,000 or less;
- - $8 per hour for training costs of $3,001 - $4,000;
- - $9 per hour for training costs of $4,001 - $5,000;
- - $10 per hour for training costs of $5,001 - $6,000;
- - $11 per hour for training costs of $6,001 - $7,000, etc.
PARTICIPANT TERMINATION. The Contractor agrees to fully comply
with the following procedures involving participant termination from the program
services offered under the terms of this Agreement (except when such termination
results from training/course completion):
If a participant chooses to drop out of the program, an exit
interview will be held, if possible, to document the reason. The Contractor
shall advise the County Employment & Training Director or his designee, and the
appropriate referral entity in writing within two (2) business days of learning
of a participant's decision.
If the Contractor determines that a participant can no longer
benefit from the program, the Contractor shall firs notify the County Employment
& Training Director or his designee, and the appropriate referral entity.
Following such notification, the Contractor shall
15
<PAGE>
conduct an exit interview, providing information to the participant in
accessing other resources which may be available.
PERFORMANCE REVIEW. Contractor's performance shall be
reviewed quarterly by appropriate County staff and will be based on program
performance as set forth in Section 307 herein.
CONTRACTOR PERFORMANCE STANDARDS. Contractor shall AT MINIMUM
BE REQUIRED TO OBSERVE THE FOLLOWING STANDARDS:
JTPA clients are treated with courtesy and respect.
JTPA clients compared to other students, receive equal or
better training, counseling, and job placement assistance.
The Contractor organization screens prospective students and
accepts only those JTPA clients expected to complete the training and secure a
training related, unsubsidized job paying industry appropriate wages, benefits
and hours.
JTPA/County required documentation is accurate and timely,
including Contractor insurance documents, client attendance records, client
progress reports, MIS forms, Contractor invoices/vouchers, and placement
verification from employers.
95% of the JTPA clients enrolled SHALL complete the training.
80% of the JTPA clients who complete the training secure,
within 90 days of completion, a JTPA training-related, unsubsidized, full-time
job with appropriate wages, benefits, and hours.
The Contractor shall not use JTPA funds paid under the terms
of this Agreement in litigation against the County, the State, or DOL or other
federal agency, nor for any action or activity inconsistent with the JTPA or
federal JTPA regulation whatsoever.
FAILURE TO MEET THE CONTRACTOR PERFORMANCE
STANDARDS SHALL BE GROUNDS FOR TERMINATION.
TIME OF PERFORMANCE. The term of this Agreement shall be as
set forth in Section 4 of the foregoing Agreement, and any additional period of
time as is required to
16
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complete necessary close out activities, provided that said term is subject
to the provisions of Section 400, Section 600, and Section 800 herein.
Performance shall not commence until the Contractor has obtained the approval
of the Employment and Training Director of those certifications and
assurances set forth in Section 200, and those documents as specified in
Section 311.
ACTIVITIES PROHIBITED.
Funds, materials, property or services provided directly or
indirectly under the terms of this Agreement shall not be used for or to promote
any partisan or non-partisan political activity; support or defeat any pending
legislation or administrative regulation; or for any sectarian purpose or
activity.
No funds allocated under the terms of this Agreement shall be
used for public service employment.
No funds allocated or paid under the terms of this
Agreement shall be used for employment generating activities, economic
development activities, investment in revolving loan funds, capitalization of
businesses, investment in contract bidding resource centers, or similar
activities (including foreign travel for these activities). JTPA funds may be
used for normal employer outreach and job development activities as set forth
in 20 CFR Section 627.225.
No currently employed worker shall be displaced by any
participant (including partial displacement such as a reduction in the hours of
non-overtime work, wages, or employment benefits).
No participant shall be employed or job opening filled (1)
when any other individual is on layoff from the same or any substantially
equivalent job, or (2) when the employer has terminated any regular employee
without cause or otherwise reduced its workforce with the intention of filling
the vacancy so created by hiring a participant whose wages are subsidized under
the Act.
17
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GRIEVANCE PROCEDURES.
The Contractor also agrees that it will process all
complaint/grievances in accordance with its adopted grievance procedure, and
will disseminate a written copy of the procedures to all participants in the
normal course of providing Services under the terms of this Agreement. All
procedures must be exhausted at the local level in an effort to resolve a
complaint/grievance. The Contractor also assures and agrees that it will be
bound by decisions issued under the County's JTPA participant grievance
procedures.
The Contractor shall participate in and be bound by the
questioned and/or disallowed costs grievance procedures at the JTPA Service
Delivery Area level as set forth in relevant rules, policies and directives
issued by the County. Copies of this procedures shall be made available to the
Contractor upon request.
The Contractor shall assure continued performance of this
Agreement during any disputes.
CONDITIONS PRECEDENT TO EXECUTION OF AGREEMENT. Except as
otherwise provided in writing by the County, prior to the execution of this
Agreement you must be an approved vendor in the Southern California Regional
Training Vendor Directory (RTVD). The following documents shall be on file with
South Bay Private Industry Council:
Contractor's Organizational/License Documents
Articles of Incorporation, including amendments
thereto, as filed with the Secretary of State.
Bylaws including amendments thereto, as adopted by
the Contractor and properly attested.
Resolutions of executorial authority or other
corporate actions of the Contractor's governing board, which specify the name(s)
of the person(s) authorized to obligate the Contractor and execute contractual
documents, if the authorized person is someone other than the Contractor's
corporate president. The name(s) and signature(s) of the authorized persons
shall also be provided in Section 5 of the foregoing Agreement.
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Fictitious Name Statement
Current and valid business licenses to conduct
business within the area covered by the Agreement.
Statement of business ownership
Nonprofit status letter from IRS [i.e., 501(c)(3)]
for nonprofit agencies.
IRS taxpayer identification number
Contractor's Administrative and Personnel Documents.
Two copies of the Contractor's catalog which shall
include the course curriculum/outline, fees and tuition rates, training schedule
and refund policy prior to the execution of this agreement. Any changes in a
program listed in the catalog, (e.g., tuition, additional tools, certificate)
shall be reported to the County within five (5) business days of such change.
A Classroom Training Information Summary (Exhibit D)
for the training occupation at the execution of this Agreement. This form shall
be attached to the Agreement and by this reference is included as part of the
Agreement. A copy of the Post Secondary Council Certificate to provide training
in the training occupation shown on the Classroom Training Information Summary
must be on file with the County.
Contractor's financial and accounting procedures, in
accordance with Section 205 herein.
Contractor's personnel policy, in accordance with
Section 205 herein.
Contractor's grievance procedure, in accordance with
Section 205 herein.
Certifications and Other Required Documents
Certification(s) by Council for Private Postsecondary
and Vocational Education (CPPVE), pertaining to facilities, curriculum, and/or
instructors. In the event of any changes in facilities, curriculum, and/or
instructor(s), or if renewals are required, the Contractor shall obtain CPPVE
certification for the changes and renewals and forward copies of same to the
County.
Certification regarding debarment, in accordance with
Section 202 herein.
If the Contractor has relocated within the last 120
days of the effective date of this Agreement, the Contractor shall certify, in a
form acceptable to the County, that such relocation has not resulted in the loss
of employment for any employee at the original location, in accordance with
Section 203 herein.
Proof of insurance as provided in Section 600
herein.
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A copy of any agreements between the Contractor and
other public or private organizations which directly impact the activities
funded under this Agreement, in accordance with Section 206 herein. Such
agreements shall include a record of any JTPA funding received in the last three
years, including funding agency, services provided, number of clients served,
and funding level.
INDEPENDENT CONTRACTOR STATUS. The Contractor shall at all
times be acting as an independent contractor. This Agreement is not intended,
and shall not be construed to create the relationship of agent, servant,
employee, partner, joint venture, or association, as between the County and the
Contractor. Contractor understands and agrees that all of Contractor's personnel
furnishing services to the County under this Agreement are employees solely of
the contractor and not of the County for purposes of workers' compensation
liability. The Contractor shall bear the sole responsibility and liability for
furnishing workers' compensation benefits to any Contractor personnel for
injuries arising from or connected with Services performed under this Agreement.
20
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<TABLE>
<CAPTION>
<S> <C> <C>
Section 100. DEFINITIONS.................................................................................1
Section 101. "Act" or "JTPA" .....................................................................1
Section 102. "Agreement" .........................................................................1
Section 103. "Allowable costs" ...................................................................1
Section 104. "Classroom training" ................................................................1
Section 105. "Client" or "participant" ...........................................................1
Section 106. "Commercially available off-the-shelf training package" .............................1
Section 107. "Contractor".........................................................................1
Section 108. "County" ............................................................................1
Section 109. "DOL" ...............................................................................1
Section 110. "DOT Codes" .........................................................................1
Section 111. "EDD" ...............................................................................1
Section 112. "Employment & Training Director" ....................................................2
Section 113. "ISS" ...............................................................................2
Section 114. "Objective assessment" ..............................................................2
Section 115. "PIC" ...............................................................................2
Section 116. "Stand-in costs" ....................................................................2
Section 117. "Supportive services" ...............................................................2
Section 200. ASSURANCES/CERTIFICATIONS...................................................................2
Section 201. Compliance with Laws.................................................................2
Section 202. Debarment and Suspension. ..........................................................2
Section 203. Relocation...........................................................................3
Section 204. Duplication of Services..............................................................3
Section 205. Administrative and Personnel Procedures. ...........................................3
Section 206. Other Agreements.....................................................................3
Section 207. EEO/Affirmative Action. ............................................................4
Section 208. Nondiscrimination in Employment......................................................4
Section 209. Civil Rights Laws. .................................................................4
Section 210. Wage and Hour Laws. ................................................................4
Section 211. Safety and Working Conditions. .....................................................5
Section 212. Employment Eligibility Verification..................................................5
Section 213. Drug Free Workplace Compliance. ....................................................5
Section 214. Conflict of Interest/Contracts Prohibited............................................5
Section 215. Lobbying.............................................................................5
Section 216. Legal Authority......................................................................6
Section 217. Limitation on Corporate Acts. ......................................................6
Section 218. Termination for Improper Consideration. ............................................6
Section 300. PROVISION OF SERVICES.......................................................................6
Section 301. Services. ..........................................................................6
<PAGE>
Section 302. Non-Authorized Participants. .......................................................7
Section 303. Participant Completion. ............................................................7
Section 304. Job Placement. .....................................................................7
Section 305. Participant Termination. ...........................................................7
Section 306. Performance Review. ................................................................7
Section 307. Contractor Performance Standards. ..................................................7
Section 308. Time of Performance. ...............................................................8
Section 309. Activities Prohibited................................................................8
Section 310. Grievance Procedures.................................................................9
Section 311. Conditions Precedent to Execution of Agreement. ....................................9
Section 312. Independent Contractor Status. ....................................................10
Section 400. COMPENSATION.........................................................................................11
Section 401. COUNTY OBLIGATION............................................................................11
Section 402. TUITION REIMBURSEMENT........................................................................11
Section 403. PAY POINTS...................................................................................11
Section 404. ELIGIBLE COST................................................................................11
Section 500. NONCOMPLIANCE SANCTIONS/PENALTIES....................................................................12
Section 600. INDEMNIFICATION AND INSURANCE........................................................................12
Section 601. INDEMNIFICATION..............................................................................12
Section 602. INSURANCE....................................................................................12
Section 700. AUDITS, REPORTS, RECORDS, & DOCUMENTATION.............................................................13
Section 701. MONITORING, EVALUATION, AND AUDIT............................................................13
Section 702. RECORDS AND REPORTS..........................................................................14
Section 703. REPORT RECONCILIATION........................................................................14
Section 704. PUBLIC RECORDS/CONFIDENTIALITY...............................................................15
Section 800. TERMINATION...........................................................................................15
Section 801. TERMINATION FOR DEFAULT......................................................................15
Section 802. TERMINATION FOR CONVENIENCE..................................................................15
Section 803. TERMINATION FOR NON-APPROPRIATION OF FUNDS...................................................16
Section 804. TERMINATION FOR INSOLVENCY...................................................................16
</TABLE>
<PAGE>
Page 23 of 7
<TABLE>
<CAPTION>
<S> <C>
Section 805. TERMINATION FOR STUDENT NON-ATTENDANCE......................................................16
Section 806. SUSPENSION OF AGREEMENT.....................................................................16
Section 900 GENERAL PROVISIONS....................................................................................16
Section 901. CONTRACT MODIFICATIONS/AMENDMENTS...........................................................16
Section 902. ASSIGNMENTS.................................................................................17
Section 903. SUBCONTRACTING..............................................................................17
Section 904. REPAYMENT...................................................................................18
Section 905. PATENT AND COPYRIGHTS.......................................................................18
Section 906. NOTICES.....................................................................................19
Section 907. WAIVERS.....................................................................................19
Section 908. VALIDITY....................................................................................19
Section 909. DISPUTES....................................................................................19
Section 910. ENTIRE AGREEMENT............................................................................19
Section 911. CAPTIONS....................................................................................20
</TABLE>
<PAGE>
Page 24 of 7
COUNTY OF LOS ANGELES
DEPARTMENT OF COMMUNITY AND SENIOR SERVICES
JTPA OFF-THE-SHELF VENDOR/VOUCHER TRAINING AGREEMENT
THIS AGREEMENT is entered into this 1ST day of JULY 1999, by and
between the County of Los Angeles (hereinafter referred to as the "County"), and
NOVAQUEST INFOSYSTEM, hereinafter referred to as the ("CONTRACTOR").
RECITALS
WHEREAS, the County and the Contractor are entering into this
Agreement for the purpose of operating classroom training in accordance with
applicable provisions of the Job Training Partnership Act, of 1982, as
amended (hereinafter referred to as "JTPA" or the "Act") (29 USC Sections
1501 ET SEQ.), its implementing regulations, rules and policies as
administered by the County; and
WHEREAS, the JTPA provides federal funds to the County to provide
employment and training programs and services to JTPA-eligible individuals who
are facing serious barriers to employment and who are in need of such
specialized training to obtain productive employment.
NOW, THEREFORE, for and in consideration of the foregoing premises and
for the express intention of carrying out the purposes of the JTPA as
administered in Los Angeles County, the parties do hereby agree as follows:
SECTION 1. APPLICABLE DOCUMENTS. (a) This Agreement consists of this
4-page document and the following exhibits, inclusive:
(1) Standard Terms and Conditions (Exhibit A)
(2) Statement of Work (Exhibit B)
(b) CONTRACTOR shall comply with all terms and conditions of this
Agreement, including all terms contained in the exhibits hereto.
<PAGE>
Page 25 of 7
SECTION 2. OBLIGATIONS OF THE PARTIES. (a) The Contractor shall provide
the Services, as defined in the Statement of Work, for the number of clients
stipulated therein and any amendments that apply per the Statement of Work.
Services shall include instruction which will assist the client(s) in obtaining
the skills necessary to secure and retain full-time training-related employment.
The Contractor agrees to operate at a level of performance, as determined by the
County, and to otherwise fully comply with the terms and conditions contained in
this Agreement.
(b) The County agrees to compensate the Contractor for the performance
rendered hereunder and to provide assistance as set forth in Exhibit B-1.
SECTION 3. COMPENSATION/OBLIGATED VOUCHERS FUNDS. JTPA Voucher funds
shall not exceed the amount(s) listed on the Off-The-Shelf Vendor Client
Voucher, per approved training program, per client.
(a) The County will compensate the Contractor for documented
performance, AND SHALL ONLY PAY TOTAL TUITION, MINUS PELL
GRANT OR ANY TYPE OF TUITION SUBSIDY.
PAYMENT SHALL BE DISBURSED AS FOLLOWS:
FIRST PAY POINT 40%
SECOND PAY POINT 40%
THIRD PAY POINT 20%
---
TOTAL 100%
(b) Payment will be made only when and if the Contractor has (1)
invoiced according to the County's instructions, and (2)
submitted all required documentation as required by other
relevant provisions of this Agreement.
SECTION 4. TERM. The term of this Agreement shall commence on JULY 1,
1999 and terminate no later than JUNE 30, 2000, except as otherwise provided in
this Agreement.
<PAGE>
Page 26 of 7
SECTION 5. NOTICES/AUTHORIZED SIGNATURES. (a) NOTICES: Unless otherwise
set forth in this Agreement, notices required or permitted to be given under the
terms herein or by any law now or hereafter in effect, shall be sent to:
(a) County
Stephanie Klopfleisch, Director Kenneth Kessler
Department of Community and Employment & Training Director
Senior Services Department of Community and
County of Los Angeles Senior Services
3175 West Sixth Street County of Los Angeles
Los Angeles, CA 90020-1798 3175 West Sixth Street
Los Angeles, CA 90020-1798
(b) CONTRACTOR
NOVAQUEST INFOSYSTEMS/INETVERSITY
19951 MARINER AVE., SUITE 100
TORRANCE, CA 90503
Attention: MRS. NOREEN KHAN
(c) AUTHORIZED SIGNATURES. (1) PERSON(S) AUTHORIZED TO SIGN
CONTRACTOR'S REIMBURSEMENT REQUESTS:
/s/ Dawn Brooks /s/ Nick Miryazdi
------------------------- --------------------------
(Authorized Signature) (Authorized Signature)
DAWN BROOKS NICK MIRYAZDI
------------------------- --------------------------
<PAGE>
Page 27 of 7
GOVERNMENT TRNG. ADMIN. DIRECTOR OF FINANCE
------------------------- --------------------------
(Typed Title) (Typed Title)
(2) Person(s) authorized to sign Contractor's Attendance
Sheets:
MEENAZ HUDANI DIR. TECH/SERVICE /s/Meenaz Hudani
------------------ ------------------ ------------------
Typed Name Title Signature
RICHARD RASMEY INSIDE SALES SUPPORT /s/ Richard Ramsey
------------------ ------------------ ------------------
Typed Name Title Signature
------------------ ------------------ ------------------
Typed Name Title Signature
IN WITNESS WHEREOF, the County of Los Angeles and the Contractor have
caused this Agreement to be executed on their behalf by their duly authorized
representatives.
COUNTY OF LOS ANGELES
<PAGE>
By: /s/ Stephanie Kloppfleisch
-----------------------------------------
STEPHANIE KLOPPFLEISCH, Director
Department of Community & Senior Services
Approved as to Form:
Lloyd W. Pellman
County Counsel
By: /s/ L. Pellman
---------------------------------------
Deputy
CONTRACTOR
Agency Name: NOVAQUEST INFOSYSTEM/INETVERSITY
------------------------------------
By:
---------------------------------------------
<PAGE>
MRS. NOREEN KHAN
---------------------------------------------
(Print or Type Name)
CHIEF EXECUTIVE OFFICER
---------------------------------------------
(Title)
<PAGE>
EXHIBIT A
STANDARD TERMS AND CONDITIONS FOR JTPA
OFF-THE-SHELF VENDOR/VOUCHER TRAINING CONTRACTS
<PAGE>
EXHIBIT 10.6
EMPLOYMENT TRAINING PANEL AGREEMENT
DATED NOVEMBER 30, 1999
<PAGE>
EMPLOYMENT TRAINING PANEL AGREEMENT
TERMS AND CONDITIONS
TERM: This training Agreement is entered into by and between the
Employment Training Panel ("ETP") and iNETVERSITY/NOVAQUEST INFOSYSTEMS
("Contractor"). The term is December 1, 1999 through November 30, 2000. The
parties intend to utilize public funding to assist the Contractor in conducting
a job training project for eligible trainees in accordance with the Training
Plan, Exhibit A; Curriculum, Exhibit B; and Budget, Exhibit C (if applicable).
Contractor certifies the training funds provided will supplement rather than
displace Contractor's ongoing investment in the training of their workers. The
Contractor has certified to ETP in writing the need for the training.
PAYMENTS:
ETP shall pay Contractor an amount not to exceed $ 488,255 .
This amount shall be earned upon the completion of ALL performance requirements
within the Agreement term as indicated in paragraph 1., above. ETP shall not pay
for partial performance. Reimbursement shall be earned for no more than the
number of trainees to be retained listed by Job # and only as specified in
Exhibit A, Chart 1, Summary (hereafter, Chart 1).
Reimbursement shall be earned only if 100% of the class/lab
training hours are delivered. Each trainee should complete 100% of the class/lab
training hours. However, a trainee can qualify for reimbursement if the trainee
completes a minimum of 80% of the class/lab training (including qualified
make-up training).
Contractor may invoice ETP as each trainee reaches qualifying
benchmarks, and may receive UNEARNED progress payments for cash flow purposes as
indicated in Chart 1
<PAGE>
Summary columns 9 through 13. All progress payments are earned only after the
training and employment retention are completed and the Contractor completes
all other requirements of this Agreement.
Contractor shall submit invoices and necessary statistical
data to ETP in a form and manner prescribed by ETP. The Contractor may submit a
Job # closeout invoice once all trainees in the Job # have completed training,
are certified competent if SOST is part of the training plan, and have been
hired or retained in the job for the retention period specified herein. The
Contractor shall submit the Final Fiscal Invoice to ETP within 30 days after the
ending date of the Agreement. Payment of this final invoice shall be contingent
upon submittal of applicable reports as described in VI. TRAINING STANDARDS,
(F); and, VII TRAINEE RETENTION REQUIREMENTS, (B).
TRAINEE AUTHORIZATION: Contractor must submit to ETP, an
ETP104 Auth form for each trainee enrolled, providing ETP permission to access
trainees' confidential Unemployment Insurance information and employer reported
wage data from the Employment Development Department. Contractor is responsible
for obtaining trainee signature and Social Security Number on the Number on the
ETP104 Auth form. Any funds invoiced and issued for a trainee who does not have
a signature and valid SSN on file must be returned to ETP as unearned monies,
with any applicable interest.
N/A
N/A
MULTIPLE EMPLOYER AGREEMENT WITH NEW HIRES: Reimbursement
shall be earned for New Hires who are placed with ETP eligible employers.
Employers must be subject to Unemployment Insurance (U.I.) Fund contributions
under the tax rate method. Placements with temporary agencies are subject to the
restrictions of Title 22, California Code of Regulations, Section 4427.
<PAGE>
MULTIPLE EMPLOYER AGREEMENT WITH RETRAINEES: The Contractor
shall be reimbursed for 70% of the cost per trainee specified in Chart 1, Column
7 for retrainees employed by a business that has previously benefited directly
or indirectly from ETP funded training. This 30% employer contribution shall be
applicable only if the participating employer has benefited from ETP funded
training of retrainees, under at least two prior Panel Agreements, in the amount
of $250,000 or more at the same facility, and if the business has 101 or more
full-time employees. The employer's participation in previous ETP funded
retraining must have been within five years from the start date of training to
the end term date of the previously applicable ETP Agreement. The Contractor
must have on file, an approved retraining certification form for each
participating employer, prior to the start of training for a company.
The Contractor shall be reimbursed for 50% of the per trainee cost
specified in Chart 1, Column 7 for retrainees employed by a
business that has had a substantial contribution applied in a
previous Agreement.
OVERPAYMENT: Reimbursements earned by the Contractor according to the
performance specified under the Agreement shall be used to offset
any outstanding financial liabilities owed to ETP under previous
ETP Agreement(s). This provision shall remain in force until the
monies owed to ETP plus interest have been fully repaid.
SUBCONTRACTS: Contractor may subcontract for training or administrative
services with the prior approval of ETP. However, no third party relationship is
intended or created between any Subcontractor and ETP.
ADMINISTRATION: Training shall be administered and managed by, or under
the direct supervision of, the Contractor. Administrative and management
functions include, but are not limited to: selecting trainees; providing
instructional staff, facilities, materials and equipment needed for instruction;
setting up and maintaining record keeping/tracking forms to document the
delivery of training including; setting up and maintaining ETP reporting and
accounting systems; and maintaining individual trainee files.
<PAGE>
PERFORMANCE:
1. ETP will provide technical assistance and monitor performance
of this Agreement. Contractor shall ensure that ETP or its
representative, including the Bureau of State Audits, ahs
the right during normal business hours, to examine,
reproduce, monitor and audit accounting source payroll
documents, and all other records, books, papers, documents
or other evidence directly related to the performance of
this Agreement by the Contractor, including any subcontract.
Records must be retained within the control of the primary
Contractor and available for review at the Contractor's
place of business, within the State of California. This
right will terminate no sooner than four (4) years from the
date of termination of the Agreement or three (3) years from
the date of the last payment by ETP to the Contractor, or
the date of resolution of appeals, audits, claims,
exceptions, or litigation, whichever is later.
a. 2. Contractor is on notice that ETP has the option to audit
this Agreement at anytime up to four years following the end
of the term of this Agreement. Audits will be performed in
accordance with Government Auditing Standards which include
sampling of available records. Contractor may protest findings
set forth in ETP audit and will be provided with procedures
for filing such protest. Contractor shall maintain and make
available all records pursuant to Title 22, California Code of
Regulations, Section 4442. Record Keeping.
Contractor shall submit all information and data required
for implementation and performance of the training project in a form and manner
prescribed by the Panel throughout the term of the Agreement.
ETP shall inform Contractor in writing if performance by
Contractor is not satisfactory and may, at its discretion, suspend any payment
and/or performance, including training, under the Agreement or terminate the
Agreement as provided herein.
ETP may terminate for cause with at least thirty (30) days
written notice to the Contractor; except, if ETP has evidence of fraud, it may
terminate immediately. The Contractor
<PAGE>
may terminate at will without any time requirement. Contractors' notice of
termination shall be delivered in person or by deposit in the United States
mail, addressed to the ETP SIGNATORY of this Agreement and shall be deemed to
have been given at the time of personal delivery or on the date of deposit in
the U.S. mail as evidenced by the postmark date of the notice.
If Contractor relocates or consolidates the California facility
at which training was provided (or the job for which training was provided)
with a facility (or a job) located outside California within three years of
the Agreement termination, Contractor shall return, at ETP's discretion, all
money earned under this Agreement as provided in Paragraph 2.
Training, for any trainee, may not exceed eighteen (18) months
from the first day of a trainee's training to the trainee's last day of
training.
If literacy training is provided, a signed statement on
Contractor's letterhead must be on file with the Contractor certifying that a
literacy assessment has been administered and the number of literacy training
hours in the Agreement is consistent with the results of the assessment.
UNEARNED FUNDS: Contractor shall return to ETP all unearned monies
under this Agreement with statutory interest computed from the first day of the
month following the date the funds are received. If the Contractor petitions for
bankruptcy, ETP shall be listed and scheduled as a creditor.
INDEMNIFICATION: Contractor shall indemnify, defend, and hold harmless
ETP, its officers, agents, and employees from any and all claims and losses
accruing or resulting to any and all Contractors, subcontractors, laborers and
any other person, firm, or corporation furnishing or supplying work, services,
materials, or supplies in connection with the performance of this Agreement, and
from any and all claims and losses accruing or resulting to any person, firm, or
corporation who may be injured or damaged by Contractor during the term of this
Agreement.
<PAGE>
GOVERNING RULES: This Agreement shall be governed by the laws of the
State of California. Contractor shall comply with all applicable federal, state,
and local laws, ordinances, and regulations. Contractor acknowledges it has
received a copy of and has reviewed applicable ETP enabling legislation,
regulations and the ETP Contractor's Guide.
OTHER FUNDS: Contractor shall notify ETP in writing promptly of other
government-funded training program(s) used to support the training under this
Agreement. All other funds provided by any governmental entity in whatever form
shall be used to reduce the training costs herein. No fee of any kind shall be
required of any trainee except as may be provided under law.
PROMOTIONAL MATERIAL: Any material used to promote this training
project or the use of the ETP name or logo must be approved by ETP before its
use.
NATIONAL LABOR RELATIONS BOARD (NLRB): Pursuant to Public Contract Code
Section 10296, by executing the Agreement, Contractor swears under penalty of
perjury that no more than one final unappealable finding of contempt of court by
a federal court has been issued against Contractor within the immediately
preceding two-year period because of Contractor's failure to comply with an
order of a federal court which orders the Contractor to comply with an order of
the National Labor Relations Board. ETP may rescind any contract in which the
Contractor falsely swears to the truth of the statement required by this
section.
AMERICAN'S WITH DISABILITIES ACT: Contractor assures that it shall
comply with the American's with Disabilities Act (ADA) of 1990, (42 U.S.C. 1201
ET SEQ.), which prohibits discrimination on the basis of disability, as well as
all applicable regulations and guidelines issued pursuant to the ADA.
DRUG FREE WORKPLACE: Contractor certifies under penalty of perjury
under the laws of the State of California that the Contractor shall comply with
the requirements of the Drug-Free Workplace Act of 1990 (Government Code Section
8350 ET SEQ.) and will provide a drug-free workplace by taking the following
actions:
6
<PAGE>
Publish a statement notifying employees that unlawful
manufacture, distribution, dispensation, possession, or use of a controlled
substance is prohibited and specifying actions to be taken against employees for
violations;
Establish a Drug-Free Awareness Program to inform employees
about all of the following:
The dangers of drug abuse in the workplace;
The person's or organization's policy of maintaining a
drug-free workplace;
Any available counseling, rehabilitation and employee
assistance programs; and
Penalties that may be imposed upon employees for drug abuse
violations.
Every employee who works on the Agreement:
Will receive a copy of the company's drug-free policy
statement; and
Will agree to abide by the terms of the company's statement
as a condition of employment on the Agreement.
NONDISCRIMINATION: During the performance of this Agreement, Contractor and its
subcontractors shall not unlawfully discriminate, harass, or allow
harassment against any employee or applicant for employment because of sex,
race, color, ancestry, religious creed, national origin, physical
disability (including HIV and AIDS), mental disability, medical condition
(cancer), age (over 40), marital status, and denial of family care leave.
Contractors and subcontractors shall insure that the evaluation and
treatment of their employees and applicants for employment are free of such
discrimination and harassment. Contractors and subcontractors shall comply
with the provisions of the Fair Employment and Housing Act (Government
Code, Section 12900 ET SEQ.) and the applicable regulations promulgated
thereunder (California Code of Regulations, Title 2, Section 7285.0 ET
SEQ.) The applicable regulations of the Fair Employment and Housing
Commission implementing Government Code, Section 12990 (a-f), set forth in
Chapter 5 of Division 4 of Title 2 of the California
7
<PAGE>
Code of Regulations are incorporated into this Agreement by reference
and made a part hereof as if set forth in full. Contractor and its
subcontractors shall give written notice of their obligations under
this clause to labor organizations with which they have a collective
bargaining or other agreement. Contractor shall include the
nondiscrimination and compliance provisions of this subparagraph in all
subcontracts to perform work under this Agreement.
NOTICES. All notices/correspondence shall be mailed or faxed to
Contractor's Contact Representative identified below. A copy of Notice of
Termination shall be sent to Contractor's Contact Representative (original
Notice of Termination sent to Contractor's signatory to this Agreement).
The Contractor's Contact Representative for this Agreement shall be:
Workforce Development Director
iNetVersity/NovaQuest Infosystems
19951 Mariner Avenue
Torrance, CA 90503
Telephone Number: (310) 921-4138
Fax: (310) 370-9629
ENTIRE AGREEMENT: This Agreement shall not be assigned or in any manner
transferred to any other party, including a bona fide purchaser for value,
without the prior written approval of ETP. This Agreement may be amended in
writing by mutual agreement of the parties. This is the entire Agreement
between the parties and it supersedes any other understanding or writing
made between them related to this matter.
APPROVED FOR ETP APPROVED FOR CONTRACTOR
Victoria Bradshaw, Executive Director Noreen Khan, Chief Executive Officer
- ------------------------------------- ------------------------------------
Type Name and Title Type Name and Title
8
<PAGE>
/s/ Victoria Bradshaw /s/ N. Khan
- --------------------------------------- -----------------------------------
Signature Date Signature Date
ETP, 1100 J Street, 4th Floor 19951 Mariner Avenue
- -------------------------------------- -------------------------------------
Address Address
Sacramento, California 95814 Torrance, California 90503
- -------------------------------------- -------------------------------------
City State Zip City State Zip
(916) 327-5640 (916) 327-5260 (310) 921-4101 (310) 370-9629
- -------------------------------------- -------------------------------------
Telephone FAX # Telephone FAX #
9
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------- --------------------- ------------ -------------- ----------------
Amount Encumbered Item Chapter Statute Fiscal Year
<S> <C> <C> <C> <C>
$244,128 5100-001-514 50 1999 1999-2000
$244,127 5100-001-514 2001 2001-2002
- -------------------------------------------------- --------------------- ------------ -------------- ----------------
Fund Object & Code
EMPLOYMENT TRAINING PANEL 96870 - 03930 - 936
96872 - 03930 - 936
- ----------------------------------------------------------------------------------------------------------------------
I hereby certify that budgeted funds are available for the period and purpose of
the expenditure stated above.
- ------------------------------------------------------------------------------------- --------------------------------
Signature of Accounting Officer Date
- ----------------------------------------------------------------------------------------------------------------------
I hereby certify that the Agreement does not fall within the meaning of Section
10295 of Chapter 2 of Part 2 of Division 2 of the Public Contract Code of the
State of California and pursuant to 58 OPS. CAL ATTY. GEN. 586 is exempt from
review or approval of the Department of General Services and the Department of
Finance.
- ------------------------------------------------------------------------------------- -------------------------------
Signature on Behalf of the Agency Date
======================================================================================================================
</TABLE>
<PAGE>
Page 1 of 16
Exhibit A
TRAINING PLAN
Project Title: INETVERSITY
--------------------------------------------------------------
I. A. TRAINING PROJECT PROFILE. Contractor certifies the following
funding criterion applies.
1. Projects to promote a healthy labor market in a
competitive California economy.
[X] Job creation: new hire or upgrade.
[X] Retraining workers of companies threatened by
out-of-state competition.
[X] Trainees subject to
displacement.
[ ] Employer adapting to a high
performance workplace.
[ ] Employer diversifying
goods and/or services.
2. Special Employment Training (SET) Projects.
[ ] 1. Frontline Workers.
[ ] 2. New industries.
[ ] 3. Workers affected by defense industry
cutbacks and military base closures.
[ ] 4. To stabilize employment in fields with a
deficit of trained employees and
clear career advancement opportunities.
[ ] 5. Entrepreneurial training for a
small business owner(s) to enhance the
competitive position of a business
having at least one full-time, but fewer
than 10 full-time employees.
[ ] 6. Individuals with barriers to full-time
employment.
3. Welfare to Work Training Project.
[ ] Trainee is an employed worker who is
receiving CalWORKs benefits or has received
CalWORKs benefits within one year of the
commencement of training.
B. LEGISLATIVE PRIORITIES
[ ] stimulating exports/imports - U.I. Code, Section 10200(b)(1)
[ ] locating into or expansion within California - U.I. Code,
Section 10200 (b)(3)
[ ] moving to a high performance
workplace - U.I. Code, Section 10200 (b)(3)
[X] hiring displaced workers - U.I. Code, Section 10200 (b)(4)
[ ] developed jointly by management and workers - U.I. Code,
Section 10200 (b)(5)
[ ] career ladders - U.I. Code, Section 10200 (b)(6)
<PAGE>
Page 2 of 16
Exhibit A
[ ] promotion of California's manufacturing workforce - U.I.
Code, Section 10200 (b)(7)
II. CONTRACTOR PROFILE
A. Contractor's full-time employees: 1) Company Wide VARY BY
PARTICIPATING EMPLOYER
2) In California VARY BY
PARTICIPATING EMPLOYER
B. SUBSIDIARY: Yes [X] No [ ] If "Yes", parent company:
INETVISIONS.COM
C. COUNTY(IES) where trainees are to be employed: VARY BY
PARTICIPATING EMPLOYER
III. TRAINEE CRITERIA
NEW HIRE: A New Hire is a person who, prior to the start of training,
is unemployed and:
1. Has established an Unemployment Insurance (UI) claim in this
State and has been determined eligible for UI by the
Employment Development Department (EDD); or
2. Has exhausted UI benefits from this State within the preceding
twenty-four (24) months; or
3. Has received, at the time of hire, a notice of layoff from the
prior employer.
RETRAINEE: A Retrainee is an individual who meets one of the following
criteria:
1. Has been employed full-time by Contractor or a participating
employer in California for a minimum of 90 days as of the
start date of that individual's training; or
2. Has been employed full-time by Contractor or a participating
employer in California for less than 90 days with their
current employer AND had been previously employed for at least
an average of 20 hours per week for at least 90 days by an ETP
eligible employer(s) during the 180 day period preceding their
hire date with their current employer; and the 90 days of
prior employment may be non-consecutive and may also be
completed with multiple employers; or
3. Has been employed full-time by Contractor or a participating
employer in California for less than 90 days at the start of
training and at the time of hire met the following criteria:
a. Has established an Unemployment Insurance (UI) claim in
this State and has been determined eligible for UI by the
Employment Development Department (EDD); or
<PAGE>
Page 3 of 16
Exhibit A
b. Has exhausted UI benefits from this State within the
preceding twenty-four (24) months; or
c. Had received, at the time of hire, a notice of layoff from
the prior employer.
A Retrainee meeting (1), (2), or (3) above must also meet one
of the following:
a. The Retrainee is likely to be displaced without
the training and, therefore, claiming
unemployment insurance benefits because of
reductions in overall employment within a
business, elimination of the individual's
current job, or a substantial change in the
skills required to remain employed due to
technological change or other factors; or
b. The Retrainee needs training in order to
facilitate an employer's adaptation to a high
performance workplace; or
c. The Retrainee needs training to facilitate an
employer's diversification of the production of
goods or services.
IV. TRAINEE CERTIFICATION REQUIREMENTS
NEW HIRE: Contractor shall pre-screen trainees for eligibility and
deliver an ETP 104 (Trainee Record), by personal delivery, by mail, or
enter information via the Internet, no later than ten (10) working days
after the start of training. The notice of layoff must also be
forwarded with the ETP 104, if applicable. If Contractor wants a
trainee certification prior to the start of training, Contractor must
deliver the ETP 104, by personal delivery, by mail, or enter
information via the Internet, at least ten (10) days, but no more than
ninety (90) days, prior to the commencement of training.
RETRAINEES (currently employed less than 90 days/with work or UI
history): For Internet On-line Process Only, Contractor shall enter and
submit trainee information on the ETP83, Employment History, via the
Internet no later than ten (10) working days after the start of
training. If Contractor wants a trainee certification prior to the
start of training, Contractor must deliver the ETP 104, by personal
delivery, by mail, or enter information via the Internet, at least ten
(10) days, but no more than ninety (90) days, prior the commencement of
training.
V. TRAINEE ENROLLMENT REQUIREMENTS
A trainee is eligible to be enrolled at the start of training, but must
be enrolled once the number of class/lab hours listed in Chart 1,
Column 9 have been completed. To enroll trainees in the training
project, the Contractor must deliver a completed ETP 104 (Trainee
Record), by personal delivery, by mail, or enter information via the
Internet, for an
<PAGE>
Page 4of 16
Exhibit A
individual trainee within THIRTY (30) days of completion of the
required class/lab training hours for enrollment. For
on-line enrollments, Contractor must also submit the ETP 104 AUTH
(Authorization for On-Line Enrollment) within 30 days of the date that
the initial enrollment information was entered, or prior to the first
invoice, whichever comes first. A trainee must complete all training
and retention prior to subsequent enrollment in same project. A trainee
cannot be enrolled in the same job number more than once within the
same project. A trainee shall not be enrolled in more than one ETP
project at the same time.
RETRAINEES (employed less than 90 days/with work or UI history): For
Scantron Process, Contractor shall deliver to ETP a completed ETP 104
(Trainee Record), by personal delivery, or by mail, for those trainees
who had been employed by the current employer at the start of training
for less than 90 days and have a previous employment or UI history. The
notice of layoff must also be forwarded with the ETP 104, if
applicable. For Internet On-line Process, Contractor should submit, via
the Internet, a completed ETP 104 (Trainee Record) for those trainees
who have been employed by the current employer at the start of training
for less than 90 days and have a previous employment or UI history
(only after receiving ETP approval for trainees submitted on the ETP
83, Employment History). The notice of layoff must also be forwarded
with the ETP 104, if applicable.
VI. TRAINING STANDARDS
A. CURRICULUM: Contractor shall provide training pursuant to the
curriculum in Exhibit B.
B. DISTRIBUTION OF TRAINING HOURS: Distribution of training hours
between categories of training (i.e. class/lab or SOST) may be
changed only by a formal, written Amendment to the Agreement.
C. TRAINERS: Class/lab and Structured, On-Site (SOST) trainers must
be company employees or training vendors who are knowledgeable
and competent in the subject matter. ETP makes no claim and has
no responsibility pertaining to qualifications of any training
vendor or individual providing training. Any trainee who is also
a trainer must complete all classroom/lab hours and, when
applicable, obtain a SOST competency certification, as required
in Exhibit B, Curriculum, for each specific type of training
prior to providing the same type of training to others.
D. "TRAINING" DEFINITIONS:
1. Classroom training is formal instruction provided to a group of
individuals, in a classroom setting removed from the trainee's
usual work environment, meeting regularly for training in a
specific skill under the constant and direct guidance of a
qualified trainer.
<PAGE>
Page 5 of 16
Exhibit A
2. Laboratory training is "hands-on" instruction or skill
acquisition conducted in a non-productive environment or
simulated work setting generally away from the trainee's
work station, under the direction of a laboratory trainer that
may require the use of specialized equipment or facilities by
the trainee. The trainer's time during laboratory training must
be dedicated exclusively to the instruction of trainees.
3. Structured, On-Site Training (SOST) is supervised training
conducted at the worksite for the purpose of transferring
and testing skills and knowledge learned in the class/lab
training to the worksite. Trainees perform structured
tasks/assignments under the direction of a qualified trainer
who is on-site and provides face-to-face instruction and
coaching, and assesses trainees competencies using the methods
referenced in item E. STRUCTURED, ON-SITE TRAINING, (3).
E. STRUCTURED, ON-SITE TRAINING (SOST): N/A
F. SUMMARY REPORT: N/A
VII. TRAINEE RETENTION REQUIREMENTS
A1. FULL-TIME EMPLOYMENT: Employment for each trainee shall be
in the occupations listed in Chart 1, Column 2 and shall
result in employment customarily considered full-time for
the occupation and shall have definite career potential and
a substantial likelihood of providing long-term job
security. Each trainee must be employed full-time, 35
HOURS/WEEK) with the Contractor or participating employer
for a period of at least ninety (90) consecutive days
immediately following the completion of training. New Hire
trainees should be placed in a job within 30 days following
completion of the trainee's training. The retention period
shall be completed no later than the last day of this
Agreement. Wages at the end of the 90-day retention period
shall be equal to or greater than the wages listed in Chart
1, Column 14.
A2. Contractor agrees to comply with rules and regulations
governing the ETP, including, but not limited to the
following:
Contractor shall not place any trainee with a Federal agency
for her/his required post-training retention period.
Placement with a non-Federal public entity or non-profit
organization shall be permitted only where such entity or
organization has elected an alternate method of financing
its unemployment insurance liability pursuant to Article 5
(commencing with Section 801) or Article 6 (commencing with
section 821) of the Unemployment Insurance Code and where
placement is limited to new hire trainees who received
training as an incidental part of a training project
designed to meet the needs of one or more private sector
employees.
<PAGE>
Page 6 of 16
Exhibit A
Contractor shall place each trainee who has completed
training with a single eligible employer for the entire
retention period, pursuant to the ETP statutory requirement
stated in Unemployment Insurance Code, Section 10209(f).
Contractor may place up to 20 percent of the total new-hires
placed and retained in employment under the contract with a
public entity or nonprofit organization that has elected an
alternate method of financing its liability for unemployment
insurance compensation benefits.
Contractor may place new hire trainees at and through
temporary employment agencies only when all of the following
circumstances apply:
a. When placements at and through temporary employment
agencies do not exceed 10% of the total actual number
of new hires placed and retained in employment under
the contract; and
b. When placements at and through temporary employment
agencies are not included in the core group of
eligible employers at the time the contract is
approved; and
c. Where the above two conditions are met, the retention
period for placements at temporary employment
agencies shall consist of 180 consecutive days before
payment is considered earned.
<PAGE>
<TABLE>
<CAPTION>
Chart 1 Summary ET 000172
Contractor: iNetVersity/NovaQuest Infosystems Page 2
Exhibit A
- -------------------------------------------------------------------------------------
TRAINING DATA
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2 3 4 5 6 7
Total Cost
Type of No. CLS/Lab SOST Trainee Per
Job # Occupations Training Retain Hours Hours Hrs. Trainee
===== =============== ========= ======= ======= ====== ======= =======
Web Graphics Creator,
Content Creator,
Web Editor,
Computer Programmer,
Server Administrator,
1 LAN/WAN Administrator,
Help Desk
Programmer, Multiple
Technician, Employers
Network New Hires
Administrator, COMPUTER SKILLS
MIS Technician,
and Customer 45/ 525 525 $8,379
Service 525 525
- -----------------------------------------------------------------------------------------
Web Graphics
Creator,
Content Creator,
Web
- ----------------------------------------------------------------
PAYMENT SCHEDULE
- ----------------------------------------------------------------
8 9 10 11 12 13 14
Wage
Pay 4 After
Total SOST Hrs To Pay 1 Pay 2 Pay 3 After 90 Reten
Trainer Hrs. Enroll Enroll Compl Hired Days -tion
============= ====== ====== ===== ===== ======== ======
80 $2,094.75 $2,094.75 $2,094.75 $2,094.75 $9.83
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Chart 1 Summary ET 000172
Contractor: iNetVersity/NovaQuest Infosystems Page 3
Exhibit A
- -------------------------------------------------------------------------------------
TRAINING DATA
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2 3 4 5 6 7
Total Cost
Type of No. CLS/Lab SOST Trainee Per
Job # Occupations Training Retain Hours Hours Hrs. Trainee
===== =============== ========= ======= ======= ====== ======= =======
Editor, Computer
Programmer,
Server
Administrator,
2 LAN/WAN
Administrator,
Help Desk
Programmer,
Technician, Multiple-
Network Employer 200 200 $2,780
Administrator, Retrainees 40/ 200 200
MIS Technician, COMPUTER
Customer Service SKILLS
- ----------------------------------------------------------------
PAYMENT SCHEDULE
- ----------------------------------------------------------------
1 2 8 9 10 11 12 13 14
Wage
Pay 4 After
Total SOST Hrs To Pay 1 Pay 2 Pay 3 After 90 Reten
Job # Occupations Trainer Hrs. Enroll Enroll Compl Hired Days -tion
===== =============== ============= ====== ====== ===== ===== ======== ======
Editor, Computer
Programmer,
Server
Administrator,
2 LAN/WAN
Administrator,
Help Desk
Programmer,
Technician, Multiple-
Network Employer
Administrator, Retrainees 40 $695.00 $1,390.00 $ $695.00 $9.83
MIS Technician, COMPUTER
Customer Service SKILLS
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
CONTRACT TOTALS
<S> <C> <C> <C> <C>
Program Cost $458,375 Total to be Retained 85
Substantial Contribution ( %) (-) $0
----
Multiple-Empl. Support ( %) (+) $29,880
----
SET Trainee Support (+) $0
SET Training Material/Program Development (+) $0
TOTAL ETP FUNDING (=) $488,255
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The figures in Col. 6 are for calculation purposes only.
<PAGE>
<TABLE>
<CAPTION>
- ------------- ------------------------- ------------ ----------------------- -------------------- ----------------------------
Turnover Rate % of Mgrs. & Sups. to be Health Benefits Inc. in SET Trainee Support SET Training
trained Wage? Material/Program Development
- ------------- ------------------------- ------------ ----------------------- -------------------- ----------------------------
<S> <S> <C> <C> <C> <C>
20.0% 0.0% No $0.00 $0.00
- ------------- ------------------------- ------------ ----------------------- -------------------- ----------------------------
</TABLE>
LOCATION OF TRAINING: Training will be held at the participating employers'
worksite or iNetVersity/NovaQuest, during work hours.
RATIOS: The trainer to trainee ratio will not exceed 1:20 for retrainees and
1:15 for new hires.
IF HEALTH BENEFITS IS "YES", PLEASE EXPLAIN: Wages will vary by participating
employer. Health benefits may be added to the calculation of the trainees wages
in order to meet the ETP minimum wage requirement for the county where the
participating employer is located.
OTHER NOTES: Turnover rate shall not exceed 20% annually, unless the
participating employer can provide information that the employer has experienced
a singular reduction in force or other occurrence which adversely affected the
turnover rate in the last calendar year.
<PAGE>
CURRICULUM
<PAGE>
INETVERSITY INFORMATION TECHNOLOGY
"MENU"
CURRICULUM
HOURS
Class/Lab
Job # 1=525
Job # 2=200
COMPUTER NETWORKING/ENGINEERING
- - Networking Essentials
- - MCSE/MCSD Tracks
- - MCSE + Internet
- - Computer Networking Systems
- - Introduction/Advanced CISCO Router
- - CISCO Internetwork
- - Novell (CAN/CNE) Track
- - Oracle
- - A+ / PC Hardware
- - Microsoft Operating Systems Administration
INTERNET
- - Web Development
- - HTML Scripting/Programming
- - Effective Web Design Strategies
- - Site Designing
- - Introduction to JAVA Script
- - Web Visual Basic Scripting
- - Microsoft Internet Development Solutions
- - Internet Explorer/Frontpage
- - NetObjects Fusion
SOFTWARE/GRAPHICS APPLICATIONS
- - Microsoft Operating Systems
- - Microsoft Office (Word, Excel, Access, Powerpoint, MOUS)
- - Outlook and Frontpage
- - PhotoShop 5.5 and QuarkXPress 3.3
- - Illustrator
- - Visio 5.0
i
<PAGE>
EXHIBIT 10.7
LEASE FOR THE PROPERTY LOCATED AT
19950 MARINER AVENUE, TORRANCE CA 90503
DATED DECEMBER 1, 1994
i
<PAGE>
ORIGINAL
LEASE
Between
OP&F SCHRODER TRUST,
Lessor
and
NOVAQUEST INFOSYSTEMS
Lessee
December 1, 1994
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
Page
----
1. Parties. 1
2. Lease of Premises. 1
3. Term. 3
4. Rent; Other Charges. 5
5. Security Deposit. 9
6. Use. 10
7. Lessor's Construction of Tenant Improvements. 11
8. Maintenance, Repairs and Alterations. 11
9. Insurance and Indemnity. 15
10. Damages or Destruction. 18
11. Mechanic's Liens. 20
12. Broker's Fee. 21
13. Assignment and Subletting. 21
14. Defaults; Remedies. 24
15. Condemnation. 28
16. Estoppel Certificate. 29
17. Lessor's Liability. 30
18. Severability. 30
19. Interest on Past-Due Obligations. 30
20. Time of Essence. 30
21. Captions. 30
22. Incorporation of Prior Agreements; Amendments. 30
23. Notices. 31
24. Waivers. 31
25. Recording. 32
26. Holding Over. 32
27. Cumulative Remedies. 32
28. Covenants and Conditions. 32
29. Binding Effect. 32
30. Choice of Law. 32
31. Attornment. 33
32. Subordination. 33
33. Attorney's Fees. 33
34. Lessor's Access. 34
35. Signs. 34
36. Merger. 34
37. Authority. 35
38. Consents. 35
39. Quiet Possession. 35
40. Arbitration. 35
41. Reservation of Minerals. 35
42. Computation of Time. 36
<PAGE>
TABLE OF CONTENTS
Page
----
43. Interpretation and Definition. 36
44. Exhibits. 37
45. Rules and Regulations. 37
46. Name of Building. 37
47. No Light and Air Easement. 37
48. Force Majeure. 37
49. Waiver of Trial by Jury. 37
50. Relocation of Premises. 38
51. Environmental Compliance. 38
52. Communications Installation. 39
</TABLE>
<PAGE>
LEASE
1. PARTIES. This Lease ("Lease"), dated for reference purposes only,
December 1, 1994, is made by and between OP&F SCHRODER TRUST (herein called
"Lessor"), and NOVAQUEST INFOSYSTEMS, a California corporation (herein called
"Lessee").
2. LEASE OF PREMISES.
2.1 PREMISES:
(a) Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, for the term, at the rental and upon all of the terms and
conditions set forth herein, those certain premises consisting of the area
outlined and cross hatched on the plans attached hereto as Exhibit B-1 and B-2
(the "Primary Premises") which-is a portion of that certain building (the
"Building") located at 19951 Mariner Avenue, in the City of Torrance, County of
Los Angeles, State of California.
(b) On the condition that the present tenant, to wit: TRW,
vacates the warehouse space located within the Building and outlined and
cross-hatched on the plan attached hereto as Exhibit B-3 (the "TRW Warehouse
Space"), Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
for the term, at the rental and upon all of the terms and conditions set forth
herein the TRW Warehouse Space. In this connection Lessor has prior to the
execution of this Lease served a thirty (30) notice on TRW to vacate the TRW
Warehouse Space, Lessor shall have no other obligation with regard to such space
other than to lease the space to Lessee pursuant to the terms of this Lease if,
as and when it becomes available. In the event TRW fails to vacate such space
this Lease shall continue in full force and effect as to the Primary Premises
and Lessor shall have no liability to Lessee as a consequence of such failure.
In the event TRW vacates the TRW Warehouse Space and as a consequence Lessor
leases the same to Lessee as above provided, when Lessor makes the TRW Warehouse
Space available to Lessee for occupancy the term "Premises" as used in this
Lease shall mean the Primary Premises together with the TRW Warehouse Space. In
the event TRW does not vacate the TRW Warehouse Space and Lessor only leases the
Primary Premises to Lessee pursuant to this Lease, the term "Premises" as used
in this Lease shall mean the Primary Premises.
(c) The Premises, the portion of the Building outside the
Premises, and the Common Area (as defined in Subparagraph 2.3 below), are herein
collectively referred to as the "Building Project." The real property on which
the Building Project is located (the "Land") is legally described in Exhibit A
attached hereto.
2.2 VEHICLE PARKING. Lessee shall be entitled to 100 vehicle
parking spaces (93 of which are allocated to the Primary Premises and 7 of which
are allocated to the TRW Warehouse Space), unreserved and unassigned, on those
portions of the
<PAGE>
Common Area designated by Lessor for parking. In the event TRW does not
vacate the TRW Warehouse Space Lessee shall not be entitled to the 7 parking
spaces allocated to the TRW Warehouse Space. Lessee shall not use more
parking spaces than the number of spaces it is entitled to as above set
forth. Said parking spaces shall be used only for parking by vehicles no
larger than full size passenger automobiles or vans or similar size vehicles
which can fit in a single parking space. In no event shall Lessor charge
Lessee for the use of such parking spaces other than for such operating
expenses as are included in Lessee's share of Operating Expenses as described
in Paragraph 4.2 below.
(a) Lessee shall not permit or allow any vehicles that
belong to or are controlled by Lessee or Lessee's employees, suppliers,
shippers, customers, or invitees to be loaded, unloaded, or parked in areas
other than those designated by Lessor for such activities.
(b) If Lessee permits or allows any of the prohibited
activities described in Paragraph 2.2 of this Lease, then Lessor shall have the
right, in addition to such other rights and remedies that it may have, to remove
or tow away the vehicle involved and charge the cost to Lessee, which cost shall
be immediately payable upon demand by Lessor.
(c) All automobiles, trucks, and other vehicles of Lessee,
Lessee's subtenants, concessionaires and licensees and their officers, agents
and employees shall be parked only in such place as may be designated by Lessor
as employee parking areas. If requested by Lessor, Lessee will furnish Lessor
with license numbers of said vehicles.
2.3 COMMON AREA. The term "Common Area" is defined as all areas
and facilities outside the Building and within the boundary lines of the
Building Project (including the Land) that are provided and designated by Lessor
from time to time for the general non-exclusive use of Lessor, Lessee and of
other lessees of the Building Project and their respective employees, suppliers,
shippers, customers and invitees, including but not limited to parking
structures, parking areas to the extent not otherwise prohibited by this Lease,
loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, ramps, driveways, landscaped areas and decorative or boundary walls
and any other improvements thereon or thereunder.
2.4 Common Area - Changes. Lessor shall have the right, in
Lessor's sole discretion, from time to time:
(a) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas and walkways;
(b) To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises remains
available:
<PAGE>
(c) To designate other land outside the boundaries of the
Building Project to be a part of the Common Areas;
(d) To add additional buildings and improvements to the
Common Areas;
(e) To use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Building Project, or any
portion thereof;
(f) To do and perform such other acts and make such other
changes in, to or with respect to the Common Areas and Building Project as
Lessor may, in the exercise of sound business judgment, deem to be appropriate.
2.5 PARKING FACILITIES. Lessor shall at all times provide the
parking facilities required by applicable law and in no event shall the number
of parking spaces that Lessee is entitled to under paragraph 2.2 be reduced.
3. TERM.
3.1 TERM AND COMMENCEMENT DATE. The term of this Lease shall
commence December 1, 1994 (the "Commencement Date") and shall terminate December
31, 1997. In the event Lessor cannot deliver possession of the Premises (either
the Primary Premises or the Primary Premises together with the TRW Warehouse
Space, as the case may be) at the time of the execution of this Lease, Lessor
shall not be subject to any liability therefor, nor shall such failure affect
the validity of this Lease, or the obligations of Lessee under the Lease, or
extend the term of the Lease as amended hereby, but in such case, Lessee shall
not, except as otherwise provided herein, be obligated to pay monthly fixed
rental or Lessee's Share of Operating Expenses until possession of the Premises
is delivered to Lessee. In no event shall the term of this lease be extended as
a consequence of Lessee not being able to make the Premises, or any portion
thereof, including, without limitation, the TRW Warehouse Space, available to
Lessee for its occupancy on the Commencement Date. However and not withstanding
the foregoing, in the event Lessor cannot deliver possession of the Primary
Premises on or before December 15, 1994, this Lease, at the option of the
Lessee, shall terminate and be of no further force or effect.
3.2 CONDITIONS OF PREMISES ON DELIVERY: "AS-IS WHERE-IS" LEASE.
(a) Lessor shall deliver the Premises to Lessee in a clean,
broom swept condition with all HVAC, plumbing, electrical and mechanical systems
and equipment in good working order. In addition, Lessor shall repair any leaks
found in the roof system. In the event the Premises are cited by any
governmental authority having jurisdiction in such matters as a consequence of
the Premises not being in compliance
<PAGE>
with the applicable provisions of the Americans With Disabilities Act ("ADA")
and such citation is not received as a consequence of Lessee constructing
Tenant Improvements and/or Alterations (both as defined below) to the
Premises (either pursuant to Paragraphs 7 or 8.4 below or otherwise) Lessor,
at its expense, shall make such modifications to the Premises as are required
in order to comply with ADA or Lessor shall otherwise cause the citation to
be rescinded or waived. In the event such citation is received as a
consequence of Lessee constructing such Tenant Improvements and/or
Alterations, Lessee, at its expense, shall make such modifications to the
Premises as are required in order to comply with ADA or otherwise cause the
citation or order to be rescinded or waived.
(b) With the exceptions set forth in subparagraph 3.2 (a)
Lessee acknowledges that it is leasing the Premises in their present "as is
where is" condition. Lessee acknowledges that Lessee is leasing the Premises
solely in reliance on Lessee's own investigation, and that no representations or
warranties of any kind whatsoever, express or implied, have been made by Lessor,
Lessor's agents, or brokers, regarding the condition of the Premises or
otherwise, other than as specifically set forth in this Lease. Lessee further
acknowledges that as of the Commencement Date Lessee shall be aware of all
zoning regulations, other governmental requirements (other than requirements of
the American Disabilities Act ("ADA"), site and physical conditions (including,
without limitation, the existence of Hazardous Materials as defined below in, on
or under the Premises, or any part thereof), and other matters affecting the use
and condition of the Premises and agrees to lease the Premises in the condition
that it is in as of the Commencement Date, except as otherwise provided in the
first two sentences of this Paragraph 3.2.
4. Rent: Other Charges.
4.1 FIXED ANNUAL RENTAL.
(a) Lessee shall pay to Lessor. without prior demand and
without any deduction, set off, or counterclaim whatsoever, for each year of the
term of this Lease, a monthly fixed minimum amount (the "monthly fixed rental";
collectively, the monthly fixed rental and Lessee's Share of Operating Expenses
are referred to as "Rent") determined as set forth below.
(b) Except as otherwise provided in Subparagraph 4.1(d)
below, commencing with the Commencement Date of the term of this Lease, and
continuing throughout the term of this Lease, Lessee shall pay to Lessor the
applicable monthly fixed rental, in advance, on the first day of each calendar
month of the term hereof. Payments under this Paragraph 4.1 for any period
during the te~ll1 of this Lease which is for less than one month shall be a pro
rata portion of the monthly fixed rental based on a 30 day month. In the event
the TRW Warehouse Space is not part of the Premises for all or a portion of the
Lease term, the payments of Rent required under this Lease shall be adjusted and
prorated accordingly.
<PAGE>
(c) The monthly fixed rental for each month during the term
of this Lease for the Premises shall be Nineteen Thousand Nine Hundred twelve
and 80/lOOths Dollars ($19,912.80) ($18,586.80 being allocated to the Primary
Premises and $1,326.00 to the TRW Warehouse Space).
(d) Anything in the Lease to the contrary notwithstanding,
Lessee shall not be obligated to pay monthly fixed rental for a four (4) month
period commencing with the Commencement Date, but Lessee shall be obligated to
pay Lessee's Share of Operating Expenses for such four (4) month period. In the
event Lessor is unable to make the TRW Warehouse Space available for occupancy
by Lessor until after the Commencement Date, Lessee shall have a separate four
(4) month rent abatement period as to the minimum monthly rent attributable to
the TRW Warehouse space, but shall pay Lessee's Share of Operating Expenses
attributable to the TRW Warehouse Space from the date Lessor makes the space
available to Lessee for occupancy.
(e) Lessee shall pay to Lessor upon delivery of the Premises
to Lessee the sum of $52,160.48 as prepaid rent which shall constitute the
monthly fixed rental and Lessee's Share of Operating Expenses (estimated at
(;6,167.44 per month) for the first two months following the four (4) month
period described in subparagraph (d) immediately above.
(f) In the event a Late Charge becomes payable pursuant to
Section 14.3 of the Lease for two (2) installments of Rent within a twelve (12)
month period, then all subsequent Rent payments shall immediately and
automatically become payable by Lessee quarterly in advance instead of monthly.
(g) Providing that (i) no uncured default then exist under
this Lease and (ii) no condition exists which but for the passage of time or the
giving of notice would constitute a default under this Lease, at the end of the
eighteenth (18) month of the Lease term Lessor shall deliver to Lessee Lessor's
check in the amount of Twenty-Five Thousand Dollars ($25,000) payable to Lessee
which shall represent a tenant allowance.
4.2 OPERATING EXPENSES. Lessee shall pay to Lessor during the
term hereof, in addition to the monthly fixed rental as described in Paragraph
4.1 above, Lessee's Share, as hereinafter defined, of all Operating Expenses, as
hereinafter defined, during each calendar year of the term of this Lease, in
accordance with the following provisions:
(a) "Lessee's Share" is mutually agreed to be 39.25% (of
which 36.64% is allocated to the Primary Premises and 2.61% is allocated to the
TRW Warehouse Space). Lessee acknowledges that the Building is part of a
multi-building Building Project and that the Operating Expenses attributable to
the Building (and therefore Lessee's Share) include an allocation of a certain
portion of Operating Expenses relating to the total Building Project.
<PAGE>
(b) "Operating Expenses" is defined, for purposes of this
Lease, as all costs incurred by Lessor, if any, for the ownership, management,
maintenance, operation, administration and repair of all or any portion of the
Building Project, including but not limited to:
(i) The operation, repair and maintenance, in neat,
clean, good order and condition, of the following:
(aa) The Common Areas, including parking areas,
loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, driveways, landscaped areas, striping, bumpers, irrigation systems,
Common Area lighting facilities and fences and gates:
(bb) Trash disposal services;
(cc) Tenant directories and signs;
(dd) Fire detection systems including sprinkler
system maintenance and repair;
(ee) Any other service to be provided by Lessor
that is elsewhere in this Lease stated to be an "Operating Expense";
(ii) Any deductible portion of an insured loss
concerning any of the items or matters described in this Paragraph 4.2;
(iii) The cost of the Premiums for the liability,
property damage (including earthquake coverage, if any) and rental income
insurance policies to be maintained by Lessor under Paragraph 9 hereof;
(iv) The amount of the Real Property Tax to be paid by
Lessor under Paragraph 4.4. hereof;
(v) The cost of water, gas and electricity to service
the Common Areas;
(vi) A reasonable management and accounting fee.
(c) The inclusion of the improvements, facilities and
services set forth in Paragraph 4.2(b)(i) of the definition of Operating
Expenses shall not be deemed to impose an obligation upon Lessor to either have
said improvements or facilities or to provide those services unless the Building
Project already has the same, Lessor already provides the services, or Lessor
has agreed elsewhere in this Lease to provide the same or some of them.
<PAGE>
(d) Operating Expenses shall not include any expenses paid
by any lessee directly to third parties.
(e) Lessee's Share of Operating Expenses shall be payable by
Lessee within ten (10) days after a reasonably detailed statement of actual
expenses is presented to Lessee by Lessor. At Lessor's option, however, an
amount may be estimated by Lessor from time to time of Lessee's Share of annual
Operating Expenses and the same shall be payable monthly or quarterly, as Lessor
shall designate, during each calendar year of the Lease term, on the same day as
the monthly fixed rental is due hereunder. In the event that Lessee pays
Lessor's estimate of Lessee's Share Of Operating Expenses, Lessor shall deliver
to Lessee within sixty (60) days after the expiration of each calendar year a
reasonably detailed statement showing Lessee's Share of the actual Operating
Expenses incurred during the preceding year. If Lessee's payments under this
Paragraph 4.2(e) during said preceding calendar year exceed Lessee's Share as
indicated on said statement, Lessee shall be entitled to credit the amount of
such overpayment against Lessee's Share of Operating Expenses next falling due.
If Lessee's payments under this paragraph during said preceding calendar year
were less than Lessee's Share as indicated on said statement, Lessee shall pay
to Lessor the amount of the deficiency within ten (10) days after delivery by
Lessor to Lessee of said statement.
4.3 PAYMENT. Rent and all other charges payable to Lessor shall
be payable in lawful money of the United States to Lessor c/o CB Commercial Real
Estate Group, Inc., 533 S. Fremont Ave., Los Angeles, CA 90071, Attention: Real
Estate Manager, or to such other persons or at such other places as Lessor may
designate in writing.
4.4 REAL PROPERTY TAXES. Lessor shall pay the Real Property Tax,
as defined in paragraph 4.4 (a), applicable to the Building Project subject to
reimbursement by Lessee of Lessee's Share of such taxes in accordance with the
provisions of paragraph 4.2(a) and (b)(iv).
(a) As used herein, the term "Real Property Tax" shall
include any form of real estate tax or assessment, general, special, ordinary or
extraordinary, and any license fee, commercial rental tax, improvement bond or
bonds, levy or tax (other than inheritance, personal income or estate taxes)
imposed on the Building Project or any portion thereof by any authority having
the direct or indirect power to tax, including any city, county, state or
federal government, or any school, agricultural, sanitary, fire, street,
drainage or other improvement district thereof, as against any legal or
equitable interest of Lessor in the Building Project or in the real property of
which the Building Project is a part, as against Lessor's right to rent or other
income therefrom and against Lessor's business of leasing the Building Project.
The term "Real Property Tax" shall also include any tax, fee, levy assessment or
charge (i) in substitution of, partially or totally, any tax, fee, levy,
assessment or charge hereinabove included within the definition of "Real
Property Tax", or (ii) the nature of which was hereinbefore included within the
definition of "Real Property Tax,. or (iii) which is imposed as a result of a
transfer, either partial or
<PAGE>
total, of Lessor's interest in the Building Project or the Land or capital
improvement made thereto or which is added to a tax or charge hereinbefore
included within the definition of real property tax by reason of such
transfer or capital improvement, or (iv) which is imposed by reason of this
transaction, any modifications or changes hereto, or any transfers hereof. To
the extent any tax is imposed on the rents collected by Lessor from the
Premises, Building or Building Project, Lessee shall only be obligated to pay
such tax to the extent it is in lieu of ad valorem real property taxes as
presently assessed and collected in Los Angeles County, California.
(b) Lessee shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the Premises or elsewhere. If any of
Lessee's said personal property shall be assessed with Lessor's real property,
Lessee shall pay to Lessor the taxes attributable to Lessee's personal property
within ten (10) days after receipt of a written statement setting forth the
taxes applicable to Lessee's personal property.
4.5 UTILITIES.
(a) Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities and services specially or exclusively supplied
and/or metered exclusively to the Premises or to Lessee, together with any taxes
thereon. If any such services are not separately metered to the Premises, Lessee
shall pay at Lessor's option, either Lessee's Share or a reasonable proportion
to be determined by Lessor of all charges jointly metered with other premises in
the Building.
(b) There shall be no abatement of Rent and Lessor shall not
be liable in any respect whatsoever for the inadequacy, stoppage, interruption
or discontinuance of any utility or service due to riot, strike, labor dispute,
breakdown, accident, repair or other cause, except as expressly provided for in
Paragraph 4.6.
4.6 TRIPLE NET LEASE. This Lease is what is commonly called a
"Net, Net, Net Lease," it being understood that Lessor shall receive the rent
set forth in Paragraph 4.1 free and clear of any and all other impositions,
taxes, liens, fees, charges or expenses of any nature whatsoever in connection
with the ownership and operation of the Premises. Nothing contained herein shall
require Lessee to pay any income, franchise, estate, succession, inheritance or
transfer taxes of Lessor pursuant to this Section 4. It is the intention of the
parties hereto that this Lease shall not be terminable for any reason by Lessee,
and that Lessee shall in no event be entitled to any abatement of or reduction
in Rent or any other charge payable under this Lease, except as expressly
provided in Paragraph 4.1 (d) above and Paragraphs 10.1, 10.2, and 15.2 below.
Any present or future law to the contrary shall not alter this agreement of the
parties.
5. SECURITY DEPOSIT. Concurrently with the execution hereof, Lessee
shall deposit with Lessor the sum of $26,080.24 The funds deposited under this
Section 5 (the "Deposit") shall be non-interest bearing and held by Lessor as
security for the full and
<PAGE>
faithful performance of Lessee's covenants and obligations under this Lease,
it being understood and agreed that the Deposit is not an advance rental
deposit or a measure of Lessor's damages in case of Lessee's default. In the
event of a material breach (as defined in Section 14 of the Lease) by Lessee,
Lessor may, from time to time, without prejudice to any other remedy provided
herein or by Law, use the Deposit to the extent necessary to make good any
arrears of sums payable by Lessee hereunder, and any other damage, injury,
expense or liability caused by such default; Lessee shall pay to Lessor on
demand (but not more frequently than monthly) any amount necessary to restore
the Deposit to its original amount. Although the Deposit shall be deemed
property of the Lessor, any remaining balance of the Deposit shall be
returned to Lessee at such time after termination of this Lease that all of
Lessee's obligations under this Lease have been fulfilled.
6. USE.
6.1 USE. The Premises shall be used and occupied only for office,
distributing and warehousing and for no other purpose.
6.2 COMPLIANCE WITH LAW.
(a) Lessee shall, throughout the term of this Lease, and at
no cost or expense whatsoever-to Lessor, promptly comply, or cause compliance,
with all laws, ordinances, zoning, zoning variances, orders, rules, regulations
and requirements of all federal, state, county, township and municipal
governments and all departments, commissions, boards and officers thereof,
whether present or future, foreseen or unforeseen, ordinary or extraordinary,
and whether or not the same shall be presently within the contemplation of
Lessor and Lessee or shall involve any change of governmental policy, or require
alterations or additions, and irrespective of the cost thereof, which may be
applicable to the Premises. Lessee shall also comply throughout the term of this
Lease, at its own cost and expense, with any requirement of all governmental
authorities having jurisdiction. Notwithstanding the foregoing, compliance with
ADA shall be in accordance with the provisions of Paragraph 3.2 (a) above.
(b) Except to the extent Lessor receives insurance proceeds
from any policy of insurance maintained pursuant to this Lease insuring Lessor
against any Loss (as hereinafter defined) incurred by Lessee and caused as
hereinafter described, no abatement, diminution or reduction in Rent, or any
other charges required to be paid by Lessee pursuant hereto, shall be claimed by
or allowed to Lessee for any inconvenience or interruption, cessation or loss of
business (collectively "Loss") caused, directly or indirectly, by any present or
future laws, ordinances, rules, regulations, requirements or orders of the
federal, state, county, township or municipal governments or any other lawful
authority whatsoever, or by priorities, rationing, or curtailment of labor or
materials, or by war, civil commotion, strikes or riots, or utility interruption
or shortage, or any matter or thing resulting therefrom, or by any other cause
or causes, nor shall this Lease be affected by any such causes; and no
diminution in the amount of the space used by Lessee caused by legally required
changes in the construction, equipment,
<PAGE>
fixtures, motors, machinery, operation or use of the Building or parking
areas shall entitle Lessee to any abatement, diminution or reduction of the
Rent or any other charges required to be paid by Lessee pursuant to the terms
of this Lease except to the extent Lessor receives insurance proceeds from
any policy of insurance maintained pursuant to this Lease to compensate
Lessor for such diminution in the space used by Lessee.
6.3 CONDITION OF TITLE. Lessee accepts this Lease and all right,
title and interest of Lessee hereunder subject to all easements, covenants,
conditions, restrictions, exceptions, zoning, zoning variances, reservations,
encumbrances and other matters affecting title to the Premises, including
without limitation, that certain Declaration of Covenants, Conditions and
Restrictions recorded on June 5, 1985 as Instrument No. 85-628623 in the
Official Records of Los Angeles County, California attached hereto as Exhibit
"C" and made a part hereof (the "Covenant, Conditions, and Restrictions").
Further, Lessee agrees to execute such appropriate documents subordinating its
interest in this Lease to easements for ingress and egress, for utilities and
for other purposes, which easements shall be necessary and appropriate for the
orderly development of the Premises and adjoining parcels.
7. LESSEE'S CONSTRUCTION OF TENANT IMPROVEMENTS. Subject to the
provisions of Paragraph 3.2 above and in accordance with the provisions of 8.4
below, Lessee, at Lessee's sole cost and expense, shall construct any and all
improvements Lessee determines are necessary and/or appropriate for Lessee's
initial occupancy of the Premises. Such improvements as Lessee constructs in
connection with its initial occupancy of the Premises shall be hereinafter
collectively referred to as the "Tenant Improvements."
8. MAINTENANCE. REPAIRS AND ALTERATIONS.
8.1 LESSEE'S OBLIGATIONS.
(a) Lessee shall, at Lessee's sole cost and expense, keep
the Premises, including all HVAC, plumbing, electrical and mechanical systems
servicing the Premises, in good and sanitary condition and repair at all times
during the Term. All damage, injury or breakage to any part or portion of the
Premises or the Building Project caused by the willful or negligent act or
omission of Lessee or Lessee's agents, contractors, licensees, directors,
officers, partners, trustees, visitors or invitees (collectively, "Lessee's
Employees") shall be promptly repaired by Lessee, at Lessee's sole cost and
expense, to the satisfaction of Lessor provided, however, no such repair shall
be made without obtaining Lessor's prior written consent and instructions as to
any special precautions or steps which may be required; provided further,
however, that Lessee shall be entitled to receive reimbursement for such expense
to the extent that the cost of any such repair is covered by insurance obtained
by Lessor as part of Operating Expenses and is related to damage to the Premises
or to the Building Project rather than expenses. Lessor may make any repairs
which are not made by Lessee within a reasonable amount of time (except in the
case of emergency when such repairs can be made immediately), and charge Lessee
for the cost of such repairs. Lessee shall be solely
<PAGE>
responsible for the design and function of all Alterations (as hereinafter
defined) whether or not installed by Lessor at Lessee's request. Lessee
waives all rights to make repairs to the Premises or to the Building Project
at the expense of Lessor, or to deduct the cost of such repairs from any
payment owed to Lessor under the Lease.
(b) Lessee shall not make any claim or demand upon or bring
any action against Lessor for any loss, cost, liability, damages or other
expenses caused by any failure or defect, structural or nonstructural, of the
Premises or any part thereof. Without limiting the generality of the foregoing,
Lessee waives any right to make repairs at Lessor's expense under the provisions
of Sections 1941 and 1942 of the California Civil Code, as amended.
8.2 SURRENDER. On the last day of the term hereof, or on any
earlier termination, Lessee shall surrender the Premises to Lessor in the same
condition as when received, broom clean, ordinary wear and tear excepted. Upon
surrender of the Premises Lessee shall have the right to remove Lessee's trade
fixtures, furnishings and equipment and Lessee shall repair any damage to the
Premises occasioned by the removal of the same, and the removal, pursuant to
Paragraph 8.4, of any Alterations (as hereinafter defined) made by Lessee, which
repairs shall include the patching, filling, painting of holes and repair of
structural damage.
8.3 LESSOR'S RIGHTS. If Lessee fails to perform Lessee's
obligations under this Section 8, Lessor or Lessor's agents may (but shall not
be required to), at Lessor's option, enter upon the Premises, after ten (10)
days prior written notice to Lessee, and put the same in good order, condition
and repair. Lessee shall pay to Lessor, upon written demand therefor, all sums
necessary for Lessor to effectuate such work.
8.4 ALTERATIONS AND ADDITIONS.
(a) Lessee shall not, without Lessor's prior written
consent, make any alterations, improvements, additions, or Utility Installation
(as defined below) in, on or about the Premises, without Lessor's prior written
consent which consent shall not be unreasonably withheld. Such alterations,
improvements, additions (including, without limitation, Tenant Improvements) or
Utility Installation (as defined below) constructed and/or installed by Lessee
in, on or about the Premises shall be collectively referred to as "Alterations."
Lessee shall first obtain Lessor's approval of the plans and specifications for
the Alterations. Lessee shall not make any change or alteration in connection
with any Alterations or otherwise to the exterior of the Premises or which could
possibly have an adverse effect on the Building's plumbing, heating, mechanical,
life safety, ventilation, air conditioning, electrical or security systems,
which could affect the structural integrity of the Building, or which could
affect the exterior appearance of the Building without Lessor's prior written
consent whether as a part of any Alterations or otherwise, which consent may be
withheld in Lessor's good faith discretion. As used in this Paragraph 8.4, the
term "Utility Installation" shall include carpeting, window coverings, air
lines, power panels, electrical distribution systems, lighting fixtures, space
heaters, air conditioning, plumbing, and fencing. Lessor may require that Lessee
remove
<PAGE>
any or all of said Alterations made with Lessor's consent forthwith following
the expiration of the term or other termination of this Lease, and restore
the Premises to their prior condition. Lessor may require Lessee to provide
Lessor, at Lessee's sole cost and expense, worker's compensation insurance, a
performance and payment bond in an amount equal to one and one-half times the
estimated cost of such improvements, to insure Lessor against any liability
for mechanic's and materialmen's liens and to insure completion of the work.
Should Lessee make any Alterations without the prior approval of Lessor,
Lessor may require that Lessee remove any or all of the same within thirty
(30) days after Lessor's notification. Lessee shall not be required to obtain
Lessor's approval of the plans and specifications for the Tenant Improvements
to be constructed by Lessee pursuant to Section 7 above providing the cost of
the Tenant Improvements does not exceed $10,000.00 in the aggregate providing
such Tenant Improvements are otherwise constructed in accordance with this
Paragraph 8.4.
(b) Any Alterations in, or about the Premises that Lessee
shall desire to make and which requires the consent of the Lessor shall be
presented to Lessor in written form, with proposed detailed plans. If Lessor
shall give its consent, the consent shall be deemed conditioned upon Lessee
obtaining a permit to do such work from all required governmental agencies, the
furnishing of a copy thereof to Lessor prior to the commencement of the work and
the compliance by Lessee of all conditions of said permit in a prompt and
expeditious manner.
(c) Unless Lessor requires their removal, as set forth in
Paragraph 8.4(a), all Alterations, including, without limitation, Utility
Installations which may constitute trade fixtures of Lessee, which may be made
on the Premises, shall become the property of Lessor and remain upon and be
surrendered with the Premises at the expiration of the term. Notwithstanding the
provisions of this Subparagraph 8.4(c), Lessee's trade fixtures, machinery and
equipment, other than that which is affixed to the Premises so that it cannot be
removed without material damage to the Premises, shall remain the property of
Lessee and may be removed by Lessee subject to the provisions of Paragraph 8.2.
(d) Lessee covenants and agrees to give Lessor written
notice of the commencement of any construction, alteration, addition,
improvements or repair, which notice shall be given to Lessor within ten (10)
days after the commencement of any such work, in order that Lessor may post
appropriate notices of Lessor's nonresponsibility.
(e) In the event the Premises are cited by any governmental
authority having jurisdiction in such matters as a consequence of the Premises
not being in compliance with the applicable provisions of the Americans With
Disabilities Act ("ADA") and such citation is received as a consequence of
Lessee constructing and/or installing Alterations to the Premises (either
pursuant to Paragraph 7 or 8.4 or otherwise) Lessee, at its expense, shall make
such modifications to the Premises as are required in order to comply with ADA
or otherwise cause the citation or order to be rescinded or waived.
<PAGE>
8.5 LESSOR'S MAINTENANCE.
(a) SCOPE OF LESSOR'S REPAIRS. So long as no default (as
defined in Section 14 of this Lease) has occurred, which remains uncured, Lessor
shall maintain and repair the structural elements and the public and Common Area
of the Building as the same may exist from time to time, except for non-insured
damage or wear and tear which is the result of a negligent or willful act or
omission of Lessee or Lessee's Employees (as defined in Paragraph 8.1(a) of the
Lease). Lessor shall have no obligation to make repairs under this Section 8
until a reasonable time after receipt of written notice of the need for such
repairs. In no event shall any payments owed by Lessee under the Lease be
abated, nor shall Lessor have any liability for interruption or interference in
Lessee's business, on account of Lessor's failure to make repairs under this
Section 8. In addition and notwithstanding the provisions of Paragraph 8.1 (a),
Lessor shall at its sole cost and expense, keep the HVAC, roof and plumbing
systems servicing the Premises, in good and sanitary condition and repair during
the first six (6) months of the Term.
(b) LESSOR'S RIGHT OF ENTRY TO MAKE REPAIRS. Lessor and
Lessor's Employees (as defined in Paragraph 9.1 of the Lease) shall have the
right to enter the Premises at all reasonable times for the purpose of making
any alterations, additions, improvements or repairs to the Premises or the
Building as Lessor may deem necessary or desirable, without liability to Lessee.
Lessor shall give reasonable notice to Lessee of Lessor's intent to enter the
Premises and effect repairs, except, however, in an emergency situation, in
which case no prior notice shall be required.
9. INSURANCE AND INDEMNITY.
9.1 INDEMNIFICATION. Lessee shall at its expense defend,
indemnify, and hold Lessor and Lessor's agents, contractors, licensees,
employees, directors, officers, partners, trustees and invitees (collectively
"Lessor's Employees") harmless from and against any and all claims, arising out
of or in connection with Lessee's use of the Premises or the Building Project,
the conduct of Lessee's business, any activity, work or things done, permitted
or allowed by Lessee in or about the Premises or the Building Project, Lessee's
or Lessee's Employees' nonobservance or nonperformance of any statute, law,
ordinance, rule or regulation, or any negligence or willful act or failure to
act of Lessee or Lessee's Employees.
9.2 INSURANCE. Lessee shall have the following insurance
obligations:
(a) LIABILITY INSURANCE. Lessee shall obtain and keep in
full force a policy of comprehensive general liability and property damage
insurance (including automobile, personal injury, broad form contractual
liability and broad form property damage) under which Lessee is named as the
insured and Lessor, Lessor's agent and any lessors and mortgagees (whose names
shall have been furnished to Lessee) are named as additional insureds and under
which the insurer agrees to indemnify and hold the Lessor, its managing agent
and all applicable lessors and mortgagees harmless from
<PAGE>
and against all cost, expense and/or liability arising out of or based upon
the indemnification obligations of this Lease. The minimum limits of
liability shall be a combined single limit with respect to each occurrence of
not less than Three Million Dollars ($3,000,000) in the event of bodily
injury or death of any number of persons, and accident and broad form
property damage coverage of not less than ($500,000). The policy shall
contain a cross liability endorsement and shall be primary coverage for
Lessee and Lessor for any liability arising out of Lessee's and Lessee's
Employees' use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall provide that it is primary
insurance and not "excess over" or contributory with any other valid,
existing and applicable insurance in force for or on behalf of Lessor. The
policy shall not eliminate cross-liability and shall contain a severability
of interest clause. Not more frequently than once each year, if, in the
opinion of Lessor's lender or of the insurance consultant retained by Lessor,
the amount of public liability and property damage insurance coverage at that
time is not adequate, Lessee shall increase the insurance coverage as
required by either Lessor's lender or Lessor's insurance consultant.
(b) LESSEE'S PROPERTY INSURANCE. Lessee at is cost shall
maintain on all of its personal property and fixtures, a policy of standard fire
and extended coverage insurance, with theft, vandalism and malicious mischief
endorsements. to the extent of at least full replacement value without any
deduction for depreciation. The proceeds from any such policy shall be used by
Lessee for the replacement of such personal property and/or fixtures. The "full
replacement value" of the personal property and fixtures to be insured under
this Section 9 shall be determined by the company issuing the insurance policy
at the time the policy is initially obtained. Not less frequently than once
every three (3) years, Lessor shall have the right to notify Lessee that it
elects to have the replacement value redetermined by an insurance company or
insurance consultant. The redetermination shall be made promptly and in
accordance with the rules and practices of the Board of Fire Underwriters, or a
like board recognized and generally accepted by the insurance company, and each
party shall be promptly notified of the results by the company. The insurance
policy shall be adjusted according to the redetermination.
(c) WORKER'S COMPENSATION. Lessee shall maintain Worker's
Compensation and Employer's Liability insurance as required by law.
(d) BUSINESS INTERRUPTION. Lessee shall maintain loss of
income and business interruption insurance in such amounts as will reimburse
Lessee for direct or indirect loss of earnings attributable to all perils
commonly insured against by prudent tenants or attributable to prevention of
access to the Premises or to the Building as a result of such perils but in no
event in an amount less than the Rent and all additional amounts payable
hereunder for six (6) months.
(e) (OMITTED).
(f) INSURANCE CRITERIA. All the insurance required under
this Lease shall:
<PAGE>
(i) Be issued by insurance companies authorized to do
business in the State of California, with a financial rating of at least an A:X
status as rated in the most recent edition of Best's Insurance Reports.
(ii) Be issued as a primary policy.
(iii) Contain an endorsement requiring thirty (30)
days' written notice from the insurance company to both parties and to Lessor's
lender before cancellation or change in the coverage, scope, or amount of any
policy.
(iv) With respect to property loss or damage by fire or
other casualty. a waiver of subrogation must be obtained, as required by
Paragraph 9.4.
(g) EVIDENCE OF COVERAGE. A duplicate original policy, or
certificate of the policy with the actual policy attached, together with
evidence of payment of premiums, shall be deposited with Lessor at the
commencement of the term, and on renewal of the policy not less than thirty (30)
days before expiration of the term of the policy.
9.3 ASSUMPTION OF RISK. Lessee, as a material part of the
consideration to Lessor, hereby assumes all risk of damage to Lessee's personal
property or injury to persons, in, upon or about the Premises and/or the
Building Project from any cause (except for damage or injury caused by the gross
negligence of Lessor) and Lessee hereby waives all such claims against Lessor.
Lessor and Lessor's Employees shall not be liable for any damage to any of
Lessee's personal property entrusted to Lessor or Lessor's Employees, nor for
loss or damage to any of Lessee's personal property by theft or otherwise.
Lessee shall give prompt notice to Lessor in case of fire or accidents in the
Premises or in the Building.
9.4 ALLOCATION OF INSURED RISKS AND SUBROGATION. Lessor and
Lessee release each other from any claims and demands of whatever nature for
damage, loss or injury to the Premises and/or the Building Project, or to the
other's property in, on or about the Premises and the Building Project, that are
caused by or result from risks or perils insured against under any insurance
policies required by the Lease to be carried by Lessor and/or Lessee and in
force at the time of any such damage, loss or injury. Lessor and Lessee shall
cause each insurance policy obtained by them or either of them to provide that
the insurance company waives all right of recovery by way of subrogation against
either Lessor or Lessee in connection with any damage covered by any policy.
Neither Lessor nor Lessee shall be liable to the other for any damage caused by
fire or any of the risks insured against under any insurance policy required by
the Lease. If an insurance policy cannot be obtained with a waiver of
subrogation, or is obtainable only by the payment of an additional premium
charge above that charged by insurance companies issuing policies without waiver
of subrogation, the parties undertaking to obtain the insurance shall notify the
other party of this fact. The other party shall have a period of ten (10) days
after receiving the notice either to place the insurance with a
<PAGE>
company that is reasonably satisfactory to the other party and that will
carry the insurance with a waiver of subrogation, or to agree to pay the
additional premium if such a policy is obtainable at additional cost. If the
insurance cannot be obtained or the party in whose favor a waiver of
subrogation is desired refuses to pay the additional premium charged, the
other party is relieved of the obligation to obtain a waiver of subrogation
with respect to the particular insurance involved.
10. DAMAGES OR DESTRUCTION.
10.1 LOSS COVERED BY INSURANCE. If, at any time prior to the
expiration or termination of this Lease, the Premises, the Building Project or
the Land is wholly or partially damaged or destroyed by a casualty, the loss to
Lessor from which is fully covered (except for the normal deductible) by
insurance maintained by Lessor or for Lessor's benefit, which casualty renders
the Premises totally or partially inaccessible or unusable by Lessee in the
ordinary conduct of Lessee's business, then:
(a) REPAIRS WHICH CAN BE COMMENCED WITHIN SIX MONTHS. Within
sixty (60) days of notice to Lessor of such damage or destruction, Lessor shall
provide Lessee with notice of its determination of whether the repair of the
damage or destruction to the Land, Building Project and Premises can be
commenced and diligently pursued to completion within a six (6) month period
from the date of such damage or destruction or as reasonably close to the
expiration of such six (6) month period as is necessary to complete such repairs
so long as Lessor at all times during the period of making such repairs is
diligently attempting to complete the same without the payment of overtime or
other premium. If in Lessor's judgment such repairs can be so completed, Lessor,
at Lessor's expense, shall repair the same and this Lease shall remain in full
force and effect and a proportionate reduction of Rent shall be allowed Lessee
for such portion of the Premises as shall be rendered inaccessible or unusable
to Lessee, and which is not used by Lessee, during the period of time that such
portion is unusable or inaccessible and not used by Lessee.
(b) REPAIRS WHICH CANNOT BE COMMENCED WITHIN SIX (6) MONTHS.
If all such repairs to the Land, Building Project and Premises cannot, in
Lessor's judgment, be commenced and diligently pursued to completion within such
six (6) month period or as reasonably close thereto as is necessary to complete
such repairs so long as Lessor at all times during the period of making such
repairs is diligently attempting to complete the same without the payment of
overtime or other premium, Lessor shall notify Lessee of such determination and
Lessor may, at Lessor's sole and absolute option, upon written notice to Lessee
given within sixty (60) days after notice to Lessor of the occurrence of such
damage or destruction, elect to repair such damage or destruction at Lessor's
expense, and in such event, this Lease shall continue in full force and effect
but the Rent shall be proportionately reduced as hereinabove provided in
Paragraph 10.1 (a). However, Lessee shall have the right, not withstanding
Lessor's notice of intent to repair, by written notice to Lessor no later than
ninety (90) days after the occurrence of such damage or destruction to elect to
terminate this Lease as of the date of the occurrence of such damage or
destruction. If Lessor does not elect to make such repairs, then either
<PAGE>
Lessor or Lessee may, by written notice to the other no later than ninety
(90) days after the occurrence of such damage or destruction elect to
terminate this Lease as of the date of the occurrence of such damage or
destruction.
10.2 LOSS NOT COVERED BY INSURANCE. If, at any time prior to the
expiration or termination of this Lease, the Premises or the Building Project or
the Land is totally or partially damaged or destroyed from a casualty, the loss
(except for the deductible) to Lessor from which is not fully covered by
insurance maintained by Lessor or for Lessor's benefit, which damage renders the
Premises inaccessible or unusable to Lessee in the ordinary course of its
business, Lessor may, at its option, upon written notice to Lessee within sixty
(60) days after notice to Lessor of the occurrence of such damage or
destruction, elect to repair or restore such damage or destruction, or Lessor
may elect to terminate this Lease. Lessor shall provide Lessee with notice of
its determination within sixty (60) days of such damage or destruction and shall
further notify Lessee whether the damage or destruction can, in Lessor's
judgment, be commenced and diligently pursued to completion within six (6) month
from the date of destruction or loss or as reasonably close thereto as is
necessary to complete such repairs so long as Lessor at all times during the
period of making such repairs is diligently attempting to complete the same
without the payment of overtime or other premium. If in Lessor's judgment such
damage or destruction can be commenced and pursued to completion as so provided
without the payment of overtime or other premium, and if Lessor elects to repair
or restore such damage or destruction, this Lease shall continue in full force
and effect but the Rent shall be proportionately reduced as provided in
Paragraph 10.1(a). If Lessor does not elect by notice to Lessee to repair such
damage, or if the damage cannot, in Lessor's judgment, be commenced and so
pursued to completion, the Lease shall terminate.
10.3 DESTRUCTION DURING FINAL YEAR. Notwithstanding anything to
the contrary contained in Paragraphs 10.1 or 10.2, if the Premises or the
Building Project or the Land is wholly or partially damaged or destroyed within
the final twelve (12) months of the term of this Lease, and no renewal rights,
if any, have been exercised prior to such damage or destruction, and if as a
result of such damage or destruction Lessee is denied access or use of the
Premises for the conduct of its business operations for a period of ten (10)
consecutive business days, Lessor or Lessee may, at its option, by giving the
other notice no later than sixty (60) days after the occurrence of such damage
or destruction, elect to terminate the Lease.
10.4 DESTRUCTION OF LESSEE'S PERSONAL PROPERTY. Lessee
Improvements or Property of Lessee's Employees. In the event of any damage to or
destruction of the Premises or the Building or the Land, under no circumstances
shall Lessor be required to repair any injury, or damage to, or make any repairs
to or replacements of, Lessee's personal property or fixtures. However, as part
of Operating Expenses, Lessor shall cause to be insured the Alterations
exclusive of Lessee's personal property and fixtures and shall cause such
Alterations to be repaired and restored at Lessor's sole expense except that
Lessee shall pay for such portion which is covered by the deductible. Lessor
<PAGE>
shall have no responsibility for any contents placed or kept in or on the
Premises or the Building or the Land by Lessee or Lessee's Employees.
10.5 EXCLUSIVE REMEDY. This Section 10 shall be Lessee's sole and
exclusive remedy in the event of damage or destruction to the Premises or the
Building Project or the Land, and Lessee, as a material inducement to Lessor's
entering into this Lease, irrevocably waives and releases Lessee's rights under
California Civil Code Sections 1932(2) and 1933(4). No damages, compensation or
claim shall be payable by Lessor for any inconvenience, any interruption or
cessation of Lessee's business, or any annoyance, arising from any damage to or
destruction of all or any portion of the Premises or the Building or the Land
except to the extent Lessor receives insurance proceeds from any policy of
insurance maintained pursuant to this Lease which policy insures against damages
sustained by Lessee as a consequence of any inconvenience, any interruption or
cessation of Lessee's business arising from such damage to or destruction.
11. MECHANIC'S LIENS.
11.1 CONSENT TO KEEP PREMISES FREE OF LIENS. Lessee covenants and
agrees to keep all of the Land, the Building Project and the Premises and every
part thereof free and clear of and from any and all mechanic's, materialmen's
and other liens for work or labor done, services performed, materials,
appliances, transportation or power contributed, used or furnished to be used in
or about the Premises for or in connection with any operations of Lessee, any
alterations, improvements, repairs or additions, which Lessee may make or permit
or cause to be made pursuant to Section 8, or any work or construction by, for
or permitted by Lessee on or about the Premises, and at all times Lessee shal1
promptly and fully pay and discharge any and all claims upon which any such lien
may or could be based; and Lessee shall save and hold Lessor and all of the
Land, the Building Project and Premises free and harmless of and from any and
all such liens and claims of liens and suits or other proceedings pertaining
thereto.
11.2 LESSOR'S TITLE. No mechanic's or materialmen's liens or
mortgages, deeds of trust, or other liens of any character whatsoever created or
suffered by Lessee shall in any way or to any extent affect the interest or
rights of Lessor in the Land, the Building Project and Premises, or attach to or
affect Lessor's title to or rights thereto.
11.3 CONTEST. Lessee shall have the right to contest any
mechanic's lien or other lien claim filed against the Premises, provided that
Lessee shall diligently prosecute any such contest, at all times effectually
stay or prevent any official or judicial sale of the Premises under execution or
otherwise, and pay or otherwise satisfy any final judgment adjudging or
enforcing such contested lien and thereafter procure record satisfaction or
release thereon.
12. Broker's Fee. Lessor shall be responsible for any and all broker's
commission due or claimed by CB Commercial Real Estate Group, Inc.,
("Broker") in connection with this Lease. Lessee represents that it has not
engaged or dealt with any broker(s)other than Broker with respect to this
<PAGE>
Lease and agrees to indemnify, and forever save and hold harmless and defend
Lessor from and against claims by any broker other than Broker claiming to
have dealt with or been engaged by Lessee in connection with this Lease,
options contained herein (if any) and renewals hereof. Lessor represents that
it has not engaged or dealt with any broker other than Broker with respect to
Ws Lease and agrees to indemnify, and forever save and hold harmless and
defend Lessee from and against claims by any broker including Broker claiming
to have dealt with or been engaged by Lessor in connection with this Lease.
13. ASSIGNMENT AND SUBLETTING.
13.1 RIGHT TO ASSIGN AND SUBLEASE. Lessor and Lessee recognize
and specifically agree that this Section 13 is an economic provision, like Rent,
and that the Lessor's right to recapture, and to share in profits, is granted by
Lessee to Lessor in consideration of certain other economic concessions granted
by Lessor to Lessee. Lessee may voluntarily assign its interest in this Lease or
in the Premises, or sublease all or any part of the Premises, or allow any other
person or entity to occupy or use all or any part of the Premises, upon first
obtaining Lessor's prior consent, but only if such assignment or sublease does
not conflict with or result in a breach of Paragraph 6.1 and if such proposed
assignee or Sublessee of Lessee's proposed assignment or sublease is not:
(a) a governmental entity unless the identity of the
proposed governmenta1 entity is first approved by Lessor which approval may be
denied at Lessor's absolute discretion as a consequence of Lessor's prior
experience with or knowledge of such entity or similar or related entities;
(b) a person with whom Lessor has negotiated with for space
in the Building during the six (6) month period ending with the date Lessor
receives notice of such assignment, encumbrance or subletting;
(c) a present Lessee in the Building with whom Lessor has
negotiated with for space in the Building during the six (6) month period ending
with the date Lessor receives notice of such assignment, encumbrance or
subletting;
(d) a person or business entity whose tenancy in the
Building would violate any exclusivity arrangement which Lessor has with any
other tenant; or
(e) a person whose tenancy results in significantly more
people working at, or visiting, the Premises, than the number of people who
worked at, or visited, the Premises at the time when Lessee was the sole
occupant of the Premises. Any assignment, encumbrance or sublease without
Lessor's prior consent shall be voidable, at Lessor's election, and shall
constitute a default. No consent to an assignment, encumbrance or sublease shall
constitute a further waiver of the provisions of this Section 13.
<PAGE>
13.2 PROCEDURE FOR ASSIGNMENT AND SUBLEASE /LESSOR'S RECAPTURE
RIGHTS. Lessee shall advise Lessor by notice of (a) Lessee's intent to assign,
encumber, or sublease this Lease, (b) the name of the proposed assignee or
sublessee, and evidence reasonably satisfactory to Lessor that such proposed
assignee or sublessee is comparable in reputation, stature and financial
condition to the other tenants then leasing comparable space in the Building,
and (c) the terms of the proposed assignment or subletting. Lessor shall, within
thirty (30) days of the later of receipt of such notice and receipt of any
additional information requested by Lessor concerning the proposed assignee's or
sublessee's financial responsibility, elect one of the following:
(i) Acknowledge that it does not object to such
proposed assignment, encumbrance or sublease;
(ii) Object to such proposed assignment, encumbrance or
sublease, which objection shall be on reasonable grounds; or
(iii) Elect to terminate the Lease in the event of an
assignment, or in the case of a sublease, terminate this Lease as to the portion
of the Premises proposed to be sublet for the proposed term of the sublease.
13.3 CONDITIONS REGARDING CONSENT TO SUBLEASE AND ASSIGNMENT. As
a condition for Lessor not objecting to any assignment, encumbrance or sublease,
Lessee must require that the rent payable by such assignee or sublessee is at
least at the then current rental rates for the Premises or comparable Premises
in the Building, and, if Lessor so requests, shall require that the assignee or
sublessee remit directly to Lessor on a monthly basis, all rent due to Lessee by
said assignee or sublessee. In the event that Lessor does not object to an
assignment or sublease under the provisions of this Section 13, Lessee shall pay
Lessor's processing costs and attorneys' fees incurred in Lessor agreeing not to
object. Notwithstanding any permitted assignment or subletting, Lessee shall at
all times remain directly, primarily and fully responsible and liable for all
payments owed by Lessee under the Lease and for compliance with all obligations
under the terms, provisions and covenants of the Lease. If for any proposed
assignment or sublease, Lessee receives rent or other consideration, either
initially or over the term of the assignment or sublease, in excess of the Rent
required by this Lease, or, in the case of the sublease of a portion of the
Premises, in excess of such rent fairly allocable to such portion, after
appropriate adjustments to assure that all other payments called for hereunder
are taken into account, Lessee shall pay to Lessor as additional rent, one
hundred percent (100%) of the excess of each such payment of rent or other
consideration received by Lessee within five (5) days of its receipt.
13.4 AFFILIATED COMPANIES /RESTRUCTURING OF BUSINESS
ORGANIZATION. Occupancy of all or part of the Premises by parent, subsidiary, or
affiliated companies of Lessee shall not be deemed an assignment or subletting
provided that such parent, subsidiary or affiliated companies were not formed as
a subterfuge to avoid the obligation of Section 13. If Lessee is a corporation,
unincorporated association, trust or general or
<PAGE>
limited partnership, then the sale, assignment, transfer or hypothecation of
any shares, partnership interest, or other ownership interest of such entity
which from time to time in the aggregate exceeds twenty-five percent (25%) of
the total outstanding shares, partnership interests or ownership interest of
such entity or which effects a change in the management or control of Lessee,
or the dissolution, merger, consolidation, or other reorganization of such
entity, or the sale, assignment, transfer or hypothecation of more than forty
percent (40%) of the value of the assets of such entity, shall be deemed an
assignment subject to the provisions of this Section 1 3.
14. DEFAULTS: REMEDIES.
14.1 DEFAULTS. The occurrence of any one or more of the following
events shall constitute a material default and breach of this Lease by Lessee:
(a) The failure by Lessee to make any payment of fixed
monthly rental pursuant to Paragraph 4.1, any payment of Lessee's Share pursuant
to Paragraph 4.2, any Deposit payments pursuant to Section 5, or any other
payment required to be made by Lessee hereunder, as and when due, where such
failure shall continue for a period of three (3) days after written notice of
the failure from Lessor to Lessee. Any such notice shall be in lieu of, and not
in addition to any notice required under Section 1161 of the California Code of
Civil Procedure.
(b) The failure by Lessee to observe or perform any of the
non-monetary covenants, conditions or provisions of this Lease to be observed or
performed by Lessee, or of the Covenants, Conditions and Restrictions discussed
in Paragraph 6.3, other than as described in Subparagraph 14.1(a), where: if a
time for performance is expressly provided, and such failure shall exist after
the time expressly provided; or if there is no express time provision, and such
failure shall continue for a period of thirty (30) days after written notice of
the failure from Lessor to Lessee; provided, however, that if the default is
capable of being cured, but is not capable of being cured within said thirty
(30) day period, Lessee shall not be deemed to be in default if such cure is
commenced within said thirty (30) day period and Lessee diligently pursues the
cure to completion. Such thirty (30) day notice shall be in lieu of and not in
addition to any notice required under Section 1161 of the California Code of
Civil Procedure.
(c) The vacation or abandonment of the Premises by Lessee.
(d) The making by Lessee of any general assignment, or
general arrangement for the benefit of creditors; the filing by or against
Lessee of a petition to have Lessee adjudged a bankrupt or a petition for
reorganization or arrangement under any law relating to bankruptcy (unless, in
the case of a petition filed against Lessee, the same is dismissed within sixty
(60) days); the appointment of a trustee, or receiver to take possession of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within thirty
(30) days; or the attachment, execution or other judicial seizure of
<PAGE>
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where such seizure is not discharged within thirty (30)
days.
(e) The discovery by Lessor that any financial statement
given to Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, or
any successor in interest of Lessee, and any of them, was materially false when
delivered to Lessor.
14.2 REMEDIES.
(a) In the event of any default by Lessee, the Lessor shall
have the right, in addition to all other rights available to Lessor under this
Lease or now or later permitted by law or equity, to terminate this Lease by
providing Lessee with a notice of termination. Upon termination, Lessor may
recover any damages proximately caused by Lessee's failure to perform under the
Lease, or which are likely in the ordinary course of business to be incurred,
including any amount expended or to be expended by Lessor in an effort to
mitigate damages, as well as any other damages to which Lessor is entitled to
recover under any statute now or later in effect. Lessor's damages include the
worth, at the time of any award, of the amount by which the unpaid Rent for the
balance of the term after the time of the award exceeds the amount of the rental
loss that the Lessee proves could be reasonably avoided. The worth at the time
of award shall be determined by discounting to present value such amount at one
percent (1%) more than the discount rate of the Federal Reserve Bank in San
Francisco in effect at the time of the award. Other damages to which Lessor is
entitled shall bear interest at the rate of ten percent (10%) per annum.
(b) In accordance with California Civil Code Section 1951.4
(or any successor statute), Lessee acknowledges that in the event Lessee has
breached this Lease and abandoned the Premises, this Lease shall continue in
effect for so long as Lessor does not terminate Lessee's right to possession,
and Lessor may enforce all its rights and remedies under this Lease, including
the right to recover the rent as it becomes due under this Lease. Acts of
maintenance or preservation or efforts to re-let the Premises or the appointment
of a receiver upon initiative of Lessor to protect Lessor's interest under this
Lease shall not constitute a termination of Lessee's right to possession.
IN ADDITION TO ITS OTHER RIGHTS UNDER THIS LEASE,
LESSOR HAS THE REMEDY DESCRIBED IN CALIFORNIA CIVIL
CODE SECTION 1951.4 (LESSOR MAY CONTINUE THE LEASE
IN EFFECT AFTER LESSEE'S BREACH AND ABANDONMENT AND
RECOVER RENT (AS DEFINED IN PARAGRAPH 4.1(a) AS IT
BECOMES DUE, IF LESSEE HAS THE RIGHT TO SUBLET OR
ASSIGN, SUBJECT ONLY TO REASONABLE LIMITATIONS).
(c) In the event of any default by Lessee, Lessor shall also
have the right, with or without terminating this Lease, to enter the Premises
and remove all persons and personal property from the Premises, such property
being removed and stored in a public warehouse or elsewhere at Lessee's sole
cost and expense. No removal
<PAGE>
by Lessor of any persons or property in the Premises shall constitute an
election to terminate this Lease. Such an election to terminate may only be
made by Lessor in writing, or decreed by a court of competent jurisdiction.
Lessor's right of entry shall include the right to remodel the Premises and
re-let the Premises. All reasonable costs incurred in such entry and
re-letting shall be paid by Lessee. Rents collected by Lessor from any other
tenant which occupies the Premises shall be offset against the amounts owed
to Lessor by Lessee. Lessee shall be responsible for any amounts not
recovered by Lessor from any other tenant. Any payments made by Lessee shall
be credited to the amounts owed by Lessee in the sole order and discretion of
Lessor, irrespective of any designation or request by Lessee. No entry by
Lessor shall prevent Lessor from later terminating the Lease by written
notice.
(d) Lessee hereby waives, for itself and all persons
claiming by and under Lessee, all rights and privileges which it might have
under any present or future law to redeem the Premises or to continue the Lease
after being dispossessed or ejected from the Premises.
(e) If Lessee fails to perform any covenant or condition to
be performed by Lessee, Lessor may perform such covenant or condition at is
option, after notice to Lessee. All costs incurred by Lessor in so performing
shall immediately be reimbursed to Lessor by Lessee, together with interest at
the interest rate equal to ten percent (10%) per annum computed from the due
date. Any performance by Lessor of Lessee's obligations shall not waive or cure
such default. Lessor may perform Lessee's defaulted obligations at Lessee's sole
cost and expense without notice in the case of any emergency. All costs and
expenses incurred by Lessor, including reasonable attorneys' fees (whether or
not legal proceedings are instituted), in collecting Rent or enforcing the
obligations of Lessee under the Lease shall be paid by Lessee to Lessor upon
demand.
(f) The rights and remedies of Lessor set forth herein are
not exclusive, and Lessor may exercise any other right or remedy available to it
under this Lease, at law or in equity.
14.3 LATE CHARGES. Lessee hereby acknowledges that late payment
by Lessee to Lessor under this Lease (including but not limited to the payments
due under Paragraphs 4.1 and 4.2), will cause Lessor to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not 1imited to, processing
and accounting charges, and late charges which may be imposed on Lessor.
Accordingly, if any installment of Rent or any other sum due from Lessee under
this Lease shall not be received by Lessor or Lessor's designee within ten (10)
days from the date when such payment is due, Lessee shall pay to Lessor a late
charge equal to six percent (6%) of such overdue amount ("Late Charge"). The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of late payment by Lessee.
Acceptance of such late charge by Lessor shall in no event constitute a waiver
of Lessee's default with respect to such overdue amount, nor prevent Lessor from
exercising any of the other rights and remedies granted hereunder.
<PAGE>
14.4 FAILURE OF LESSEE TO PAY CLAIMS. Should Lessee fail to pay
or discharge or cause to be paid and discharged, at the time or times called for
in this Lease, any claim, imposition, insurance premium or other lien or charge
required to be paid by Lessee under this Lease, or any claim for damages arising
out of the repair, maintenance or use of the Premises, or to satisfy any
judgment rendered on any contested lien or claim, then Lessor may, at its option
but only after ten (10) days written notice to Lessee, pay such claim,
imposition, insurance premium, lien, or other charge, or settle or discharge any
action therefor, or satisfy any judgment thereon. All costs, expenses, penalties
and other sums incurred or paid by Lessor in connection therewith shall be paid
to Lessor by Lessee upon demand together with interest thereon at the per annum
rate equal to the lesser of the prime lending rate (whether known as the
"reference rate" or otherwise) charged by Bank of America NT & SA, as that rate
shall vary, or the maximum rate allowed by applicable law from the date incurred
or paid by Lessor until repaid by Lessee, and any default in such repayment
shall constitute a material default and breach of the covenants and conditions
of this Lease. If Lessee desires in good faith to contest any such lien or
claim, and it so notified Lessor of its intention to do so and furnishes to
Lessor a surety bond in an amount equal to one and one-half the amount of such
contested lien or claim indemnifying Lessor against liability for same within
ten (10) days after such lien comes into existence or such claim is first made,
as the case may be, Lessee shall not be in default hereunder and Lessor shall
not satisfy such lien or claim until five days after the determination of the
validity thereof.
14.5 WAIVER. Lessee further covenants and agrees that if Lessor
fails or neglects for any reason to take advantage of any of the terms hereof
providing for the termination of this Lease or for the termination or forfeiture
of the estate hereby demised, or if Lessor, having the right to declare this
Lease terminated or the estate hereby demised, terminated or forfeited, shall
fail to do so, any such failure or neglect of Lessor shall not be or be deemed
to be construed to be a waiver of any provision for the termination of this
Lease continuing to exist or for the termination or forfeiture of the estate
hereby demised subsequently arising, or as a waiver of any of the covenants,
terms or conditions of this Lease or of the prompt performance thereof by
Lessee. None of the covenants, terms or conditions of this Lease can be waived
except by the written consent of the party entitled to the benefits thereof.
15. CONDEMNATION.
15.1 PERMANENT TAKING - WHEN LEASE CAN BE TERMINATED. If the
whole of the Premises, or so much of the Premises as to render the balance
unusable by Lessee, shall be taken under the power of eminent domain, the Lease
shall automatically terminate as of the date of final judgment in such
condemnation, or as of the date possession is taken by the condemning authority,
whichever is earlier. A sale by Lessor under the threat of condemnation shall
constitute a "taking" for the purpose of this Section 15. No award for any
partial or entire taking shall be apportioned and Lessee assigns to Lessor any
award which may be made in such taking or condemnation, together with all rights
of Lessee to such award, including, without limitation, any award
<PAGE>
or compensation for the value of all or any part of the leasehold estate;
provided that nothing contained in this Section 15 shall be deemed to give
Lessor any interest in or to require Lessee to assign to Lessor any award
made to Lessee and Lessee may maintain a separate action for (a) the taking
of Lessee's personal property, or (b) interruption to or damage to Lessee's
business, or (c) Lessee's unamortized cost of the Alterations to the extent
paid for by Lessee. Furthermore, Lessee shall be entitled to recover from
Lessor any advance payments of Rent made by Lessee attributable to that
unelasped portion of the term of the Lease following such taking.
15.2 PERMANENT TAKING - WHEN LEASE CANNOT BE TERMINATED. In the
event of a partial taking which does not result in a termination of the Lease
under Section 15.1, Rent shall proportionately be reduced based on the portion
of the Premises rendered unusable, and Lessor shall restore the Premises or the
Building to the extent of available condemnation proceeds.
15.3 TEMPORARY TAKING. No temporary taking of the Premises or any
part of the Premises and/or of Lessee's rights to the Premises or under this
Lease shall terminate this Lease or give Lessee any right to any abatement of
any payments owed to Lessor pursuant to this Lease unless such taking would
substantially and adversely affect the operation and profitability of Lessee's
business conducted from the Premises; any award made to Lessee by reason of such
temporary taking shall belong entirely to Lessee. For the purposes of this
Lease, any taking, which at the time of such taking, is known to be for a period
less than six (6) months or any taking which in fact lasts less than six (6)
months shall be deemed a "temporary" taking and shall be governed by Paragraph
15.3. Any taking which, at the time of the taking, is known to be for a period
of six (6) months or longer or any taking which in fact lasts for a period of
six (6) months or longer shall be deemed a permanent taking and shall be
governed by Paragraphs 15.1 and 15.2.
15.4 EXCLUSIVE REMEDY. This Section 15 shall be Lessee's sole and
exclusive remedy in the event of a taking or condemnation. Lessee hereby waives
the benefit of California Code of Civil Procedure Section 1265. 130.
15.5 RELEASE UPON TERMINATION. Upon termination of the Lease
pursuant to this Section 15, Lessee and Lessor hereby agree to release each
other from any and all obligations and liabilities with respect to the Lease
except for such obligations and liabilities which arise or accrue prior to such
termination.
16. ESTOPPEL CERTIFICATE.
16.1 LESSEE'S CERTIFICATE. Lessee shall at any time, upon not
less than ten (10) days prior written notice from Lessor, execute, acknowledge
and deliver to Lessor, a statement in writing (i) certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification and certifying that this Lease, as so modified, is in full
force and effect) and the date to which the Rent and other charges are paid in
advance, if any, and (ii) acknowledging that there are not to Lessee's
knowledge, any uncured defaults on the part of Lessor hereunder, or specifying
such
<PAGE>
defaults if any are claimed. Any such statement may be conclusively relied
upon by any prospective purchaser or encumbrancer of the Premises. Lessee's
failure to deliver such statement within such time shall be conclusive upon
Lessee (i) that this Lease is in full force and effect, without modification
except as may be represented by Lessor, (ii) that there are no uncured
defaults in Lessor's performance, and (iii) that not more than one month's
Rent has been paid in advance, Such failure to timely deliver such statement
may be considered by Lessor as a default by Lessee under this Lease.
16.2 LESSOR'S CERTIFICATE. Lessor shall at any time, upon not
less than ten (10) days prior written notice from Lessee, execute, acknowledge
and deliver to Lessee a statement in writing (i) certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification and certifying that this Lease, as so modified, is in full
force and effect) and the date to which the Rent and other charges are paid in
advance, if any, and (ii) acknowledging that there are not to Lessor's
knowledge, any uncured defaults on the part of Lessee hereunder, or specifying
such defaults, if any, are claimed.
16.3 FINANCIAL STATEMENTS. If Lessor desires to finance or
refinance the Premises, or any part hereof, Lessee hereby agrees to deliver to
any lender designated by Lessor such financial statement of Lessee as may be
reasonably required by such lender. Such statements shall include Lessee's
financial statements for the three years preceding the then current year if
required by said lender. All such financial statements shall be used only for
the purposes herein set forth.
17. LESSOR'S LIABILITY. In the event Lessor shall sell, assign, convey
or transfer all or a part of its interest in the Building Project or the Land or
any part thereof, Lessee agrees to attorn to such transferee, assignee or new
owner, and upon consummation of such sale, conveyance or transfer, Lessor shall
automatically be freed and relieved from all liability and obligations accruing
or to be performed from and after the date of such sale, transfer, or
conveyance. In the event of such sale, assignment, transfer or conveyance,
Lessor shall transfer to such transferee, assignee or new owner of the Building
Project or the Land the balance of the Deposit, if any, remaining after lawful
deductions and in accordance with California Civil Code Section 1950.7, after
notice to Tenant, and Landlord shall thereupon be relieved of all liability with
respect to the Deposit.
18. SEVERABILITY. The invalidity, illegality or unenforceability of
any provisions of this Lease as determined by a court of competent jurisdiction,
shall in no way affect the validity of any other provision thereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein
provided, any amount due Lessor not paid when due shall, at Lessor's option,
bear interest at a per annum rate equal to the lesser of the Bank of America
prime lending rate (whether known as the "reference rate" or otherwise), as that
rate shall vary, or the maximum rate allowed by applicable law. Payment of such
interest shall, not excuse or cure any default by Lessee under this Lease.
<PAGE>
20. TIME OF ESSENCE. Subject to the provisions of Section 48 hereof,
time is of the essence of the Lease and of each of the provisions hereof.
21. CAPTIONS. The captions of the paragraphs and sections of this
Lease are for convenience only and shall not be considered or referred to in
resolving questions of interpretation or construction.
22. INCORPORATION OF PRIOR AGREEMENTS AMENDMENTS. This Lease contains
all agreements of the parties with respect to any matter mentioned herein. No
prior agreement or understanding pertaining to any such matter shall be
effective. This Lease may be modified in writing only, signed by the parties in
interest at the time of modification. Except as otherwise stated in this Lease,
Lessee hereby acknowledges that neither the Broker(s) listed in Section 12
hereof, if any. nor Lessor nor any employees or agents of any of said persons
has made any oral or written warranties or representations to Lessee relating to
the condition or use by Lessee of the Premises.
23. NOTICES. All notices, requests, consents, approvals, payments in
connection with the Lease or communications that either party desires or is
required or permitted to give or make to the other party under the Lease
(collectively "Notices") shall only be deemed to have been given, made and
delivered, when made or given in writing and personally served, or deposited in
the United States mail, certified or registered mail, postage prepaid, and
addressed to the parties as follows:
To Lessee: Novaquest InfoSystems, Inc.
19950 Mariner Ave.
Torrance, CA 90501
To Lessor: OP&F Schroder Trust
c/o Schroder Real Estate Associates
437 Madison Avenue
New York, New York 10022
Attn: Legal Coordinator
- and - OP&F Schroder Trust
c/o Schroder Real Estate Associates
211 East Ocean Boulevard
Suite 241
Long Beach, California 90802
Attn: Mr. Randy Frisk
- and -
With a copy to: Berger, Kahn, Shafton, Moss,
Figler, Simon and Gladstone
4215 Glencoe Avenue
<PAGE>
Second Floor
Marina del Rey, California 90292
Attn: Charles H. Kahn, Esq.
From and after the time Lessee takes possession of the Premises Notices shall be
addressed to Lessee at the Premises. All notices may be delivered to such other
address or addresses as either Lessee or Lessor may from time to time designate
to the other by written notice in accordance herewith.
24. WAIVERS. No waiver by either party hereto of any provision hereof
shall be deemed a waiver of any other provision thereof or of any subsequent
breach by the other party of the same or any other provision. Lessor's or
Lessee's consent to or approval of any act by the other shall not be deemed to
render unnecessary the obtaining of subsequent consent to or approval of any
subsequent act. The acceptance of rent hereunder by Lessor shall not be a waiver
of any preceding breach by Lessee of any provision hereof other than the failure
of Lessee to pay the particular rent so accepted. Regardless of Lessor's
knowledge of such preceding breach at the time of acceptance of such rent. No
payment by Lessee or receipt by Lessor of a lesser amount than any rent payment
specified herein shall be deemed to be other than on account of rent, nor shall
any endorsement or statement on any check or any letter accompanying any check
or statement as rent be deemed an accord and satisfaction, and Lessor may accept
such check or payment without prejudice to Lessor's right to recover the balance
of rent or pursue any other remedy provided for in this Lease.
25. RECORDING. Lessor and Lessee agree that in no event and under no
circumstances shall Lessee record this Lease.
26. HOLDING OVER. If Lessee remains in possession of the Premises or
any part thereof after the expiration of the term hereof without the express
written consent of Lessor, such occupancy shall be a tenancy from month to month
with monthly rental payable by Lessee in the amount of 150% of the last monthly
fixed rental pursuant to Paragraph 4.1, plus all other charges payable hereunder
including, without limitation, Lessee's Share of Operating Expenses, and upon
all the terms hereof applicable to a month-to-month tenancy.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
28. COVENANTS AND CONDITIONS. All of the provisions of the Lease shall
be deemed as running with the Land, and construed to be "conditions" as well as
"covenants" as though the words specifically expressing or imparting covenants
and conditions were used in each separate provision.
<PAGE>
29. BINDING EFFECT. Subject to any provisions hereof restricting
assignment or subletting by Lessee and subject to the provisions of Section 17,
this Lease shall bind the parties, their personal representatives, successors or
assigns.
30. CHOICE OF LAW. All questions with respect to, related to or
concerning this Lease and Lessee's use of the Premises shall be governed by, and
decided in accordance with, the laws of the State of California. Any litigation
or action with respect to, related to, or concerning this Lease and Lessee's use
of the Premises shall be conducted only in the California courts. Lessee agrees
to submit to the jurisdiction of the California courts in the event of any court
action with respect to, related to, or concerning this Lease and Lessee's use of
the Premises.
31. ATTORNMENT. Lessee agrees, upon demand by Lessor, to attorn to any
purchaser at any foreclosure sale, or to any grantee or transferee designated in
any deed given in lieu of foreclosure. Lessee also agrees to cause any sublessee
or assignee of Lessee to attorn to Lessor or to any purchaser at any foreclosure
sale, or to any grantee or transferee designated in any deed given in lieu of
foreclosure.
32. SUBORDINATION. Lessee agrees that in the event any mortgage or
deed of trust on the Land, Building Project or the Premises, or Lessee's
interest therein, or any part thereof, is executed by Lessor or any of Lessor's
successors or assigns in favor of any lender, this Lease shall automatically be
subordinate to the lien of any such mortgage or deed of trust, and to any
replacements, renewals or extensions thereof, and Lessee will, upon written
demand from Lessor, or the mortgagee under any such mortgage or the beneficiary
of any such deed of trust, subordinate this Lease to the lien of said mortgage
or deed of trust, and to any replacements, renewals or extensions thereof, and
upon receipt of such demand Lessee will promptly execute, acknowledge and
deliver any instruments, releases or other documents that may be required by
such mortgagee or beneficiary for the purpose of effecting such subordination.
In the event Lessee fails to execute any such document within fifteen (15) days
of a request to do so, Lessee hereby appoints Lessor and any such mortgagee or
beneficiary, severally and not jointly, the attorney-in-fact of Lessee to
execute and deliver such instruments, releases or other document for and on
behalf of Lessee. A mortgage or deed of trust to which this Lease shall be
subordinate shall include a provision to the effect that, notwithstanding such
subordination, the mortgagee agrees that so long as Lessee faithfully discharges
all obligations on its part to be kept and performed under this Lease, its
tenancy will not be affected by any default under such mortgage or deed of
trust, and in the event of foreclosure or sale under power of sale, the rights
of Lessee under this Lease shall survive and this Lease shall in all respects
continue in full force and effect provided that Lessee fully performs all of its
obligations thereunder.
33. ATTORNEY'S FEES. If either Lessor or Lessee commences or engages
in an action, arbitration or other proceeding by or against the other party
arising out of or in connection with this Lease or the Premises, including but
not limited to any action for recovery of Rent due and unpaid, to recover
possession or for damages for breach of this Lease, the prevailing party shall
be entitled to have and recover from the losing party
<PAGE>
reasonable attorneys' fees and other costs incurred in the action,
arbitration or proceeding and in preparation for the same.
37. AUTHORITY. Each individual executing this Lease on behalf of
Lessee or Lessor represents and warrants that he is duly authorized to execute
and deliver this Lease on behalf of Lessee or Lessor in accordance with a duly
adopted resolution of Lessee's or Lessor's Board of Directors or in accordance
with Lessee's or Lessor's Bylaws, and that this Lease is binding upon Lessee or
Lessor as the case may be in accordance with its terms. Lessee shall, within
thirty (30) days after execution of this Lease, deliver to Lessor a certified
copy of a resolution of its Board of Directors authorizing or ratifying the
execution of this Lease.
38. CONSENTS. Except as specifically provided herein, wherever in this
Lease the consent of one party is required to an act of the other party, such
consent may be made subject to such reasonable conditions as the consenting
party deems appropriate. Except as otherwise provided herein and in emergency
situations, the consenting party shall have thirty (30) days from receipt of the
request for consent to respond thereto.
39. QUIET POSSESSION. Upon Lessee paying the rental reserved hereunder
and observing and performing all of the covenants, conditions and provisions on
Lessee's part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease.
40. ARBITRATION. If any controversy shall arise between the parties
with respect to any other matters set forth in this Lease and such dispute shall
not be resolved by the parties within thirty (30) days after either of the
parties shall notify the other of its desire to arbitrate the dispute, then the
dispute shall be settled by arbitration in accordance with the provisions of
Title 9 of the Code of Civil Procedure of California and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction. The
arbitration shall be by a panel of three (3) arbitrators, one of whom must be an
attorney at law actively engaged in the practice of his profession for at least
ten (10) years. The arbitrators shall have no power to modify any of the
provisions hereof and their jurisdiction is limited accordingly. Each party
hereby consents to the entry of judgment by any court having jurisdiction in
accordance with the decision of the arbitration panel. No change in the rules of
arbitration which would deprive a party of the right to be represented by
counsel, to present evidence, or to cross-examine witnesses presented by the
other party shall be effective in any arbitration proceeding arising out of this
agreement. Nothing contained in this Section 40 shall prevent any party from
exercising, in a court having jurisdiction thereof in lieu of arbitration, those
rights granted in Section 14 hereof.
41. RESERVATION OF MINERALS. There is reserved to the Lessor the title
and exclusive right to all of the minerals and mineral ores of every kind and
character now known to exist or hereafter discovered upon, within or underlying
the Land, or that may be produced therefrom, including, without limiting the
generality of the foregoing, all petroleum, oil, natural gas and other
hydrocarbon substances and products derived
<PAGE>
therefrom and all geothermal steam or brines which may be produced or derived
therefrom, together with the exclusive and perpetual right thereto, without,
however, the right to use or penetrate the surface of, or to enter upon the
Land within five hundred (500) feet of the surface thereof, to extricate or
remove the same.
42. COMPUTATION OF TIME. The time in which any act provided by this
Lease is to be done is computed by excluding the first day and including the
last unless the last day is a Saturday, Sunday or holiday, and then it is also
excluded.
43. INTERPRETATION AND DEFINITION. The language in all parts of this
Lease shall in all cases be simply construed according to its fair meaning and
not strictly for or against Lessor or Lessee. Unless otherwise provided in this
Lease, or unless the context otherwise requires, the following definitions and
rules of construction shall apply to this Lease:
43.1 NUMBER AND GENDER: In this Lease the neuter gender includes
the feminine and masculine, and the singular number includes plural and the word
"person" includes corporation, partnership, firm or association wherever the
context so requires.
43.2 MANDATORY AND PERMISSIVE: "Shall," "will," and "agree" are
mandatory, "may" is permissive.
43.3 SUBLESSEE: As used herein, the word "sublessee" shall mean
and include, in addition to a sublessee and a subtenant, a licensee,
concessionaire, or other occupant or user of any portion of the Premises or
buildings or improvements thereon.
43.4 UNDERTAKING: Wherever reference is made in this Lease to an
engagement by Lessee to perform a certain undertaking it shall mean that as to
that undertaking or engagement, that Lessee has covenanted for its performance,
and the expression "Undertaking," "Undertakes," "Engages," or "Engagement" shall
be so construed in each instance.
43.5 MORTGAGE: The term "Mortgage" means a mortgage of Lessor's
interest and includes a Deed of Trust conveying Lessor's interest under this
Lease as security.
43.6 MORTGAGEE: The term "Mortgagee" means the holder of a
Mortgage.
44. EXHIBITS. The Exhibits attached to this Lease and are made a part
hereof by this reference.
45. RULES AND REGULATIONS. Lessee shall faithfully observe and comply
with the Building rules and regulations ("Rules") and all reasonable
modifications and additions to the Rules from time to time put into effect by
Lessor, provided, however, that no modifications or additions to the Rules shall
interfere with Lessee's permitted use of
<PAGE>
the Premises as set forth in Paragraph 6.1. Lessor shall not be responsible
to Lessee for the nonperformance of any of the Rules by any other occupant or
tenant of the Property.
46. NAME OF BUILDING. Lessee shall not use any name, insignia, or
logotype of the Building for any purpose. Lessee shall not use any picture of
the Building or in the Project or the Property in its advertising, stationery or
any other manner. Lessor expressly reserves the right, in Lessor's sole and
absolute discretion, at any time to-change the name, insignia, logotype, or
street address of the Building or the Property without in any manner being
liable to Lessee whether or not Lessee has used such name, exterior appearance,
insignia, logotype or street address of the Building, the Building Project, or
Land in any advertising, stationary, or in any other manner.
47. NO LIGHT AND AIR EASEMENT. Any diminution or shutting off of light
or air by any structure which may be erected on lands adjacent to or in the
vicinity of the Property shall not affect the Lease, abate any payment owed by
Lessee under the Lease or otherwise impose any liability on Lessor.
48. FORCE MAJEURE. Lessor shall not be chargeable with, liable for, or
responsible to Lessee for anything or in any amount for any failure to perform
or delay caused by: fire; earthquake; explosion; flood; hurricane; the elements;
acts of God or the public enemy; actions, restrictions, limitations or
interference of governmental authorities or agents; war; invasion; insurrection;
rebellion; riots; strikes or lockouts; inability to obtain necessary materials,
goods, equipment, services, utilities or labor; or any other cause whether
similar or dissimilar to the foregoing which is beyond the reasonable control of
Lessor; and any such failure or delay due to said causes or any of them shall
not be deemed a breach of or default in the performance of the Lease by Lessor.
49. WAIVER OF TRIAL BY JURY. The respective parties hereto shall and
they hereby do waive trial by jury in any action, proceeding or counterclaim
brought by either of the parties hereto against the other on any matter
whatsoever arising out of or in any way connected with this Lease, the
relationship of Lessor and Lessee, Lessee's use or occupancy of the Premises, or
any claim of injury or damage, or the enforcement of any remedy under any
statute, emergency or otherwise.
50. RELOCATION OF PREMISES. Lessor shall have the right to relocate
the Premises to another part of the Building Project on the following terms and
conditions:
(a) The new premises shall be substantially the same in
size, dimensions and decor as the Premises described in this Lease, and shall be
placed in that condition by Lessor at its cost;
(b) The physical relocation of the Premises shall be
accomplished by Lessor at its cost;
(c) Lessor shall give Lessee at least sixty (60) days notice
of Lessor's intention to relocate the Premises;
<PAGE>
(d) The physical relocation of the Premises shall take place
on a weekend, if practicable, and shall be accomplished as quickly as reasonably
practicable;
(e) All reasonable out-of-pocket costs incurred by Lessee as
a result of the relocation, including, without limitation, costs incurred in
changing addresses on stationery, business cards, directories, advertising, and
other such items, but excluding any lost revenues or any intangible costs, shall
be paid by Lessor;
(f) Monthly fixed rental shall be revised to be equal to
monthly fixed rental for the month preceding the relocation times a fraction the
numerator of which is the rentable square footage within the new premises and
the denominator of which is the rentable square footage within the original
Premises as provided in Paragraph 4.1 (c) above. Similarly, Lessee's Share (as
defined in Paragraph 4.2 (a) above) shall be recomputed to be equal to the
rentable square footage within the new premises divided by the rentable square
footage within the building in which the new premises are located.
(g) The parties shall immediately execute an amendment to
this Lease stating the relocation of the Premises and the reduction of Rent, if
any.
51. ENVIRONMENTAL COMPLIANCE. Lessee shall not cause any hazardous
wastes, toxic substances or toxic or hazardous materials (collectively
"Hazardous Materials") to be used, generated, stored or disposed of on, under or
about, or transported to or from, the Premises, the Building, Common Area, Land
or Building Project (collectively "Hazardous Materials Activities" without first
receiving Lessor's written consent, which may be withheld for any reason and
revoked at any time. If Lessor consents to any such Hazardous Materials
Activities, Lessee shall conduct them in strict compliance (at Lessee's expense)
with all applicable Regulations, as hereinafter defined, and using all necessary
and appropriate precautions, Lessor shall not be liable to Lessee for any
Hazardous Materials Activities by Lessee, Lessee's employees, agents,
contractors, licensees or invitees, whether or not consented to by Lessor.
Lessee shall indemnify, defend with counsel acceptable to Lessor and hold Lessor
harmless from and against any claims, damages, costs and liabilities arising out
of Lessee's Hazardous Materials Activities. For purposes hereof, Hazardous
Materials shall include, but not be limited to, substances deemed as "hazardous
substances," "toxic substances," or "hazardous wastes" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980; Resource
Conservation and Recovery Act of 1976 "RCRA"); Hazardous Materials
Transportation Act; the California Health and Safety Code; all other laws and
ordinances governing similar matters; and any regulations adopted and
publications promulgated pursuant thereto (collectively, "Regulations". Prior to
using, storing or maintaining any Hazardous Materials on or about the Premises,
Lessee shall provide Lessor with a list of the types and quantities thereof, and
shall update such list as necessary for continued accuracy. Lessee shall also
provide Lessor with a copy of any Hazardous Materials inventory statement
required by any applicable Regulation, and any update filed in accordance with
any applicable Regulation. If Lessee's activities violate or create a risk
<PAGE>
of violation of any Regulation, Lessee shall cease such activities
immediately upon notice from Lessor. Lessee shall immediately notify Lessor
both by telephone and in writing of any spill or unauthorized discharge of
Hazardous Materials or of any condition constituting an "imminent hazard"
under RCRA. Lessor, Lessor's representatives and employees, may enter the
Premises at any time during the Term to inspect Lessee's compliance herewith,
and may disclose any violation of any Regulation to any governmental agency
with jurisdiction.
52. COMMUNICATIONS INSTALLATION. Lessee intends to install a conduit,
four (4) inches in diameter from its building at 19950 Mariner Avenue, Torrance
California across Mariner Avenue to the Premises and to run through such conduit
a 300 pair 24 gauge cable, a fiber optic cable and an innerduct. The aforesaid
conduit, cables and innerduct, together with all related plans, designs, parts,
equipment, terminations, couplings and other components, shall hereinafter be
collectively referred to as the "Communications Installation. In connection with
the Communications Installation it is agreed that:
(a) The Communications Installation shall be designed,
installed, used, maintained and/or removed solely at the expense of Lessee and
at no cost, liability or expense whatsoever to Lessor. Lessee shall be solely
responsible for the design and function of the Communications Installation. In
connection with designing, installing, using, maintaining and/or removing the
Communications Installation, Lessee shall promptly comply, or cause compliance
with all laws, ordinances, zoning, zoning variances, orders, rules, regulations
and requirements (including, without limitation, obtaining all building and
other permits required) of all federal, state, county, township and municipal
governments and all departments, commissions, boards and officers thereof,
whether present or future, foreseen or unforeseen, ordinary or extraordinary,
and whether or not the same shall be presently within the contemplation of
Lessor and Lessee or shall involve any change of governmental policy, or require
alterations or additions, and irrespective of the cost thereof, At the end of
the Lease term, if so requested by Lessor, Lessee shall remove such portion of
the Communications Installation as is installed in, on or upon the Building
Project or any portion thereof and shall repair the Building Project to the
extent required and in accordance with the provisions of Paragraph 8.2 above.
The location of the Communications Installation shall be as set forth on Exhibit
"E" attached hereto. In connection with the Communications Installation Lessee
shall comply with all of the provisions of Paragraph 8.4 above other than
obtaining the written consent of Lessor to the Communications Installation. In
addition Lessee shall repair to the condition existing prior to such
installation any and all landscaping, asphalt, sidewalks, parking areas, floors,
walls, foundations or other improvements within the Building Project which are
in any way disturbed, modified and/or damaged during the process of installing
and/or removing the Communications Installation or any part thereof.
(b) Lessee shall at its expense defend, indemnify, and hold
Lessor and Lessor's Employees (as defined in Paragraph 9 above) harmless from
and against any and all claims, damages, losses, judgments, settlements, awards,
expenses,
<PAGE>
attorneys fees and costs and expenses of litigation (collectively
"Liabilities") arising out of or incurred in connection with the design,
installation, use, maintenance and removal of the Communications Installation
wherever located. In this connection Lessee's obligation to so indemnify and
hold Lessor harmless shall be covered by the insurance policy Lessee is
required to maintain during the term of the Lease pursuant to Paragraph 9.2
(a) above.
(c) In the event Lessor incurs and/or becomes liable for
Liabilities, Lessee shall cause the same to be paid to or for the benefit of
Lessor at the time Lessor becomes liable therefor. In the event Lessee fails to
promptly make such payments, Lessor may make such payment in good faith and in a
reasonable manner, and Lessee shall pay to Lessor, in addition to the amount of
such Liabilities, interest thereon from the date of payment by Lessor at an
annual rate equal to the then existing Bank of America reference rate. Becoming
liable for, shall mean as to any damage, judgment, settlement or award, the
final, non-appealable, if appropriate, conclusion of the proceeding or
negotiation from which such liability stems, but with the understanding that if
an appeal is required Lessee shall pay the cost or amount of any appeal bond
required to prevent the enforcement of any judgment, settlement or award.
Becoming "liable for" as used herein shall mean as to costs, expenses and
attorneys fees, the actual incurrence of such items in a manner consistent with
the provisions of this Lease.
(d) In the event Lessor is named as a party in any
litigation or other proceeding in connection with the Communications
Installation, Lessee shall defend the name at its own expense, or, at Lessor's
election, based upon Lessee's failure to reasonably and diligently defend such
action, after fifteen (15) days notice to Lessee to cure such failure or to
commence to cure such failure, if the same cannot be cured in a reasonable
manner within such fifteen (15) day period, Lessor may assume the defense, at
the expense of Lessee. The attorneys selected by Lessee for the defense of
Lessor and Lessee, if appropriate, shall be subject to the written approval of
Lessor, which approval shall not be unreasonably withheld. Lessor shall have the
right to join Lessee as party defendants in any legal action brought against
Lessee alone, and Lessee hereby consents to the entry of an order making them
party defendants.
(e) Any repairs required to the Communications Installation
or to the Premises, Building and/or Building Project, as a consequence of the
Communications Installation, shall be promptly made by Lessee in a good and
workmanlike manner and in accordance with Paragraph 8.1 above. If Lessee fails
to so make such repairs, Lessor shall have the right to make such repairs
pursuant to Paragraph 8.3 above. The failure by Lessee to observe or perform any
of the conditions or provisions of this Paragraph 52 shall constitute a material
default and breach of this Lease and shall subject Lessee to the remedies set
forth in Paragraph 14.2 above.
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease as of
the date first set forth above.
LESSOR:
OP&1F SCHRODER TRUST
By: SCHRODER REAL ESTATE ASSOCIATES
as Attorney-In-Fact
By: _________________________________
CHARLES MCINTYRE
Senior Vice-President
LESSEE:
NOVAQUEST INFOSYSTEMS, a California Corporation
By: _________________________________
ASIF HUDANI, President
<PAGE>
Exhibit List
------------
Exhibit A - Legal Description for Land
Exhibit B - 1 and B -2 - Drawings of the Primary Premises
Exhibit B - 3 - Drawing of the TRW Warehouse Space
Exhibit C - Covenants, Conditions and Restrictions
Exhibit D - Sign Program
Exhibit E - Location of Communications Installation
Exhibit "A"
Lot Nos. 3 and 4 of Tract Map No. 43686 recorded on May 17, 1985 in Book 1049 of
Maps at Pages 89-95 in the Official Records of Los Angeles County.
<PAGE>
judgment, settlement or award, the final, non-appealable, if appropriate,
conclusion of the proceeding or negotiation from which such liability stems, but
with the understanding that if an appeal is required Lessee shall pay the cost
or amount of any appeal bond required to prevent the enforcement of any
judgment, settlement or award. Becoming "liable for" as used herein shall mean
as to costs, expenses and attorneys fees, the actual incurrence of such items in
a manner consistent with the provisions of this Lease.
(d) In the event Lessor is named as a party in any litigation or other
proceeding in connection with the Communications Installation, Lessee shall
defend the same at its own expense, or, at Lessor's election, based upon
Lessee's failure to reasonably and diligently defend such action, after fifteen
(15) days notice to Lessee to cure such failure or to commence to cure such
failure, if the same cannot be cured in a reasonable manner within such fifteen
(15) day period, Lessor may assume the defense, at the expense of Lessee. The
attorneys selected by Lessee for the defense of Lessor and Lessee, if
appropriate, shall be subject to the written approval of Lessor, which approval
shall not be unreasonably withheld. Lessor shall have the right to Join Lessee
as party defendants in any legal action brought against Lessee alone, and Lessee
hereby consents to the entry of an order making them party defendants.
(e) Any repairs required to the Communications Installation or to the Premises,
Building and/or Building Project, as a consequence of the Communications
Installation, shall be promptly made by Lessee in a good and workmanlike manner
and in accordance with Paragraph 8.1 above. If Lessee fails to so make such
repairs, Lessor shall have the right to make such repairs pursuant to Paragraph
8.3 above. The failure by Lessee to observe or perform any of the conditions or
provisions of this Paragraph 52 shall constitute a material default and breach
of this Lease and shall subject Lessee to the remedies set forth in Paragraph
14.2 above.
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease as of the date
first set forth above.
FOR: LESSEE:
OP&F SCHRODER TRUST NOVAt3UEST INFOSYSTEMS,
By: SCHRODER REAL ESTATE a California Corporation
ASSOCIATES, as Attorney-In-Fact
/s/ Charles McIntyre
- ----------------------------------
Charles McIntyre,
Senior Vice-President
FOR: LESSOR
NOVAQUEST INFOSYSTEMS, a California corporation
/s/ Asif Hudani
- ----------------------------------
Asif Hudani,
President
<PAGE>
EXHIBIT 10.8
LEASE FOR THE PROPERTY LOCATED AT
19772 MACARTHUR BLVD., IRVINE, CA 92615
DATED NOVEMBER 18, 1997
LEASE SUMMARY
PREPARED FOR NOVAQUEST INFOSYSTEMS, INC., A CALIFORNIA CORPORATION
Date: September 9, 1997
Building 19772 MacArthur Blvd.
Irvine, CA 92615
Tenant: NovaQuest InfoSystems, Inc. a California corporation
Premises: Approximately 5,883 rentable square feet located at
19772 MacArthur Blvd., Suite 100, Irvine, CA 92615
Term: Thirty six (36) month lease term
Lease Commencement: January 1, 1998
Early occupancy upon completion of Landlords Tenant
Improvement.
Security Deposit: First month's rent in the amount of $7,647.90 and
Landlord requires security deposit in the amount of
$8,286.20 Total due $15,934.10
<TABLE>
<CAPTION>
Primary Term Rent: Months Rate/s.f. Amount
<S> <C> <C>
01-12 $1.30 $7,647.90
13-24 $1.35 $7,942.05
25-36 $1.40 $8,236.20
</TABLE>
- Lease must be renewed with ninety (90) days of
expiration otherwise suite will be marketed to
prospective tenants as coming available.
Tenant Improvements: Landlord has agreed to paint suite with building
standard paint detail clean suite
Operating Expenses: 1997 Base Year - 5% cap on operation costs
Proportionate Share: 5,883 SF + 24,917 SF = 23.61%
Signage: Suite & Directors signage will be at Tenant's
expense See Schedule "H"
Early Occupancy: Tenant shall be granted early occupancy to premises
to complete the tenant improvements to the space.
All scheduled tenant improvements above building
standard paint shall be at sole cost of the tenant.
i
<PAGE>
OFFER TO LEASE
The Integrity Fund II
1. The undersigned offeror, having inspected the premises or plans
thereto offers to lease the premises as outlined in Schedules "A" and "B" and
under the terms and conditions as set forth in the Lease attached hereto and
forming a part hereof and initialed by the parties.
2. Cash/Cheque for $8,286.20 payable to The Integrity Fund II pending
completion or other termination of this agreement, it is attached hereto to
apply as a deposit on Basic Rent and/or as security deposit which will be
returned if this Offer is not accepted.
3. The Lease shall be drawn by you in accordance with the attached
Lease and shall be executed by both parties forthwith.
4. It is further understood that all representations made by The
Integrity Fund II or any of its representatives, are set out in this
agreement.
5. This offer shall be irrevocable until September 18, 1997, after
which time if not accepted, this Offer shall be null and void.
DATED this 17th day of November 1997.
NovaQuest InfoSystems, Inc., a California corporation
/s/ not legible .
-----------------------------------------------------------------
Signature Title
.
-----------------------------------------------------------------
Signature Title
(Note: If a corporation, give title of signing officer and affix seal).
The Integrity Fund II hereby accepts the above Offer.
DATED this 18th day of November 1997.
The Integrity Fund II
/s/ not legible .
-----------------------------------------------------------------
Signature
Director of operations .
-----------------------------------------------------------------
Title
ii
<PAGE>
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. LEASED PREMISES.................................................1
2. TERM
(a) Term....................................................1
(b) Delay in Occupancy......................................1
(c) Overholding ..........................................2
3. RENT
(a) Basic Rent.........................................2
(b) Additional Rent.........................................2
(i) Taxes.....................................2
(ii) Operating Costs...........................2
(c) Payment - Additional Rent...............................2
(d) Accrual of Rent.........................................3
(e) Recovery of Rent........................................3
(f) Limitations............................................3
4. SECURITY DEPOSIT................................................3
5. GENERAL COVENANTS
(a) Landlord's Covenant.....................................3
(b) Tenant's Covenant.......................................3
6. USE AND OCCUPANCY
(a) Use.....................................................3
(b) Waste, Nuisance, etc....................................4
(c) Insurance Risks.........................................4
(d) Compliance with Law.....................................4
(e) Environmental Compliance................................4
(f) Rules and Regulations...................................4
iii
<PAGE>
7. ASSIGNMENT AND SUBLETTING
(a) No Assignment With Consent..............................4
(b) Assignment or Subletting Procedures.....................5
(c) Assumption of Obligations...............................5
(d) Tenant's Continuing Obligations.........................5
8. REPAIR AND DAMAGE
(a) Landlord's Repairs to Building and Property.............5
(b) Landlord's Repairs to the Leased Premises...............6
(c) Tenant's Repairs........................................6
(d) Indemnification.........................................6
(e) Damage and Destruction..................................6
9. INSURANCE AND LIABILITY
(a) Landlord's Insurance....................................7
(b) Tenant's Insurance......................................7
(c) Limitation of Landlord's Liability......................8
(d) Indemnity of Landlord...................................8
(e) Definition of "Insured Damage"..........................8
10. EVENTS OF DEFAULT AND REMEDIES
(a) Events of Default and Remedies..........................9
(b) Payment of Rent, etc. on Termination....................9
(c) Tenant to pay on demand................................10
iv
<PAGE>
ADDITIONAL PROVISIONS
11. Relocation of Leased Premises.........................................10
12. Subordination and Attornment..........................................11
13. Certificates..........................................................11
14. Inspection of and Access to the Leased Premises.......................11
15. Delay.................................................................11
16. Waiver................................................................12
17. Sale, Demolition and Renovation.......................................12
18. Public Taking.........................................................12
19. Registration of Lease.................................................13
20. Entire Lease Agreement................................................13
21. Notices...............................................................13
22. Interpretation........................................................13
23. Extent of Lease Obligations...........................................14
24. Use and Occupancy Prior to Term.......................................14
25. Schedules.............................................................14
</TABLE>
<TABLE>
<CAPTION>
DEFINITIONS OF PRINCIPAL TERMS PARAGRAPH PAGE
<S> <C> <C>
Additional Rent...............................................3(b)..........2
Additional Services...........................................3(b)........D-1
Basic Rent....................................................3(a)..........2
Building......................................................1.............1
Fiscal Period.................................................3(c)..........2
Insured Damage................................................9(e)..........9
Landlord....................................................................1
Landlord's Taxes..............................................2(a)........C-1
Leased Premises...............................................1.............1
v
<PAGE>
Leasehold Improvements........................................1...........F-1
Landlord's Work...............................................2...........F-1
Operating Costs...............................................5...........D-2
Property......................................................1.............1
Public Taking.................................................18...........14
Rent..........................................................3(d)..........3
Taxes.........................................................2(d)........C-2
Tenant......................................................................1
Tenant's Proportionate Share..................................2(d)........C-2
Tenant's Proportionate Share..................................7...........D-3
Tenant's Taxes................................................2(c)........C-2
Term..........................................................2(a)..........1
</TABLE>
vi
<PAGE>
THIS AGREEMENT made this 9th day of September, 1997
BETWEEN: THE INTEGRITY FUND II,
a California limited partnership having the
offices of its General Partner,
COLTON CAPITAL CORPORATION
having an office at 2171 Campus Drive, Suite 260
in the City of Irvine
County of Orange
(Hereinafter called the "Landlord" OF THE FIRST PART,
---and---
NOVAQUEST INFOSYSTEMS, INC. A CALIFORNIA CORPORATION
having an office at 19772 MacArthur Blvd., 100
in the City of Irvine
County of Orange
(Hereinafter called the "Tenant") OF THE SECOND PART
In consideration of the rents, covenants and agreements hereinafter contained,
the Landlord and Tenant hereby agree as follows:
1. LEASED PREMISES
LEASED PREMISES The Landlord does demise and lease to the Tenant
the premises (the "Leased Premises") located in a building
(the "Building") having a municipal address of 19772
MacArthur Blvd., Suite 100, in the City of Irvine, County of
Orange, State of California and known as 19772 MacArthur
Blvd. (the Leased Premises), the Building, together with the
lands described in Schedule "A" attached and present and
future improvements, additions and changes thereto being
herein called (the "Property"), the Leased Premises
consisting of approximately 5,883 rentable square feet on
the first (1st) floor as outlined in red on the plan or
plans marked Schedule(s) "B" attached hereto, excluding the
exterior surfaces of the exterior walls of the Leased
Premises.
2. TERM
TERM (a) TO HAVE AND TO HOLD the Leased Premises for and during
the term of thirty six (36) months (the "Term") to be
computed from the 1ST DAY OF December, 1997, and to be fully
complete and ended on the 30th day of September, 2000 unless
otherwise terminated.
1
<PAGE>
DELAY IN
OCCUPANCY (b) If the Leased Premises or any part thereof are not ready
for occupancy on the date of commencement of the Term, no
part of the "Rent" (as hereinafter defined) or only a
proportionate part thereof, in the event that the Tenant
shall occupy a part of the Leased Premises, shall be payable
for the period prior to the date when the entire Leased
Premises are ready for occupancy and the full Rent shall
accrue only after such last mentioned date. The Tenant
agrees to accept any such abatement of Rent in full
settlement of all claims which the Tenant might otherwise
have by reason of the Leased Premises not being ready for
occupancy on the date of commencement of the Term, provided
that when the Landlord has completed construction of such
part of the Leased Premises as it is obliged hereunder to
construct, the Tenant shall not be entitled to any abatement
of Rent for any delay in occupancy due to the Tenant's
failure or delay to provide plans or to complete any special
installations or other work required for its purposes or due
to any other reason, nor shall the Tenant be entitled to any
abatement of Rent for any delay in occupancy if the Landlord
has been unable to complete construction of the Leased
Premises by reason of such failure or delay by the Tenant.
2
<PAGE>
Notwithstanding and delay in occupancy, the expiration
date of this Lease shall remain unchanged. NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED IN THIS SECTION 2.
TENANT MAY OCCUPY THE PREMISES PRIOR TO THE COMMENCEMENT
DATE UPON COMPLETION OF LANDLORD'S PORTION (BUILDING
STANDARD PAINT ONLY) OF IMPROVEMENTS TO THE PREMISES.
OVERHOLDING (c) If, at the expiration of the Term or sooner
termination hereof, the Tenant shall remain in possession
without any further written agreement or in circumstances
where a tenancy would thereby be created by implication of
law or otherwise, a tenancy from year to year shall not be
created by implication of law or otherwise, but the Tenant
shall be deemed to be a monthly tenant only, at 150%
"Basic Rent" (as hereinafter defined) payable monthly in
advance plus "Additional Rent" (as hereinafter defined)
and otherwise upon and subject to the same terms and
conditions as herein contained, excepting provisions for
renewal (if any) and leasehold improvement allowance (if
any), contained herein, and nothing, including the
acceptance of any Rent by the Landlord, for periods other
than monthly periods, shall extend this Lease to the
contrary except an agreement in writing between the
Landlord and the Tenant and the Tenant hereby authorizes
the Landlord to apply any monies received from the Tenant
in payment of such monthly Rent. 30 DAY WRITTEN NOTICE
MUST BE RECEIVED BY LANDLORD TO TERMINATE THIS LEASE
OBLIGATION UNDER THE HOLDOVER PERIOD.
3. RENT
BASIC RENT (a) See Schedule "G".
ADDITIONAL RENT (b) The Tenant shall, without deduction or right of
offset pay to the Landlord yearly and every year during the
Term as additional rental (hereinafter called "Additional
Rent")
(i) the amounts of any Taxes payable by the Tenant
to the Landlord pursuant to the provisions of
Schedule "C" attached hereto; and
(ii) the amounts required to be paid to the Landlord
pursuant to the provisions of Schedule "D"
attached hereto.
PAYMENT (c) Additional Rent shall be paid and adjusted with
reference to a fiscal period of twelve (12) calendar months
("Fiscal Period"), which shall be a calendar year unless the
Landlord shall from time to time have selected a Fiscal
Period which is not a calendar year by written notice to the
Tenant. The Landlord shall advise the Tenant in writing of
its estimate of the Additional Rent to be payable by the
Tenant during the Fiscal Period (or broken portion of the
Fiscal Period, as the case may be, if applicable at the
commencement or end of the Term or because of a change in
Fiscal Period) which commenced upon the commencement date of
the Term and for each succeeding Fiscal Period or broken
portion thereof which commences during the Term. Such
estimate shall, in every case, be a reasonable estimate and,
if required by the Tenant, shall be accompanied by
reasonable particulars of the manner in which it was
calculated. The Additional Rent payable by the Tenant shall
be paid in equal monthly installments in advance at the same
time as payment of Basic Rent is due hereunder based on the
Landlord's estimate as
3
<PAGE>
aforesaid. From time to time, the Landlord may re-estimate,
or a reasonable basis, the amount of Additional Rent for
any Fiscal Period or broken portion thereof, in which case
the Landlord shall advise the Tenant in writing of such
re-estimate and fix new equal monthly installments for the
remaining balance of such Fiscal Period or broken portion
thereof. After the end of each such Fiscal Period or
broken portion thereof the Landlord shall submit to the
Tenant a statement of the actual Additional Rent payable
in respect of such Fiscal Period or broken portion thereof
and a calculation of the amounts by which the Additional
Rent payable by the Tenant exceeds or is less than (as the
case may be) the aggregate installments paid by the Tenant
on account of Additional Rent for such Fiscal Period.
Within thirty (30) days after the submission of such
statement either the Tenant shall pay to the Landlord any
amount by which the amount found payable by the Tenant with
respect to such Fiscal Period or broken portion thereof
exceeds the aggregate monthly payments made by it on account
thereof during such Fiscal Period or broken portion thereof,
or the Landlord shall pay to the Tenant any amount by which
the amount found payable as aforesaid is less than the
aggregate of such monthly payments.
4
<PAGE>
ACCRUAL OF RENT (d) Basic Rent and Additional Rent (herein collectively
called "Rent") shall be considered as accruing from day to
day, and Rent for an irregular period of less than one
year or less than one calendar month shall be apportioned
and adjusted by the Landlord for the Fiscal Periods of the
Landlord in which the tenancy created hereby commences and
expires. Where the calculation of Additional Rent for a
period cannot be made until after the termination of this
Lease, the obligation of the Tenant to pay Additional Rent
shall survive the termination hereof and Additional Rent
for such period shall be payable by the Tenant upon demand
by the Landlord. If the Term commences or expires on any
day other than the first or the last day of a month, Rent
for such fraction of a month shall be apportioned and
adjusted as aforesaid and paid by the Tenant on the
commencement date of the Term.
RECOVERY OF RENT (e) Rent and any other amounts required to be paid by
the Tenant to the Landlord under this Lease shall be deemed
to be and the treated as rent and payable and recoverable
as rent, and the Landlord shall have all rights against
the Tenant for default in any payment of rent and other
amounts as in the case of arrears in rent.
LIMITATIONS (f) The information set out in statements, documents or
other writings setting out the amount of Additional Rent
submitted to the Tenant under or pursuant to this Lease
shall be binding on the Tenant and deemed to be accepted
by it and shall not be subject to amendment for any reason
unless the Tenant gives written notice to the Landlord
within sixty (60) days of the Landlord's submission of
such statement, document or other writing identifying the
statement, document, or writing should not be binding on
the Tenant.
4. SECURITY DEPOSIT
SECURITY DEPOSIT The Landlord shall recognize the tenant's security
deposit upon execution of this Lease by the Tenant for the
sum of Eight Thousand Two Hundred Eighty Six Dollars and
20/100 ($8,286.20) as a deposit on the Landlord to stand
as security for the payment by the Tenant of any and all
present and future debts and liabilities of the Tenant to
the Landlord for the performance by the Tenant of all of
its obligations arising under or in connection with this
Lease (the "Debts, Liabilities and Obligations"). The
Landlord shall not be required to keep the deposit
separate from its general funds. In the event of the
Landlord disposing of its interest in this Lease, the
Landlord shall credit the deposit to its successor and
thereupon shall have no liability to the Tenant to repay
the security deposits to the Tenant. Subject to the
foregoing and to the Tenant not being in default under
this Lease, the Landlord shall repay the security deposit
to the Tenant without interest at the end of the Term or
sooner termination of the Lease provided that all Debts,
Liabilities and Obligations of the Tenant to the Landlord
are paid and performed in full, failing which the Landlord
may on notice to the Tenant elect to retain the security
deposit and to apply it in reduction of the Debts,
Liabilities and Obligations and the Tenant shall remain
fully liable to the Landlord for payment and performance
of the remaining Debts, Liabilities and Obligation.
5. GENERAL COVENANTS
LANDLORD'S
COVENANT (a) The Landlord covenants with the Tenant:
(i) for quiet enjoyment; and
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(ii) to observe and perform all the covenants and
obligations of the Landlord herein.
TENANT'S
COVENANT (a) The Tenant covenants with the Landlord:
(i) to pay Rent; and
(ii) to observe and perform all the covenants and
\ obligations of the Tenant herein.
6. USE AND OCCUPANCY
USE The Tenant covenants with the Landlord:
(a) not to use the Leased Premises for any purpose other
than an office for the conduct of the Tenant's business
which is general office use, AND COMPUTER TRAINING CLASSES.
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WASTE,
NUISANCE, ETC. (b) not to commit, or permit, any waste, injury or
damage to the Property including the Leasehold Improvements
and any trade fixture therein, any loading of the floors
thereof in excess of the maximum degree of loading as
determined by the Landlord acting reasonably, any nuisance
therein or any use or manner of use causing annoyance to the
other tenants and occupants of the Property or to the
Landlord;
INSURANCE RISKS (c) not to do, omit or permit to be done or omitted to
be done upon the Property anything which would cause to be
increased the Landlord's cost of insurance or the costs of
insurance of another tenant of the Property against perils
as to which the Landlord or such other tenant has insured or
which shall cause any policy of insurance on the Property to
be subject to cancellation;
COMPLIANCE
WITH LAW (d) to comply at its own expense with all governmental
laws, regulations and requirements pertaining to the
occupation and use of the Leased Premises, the condition of
the Leasehold Improvements, trade fixtures, furniture and
equipment installed by or on behalf of the Tenant therein
and the making by the Tenant of any repairs, changes or
improvements therein;
ENVIRONMENTAL
COMPLIANCE (e) (i) to conduct and maintain its business and
operations at the Leased Premises so as to comply in
all respects with common law and with all present
and future applicable federal, provincial/state,
local municipal, governmental or quasi-governmental
laws, by-laws, rules, regulations, licenses, orders,
guidelines, directives, permits, decisions or
requirements, concerning occupational or public
health and safety or the environment and any order,
injunction, judgement, declaration, notice or demand
issued thereunder, ("Environmental Laws").
(ii) not to permit or suffer any substance which is
hazardous or is prohibited, restricted, regulated or
controlled under any Environmental Law to be present
at, on or in the Leased Premises, unless it has
received the prior written consent of the Landlord
which consent may be arbitrarily withheld.
RULES &
REGULATIONS (f) to observe and perform, and to cause its employees,
invitees and others over Tenant can be reasonably expected
to exercise control to observe and perform, the Rules and
Regulations contained in Schedule "E" hereto, and such
further and other reasonable rules and regulations and
amendments and additions therein as may hereafter be made by
the Landlord and notified in writing to the Tenant, except
that no change or addition may be made that is inconsistent
with this Lease unless as may be required by governmental
regulation or unless the Tenant consents thereto. The
imposition of such Rules and Regulations shall not create or
imply any obligation of the Landlord to enforce them or
create any liability of the Landlord for their
non-enforcement or otherwise.
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7. ASSIGNMENT AND SUBLETTING
NO ASSIGNMENT
OR SUBLETTING (a) The Tenant covenants that it will not assign this
Lease or sublet the Leased Premises in whole or in part
without the prior written consent of the Landlord, which
consent the Landlord covenants not to withhold
unreasonably (i) and to any assignee or sublessee who is
in a satisfactory financial condition, agrees to use the
Leased Premises for those purposes permitted hereunder,
and is otherwise satisfactory to the Landlord, and
(ii) as to any portion of the Leased Premises which, in
the Landlord's sole judgement, is a proper and rational
division of the Leased Premises, subject to the Landlord's
right of termination arising under this paragraph. Without
limitation, the Tenant shall, for the purpose of this
paragraph, be considered to assign or sublet in any case
where it permits the Leased Premises or any portion
thereof to be, or the Leased Premises or any portion
thereof are, occupied by persons other than the Tenant,
its employees and others engaged in carrying on the
business of the Tenant, whether pursuant to assignment,
subletting, license or other right, or where any of the
foregoing occurs by operation of law.
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ASSIGNMENT OR
SUBLETTING
PROCEDURES (b) The Tenant shall not assign this Lease or sublet the
whole or any part of the Leased Premises unless:
(i) it shall have received or procured a bona fide
written offer to take an assignment or sublease
which is consistent with this Lease, and the
acceptance of which would not breach any provisions
of this Lease if this paragraph is complied with
and which the Tenant has determined to accept
subject to this paragraph complied with, and
(ii) it shall have first requested and obtained the
consent in writing of the Landlord thereto.
Any request for consent shall be in writing and accompanied
by a copy of the offer certified by the Tenant to be true
and complete, and the Tenant shall furnish to the Landlord
all information available to the Tenant and requested by the
Landlord as to the responsibility, financial standing and
business of the proposed assignee or subtenant. If such
consent shall be given the Tenant shall assign or sublet, as
the case may be, only upon the terms set out in the offer
submitted to the Landlord as aforesaid and not otherwise.
ASSUMPTION
OBLIGATIONS (c) No assignment or subletting of this Lease shall be
effective unless the assignee or sublessee shall execute an
assumption agreement on the Landlord's form, assuming all
the obligations of the Tenant hereunder, and shall pay to
the Landlord its reasonable fee for processing the
assignment or subletting.
TENANT'S
CONTINUING
OBLIGATIONS (d) The Tenant agrees that any consent to an assignment
or subletting of this Lease or Leased Premises, shall not
thereby release the Tenant of its obligations hereunder.
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8. REPAIR AND DAMAGE
LANDLORD'S REPAIRS
TO BUILDING &
PROPERTY
(a) The Landlord covenants with the Tenant to keep in a good
and reasonable state of repair and decoration:
(i) those portions of the Property consisting of
the entrance, lobbies, stairways, corridors,
landscaped areas, parking areas, and other
facilities from time to time provided for use in
common by the Tenant and other tenants of the
Building or Property, and the exterior portions
(including foundations and roofs) of all buildings
and structures from time to time forming part of
the property and affecting its general appearance;
(ii) the Building (other than the Leased Premises
and premises of other tenants) including the
systems for interior climate control, the elevators
and escalators (if any), entrances, lobbies,
stairways corridors and washrooms from time to time
provided for use in common by the Tenant and other
tenants of the Building or Property and the systems
provided for use in common by the Tenant and other
tenants of the Building or Property and the systems
as provided for bringing utilities to the Leased
Premises.
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(b) The Landlord covenants with the Tenant to repair, so far
as reasonably feasible, and as expeditiously as reasonably
feasible, defects in standard demising walls or in
structural elements, exterior walls of the Building,
suspended ceiling, electrical and mechanical installation
standard to the building installed by the Landlord in the
Leased Premises (if and to the extent that such defects are
sufficient to impair the Tenant's use of the Leased Premises
while using them in a manner consistent with this Lease) and
"Insured Damage" (as herein defined). The Landlord shall in
no event be required to make repairs to Leasehold
Improvements made by the Tenant, or by the Landlord on
behalf of the Tenant or another tenant or to make repairs to
wear and tear within the Leased Premises.
TENANT'S REPAIRS
(c) The Tenant covenants with the Landlord to repair,
maintain and keep at the Tenant's own costs, except insofar
as the obligation to repair rests upon the Landlord pursuant
to this paragraph, the Leased Premises, including Leasehold
Improvements in good and substantial repair, reasonable wear
and tear excepted, provided that this obligation shall not
extend to structural elements or to exterior glass or to
repairs which the Landlord would be required to make under
this paragraph but for the exclusion therefrom of defects
not sufficient to impair the Tenant's use of the Leased
Premises while using them in a manner consistent with the
Lease. The Landlord may enter the Leased Premises at all
reasonable time WITH 48 HOURS WRITTEN NOTICE (EXCEPT IN CASE
OF EMERGENCY, AND IN THAT EVENT WITH OR WITHOUT WRITTEN OR
ORAL NOTICE AS REASONABLY POSSIBLE GIVEN THE CIRCUMSTANCE,)
and view the condition thereof and the Tenant covenants with
the landlord to repair, maintain and keep the Leased
Premises in good and substantial repair according to notice
in writing, reasonable wear and tear excepted. If the Tenant
shall fail to repair as aforesaid after reasonable notice to
do so, the Landlord may effect the repairs and the Tenant
shall pay the reasonable cost thereof to the Landlord on
demand. The Tenant covenants with the Landlord that the
Tenant will at the expiration of the Term or sooner
termination thereof peaceably surrender the Leased Premises
and appurtenances in good and substantial repair and
condition, reasonable wear and tear excepted.
INDEMNIFICATION (d) If any part of the Property becomes out of repair,
damaged or destroyed through the negligence of, or misuse
by, the Tenant or its employees, agents, invitees or others
under its control, the Tenant shall pay the Landlord on
demand the expense of repairs or replacements, including the
Landlord's reasonable administration charge thereof,
necessitated by such negligence or misuse. THIS SECTION
SHALL NOT APPLY IN THE EVENT DAMAGE WAS CAUSED BY NEGLIGENCE
OF LANDLORD OR ITS AGENTS, EMPLOYEES, INVITEES, OR OTHER
UNDER LANDLORD'S CONTROL.
DAMAGE &
DESTRUCTION
(e) it is agreed between the Landlord and the Tenant that:
(i) In the event of damage to the Property or to any part
thereof, if the damage is such that the Leased Premises or
any substantial part thereof is rendered not reasonably
capable of use and occupancy by the Tenant for the purposes
of its business for any period of time in excess of FIVE (5)
days, OR IF LANDLORD CANNOT REASONABLY MAKE THE PREMISES
AVAILABLE FOR SAID USE AND OCCUPANCY BY TENANT WITHIN FIVE
(5) DAYS, then TEN (10) DAYS, IF AND ONLY IF, LANDLORD
COMMENCES ANY NECESSARY REPAIRS WITHIN FIVE (5) DAYS,
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(ii) unless the damage was caused by the fault or negligence
of the Tenant or its employees, agents, invitees or others
under its control, from the date of occurrence of the damage
and until the Leased Premises are again reasonably capable
for use and occupancy as aforesaid, the Rent payable
pursuant to this Lease shall abate from time to time in
proportion to the part or parts of the Leased Premises not
reasonably capable of such use and occupancy, and
unless this Lease is terminated as hereinafter provided, the
Landlord or the Tenant as the case may be (according to the
nature of the damage and their respective obligations to
repair as provided in sub-paragraphs (1), (b) and (c) of
this paragraph) shall repair such damage with all reasonable
diligence, but to the extent that any part of the Leased
Premises is not reasonably capable of such use and occupancy
by reason of damage which the Tenant is obligated to repair
hereunder, any abatement of Rent to which the Tenant would
otherwise be entitled hereunder shall not extend later than
the time by which, in the reasonable opinion of the
Landlord, repairs by the Tenant ought to have been completed
with reasonable diligence, and
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(iii) if the Leased Premises are substantially damaged or
destroyed by any cause and if in the reasonable opinion of
the Landlord given in writing within thirty (30) days of the
occurrence the damage cannot reasonably be repaired with
NINETY (90) DAYS after the occurrence thereof, then the
Lease shall terminate, in which event neither the Landlord
nor the Tenant shall be bound to repair as provided in
subparagraphs (a), (b) and (c) of this paragraph, and the
Tenant shall instead deliver up possession of the Leased
Premises to the Landlord with reasonable expedition and Rent
shall be apportioned and paid to the date of the occurrence;
and
(iv) if premises, whether of the Tenant, or other tenants of
the Property comprising in the aggregate half or more of the
total number of square feet of rentable office area in the
Property on half or more of the total number of square feet
of rentable office area in the Building (as determined by
the Landlord) or portions of the Property which affect
access of services essential thereto, are substantially
damaged or destroyed by any cause and if in the reasonable
opinion of the Landlord the damage cannot reasonably be
repaired with NINETY (90) DAYS after the occurrence thereof,
then the Landlord may, by written notice to the Tenant given
within thirty (30) days after the occurrence of such damage
or destruction, terminate this Lease, in which event neither
the Landlord nor the Tenant shall be bound to repair as
provided in subparagraphs (a), (b) and (c) of this
paragraph, and the Tenant shall instead deliver up
possession of the Leased Premises to the Landlord with
reasonable expedition but in any event within sixty (60)
days after delivery of such notice of termination, and Rent
shall be apportioned and paid to the date upon which
possession is so delivered up (but subject to any abatement
to which the Tenant may be entitled under subparagraph (e)
(i) of this paragraph).
9. INSURANCE AND LIABILITY
LANDLORD'S
INSURANCE (a) The Landlord shall take out and keep in force during the
Term insurance with respect to the Property except for the
"Leasehold Improvements" (as hereinafter defined) in the
Leased Premises. The insurance to be maintained by the
Landlord shall be in respect of perils and to amounts and on
terms and conditions which from time to time are insurable
at a reasonable premium and which are normally insured by
reasonable prudent buyers of properties similar to the
Property, all as from time to time determined at reasonable
intervals by insurance advisors selected by the Landlord,
and whose opinion shall be conclusive. Unless and until the
insurance advisors shall state that any such perils are not
customarily insured against by owners of properties similar
to the Property, the periods to be insured against by the
Landlord shall include, without limitation, public
liability, boilers and machinery, fire and extended perils
and may include, at the option of the Landlord, losses
suffered by the Landlord in its capacity as Landlord through
business interruption. The insurance to be maintained by the
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Landlord shall contain a waiver by the insurer of any rights
of subrogation or indemnity or any other claim over which
the insurer might otherwise be entitled against the Tenant
or the agents or employees of the Tenant, IF AVAILABLE ON
COMMERCIALLY REASONABLE TERMS.
TENANT'S INSURANCE (b) The Tenant shall take out and keep in force during the
Term:
(i) comprehensive general public liability insurance all on
an occurrence basis with respect to the business carried on
in or from the Leased Premises and the Tenant's use and
occupancy of the Leased Premises and of any other part of
the Property, WHICH PROVISIONS SHALL NOT REQUIRE ADDITIONAL
COVERAGE BEYOND THE STANDARD COMMERCIAL TENANT POLICY, with
coverage for any one occurrence or claim of not less than
One Million Dollars ($1,000,000) or such other amount as the
Landlord may reasonably require upon not less than one (1)
month notice at any time during the Term, which insurance
shall include the Landlord as a named insured
(ii) insurance in respect of fire and such other perils as
are from time to time in the usual extended coverage
endorsement covering the Leasehold Improvements, trade
fixtures, and the furniture and equipment in the Leased
Premises for not less than 80% of the full replacement cost
thereof, and which insurance shall include the Landlord as
named insured as the Landlord's interest may appear;
(iii) insurance against such other perils and in such
amounts as the Landlord may from time to time reasonably
require upon not less than ninety (90) days written notice,
such requirement to be made on the basis that the required
insurance is customary at the time for prudent tenants of
properties similar to the Property.
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All insurance required to be maintained by the Tenant shall
be on terms and with insurers satisfactory to the Landlord.
Each policy shall contain a waiver by the insurer of any
rights, IF AVAILABLE ON COMMERCIALLY REASONABLE TERMS, of
subrogation or indemnity or any other claim over to which
the insurer might otherwise be entitled against the Landlord
or the agents or employees of the Landlord, and shall also
contain an undertaking by the insurer that no material
change adverse to the Landlord or the Tenant will be made,
and the policy will not lapse to be canceled, except after
not less than thirty (30) days' written notice to the
Landlord of the intended change, lapse or cancellation. The
Tenant shall furnish to the Landlord, if and whenever
requested by it, certificates or other evidence acceptable
to the Landlord as to the insurance from time to time
effected by the Tenant and if renewal or continuation in
force, together with evidence as to the method of
determination of full replacement cost of the Tenant's
Leasehold Improvements, trade fixtures, furniture and
equipment, and if the Landlord reasonably concludes that the
full replacement cost has been underestimated, the Tenant
shall forthwith arrange for any consequent increase in
coverage required under subparagraph (b). If the Tenant
shall fail to take out, renew and keep in force such
insurance, or if the evidences submitted to the Landlord are
unacceptable to the Landlord (or not such evidences are
submitted within a reasonable period after request therefor
by the Landlord), then the Landlord may give to the Tenant
written notice requiring compliance with this subparagraph
and specifying the respects in which the Tenant is not then
in compliance with this subparagraph. If the Tenant does not
within forty-eight (48) hours provide appropriate evidence
of compliance with this subparagraph, the Landlord may (but
shall not be obligated to) obtain some or all of the
additional coverage or other insurance which the Tenant
shall have failed to obtain, without prejudice to any other
rights of the Landlord under this Lease or otherwise, and
the Tenant shall pay all premiums and other reasonable
expenses incurred by the Landlord to the Landlord on demand.
LIMITATION OF
LANDLORD'S
LIABILITY (c) The Tenant agrees that the Landlord shall not be liable
for any bodily injury or death of, or loss or damage to any
property belonging to, the Tenant or its employees, invitees
or licensees or any other person in, on or about the
Property unless resulting from the actual willful misconduct
or gross negligence of the Landlord or its own employees.
INDEMNITY OF
LANDLORD (d) Except with respect to claims or liabilities in respect
of any damage which is Insured Damage to the extent of the
cost of repairing such Insured Damage, the Tenant agrees to
indemnify and save harmless the Landlord in respect of:
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(i) all claims for bodily injury or death, property
damage or other loss or damage arising from the
conduct of any work or any act or omission of the
Tenant or any assignee, subtenant, agent employee,
contractor, invitee or licensee of the Tenant, and
in respect of all costs, expenses and liabilities
incurred by the Landlord in connection with or
arising out of all such claims, including the
expenses of any action or proceeding pertaining
thereto; and
(ii) any loss, cost, (including, without
limitation, lawyers' fees and disbursements),
expense or damage suffered by the Landlord arising
from any breach by the Tenant of any of its
covenants and obligations under this Lease. THIS
SECTION SHALL NOT APPLY IN THE EVENT DAMAGE WAS
CAUSED BY NEGLIGENCE OF LANDLORD OR ITS AGENTS,
EMPLOYEES, INVITEES OR OTHERS UNDER LANDLORD'S
CONTROL.
DEFINITION OF
"INSURED DAMAGE" (e) for purpose of this Lease, "Insured Damage" means that
part of any damage occurring to the Property of which the
entire cost of repair (or the entire cost of repair other
than a deductible amount properly collectable by the
Landlord as part of the Additional Rent) is actually
recovered by the Landlord under a policy or policies of
insurance from time to time effected by the Landlord
pursuant to subparagraph (a). Where an applicable policy of
insurance contains an exclusion for damages recoverable from
a third party, claims as to which the exclusion applies
shall be considered to constitute Insured Damage only if the
Landlord successfully recovers from the third party.
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10. EVENTS OF DEFAULT AND REMEDIES
EVENTS OF
DEFAULT &
REMEDIES (a) In the event of the happening of any one of the
following events:
(i) the Tenant shall have failed to pay an
installment of Basic Rent or of Additional Rent or
any other amount payable hereunder when due, and
such failure shall be continuing for a period of
more than ten (10) days after the date such
installment or amount was due;
(ii) there shall be a default of or with any
condition, covenant, agreement or other obligation
on the party of the Tenant to be kept, observed or
performed hereunder (other than a condition,
covenant, agreement or other obligation to pay
Basic Rent, Additional Rent or any other amount of
money) and such default shall be continuing for a
period of more than fifteen (15) days after written
notice by the Landlord to the Tenant specifying the
default and requiring that it discontinue UNLESS
TENANT HAS TAKEN ALL COMMERCIALLY REASONABLE STEPS
TO REMEDY DEFAULT.
(iii) if any policy of insurance upon the Property
or any part thereof from time to time effected by
the Landlord shall be canceled or about to be
canceled by the insurer by reason of the use or
occupation of the Leased Premises by the Tenant or
any assignee, subtenant or licensee of the Tenant
or anyone permitted by the Tenant to be upon the
Leased Premises and the Tenant after receipt of
notice in writing from the Landlord shall have
failed to take such immediate steps in respect of
such use or occupation as shall enable the landlord
to reinstate or avoid cancellation (as the case may
be) of such policy of insurance,
(iv) the Leased Premises shall, without the prior
written consent of the Landlord, be used by any
other persons than the Tenant or its permitted
assigns or subtenants or for any purpose other than
that for which they were leased or occupied or by
any persons whose occupancy is prohibited by this
Lease,
(v) the Leased Premises shall be vacated or
abandoned, or remain unoccupied without the prior
written consent of the Landlord for fifteen (15)
consecutive days or more while capable of being
occupied,
(vi) DURING the balance of the Term of this Lease
the goods and chattels of the Tenant MATERIAL AND
NECESSARY TO THE OPERATION OF TENANT'S BUSINESS
located in Leased Premises, shall at anytime be
seized in execution of attachment, or
(vii) the Tenant shall make any assignment for the
benefit of creditors or become bankrupt or
insolvent or take the benefit of any statute for
bankrupt or insolvent
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debtors or, if a corporation shall take any steps
or suffer any order to be made for its winding up
or other termination of its corporate existence; or
a trustee, receiver or receiver-manager or agent or
other like person shall be appointed of any of the
assets of the Tenant.
(b) The Landlord shall have the following rights and
remedies all of which are cumulative and not alternative and
not to the exclusion of any other or additional rights and
remedies in law or equity available to the Landlord by
statute or otherwise:
(i) to remedy or attempt to remedy and default of
the Tenant, and in doing so to make any payments
due or alleged to be due by the Tenant to third
parties and to enter upon the Leased Premises to do
any work or other thing therein, and in such event
all reasonable expenses of the Landlord in
remedying or attempting to remedy such default
shall be payable by the Tenant to the Landlord on
demand;
(ii) with respect to unpaid overdue rent, to the
payment by the Tenant of the Rent and of interest
(which said interest shall be deemed included
herein in the term "Rent") thereon at a rate equal
to ten percent (10%) of the total unpaid amount
each month until paid in full;
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(THE REMAINDER OF THIS SECTION IS MISSING)
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12. SUBORDINATION & ATTORNMENT
This Lease and all rights of the Tenant hereunder are subject and subordinate
to all underlying leases and charges, or mortgages now or hereafter existing
(including charges, and mortgages by way of debenture, note, bond, deeds of
trust and mortgage and all instruments supplemental thereto) which may now or
hereafter affect the Property or any party thereof and to all renewal,
modifications, considerations, replacements and extensions thereof provided
the lessor, chargee, mortgagee, or trustee agrees to accept this Lease if not
in default; and in recognition of the foregoing the Tenant agrees that it
will, whenever requested, attorn to such lessor, chargee, mortgagee as a
tenant upon all the terms of this Lease. The Tenant agrees to execute
promptly whenever requested by the Landlord or by the holder of any such
lease, charge, or mortgage an instrument of subordination or attornment, as
the case may be as may be required of it. LANDLORD SHALL AGREE TO GIVE TENANT
A NON-DISTURBANCE AGREEMENT WITHIN REASONABLE TIME AND IN NO EVENT MORE THAN
30 DAYS FROM THE DATE OF EXECUTION OF THIS AGREEMENT.
13. CERTIFICATES
The Tenant agrees that it shall promptly whenever requested by the Landlord
FOR THE BENEFIT OF LANDLORD'S LENDER OR THIRD PARTY PURCHASER from time to
time execute and deliver to the Landlord, IF REQUIRED BY LENDER OR THIRD
PARTY PURCHASER, an acknowledgement in writing as to the ten status of this
Lease, including SUCH ITEMS AS ARE INCLUDED IN THE REQUEST, FROM THE LENDER
OR THIRD PARTY PURCHASER, as to whether LEASE is in full force and effect, is
modified or unmodified, confirming the Basic Rent and Additional Rent payable
hereunder and the state of accounts between Landlord and the Tenant, the
existence or nonexistence of defaults, and any other matters pertaining to
this Lease as to which the Landlord shall request an acknowledgement.
14. INSPECTION OF AND ACCESS TO LEASED PREMISES
The Landlord shall be permitted at any time, and from time to time, to enter and
to have its authorized agents, employees and contractors enter the Leased
Premises for the purposes of inspection, window cleaning, maintenance, providing
janitor service, making repairs, alterations or improvements to the Leased
Premises or the Property, or to have access to utilities and services (including
all ducts and access panels (if any), which the Tenant agrees not to obstruct)
and the Tenant shall provide free and unhampered access for the purpose, and
shall not be entitled to compensation for any inconvenience, nuisance or
discomfort caused thereby. The Landlord and its authorized agents and employees
shall be permitted entry to the Leased Premises for the purpose of exhibiting
them to
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prospective tenants, IN THE EVENT OF DEFAULT AND FAILURE TO CURE SAME, UNDER
THE LEASE OR WITHIN NINETY (90) DAYS OF THE EXPIRATION OF THE LEASE TERM. The
Landlord in exercising its rights under this paragraph shall do so to the
extent reasonably necessary so as to minimize interference with the Tenant's
use and enjoyment of the Leased Premises provided that in an emergency the
Landlord or persons authorized by it may enter the Leased Premises without
regard to minimizing interference.
15. DELAY
Except as herein otherwise expressly provided, if and whenever and to the
extent that either the Landlord or the Tenant shall be prevent, delayed or
restricted in the fulfillment of any obligation hereunder in respect of the
supply or provision of any service or utility, the making of any repair, the
doing of any work or any other thing (other than the payment of monies
required to be paid by the Tenant to the Landlord hereunder) by reason of:
(a) strikes or work stoppages;
(b) being unable to obtain any material, service, utility or
labor required to fulfill such obligation;
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(c) any statute, law or regulation of, or inability to
obtain any permission from any government authority having
lawful jurisdiction preventing, delaying or restricting such
fulfillment;
(d) other unavoidable occurrence;
(e) the time for fulfillment of such obligation shall be
extended during the period in which such circumstance
operates to prevent, delay or restrict the fulfillment
thereof, and the other party to this Lease shall not be
entitled to compensation for any inconvenience, nuisance or
discomfort thereby OCCASIONED provided that nevertheless the
Landlord will use its best efforts to maintain services
essential to the use and enjoyment of the Leased Premises
and provided further that if the Landlord shall be
prevented, delayed or restricted in the fulfillment of any
such lease of any such obligation hereunder by reason of any
of the circumstances set out in subparagraph (c) of this
paragraph 15 and to fulfill such obligation could not, in
the reasonable opinion of the Landlord, be completed without
substantial additions to or renovations or the Property, the
Landlord OR TENANT may on sixty (60) days' written notice to
the OTHER PARTY terminate this Lease.
16. WAIVER
If either the Landlord or the Tenant shall overlook, excuse, condone or suffer
any default, breach, nonobservance, improper compliance or noncompliance by
the other of any obligation hereunder, this shall not operate as a waiver of
such obligation in respect of any continuing or subsequent default, breach,
or nonobservance, and no such waiver shall be implied but shall only be
effective if expressed in writing.
17. SALE, DEMOLITION AND RENOVATION
(a) The term "Landlord" as used in this Lease, means only
the owner for the time being of the Property, so that in the
event of any sale or sales or transfer or transfers of the
Property, or the making of any lease or leases thereof, or
the sale or sales or the transfer or transfers or the
assignment or assignments of any such lease or leases,
previous landlords shall be and hereby are relieved of all
covenants and obligations of Landlord hereunder. It shall be
deemed and construed without further agreement between the
parties, or their successors in interest, or between the
parties and the transferee or acquirer, at any such sale,
transfer or assignment, or lessee on the making of any such
lease, that the transferee, acquirer or lessee has assumed
and agreed to carry out any and all of the covenants and
obligations of Landlord hereunder to Landlord's exoneration,
and Tenant shall thereafter be bound to and shall attorn to
such transferee, acquirer or lessee, as the case may be as
Landlord under this Lease;
(b) Notwithstanding anything contained in this Lease to the
contrary, in the event the Landlord intends to demolish or
to renovate substantially all of the Building, then the
Landlord, upon giving the Tenant one hundred and eighty
(180) days' written notice, shall have the right to
terminate this Lease and this Lease shall thereupon expire
on the expiration of one hundred and eighty (180) days from
the date of the giving of such notice without compensation
of any kind
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to the Tenant. IF TENANT CHOOSES TO MOVE TO ANOTHER OF
LANDLORD'S BUILDINGS, LANDLORD SHALL PAY FOR SAID MOVE,
AND CONTINUE THIS AGREEMENT IN FULL FORCE AND EFFECT TO
THE FULLEST EXTENT POSSIBLE, BUT IF TENANT CHOOSES TO
MOVE TO A BUILDING NOT UNDER THE CONTROL OF LANDLORD,
THEN TENANT SHALL PAY ITS OWN MOVING EXPENSES.
18. PUBLIC TAKING
The Landlord and Tenant shall cooperate, each with the other, in respect of
any Public Taking of the Leased Premises or any part thereof so that the
Tenant may receive the maximum award to which it is entitled in law for
relocation costs and business interruption and so that the Landlord AND
TENANT MAY RECEIVE THEIR PROPORTIONATE SHARE OF ANY AWARD for all other
compensation arising from or relating to such Public Taking. If the whole or
any part of the Leased Premises is Publicly Taken, as between the parties
hereto, their respective rights and obligations under this Lease shall
continue until the day on which the Public Taking authority takes possession
therefore. If the whole or any part of the Leased Premises is Publicly Taken,
Landlord OR TENANT shall have the option, to be exercised on written notice
to the OTHER PARTY to terminate this Lease and such termination shall be
effective on the day the Public Taking authority takes possession of the
whole or the portion of the Property Publicly Taken. Rent and all other
payments shall be adjusted as of the date of such termination and the Tenant
shall, on the date of such Public taking, vacate the Leased Premises and
surrender the same to the Landlord, with the Landlord having the right to
re-enter and repossess the Leased Premises discharged of this Lease and to
remove all persons therefrom. In this paragraph the words "Public Taking"
shall include expropriation and condemnation and shall include a sale by the
Landlord to any authority with powers of expropriation, condemnation or
taking, in lieu of or under threat of expropriation or taking and "Publicly
Taken" shall have a corresponding meaning.
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(THE REMAINDER OF THIS SECTION IS MISSING)
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25. SCHEDULES
The provisions of the following Schedules attached hereto shall form part of
this Lease as if the same were embodied herein:
Schedule "A" - Legal Description of Lands
Schedule "B" - Outline of Leased Premises
Schedule "C" - Taxes payable by Landlord and Tenant
Schedule "D" - Services and Costs
Schedule "E" - Rules and Regulations
Schedule "F" - Leasehold Improvements
Schedule "G" - Basic Rent
IN WITNESS WHEREOF the parties hereto have executed this Agreement.
<TABLE>
<S> <C>
Landlord: Tenant:
THE INTEGRITY FUND II NOVAQUEST INFOSYSTEMS, INC., a California corporation
By Signature: /s/ not legible By Signature: /s/ not legible
----------------------- ----------------------------------
Title: Director of Operations Title: Executive Vice President
------------------------------ ---------------------------------------
</TABLE>
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SCHEDULE "A"
(Legal Description of Property)
PARCEL A:
THAT PORTION OF BLOCK 50 OF IRVINE'S SUBDIVISION, IN THE CITY OF IRVINE,
COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 1,
PAGE 88 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA,
DESCRIBED AS FOLLOWS:
PARCEL NO. 5 AS SHOWN ON A MAP FILED IN BOOK 107, PAGES 10 AND 11 OF PARCEL
MAPS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA.
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SCHEDULE "B"
(Plan of Leased Premises outlined in red)
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SCHEDULE "C"
(THIS SECTION IS MISSING)
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(c) "Tenant Taxes" shall mean the aggregate of:
(i) all Taxes (whether imposed upon the Landlord or
the Tenant) attributable to the personal property,
trade fixtures, business, income, occupancy, or
sales of the Tenant or any other occupant of the
Leased Premises, and to any Leasehold Improvements
or fixtures installed by or on behalf of the Tenant
within the Leased Premises, and to the use by the
Tenant of any of the Property; and
(ii) the amount by which Taxes (whether imposed
upon the Landlord or the Tenant) are increased
above the Taxes which would have otherwise been
payable as a result of the Leased Premises or the
Tenant or any other occupant of the Leased Premises
being taxes or assessed in support of separate
schools.
(d) "Tenant's Proportionate Share" shall mean 23.61% subject to
adjustment as determined solely by the Landlord and notified
to the Tenant in writing for physical increases or decreases
in the total rentable area of the Property provided that
total rentable area of the Property and the rentable area of
the Leased Premises shall exclude areas designated (whether
or not rented) for parking and for storage.
(e) "Base Year" as used in this schedule shall mean calendar
year 1997. INCREASES SHALL NOT EXCEED FIVE PERCENT (5%) PER
YEAR.
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SCHEDULE "D"
(Services and Costs)
1. The Landlord covenants with the Tenant:
INTERIOR CLIMATE
CONTROL
(a) To maintain in the Leased Premises conditions of
reasonable temperature and comfort in accordance with good
standards applicable to normal occupancy of premises for
office purposes subject to governmental regulations during
hours to be determined by the Landlord (but to be at least
the hours from 8:00 a.m. to 6:00 p.m. from Monday to Friday
inclusive with the exception of holidays, Saturdays and
Sundays), such conditions to be maintained by means of a
system for heating and cooling, filtering and circulating
air; the Landlord shall have no responsibility for any
inadequacy of performance of the said system if the
occupancy of the Leased Premises or the electrical power or
other energy consumed on the Leased Premises for all
purposes exceeds reasonable amounts as determined by the
Landlord or the Tenant installs partitions or other
installations in locations which interfere with the proper
operations of the system of interior climate control or if
the window covering on exterior windows is not kept fully
closed; AFTER HOURS HVAC IS BILLED SEPARATELY TO TENANT AT A
RATE OF $25.00/HOUR.
JANITOR SERVICE (b) To provide janitor and cleaning services 5 DAYS
A WEEK (TRASH, VACUUM, AND LIGHT DUSTING) to the Leased
Premises and to common areas of the Building consisting of
reasonable services in accordance with the standards of
similar office buildings;
ELEVATORS,
LOBBIES, ETC. (c) To keep available the following facilities for use by
the Tenant and its employees and its employees and invitees
in common with other persons entitled thereto:
(i) passengers and freight elevator service to each
floor upon which the Leased Premises are located
provided such service is installed in the Building
and provided that the Landlord may prescribe the
hours during which and the procedures under which
freight elevator service shall be available and may
limit the number of elevators providing service
outside normal business hours;
(ii) common entrances, lobbies, stairways and
corridors giving access to the Building and the
Leased Premises, including such other areas from
time to time which may be provided by the Landlord
for common use and enjoyment within the Property;
(iii) the washrooms as the Landlord may assign from
time to time which are standard to the Building,
provided that the Landlord and the Tenant
acknowledges that where an entire floor is leased
to the Tenant or some other tenant the Tenant or
such other tenant, as the case may be, may exclude
others from the washroom thereon.
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ELECTRICITY (a) The Landlord covenants with the Tenant to furnish
electricity to the Leased Premises (except Leased Premises
which have separate meters) for normal office use for
lighting and for office equipment capable of operating from
the circuits available to the Leased Premises and standard
to the Building.
(b) The amount of electricity consumed on the Leased
Premises in excess of electricity required by the Tenant for
normal office use shall be as determined by the Landlord
acting reasonable or by a metering device installed by the
Tenant at the Tenant's expense. The Tenant shall pay the
Landlord for any such excess electricity on demand. Landlord
hereby acknowledges and agrees that "normal office use"
shall be defined to include tenant's use of up to an
including 65 computers on and within the leased premises
subject to monthly review of electrical use.
(c) The Tenant covenants to pay to the Landlord the Tenant's
Proportionate Share of all electricity consumed on the
Property (except the amounts recovered from and paid by
tenants separately metered).
(d) In calculating electricity costs for any Fiscal Period,
if less than one hundred percent (100%) of Building is
occupied by tenants, then the amount of such electricity
costs shall be deemed for the purpose of this Schedule to be
increased to an amount equal to the like electricity costs
which normally would be expected by the Landlord to have
been incurred had such occupancy been one hundred percent
(100%) during such entire period.
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(MISSING NEXT PAGE)
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(viii) cost of providing security;
(ix) cost of providing janitorial services, window
cleaning, garbage and snow removal and pest
control;
(xi) cost of decoration of common area;
(xii) cost of landscaping;
(xiii) cost of maintenance and operation of the
parking areas;
(xv) cost of replacements, additions and
modifications unless otherwise included under
paragraph 6, and cost of repair;
(c) In this Lease there shall be excluded from Operating
Costs the following:
(i) interest of debt and capital retirement
of debt;
(ii) such of the Operating Costs as are recovered
from insurance proceeds; and
(iii) costs as determined by the Landlord of
acquiring tenants for the Property.
(iv) leasing costs, fees and commissions
(v) legal fees and costs including costs of
litigating with other tenants
(vi) limit administrative costs to costs
associated with this building, only.
6. The Tenant covenants to pay to the Landlord the Tenant's Proportionate
Share of the costs in respect of each Major Expenditure (as hereinafter
defined) as amortized over the period of the Landlord's reasonable estimate
of the economic life of the Major Expenditure, but not to exceed fifteen (15)
years, using equal monthly installments of principal and interest at ten
percent (10%) per annum compounded semiannually. For the purposes hereof,
"Major Expenditure" shall mean any expenditure incurred after the date of
substantial completion of the Building for replacement of machinery,
equipment, building elements, systems or facilities forming a part of or used
in connection with the Property or for modifications, upgrades or additions
to the Property or facilities used in connection therewith, provided that, in
each case, such expenditures is more than ten percent (10%) of the total
Operating Costs of the immediately preceding Fiscal Period. THE PROVISIONS OF
THIS PARAGRAPH PERTAIN TO NON-VOLUNTARY UPGRADES AND/OR IMPROVEMENTS.
7. In calculating Operating Costs for any Fiscal Period including the Base Year,
if less than one hundred percent (100%) of Building is occupied by tenants, then
the amount of such Operating Costs shall be deemed for the
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purposes of this Schedule to be increased to an amount equal to the like
Operating Costs which normally would be expected by the Landlord to have been
incurred had such occupancy been one hundred percent (100%) during such
entire period.
8. In this Lease:
(i) "Tenant's Proportionate Share" shall mean 23.61% subject
to adjustment as determined solely by the Landlord and
notified to the Tenant in writing for physical increases or
decreases in the total rentable area of the Property
provided that total rentable area of the Property and the
rentable area of the Leased Premises shall exclude areas
designated (whether or not rented) for parking and for
storage.
(ii) "Base Year" shall mean the calendar year 1997.
INCREASES SHALL NOT EXCEED FIVE PERCENT (5%) PER YEAR.
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SCHEDULE "E"
(Rules and Regulations)
1. The sidewalks, entry passages, elevators (if installed in the Building)
and common stairways shall not be obstructed by the Tenant or used for any
other purpose than for ingress and egress to and from the Leased Premises.
The Tenant will not place or allow to be placed in the Building corridors or
public stairways any waste paper, dust, garbage, refuse or anything whatever.
2. The washroom plumbing fixtures and other water apparatus shall not be used
for any purpose other than those for which they were constructed, and no
sweeping, rubbish, rags, ashes or other substances shall be thrown therein.
The expense of any damage resulting by misuse by the Tenant shall be borne by
the Tenant.
3. The Tenant shall permit window cleaners to clean the windows of the Leased
Premises during normal business hours.
4. No birds or animals shall be kept in or about the Property nor shall the
Tenant operate or permit to be operated any musical or sound-producing
instruments or devise or make or permit any improper noise inside or outside
the Leased Premises which may be heard outside such Leased Premises.
5. No one shall use the Leased Premises for residential purposes, or for the
storage of personal effects or articles other than those required for
business purposes.
6. All persons entering and leaving the Building at any time other than
during normal business hours shall register in the books which may be kept by
the landlord at or near the night entrance and the Landlord will have the
right to prevent any person from entering or leaving the Building or the
Property unless provided with a key to the premises to which such person
seeks entrance and a pass in a form to be approved by the Landlord. Any
persons found in the Building at such times without such keys and passes will
be subject to surveillance BY employees and agents of the Landlord.
7. No dangerous or explosive materials shall be kept or permitted to be kept
in the Leased Premises.
8. The Tenant shall not and shall not permit any cooking in the Leased
Premises. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
PARAGRAPH, TENANT SHALL BE PERMITTED TO HAVE AND USE IN THE LEASED PREMISES
THE FOLLOWING: MICROWAVE(S), VENDING MACHINE(S), REFRIGERATOR(S), AND/OR
WATER DISPENSER(S). Only persons authorized by the Landlord shall be
permitted to deliver or to use the elevators (if installed in the Building)
for the purpose of delivering food or beverages to the Leased Premises.
9. The Tenant shall not bring in or take out, position, install or move any
safe, business machine or other heavy equipment without first obtaining the
prior written consent of the Landlord. In giving such consent, the Landlord
shall have the right, in its sole discretion, to prescribe the weight
permitted and the position thereof, and the use and design of planks, skids
or platforms to distribute the weight thereof. All damage done to the
Building by moving or using any such heavy equipment or other office
equipment or furniture shall occur only at times consented to by the Landlord
and the persons employed to move the same in and out of the Building must be
acceptable to the Landlord. Safes and other heavy office equipment will be
moved through the halls and corridors only upon steel bearing plates. No
freight or bulky matter of any description will be received into the Building
or carried in the elevators (if installed in the Building) except during
hours approved by the Landlord. THIS PARAGRAPH SPECIFICALLY EXCLUDES ANY AND
ALL NORMAL OFFICE EQUIPMENT.
10. The Tenant shall give the Landlord prompt notice of any accident to or
any defect in the plumbing, heating, air-conditioning, ventilating,
mechanical or electrical apparatus or any other part of the Building.
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11. The parking of automobiles shall be subject to the charges and reasonable
regulations of the Landlord. The Landlord shall not be responsible for damage
to or theft of any car, its accessories or contents whether the same be the
result of negligence or otherwise.
12. The Tenant shall not mark, drill into or in any way deface the walls,
ceilings, partitions, floors or other parts of the Leased Premises and the
Building.
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13. Except with the prior written consent of the Landlord, no tenant shall
use or engage any person or persons other than the janitor or janitorial
contractor of the Landlord for the purpose of any cleaning of the Leased
Premises.
14. If the Tenant desires any electrical or communications wiring, the
Landlord reserves the right to direct qualified persons as to where and how
the wires are to be introduced, and without such directions no borings or
cutting for wires shall take place. No other wires or pipes of any kind shall
be introduced without the prior consent of the Landlord.
15. The Tenant shall not place or cause to be placed any additional locks
upon doors of the Leased Premises without the approval of the Landlord and
subject to any conditions imposed by the Landlord. Additional keys may be
obtained from the Landlord at the cost of the Tenant.
16. The Tenant shall be entitled to have its name shown upon the directory
board of the building and at one of the entrance doors to the Leased
Premises, all at the Tenant's expense, but the Landlord shall in its sole
discretion design the style of such identification and allocate the space on
the directory board for the Tenant.
17.
18. The Tenant shall not conduct, and shall not permit any, canvassing in the
Building.
19. The Tenant shall take care of the rugs and drapes (if any) in the Leased
Premises and shall arrange for the carrying-out of regular spot cleaning and
shampooing of carpets and dry cleaning of drapes in a manner acceptable to
the Landlord.
20. The Tenant shall permit the periodic closing of lanes, driveways and
passages for the purposes of preserving the Landlord's rights over such
lanes, driveways and passages.
21. The Tenant shall not place or permit to be placed any sign,
advertisement, notice or other display on any part of the exterior of the
Leased Premises or elsewhere if such sign, advertisement, notice or other
display is visible from outside the Leased Premises without the prior written
consent of the Landlord which may be arbitrarily withheld. The Tenant, upon
request of the Landlord, shall immediately remove any sign, advertisement,
notice or other display which the Tenant has placed or permitted to be placed
which, in the opinion of the Landlord, is objectionable, and if the Tenant
shall fail to do so, the Landlord may removed the same at the expense of the
Tenant. SEE SCHEDULE "H".
22. The Landlord shall have the right to make such other and further
reasonable rules and regulations and to alter the same as in its judgement
from time to time be needful for the safety, care, cleanliness and appearance
of the Leased Premises and the Building and for the preservation of good
order therein, and the same shall be kept and observed by the tenants, their
employees and servants. The Landlord also has the right to SUSPEND or cancel
any or all of these rules and regulations herein set out.
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SCHEDULE "F"
LEASEHOLD IMPROVEMENTS
LEASEHOLD
IMPROVEMENTS
1. For the purposes of this Lease, the Term "Leasehold Improvements"
includes, without limitation, all fixtures, improvements, installations,
alterations and additions from time to time made, erected or installed by or
on behalf of the Tenant, or any previous occupant of the Leased Premises in
the Leased Premises and by or on behalf of other tenants in other premises in
the Building (including the Landlord if an occupant of the Building),
including all partitions, doors and hardware however affixed, and whether or
not movable, all mechanical, electrical and utility installations and all
carpeting and drapes with the exception only of furniture and equipment not
of the nature of fixtures.
INSTALLATION OF
IMPROVEMENTS &
FIXTURES
2. The Landlord shall include in the Leased Premises the "Landlord's
Work" (as hereinafter defined. The Tenant shall not make, erect, install or
alter any Leasehold Improvements in the Leased Premises without having
requested and obtained the Landlord's prior written approval. The Landlord's
approval shall not, if given, under any circumstances, be construed as a
consent to the Landlord having its estate charges with the cost of work. The
Landlord shall not unreasonably withhold its approval to any such request,
but failure to comply with Landlord's reasonable requirements from time to
time for the Building shall be considered sufficient reason for refusal. In
making, erecting, installing or altering any Leasehold Improvements the
Tenant shall not, without the prior written approval of the Landlord, alter
or interfere with any; installations which have been made by the Landlord or
others and in no event shall alter or interfere with window coverings (if
any) or other light control devices (if any) installed in the Building. The
Tenant's request for any approval hereunder shall be in writing and
accompanied by an adequate description of the contemplated work and, where
appropriate, working drawings and specifications thereof. If the Tenant
requires from the Landlord drawings or specifications of the Building in
connection with Leasehold Improvements, the Tenant shall pay the cost thereof
to the Landlord on demand. Any reasonable costs and expenses incurred by the
Landlord in connection with the Tenant's Leasehold Improvements shall be paid
by the Tenant to the Landlord on demand. All work to be performed in the
Leased Premises shall be performed by competent contractors and
subcontractors of whom the Landlord shall have approved in writing prior to
commencement of any work, such approval not to be unreasonably withheld
(except that the Landlord may require that the Landlord's contractors and
subcontractors be engaged for any mechanical or electrical work) and by
workmen who have labor union affiliations that are compatible with these
affiliations (if any) or workmen employed by the Landlord and its contractors
and subcontractors. All such work including the delivery, storage and removal
of materials shall be subject to reasonable supervision of the Landlord,
shall be performed in accordance with any reasonable conditions or
regulations imposed by the Landlord including, without limitation, payment on
demand of a reasonable fee of the Landlord for such supervision, and shall be
completed in good and workmanlike manner in accordance with the description
of the work approved by the Landlord and in accordance with all laws,
regulations and by-laws of all regulatory authorities. Copies of required
building permits or authorizations shall be obtained by the Tenant at its
expense and copies shall be provided to the Landlord. No locks shall be
installed on the entrance doors or in any doors in the Leased Premises that
are not keyed to the Building master key system.
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LIENS &
ENCUMBRANCES ON
IMPROVEMENTS &
FIXTURES
3. In connection with the making, erection, installation or
alteration of Improvements and all other work or installations made by or for
the Tenant in the Leased Premises, the Tenant shall comply with all the
provisions of the mechanics' lien and other similar statutes from time to
time applicable thereto (including any provision requiring or enabling the
retention by way of holdback of portions of any sums payable) and, except as
to any such holdback, shall promptly pay all accounts relating thereto. The
Tenant will not create any mortgage, conventional sale agreement or the
encumbrance in respect of its Leasehold Improvements or, without the written
consent of the Landlord, with respect to its trade fixtures nor shall the
Tenant take any action as a consequence of which any such mortgage,
conditional sale agreement or other encumbrance would attach to the Property
or any part thereof. If and whenever any mechanics' or other lien for work,
labor, services or materials supplied to or for the Tenant or for the cost of
which the
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Tenant may be in any way liable or claims therefore shall arise or
be filed or any such mortgage, conditional sale agreement or other
encumbrance shall attach, the Tenant shall within twenty (20) days after
submission by the Landlord of notice thereof procure the discharge thereof,
including any certification of action registered in respect of any lien, by
payment of giving security or in such other manner as may be required or
permitted by law, and failing which the Landlord may avail itself of any of
its remedies hereunder for default to the Tenant and may make any payments or
take steps or proceedings required to procure the discharge of any such liens.
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SCHEDULE "G"
<TABLE>
<CAPTION>
BASIC RENT
MONTHS RATE/S.F. AMOUNT
------- --------- -----------
<S> <C> <C>
01 - 12 $1.30 $7,647.90
13 - 24 $1.35 $7,942.05
25 - 36 $1.40 $8,236.20
</TABLE>
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SCHEDULE "H"
SPECIAL CONSIDERATIONS TO LEASE
1. ADA Compliance. Should there be any ADA compliance issues to be dealt
with, Landlord will agree to contribute a maximum of $4,000 toward the
demands.
2. Signage: Landlord shall grant the Tenant building top signage on MacArthur
side of building to replace the current "World Class Network" sign. Tenant
will agree to pay all costs associated with the dismantling of the existing
signs. Tenant shall be allowed to install their signage based on prior
approval from the City of Irvine and approval of the sign design by Landlord.
All costs associated with the signage on the building will be entirely borne
by the Tenant. This would include installation, maintenance, all ongoing
electricity costs and cost to dismantle sign upon expiration of lease
agreement.
H-1
Standard Lease Form INITIALS
Form FSGLI (894) ---------------------
Landlord Tenant
<PAGE>
EXHIBIT 10.9
SCHEDULE OF RECEIVABLES AS OF
DECEMBER 31, 1999
G-3
<PAGE>
INETVERSITY, INC. (A SUBSIDIARY OF INETVISIONZ, INC.)
ACCOUNTS RECEIVABLE AGING WITH COLLECTIONS AND EXPOSURE - DECEMBER 31, 1998
<TABLE>
<CAPTION>
CUSTOMER BALANCE COLLECTIONS EXPOSURE
- -------- ------- ----------- --------
<S> <C> <C> <C>
Aero Electric Connector, Inc $ 600 $ 600 $ -
Allied Signal Aerospace - 2,400 (2,400)
American Honda Motor Co. Inc 3,441 1,721 1,721
Autospeciality (1,145) - (1,145)
Career Planning Center 85,120 73,475 11,645
Career Transition Center 16,491 16,491 0
Carson/Lomita/Torrance Prv. IND 13,779 - 13,779
CCH, Inc - A 3,021 887 2,134
CCH, Inc. - B 1,636 3,272 (1,636)
Charo 5,450 5,450 -
City National (1,720) - (1,720)
City of Anaheim 21,900 21,900 -
City of Compton - Dept. of Water 5,500 - 5,500
City of Corona 3,600 3,600 -
City of L.A.-Dept of Bldg. & Safety 7,826 6,713 1,113
Community Career Develop 16,350 16,350 -
Concord Communications, Inc. 11,725 10,750 975
Corpinfo 96 - 96
CTC 5,450 5,450 -
Emax Laboratories 2,691 2,691 -
Ernst & Young LLP 6,600 6,300 300
Fitz Albert Abraham 3,000 1,500 1,500
Gibbs, Todd (30) - (30)
Infonet Service 2,879 2,879 -
IT Training Marketing Company (1,464) 940 (2,404)
Joe Newman (1,720) - (1,720)
Julie Johnson (3,160) - (3,160)
Kaiser Permanente - 3,000 (3,000)
KPMG Peat Marwick 3,200 3,200 -
LAC - Internal Services 4,469 2,979 1,490
LAC - Public Works - - -
LAC-DPSS 10,010 8,880 1,130
Lee, Tae (1,214) - (1,214)
Logicon, Inc. 1,533 - 1,533
Los Angeles World Airports 1,540 - 1,540
Marina Del Rey, One Stop 5,450 5,450 -
Mohegan Tribe (4,899) - (4,899)
Net Co 6,300 6,300 -
Nguyen, Hiep 1,533 1,533 -
Nissan Trading 136 136 -
NovaQuest 6,180 6,180 -
Orange County SDA Fiscal 16,350 16,350 -
Other individuals 11,086 - 11,086
Pace - One Stop 5,450 - 5,450
Panasonic 3,286 3,286 -
Phil Caudle 458 - 458
Port of Long Beach 1,762 1,762 -
Raytheon Learning Center 360 360 -
Rich Wickline (363) - (363)
RR Donnelley & Sons Company 2,564 1,720 844
Salvation Army (99) - (99)
SARCOM/NovaQuest 5,040 5,040 -
<PAGE>
Securities & Exchange Commission 257 - 257
South Bay Private PIC 113,370 110,840 2,530
South Central One Stop Center 2,750 2,750 -
System Exp (2,290) - (2,290)
Torrance Memorial Med 375 375 -
Toshiba America 1,440 1,440 -
Toyota Motor Sales 41,090 39,560 1,529
Toyota Motors Fed Credit Union 390 - 390
Training Resource Central 844 1,811 (967)
TRW Federal Credit Union 4,000 4,000 -
TRW Space & Electronics 2,550 2,550 -
UAW-LETC 27,250 27,250 -
Watts Labor 5,450 5,450 -
WEBCON/ ACI 2,750 1,162 1,588
West Area Opp. Center 9,436 9,436 (0)
Wickline, Rich 6,200 6,200 -
Xerox 12,110 12,110 -
--------------------------------------------
$ 516,019 $ 474,479 $ 41,539
============================================
Sum of negative balances 18,104
---------
</TABLE>
Pass on negative reclass as amounts are not material taken as a whole
<TABLE>
<CAPTION>
FINANCIAL STATEMENT DISCLOSURE:
<S> <C>
Accounts receivable $ 516,019
Allowance for doubtful accounts (41,539)
---------
$ 474,479
=========
</TABLE>
<PAGE>
INETVERSITY, INC. (A SUBSIDIARY OF INETVISIONZ.COM, INC.)
ACCOUNTS RECEIVABLE SCHEDULE AS OF 12/31/99
<TABLE>
<CAPTION>
CUSTOMER NET RECLASS -VE BAL GROSS A/R COLLECTIONS OPEN BALANCE EXPOSURE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
American Honda Motor Co. Inc 1,400 - 1,400 (1,400) - -
Auditors SJ - - - - - -
Beach Cities One Stop 4,950 - 4,950 (4,950) - -
Boursiquot, Jean Claude (350) 350 - - - -
Bradford,Christina 240 - 240 (240) - -
Bull's Eye Computer Training (0) 0 - - - -
Burton, Stewart (968) 968 - - - -
Byrom, Jim (350) 350 - - - -
California State Lands Commission (733) 733 - - - -
Career Options 731 - 731 - 731 731
Career Partners 2,725 - 2,725 (2,725) - -
Career Planning Center - - - - - -
CAREER TRANSITION CENTER (86) 86 - - -
Carson/Lomita/Torrance Prv. IND 19,439 - 19,439 (4,025) 15,414 15,414
Cathay Bank - - - - - -
Chuan-Chang, Han (100) 100 - - - -
Chubb 9,333 - 9,333 (9,333) - -
City of Anaheim 5,500 - 5,500 (5,500) - -
City of Compton - Dept. of Water 18,700 - 18,700 - 18,700 18,700
City of L.A.-Dept of Bldg. & Safety 1,612 - 1,612 (1,113) 499 499
City of LA - Dept. of Water & Power - - - - - -
Co-Tell Training Consultants 3,105 - 3,105 - 3,105 3,105
Commonwealth Aluminum Corp. (871) 871 - - - -
Community Career Develop. 9,670 - 9,670 (8,295) 1,375 1,375
Community Centers, Inc 5,450 - 5,450 - 5,450 5,450
Concord Communications, Inc. - - - - - -
Corpinfo 96 - 96 - 96 96
Crawford & Company 9,500 - 9,500 - 9,500 -
Davis, Richard 1,495 - 1,495 - 1,495 1,495
Department of Rehabilitation 5,450 - 5,450 (5,500) (50) -
Dinh, Patrick - - - - - -
Dove, Kathleen 1,000 - 1,000 (1,000) - -
ELA One Stop Career Center 3,290 - 3,290 (3,290) - -
Ernst & Young LLP 700 - 700 - 700 700
ETP Funding 29,327 - 29,327 (29,327) - -
Financial Network 173 - 173 - 173 173
Flores, Hortencia (250) 250 - - - -
Fox Television - - - - - -
Galla, Mike 200 - 200 (200) - -
Garland, James "Brian" - - - - - -
Gibbs, Todd (30) 30 - - - -
Gonzalez, Jose - - - - - -
Goya, Cory 5,844 - 5,844 (5,844) - -
Honda R&D North America 5,600 - 5,600 (3,600) 2,000 -
Infonet Service 18,117 - 18,117 (18,117) - -
Ingersoll Dresser Pump Co. (165) 165 - - - -
International Rectifier 1,722 - 1,722 (1,722) - -
James, Lashon (1) 1 - - - -
Joint Efforts Inc. (6,000) 6,000 - - - -
Kenney, Rob (6,554) 6,554 - - - -
<PAGE>
KPMG Peat Marwick 1,600 - 1,600 (1,600) - -
LAC- Health Services Administration 10,262 - 10,262 - 10,262 10,262
LAC-DPSS 27,127 - 27,127 - 27,127 27,127
LAC - Dept of Health Services 5,500 - 5,500 - 5,500 5,500
LAC ISD 9,560 - 9,560 (9,560) - -
Lee, Junghoon 541 - 541 - 541 541
Lee, Tae (1,564) 1,564 - - - -
Lexus Service & Parts 4,000 - 4,000 (4,000) - -
Li, Bianca 8,086 - 8,086 (8,086) - -
Li, Chih-Ming - - - - - -
Little Company of Mary 3,079 - 3,079 - 3,079 3,079
Logicon, Inc. 1,533 - 1,533 (1,500) 33 -
Los Angeles World Airports (665) 665 - - - -
Marina Del Rey, One Stop 9,265 - 9,265 (5,450) 3,815 3,815
MCS Rehabilitation 5,088 - 5,088 - 5,088 5,088
Merisel, Inc 1,408 - 1,408 (2,685) (1,277) -
Mobil Oil 1,202 - 1,202 (1,202) - -
Moser, Keith - - - - - -
Ngo, Loan Kim (250) 250 - - - -
Norby, Chris 195 - 195 - 195 195
Orange County SDA Fiscal 2,750 - 2,750 (2,750) - -
Orix Credit Alliance (1,252) 1,252 - - - -
Pace - One Stop 1,720 - 1,720 - 1,720 1,720
Parker-Hannifin 800 - 800 (800) - -
Peerless Systems 1,200 - 1,200 (1,200) - -
Petersen, Thomas 529 - 529 - 529 529
Polygram Records 632 - 632 - 632 632
Price WaterHouse Coopers (1,620) 1,620 - - - -
Productivity Point International 1,397 - 1,397 - 1,397 1,397
Rajan, Ravi (300) 300 - - - -
Randeria, Shyamal 1,525 - 1,525 (800) 725 -
Raytheon Learning Center 1,506 - 1,506 - 1,506 1,506
Richard Marshall Co. 3,548 - 3,548 - 3,548 -
Robinson, Douglas - - - - - -
RR Donnelley & Sons Company 844 - 844 - 844 844
RxAlternative 27,000 - 27,000 (27,000) - -
Salvation Army (99) 99 - - - -
SARCOM/NovaQuest 687 - 687 - 687 687
Scarpulla, Richard (1,380) 1,380 - - - -
ScheduleMaker - - - - - -
SGL Carbon Composites Inc. 3,400 - 3,400 (3,400) - -
Shiue, Newman 588 - 588 - 588 588
Smith, Jeff - - - - - -
SMT Dynamics 99 - 99 - 99 -
South Bay Private PIC 81,705 - 81,705 (76,300) 5,405 -
South Central One Stop Center 15,595 - 15,595 (10,920) 4,675 -
Techmer-PM - - - - - -
Tombo Aviation 3,900 - 3,900 (3,900) - -
Torrance Memorial Med. (1,500) 1,500 - - - -
Toyota Motor Sales 14,941 - 14,941 (13,246) 1,695 1,695
<PAGE>
Toyota Motors Fed Credit Union 390 - 390 (390) - -
Training Resource Central 663 - 663 - 663 -
Trans Pacific Container (97) 97 - - - -
Truong, Phong Nhu 99 - 99 - 99 -
TRW Accounts Payable 27,250 - 27,250 (27,250) - -
Washington Mutual Bank (1,885) 1,885 - - - -
Web Service Co. Inc. (690) 690 - - - -
WEBCON/ ACI - - - - - -
Western Office Interiors (8) 8 - - - -
--------------------------------------------------------------------------
TOTAL 418,811 27,769 446,580 (308,219) 138,361 -
==========================================================================
-
-------------------------------------------
Allowance for doubtful accounts (112,942) < ======================== > 112,942
--------------- ============
$ 333,638
==============
</TABLE>
<PAGE>
INETVISIONZ, INC.
COMMON STOCK
31-DEC-99
<TABLE>
<S><C>
STOCK
DATE DESCRIPTION OPTIONS SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
Mar-98 Original shares issued (Traced to Zebulon sale agreement) 1,142,857
Apr-98 Private Placement Offering No. 1 1,114,000
May-98 Private Placement Offering No. 2 1,400,000
May-98 Shares issued to Jack Madha as consultant, unrelated 50,000
May-98 Shares issued to Noreen Khan as CEO/President/Director 200,000
May-98 Shares issued to Noreen Khan as CEO/President/Director 800,000
May-98 Shares issued to Tariq Khan as Consultant, Noreen Khan's Son 500,000
May-98 Shares issued to Ramsey Hakim as consultant, unrelated 250,000
-----------
1,800,000
Sep-98 Private Placement Offering No. 3 180,000
Sep-98 Private Placement Offering No. 4 400,000
Sep-98 Zmudski as Consultant for Services, unrelated (Consideration determined using PPO 4) 250,000
Sep-98 Shares issued to acquire Novaquest training division (Corporation) 200,000
Sep-98 Shares issued to acquire Novaquest training division (Various unrelated individual) 320,000
-----------
520,000
---------- --------------
BALANCE AT DECEMBER 31, 1998 - 6,806,857
---------- --------------
Mar-99 Private Placement Offering No. 5 - World Trade Group - Unrelated 500,000
9/13/99 Conversion of debt ($113,000 at $0.20 per line of credit agreement) 565,000
11/12/99 Conversion of debt ($43,000 at $0.20 per line of credit agreement) 215,000
11/12/99 Winthrop Venture Management - Services rendered per agreement, unrelated 66,667
11/12/99 Ramsey Hakim - Services rendered per agreement as consultant 100,000
11/12/99 Manhattan West/Tariq Khan - Services rendered per agreement 66,667
11/12/99 Larry Horwitz (300,000 options, at 12/31/99 60,000 vested per Confirm) 60,000
11/12/99 500,000 Options granted to Employees and key personnel at an exercise price of
$1.00 for vesting period from 1/1/99 to 12/31/99 FMV=$0.88, Exercisable 1/1/2000 -
12/5/99 Conversion of debt ($527,000 at $0.20 per line of credit agreement) 2,635,000
12/5/99 Floyd Horwitz - Father of Corporate Counsel Larry Horwitz 200,000
12/30/99 Conversion of debt ($10,487 at $0.20 per line of credit agreement) 52,435
---------- --------------
ACTIVITY DURING FYE 12/31/99 60,000 4,400,769
---------- --------------
BALANCE AT DECEMBER 31, 1999 60,000 11,207,626
========== ==============
<CAPTION>
<S><C>
PRICE PER SHARE EQUITY
DATE DESCRIPTION USED AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
Mar-98 Original shares issued (Traced to Zebulon sale agreement) $ 0.09
Apr-98 Private Placement Offering No. 1 0.09
May-98 Private Placement Offering No. 2 0.15
May-98 Shares issued to Jack Madha as consultant, unrelated 0.15 7,500
May-98 Shares issued to Noreen Khan as CEO/President/Director 0.15 30,000
May-98 Shares issued to Noreen Khan as CEO/President/Director 0.35 280,000
May-98 Shares issued to Tariq Khan as Consultant, Noreen Khan's Son 0.35 175,000
May-98 Shares issued to Ramsey Hakim as consultant, unrelated 0.35 87,500
--------------
Sep-98 Private Placement Offering No. 3 1.00
Sep-98 Private Placement Offering No. 4 0.63
Sep-98 Zmudski as Consultant for Services, unrelated (Consideration determined using PPO 4) 0.63
Sep-98 Shares issued to acquire Novaquest training division (Corporation) 0.96 192,308
Sep-98 Shares issued to acquire Novaquest training division (Various unrelated individual) 0.96 307,692
--------------
BALANCE AT DECEMBER 31, 1998
Mar-99 Private Placement Offering No. 5 - World Trade Group - Unrelated 0.15
9/13/99 Conversion of debt ($113,000 at $0.20 per line of credit agreement) 0.20
11/12/99 Conversion of debt ($43,000 at $0.20 per line of credit agreement) 0.20
11/12/99 Winthrop Venture Management - Services rendered per agreement, unrelated 0.45
11/12/99 Ramsey Hakim - Services rendered per agreement as consultant 0.45
11/12/99 Manhattan West/Tariq Khan - Services rendered per agreement 0.45
11/12/99 Larry Horwitz (300,000 options, at 12/31/99 60,000 vested per Confirm) 1.00
11/12/99 500,000 Options granted to Employees and key personnel at an exercise price of
$1.00 for vesting period from 1/1/99 to 12/31/99 FMV=$0.88, Exercisable 1/1/2000 0.88
12/5/99 Conversion of debt ($527,000 at $0.20 per line of credit agreement) 0.20
12/5/99 Floyd Horwitz - Father of Corporate Counsel Larry Horwitz 0.25
12/30/99 Conversion of debt ($10,487 at $0.20 per line of credit agreement) 0.20
ACTIVITY DURING FYE 12/31/99
BALANCE AT DECEMBER 31, 1999
<CAPTION>
<S><C>
MERGER
DATE DESCRIPTION ACQUISITION
- --------------------------------------------------------------------------------------------------------------- ----------------
Mar-98 Original shares issued (Traced to Zebulon sale agreement) $ 108,240 $ 108,240
Apr-98 Private Placement Offering No. 1 94,690
May-98 Private Placement Offering No. 2 210,000
May-98 Shares issued to Jack Madha as consultant, unrelated
May-98 Shares issued to Noreen Khan as CEO/President/Director
May-98 Shares issued to Noreen Khan as CEO/President/Director
May-98 Shares issued to Tariq Khan as Consultant, Noreen Khan's Son
May-98 Shares issued to Ramsey Hakim as consultant, unrelated
580,000
Sep-98 Private Placement Offering No. 3 180,000
Sep-98 Private Placement Offering No. 4 250,000
Sep-98 Zmudski as Consultant for Services, unrelated (Consideration determined using PPO 4) 157,000
Sep-98 Shares issued to acquire Novaquest training division (Corporation)
Sep-98 Shares issued to acquire Novaquest training division (Various unrelated individual)
500,000
-------------- ---------------
BALANCE AT DECEMBER 31, 1998 $ 2,079,930 $ 108,240
-------------- ---------------
Mar-99 Private Placement Offering No. 5 - World Trade Group - Unrelated 75,000
9/13/99 Conversion of debt ($113,000 at $0.20 per line of credit agreement) 113,000
11/12/99 Conversion of debt ($43,000 at $0.20 per line of credit agreement) 43,000
11/12/99 Winthrop Venture Management - Services rendered per agreement, unrelated 30,000
11/12/99 Ramsey Hakim - Services rendered per agreement as consultant 45,000
11/12/99 Manhattan West/Tariq Khan - Services rendered per agreement 30,000
11/12/99 Larry Horwitz (300,000 options, at 12/31/99 60,000 vested per Confirm) 60,000
11/12/99 500,000 Options granted to Employees and key personnel at an exercise price of
$1.00 for vesting period from 1/1/99 to 12/31/99 FMV=$0.88, Exercisable 1/1/2000
12/5/99 Conversion of debt ($527,000 at $0.20 per line of credit agreement) 527,000
12/5/99 Floyd Horwitz - Father of Corporate Counsel Larry Horwitz 50,000
12/30/99 Conversion of debt ($10,487 at $0.20 per line of credit agreement) 10,487
-------------- ---------------
ACTIVITY DURING FYE 12/31/99 983,487 -
-------------- ---------------
BALANCE AT DECEMBER 31, 1999 $ 3,063,417 $ 108,240
============== ===============
<CAPTION>
<S><C>
ASSET C/S REC
DATE DESCRIPTION PURCHASE CASH
- -------------------------------------------------------------------------------------------------------------------------
Mar-98 Original shares issued (Traced to Zebulon sale agreement)
Apr-98 Private Placement Offering No. 1 94,690
May-98 Private Placement Offering No. 2 210,000
May-98 Shares issued to Jack Madha as consultant, unrelated
May-98 Shares issued to Noreen Khan as CEO/President/Director
May-98 Shares issued to Noreen Khan as CEO/President/Director
May-98 Shares issued to Tariq Khan as Consultant, Noreen Khan's Son
May-98 Shares issued to Ramsey Hakim as consultant, unrelated
Sep-98 Private Placement Offering No. 3 180,000
Sep-98 Private Placement Offering No. 4 250,000
Sep-98 Zmudski as Consultant for Services, unrelated (Consideration determined using PPO 4)
Sep-98 Shares issued to acquire Novaquest training division (Corporation)
Sep-98 Shares issued to acquire Novaquest training division (Various unrelated individual)
500,000
-----------------------
BALANCE AT DECEMBER 31, 1998 $ 500,000 $ 734,690
-----------------------
Mar-99 Private Placement Offering No. 5 - World Trade Group - Unrelated 75,000
9/13/99 Conversion of debt ($113,000 at $0.20 per line of credit agreement)
11/12/99 Conversion of debt ($43,000 at $0.20 per line of credit agreement)
11/12/99 Winthrop Venture Management - Services rendered per agreement, unrelated
11/12/99 Ramsey Hakim - Services rendered per agreement as consultant
11/12/99 Manhattan West/Tariq Khan - Services rendered per agreement
11/12/99 Larry Horwitz (300,000 options, at 12/31/99 60,000 vested per Confirm)
11/12/99 500,000 Options granted to Employees and key personnel at an exercise price of
$1.00 for vesting period from 1/1/99 to 12/31/99 FMV=$0.88, Exercisable 1/1/2000
12/5/99 Conversion of debt ($527,000 at $0.20 per line of credit agreement)
12/5/99 Floyd Horwitz - Father of Corporate Counsel Larry Horwitz 50,000
12/30/99 Conversion of debt ($10,487 at $0.20 per line of credit agreement)
-----------------------
ACTIVITY DURING FYE 12/31/99 125,000
-----------------------
BALANCE AT DECEMBER 31, 1999 $ 500,000 $ 859,690
=======================
<CAPTION>
<S><C>
DEBT
DATE DESCRIPTION CONVERSION EXPENSE
- ----------------------------------------------------------------------------------------------------------------------------
Mar-98 Original shares issued (Traced to Zebulon sale agreement)
Apr-98 Private Placement Offering No. 1
May-98 Private Placement Offering No. 2
May-98 Shares issued to Jack Madha as consultant, unrelated
May-98 Shares issued to Noreen Khan as CEO/President/Director
May-98 Shares issued to Noreen Khan as CEO/President/Director
May-98 Shares issued to Tariq Khan as Consultant, Noreen Khan's Son
May-98 Shares issued to Ramsey Hakim as consultant, unrelated
580,000
Sep-98 Private Placement Offering No. 3
Sep-98 Private Placement Offering No. 4
Sep-98 Zmudski as Consultant for Services, unrelated (Consideration determined using PPO 4) 157,000
Sep-98 Shares issued to acquire Novaquest training division (Corporation)
Sep-98 Shares issued to acquire Novaquest training division (Various unrelated individual)
---------------------------
BALANCE AT DECEMBER 31, 1998 $ - $ 737,000
---------------------------
Mar-99 Private Placement Offering No. 5 - World Trade Group - Unrelated
9/13/99 Conversion of debt ($113,000 at $0.20 per line of credit agreement) 113,000
11/12/99 Conversion of debt ($43,000 at $0.20 per line of credit agreement) 43,000
11/12/99 Winthrop Venture Management - Services rendered per agreement, unrelated 5,000 25,000
11/12/99 Ramsey Hakim - Services rendered per agreement as consultant 7,000 38,000
11/12/99 Manhattan West/Tariq Khan - Services rendered per agreement 5,000 25,000
11/12/99 Larry Horwitz (300,000 options, at 12/31/99 60,000 vested per Confirm) 60,000
11/12/99 500,000 Options granted to Employees and key personnel at an exercise price of
$1.00 for vesting period from 1/1/99 to 12/31/99 FMV=$0.88, Exercisable 1/1/2000
12/5/99 Conversion of debt ($527,000 at $0.20 per line of credit agreement) 527,000
12/5/99 Floyd Horwitz - Father of Corporate Counsel Larry Horwitz
12/30/99 Conversion of debt ($10,487 at $0.20 per line of credit agreement) 10,487
---------------------------
ACTIVITY DURING FYE 12/31/99 710,487 148,000
---------------------------
BALANCE AT DECEMBER 31, 1999 $ 710,487 $ 885,000
===========================
</TABLE>
<TABLE>
FINANCIAL STATEMENT DISCLOSURE:
<S> <C>
Common stock $ 11,207
Additional Paid in capital 3,052,210
---------------
3,063,417
---------------
</TABLE>
Note: Since the Company's stock price per share as quoted on the OTCBB was not
the economic fair market of price per share, the Auditors used the price
per share as determined in the Private Placement Offerings. Stocks trading
on the OTCBB was for very thinly traded number of shares, which were
unrestricted shares issued under Rule 144 and not indicative of fair value
The Company would not have been able to raise capital using the OTCBB fair
market value due to restriction features & other limitations. With respect
to shares issued for services, the Company recorded transactions at the
fair value of services received or fair value of consideration given,
whichever is better determinbale, as required under GAAP.
