<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR
12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
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WALL STREET STRATEGIES CORPORATION
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
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NEVADA 13-4100704
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(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
130 WILLIAM STREET
SUITE 401
NEW YORK, NY 10038
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(212) 514-9500
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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SECURITIES TO BE REGISTERED UNDER SECTION 12(b) OF THE ACT:
NONE
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SECURITIES TO BE REGISTERED UNDER SECTION 12(g) OF THE ACT:
COMMON STOCK, $.001 PAR VALUE PER SHARE
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(TITLE OF CLASS)
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TABLE OF CONTENTS
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ITEM PAGE
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Introduction.............................................................................................
Forward-Looking Statements...............................................................................
Part I
Item 1. Description of Business....................................................................
History....................................................................................
Business Overview..........................................................................
Risk Factors..............................................................................
Products and Services......................................................................
Distribution of Products...................................................................
Competition................................................................................
Dependence on Major Customers..............................................................
Intellectual Property......................................................................
Governmental Regulations...................................................................
Employees..................................................................................
Item 2. Management's Discussion and Analysis.......................................................
Item 3. Description of Property....................................................................
Item 4. Security Ownership of Certain Beneficial Owners and Management.............................
Item 5. Directors and Executive Officers...........................................................
Item 6. Executive and Director's Compensation......................................................
Item 7. Certain Relationships and Related Party Transactions.......................................
Item 8. Description of Securities..................................................................
Part II
Item 1. Market Price of and Dividends on Registrant's Common Equity and
Other Shareholder Matters................................................................
Item 2. Legal Proceedings..........................................................................
Item 3. Changes in and Disagreements with Accountants..............................................
Item 4. Recent Sales of Unregistered Securities....................................................
Item 5. Indemnification of Directors and Officers..................................................
Part F/S
Financial Statements.....................................................................................
Part III
Index to Exhibits........................................................................................
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INTRODUCTION
This is Amendment No. 1 to the Registration Statement on Form 10-SB
relating to the common stock, par value $0.001 per share (the "Common Stock"),
of Wall Street Strategies Corporation, a Nevada corporation ("WSSC"). WSSC has
voluntarily filed this Registration Statement in order to register the Common
Stock under Section 12(g) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), so as to permit the Common Stock to continue to trade on
the OTC Electronic Bulletin Board. The Registration Statement as amended hereby
contains the information required by Alternative 3 of Form 10-SB. The Common
Stock has traded on the OTC Electronic Bulletin Board under the symbol "VEMP"
since August 20, 1999 and, since September 25, 1999, under the symbol "WSST". On
April 10, 2000, the closing bid price for the Common Stock was $11.00 per share.
FORWARD-LOOKING STATEMENTS
The following statements are or may constitute forward-looking statements:
1. statements set forth in this Registration Statement, including possible
or assumed future results of operations, WSSC's expectations concerning its
future profitability, WSSC's ability to generate positive cash flows in the
future, and WSSC's ability to expand its operations;
2. any statements preceded by, followed by or that include the words
"believes," "expects," "predicts," "anticipates," "intends," "estimates,"
"should," "may" or similar expressions; and
3. other statements contained or incorporated by reference in this
Registration Statement regarding matters that are not historical facts.
Because such statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by such
forward-looking statements. Such factors include:
o general economic and business conditions;
o technology changes;
o competition;
o changes in business strategy or development plans;
o the ability to attract and retain qualified management and staff; and
o liability and other claims which might be asserted against WSSC.
Such statements speak only as of the date that they were made, and undue
reliance should not be placed on such statements. WSSC's independent public
accountant has not examined or compiled the forward-looking statements and,
accordingly, does not provide any assurance with respect to such statements.
These cautionary statements should be considered in connection with any written
or oral forward-looking statements that WSSC may issue in the future.
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
HISTORY
WSSC, a Nevada corporation formed under the name Vacation Emporium
Corporation on April 2, 1999, is the surviving entity in a merger with its then
corporate parent, The Vacation Emporium International, Inc., a Colorado
corporation formed under the name Rising Sun Capital, Ltd. ("VEI-Colorado") on
May 12, 1988. The background to the merger and related transactions is as
follows:
VEI-Colorado commenced commercial operations on June 12, 1998, when,
through a wholly owned subsidiary, Vacation Emporium Marketing, Inc., a Colorado
corporation formed in April 1998 ("VEM"), it acquired all of the membership
interests of The Vacation Emporium LLC, a Colorado limited liability company
("VECO"), and The Vacation Emporium Tennessee, LLC, a Tennessee limited
liability company ("VET"). The acquisition was effected by means of a merger
(the "1998 Merger") of VECO and VET with and into VEM, as a result of which all
of the assets, liabilities and operations of VECO and VET were acquired by VEM
and the separate existence of VECO and VET ceased. Thereafter, VEI-Colorado,
through VEM, engaged in the business of marketing and selling vacation ownership
interests, commonly known as timeshares, at resort properties in Hawaii and
elsewhere in the United States.
In connection with the 1998 Merger, VEI-Colorado issued an aggregate of
6,000,000 shares of its common stock to the former member-owners of VECO and VET
(the "1998 Merger Group"). Also in conjunction with the 1998 Merger, an existing
shareholder of VEI-Colorado voluntarily canceled a total of 7,500,000 shares of
common stock and VEI-Colorado raised a total of $550,000 from the sale of
550,000 shares of its common stock in reliance upon Rule 504 of Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities Act").
These funds were advanced to VEM and carried on the books of VEI-Colorado as a
loan to VEM. Upon completion of the 1998 Merger and related transactions,
9,050,000 common shares of VEI-Colorado were issued and outstanding.
By February 1999, VEM's time share business proved to be unprofitable. VEM
had exhausted the proceeds of the $550,000 loan advanced by VEI-Colorado, and,
based on VEM's poor operating results, VEI-Colorado and VEM were unable to
arrange additional financing. VEI-Colorado concluded that the loan to VEM was
uncollectible and, accordingly, that VEI-Colorado and VEM, on a consolidated
basis, had a negative net worth. VEI-Colorado undertook to negotiate a
divestiture of VEM with the 1998 Merger Group in order to permit VEI-Colorado to
seek to acquire another operating business.
Effective March 31, 1999, VEI-Colorado completed such divestiture by
unwinding the 1998 Merger pursuant to an Unwinding and Stock Exchange Agreement
among VEI-Colorado, VEM and the 1998 Merger Group. Pursuant to the Unwinding and
Stock Exchange Agreement, VEI-Colorado canceled all of the shares issued in the
1998 Merger, reducing the number of issued and outstanding shares to 3,050,000,
and in exchange for the cancellation of the merger shares, transferred ownership
of VEM to the 1998 Merger Group. In connection with such unwinding, VEI-Colorado
forgave and wrote off its $550,000 advance to VEM.
Following the unwinding of the 1998 Merger on March 31, 1999, VEI-Colorado
did not engage in business of any kind, other than to seek investment
opportunities, including a possible acquisition of a business by means of a
business combination with a privately held company interested in becoming
publicly traded through such a business combination.
On June 4, 1999, VEI-Colorado sold 4,000,000 shares of its common stock to
Ian Rice ("Rice") for an aggregate purchase price of $20,000 ($.0025 per share
purchased). The shares issued to Rice represented approximately 57% of the then
issued and outstanding shares of VEI-Colorado and, accordingly, Rice was
thereafter able to exercise control over VEI-Colorado. On June 18, 1999, John D.
Brasher, Jr., resigned as the sole director of VEI-Colorado, and Rice was
elected the sole director of VEI-Colorado. Following completion of such change
of control, VEI-Colorado continued its efforts to seek investment opportunities,
including business combinations.
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On June 21, 1999, VEI-Colorado merged (the "1999 Merger") with and into its
wholly-owned subsidiary, WSSC, for the purpose of effecting the reincorporation
of VEI-Colorado as a Nevada corporation. In the 1999 Merger, WSSC issued to
shareholders of VEI-Colorado two (2) common shares for each share of common
stock in VEI-Colorado owned by them immediately prior to the 1999 Merger.
All references below to the "Company" include WSSC and VEI-Colorado.
On July 30, 1999, the Company entered into an Agreement and Plan of Share
Exchange ("Share Exchange Agreement") with Charles V. Payne ("Payne"), the sole
shareholder of Wall Street Strategies, Inc. ("Wall Street Inc."), a Delaware
corporation engaged in providing investment research and information services
for individual and institutional investors and financial professionals. Pursuant
to the Share Exchange Agreement, the Company agreed to purchase from Payne all
of the issued and outstanding shares of common stock of Wall Street Inc., thus
making Wall Street Inc. a wholly-owned subsidiary of the Company, in exchange
for the issuance to Payne of shares of Common Stock which, after giving effect
to certain other issuances and cancellations of Common Stock contemplated by the
Share Exchange Agreement, would represent approximately 53.84% of the total
issued and outstanding shares of Common Stock.
On July 30, 1999, in contemplation of the possible transaction with Payne
for the purchase of Wall Street Inc. in accordance with the Share Exchange
Agreement, the Company entered into Subscription and Rights Agreements with ten
individuals pursuant to which such individuals purchased an aggregate of
1,258,205 shares of Common Stock for a purchase price of $.0025 per share.
Eight of the ten individuals, purchasing an aggregate of 380,000 shares of
Common Stock, were, as of such date, existing employees of Wall Street Inc. Each
of such individuals has continued as employees at will of Wall Street Inc.
subsequent to the completion of the Company's acquisition of Wall Street Inc.
The shares purchased by such individuals are subject to repurchase by the
Company in declining increments over a two year period (the "Escrow Period"), at
the same purchase price of $.0025 per share, if the individuals' employment is
terminated other than by reason of death or disability. The shares purchased by
the individuals were placed into escrow to be released therefrom (and from the
Company's corresponding repurchase right) in eight equal quarter annual
installments over the course of the Escrow Period.
A ninth individual, David McCallen ("McCallen"), entered into a
Subscription and Rights Agreement with the Company on July 30, 1999, pursuant to
which McCallen purchased 526,923 shares of Common Stock. Simultaneously
therewith, McCallen entered into a two year Employment Agreement with the
Company which employment commenced on September 23, 1999, the date of the
closing of the Company's acquisition of Wall Street Inc. Pursuant to the
Employment Agreement, McCallen serves as Executive Vice President of the
Company. During 1999 but prior to the closing of the Company's acquisition of
Wall Street Inc. McCallen and an entity wholly owned by him performed consulting
services for Wall Street Inc. and received consulting fees for such services in
the aggregate amount of $56,500. McCallen had no affiliation with the Company
prior to July 30, 1999.
In his Subscription and Rights Agreement, McCallen granted to the Company
the right to repurchase such shares, in declining increments, during the two
year period commencing on the date of the closing of the Company's acquisition
of Wall Street Inc. (the "McCallen Escrow Period"), at the same purchase price
of $.0025 per share, if McCallen's employment by the Company is terminated for
cause. The shares purchased by McCallen were placed into escrow to be released
therefrom (and from the Company's corresponding repurchase right) during the
McCallen Escrow Period. One-third of McCallen's shares were released from escrow
on September 23, 1999, one-third were released on March 23, 2000, and the
balance will be released in five equal quarter annual increments over the
remainder of the McCallen Escrow Period.
Simultaneously with the execution of his Employment Agreement, and in
accordance with the terms thereof, the Company granted to McCallen an option
under the Company's 1996 Compensatory Stock Option Plan (the "Plan") to acquire
351,282 shares of Common Stock at an exercise price equal to the closing bid
price for common shares as quoted on the OTC Electronic Bulletin Board on the
first day after the date of grant on which the common shares traded (i.e., $3.50
per share). The options vest in six equal quarter annual increments over an 18
month period, provided McCallen's employment by the Company has not been
terminated for cause. See "Item 6. Executive Compensation."
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The tenth individual, Shawn D. Baldwin ("Baldwin"), entered into a
Subscription and Rights Agreement with the Company on July 30, 1999, pursuant to
which Baldwin purchased 351,282 shares of Common Stock. Simultaneously
therewith, Baldwin entered into a three year Employment Agreement with the
Company which commenced on October 1, 1999. Pursuant to the Employment
Agreement, Baldwin serves as Chief Strategy Officer of the Company. Prior to
July 30, 1999, Baldwin had no affiliation with the Company or with Wall Street
Inc.
In his Subscription and Rights Agreement, Baldwin granted to the Company
the right to repurchase up to 263,461 of the shares subscribed for (the "Baldwin
Escrow Shares"), at the same purchase price of $.0025 per share, if Baldwin's
employment by the Company is terminated for cause. The Baldwin Escrow Shares
were placed into escrow and 87,820 of such shares were released therefrom as of
October 28, 1999, and the balance of the shares subscribed for were released
from escrow on April 7, 2000.
Simultaneously with the execution of his Employment Agreement, and in
accordance with the terms thereof, the Company granted to Baldwin an option
under the Plan to acquire 526,923 shares of Common Stock at an exercise price
per share equal to the closing bid price for common shares as quoted on the OTC
Electronic Bulletin Board on the first day after the date of grant on which the
common shares traded (i.e., $3.50). The option vests in nine equal quarter
annual increments commencing nine months after the commencement date of
Baldwin's employment by the Company pursuant to his Employment Agreement (July
1, 2000). See "Item 6. Executive Compensation."
The ten individuals referred to above also entered into a voting agreement
with Payne dated as of July 30, 1999, conditioned on the closing of the
Company's acquisition of Wall Street Inc., pursuant to which, among other
matters, the individuals agreed to vote their shares of Common Stock to elect
Payne and his designees as directors of the Company for so long as Payne
beneficially owns at least 10% of the voting shares of capital stock of the
Company.
On August 9, 1999, Stephen Gross, David McCallen and Gerald Turner were
elected to the Board of Directors of the Company.
On September 23, 1999, the Company completed the purchase from Payne of all
of the issued and outstanding shares of common stock of Wall Street Inc. in
accordance with the terms of the Share Exchange Agreement. In connection with
the closing of the Company's acquisition of Wall Street Inc., (i) an aggregate
of 7,850,000 shares of the outstanding Common Stock owned by Rice were canceled,
(ii) the Company completed the sale to accredited investors, pursuant to Rule
506 of Regulation D under the Securities Act, of an aggregate of 600,000 shares
of Common Stock for aggregate proceeds of $3,000,000, (iii) the Company and
Payne entered into an employment agreement, (iv) certain parties, including the
Company and Rice, entered into a Voting Agreement dated September 23, 1999 (the
"Voting Agreement") with respect to certain shares of Common Stock (see "Item 8.
Description of Securities-Voting Agreement"), and (v) Payne became a director of
the Company. The Company changed its name from Vacation Emporium Corporation to
Wall Street Strategies Corporation on September 24, 1999.
Wall Street Inc. was incorporated in the State of Delaware on September 18,
1991. Except in connection with its acquisition by the Company as described
above, Wall Street Inc. has not been subject to or involved with any material
classification, merger, consolidation or purchase or sale of a significant
amount of assets not in the ordinary course of business. Neither the Company nor
Wall Street Inc. has been involved in any bankruptcy, receivership or similar
proceeding.
All references below to the "Company" include (in addition to WSSC and
VEI-Colorado) Wall Street Inc., except as otherwise indicated or where the
context otherwise requires.
BUSINESS OVERVIEW
The Company, through its Wall Street Inc. subsidiary, provides investment
research and information services for individual and institutional investors and
financial professionals, including brokerage firms and their clients, investment
banks and their clients, and mutual fund and portfolio managers. Wall Street
Inc., which was founded in 1991 by Charles V. Payne, the beneficial owner of
approximately 59% of the Company's Common Stock (see "Item 4. Security Ownership
of Certain Beneficial Owners and Management"), historically has delivered its
products, including financial and market information, analysis, advice and
commentary, to paying subscribers through a variety of media including phone,
fax, e-mail, audio recordings, newsletters and traditional mail.
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As of March 31, 2000, the Company had approximately 3,050 active
subscribers, consisting primarily of financial professionals. Subscription fees
paid by such subscribers for one or more of the Company's products or services,
presently constitute the Company's sole source of revenue. During the second
calendar quarter of 1999, Wall Street Inc. adopted a business strategy designed
to increase the total number of its subscribers, including significant numbers
of individual investors, and to increase and diversify its revenue sources. To
those ends, the Company has announced a number of initiatives, including the
creation, launch and marketing of its website and the establishment of strategic
distribution relationships through which the Company will reach both
institutional and individual investors.
The website, the first phase of which became operational during January
2000, offers to subscribers the Company's own proprietary content, including
financial information and analysis, as well as access to other financial
information and services in a real-time, interactive medium. The Company expects
to use the website to build brand awareness, attract paying subscribers for its
products, and generate advertising revenue. See "Existing Products and Services
- - wstreet.com - The Company's Website" below.
To date, the Company has entered into strategic relationships with Zacks
Investment Research and Data Broadcasting Communications Corporation. These and
other futute strategic relationships for distribution of the Company's products
and services and for syndication and co-branded publication of the Company's
content, are intended to provide the Company with access to targeted groups of
potential subscribers, as well as to promote and brand Wall Street Inc. and its
products to particular audiences. See "Distribution of Products--Strategic
Distribution Relationships and Content Syndication".
RISK FACTORS
Prospective investors should carefully consider the following risks, in
addition to the other information contained in this Registration Statement,
concerning the Company and its business, before making any investment in the
Company's securities.
History of Operating Losses; Future Losses
The Company has incurred operating losses in each of its last three fiscal
years. As of December 31, 1999, the Company had an accumulated deficit of
approximately $4,400,000. In addition, as of December 31, 1999, the Company had
unearned compensation expense of approximately $6,250,000 that will be amortized
into operations over the next two to three years but that will not require a
cash expenditure. The Company expects operating losses to continue for the
foreseeable future as it intends to significantly increase its operating
expenses to grow its business. The Company expects to incur significant sales,
marketing, product development, additional non-cash compensation charges in
connection with the issuance of stock options to new management personnel, and
general and administrative expenses, in particular, in connection with its
recently created website. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
Success of Business Strategy
The Company may not be successful in its business strategy designed to
increase the total number of its subscribers and to increase and diversify its
revenue sources. Among the principal elements of such strategy are the creation,
launch and marketing of its website and the establishment of strategic
relationships through which the Company expects to reach both institutional and
individual investors. The limited extent of the Company's assets and history of
operating a website make it subject to the risks, expenses and difficulties
frequently encountered by early stage companies in new and rapidly evolving
markets, such as the Internet. Such factors may also make it difficult for the
Company to establish and maintain strategic relationships with other websites to
attract subscribers and advertisers. Even if the Company enters into
distribution relationships with other websites, they themselves may not attract
significant numbers of users. Therefore, the Company's site may not receive
additional subscribers from these relationships. See "Business--Products and
Services," "Distribution of Products" and "Competition".
Need for Additional Capital; Uncertainty of Access to Capital
The Company may require additional capital to fund its operations. No
assurance can be given that the Company will be able to obtain such capital. If
the Company cannot obtain additional capital, the Company may be required to
limit its development of new products, reduce its advertising and marketing
efforts, decrease or eliminate capital expenditures, reduce customer services
and support, and slow the rate of growth in or reduce the number of its
administrative and executive employees. Any of the foregoing could materially
adversely affect the Company's business and its ability to compete.
Even if the Company finds a source of additional capital, the Company may
not be able to negotiate acceptable terms and conditions for receiving the
additional funding. Any future capital investments could dilute or otherwise
adversely affect the holdings or rights of existing shareholders or restrict the
operations of the Company. See "Management's Discussion and Analysis --
Liquidity and Capital Resources".
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Dependence on Charles V. Payne.
The Company's success depends, to a significant extent, upon the
abilities, reputation and continued efforts of its Chief Executive Officer and
controlling shareholder, Charles V. Payne, who is also the Company's principal
stock market analyst and media spokesperson. The Company has entered into an
employment agreement with Mr. Payne and has insurance on the life of Mr. Payne
in the amount of $6,000,000 The loss of Mr. Payne or damage to his reputation
could have a material adverse effect upon the Company. See "Item 5. Directors
and Executive Offices" and "Item 6. Executive Compensation".
Competition.
An increasing number of financial news, analysis and information sources
compete for consumers' and advertisers' attention and spending . The Company
expects this competition to continue to increase. The Company competes for
subscribers and staff and will compete for advertisers with many types of
companies, including online services or websites focused on business, finance
and investing, publishers of traditional media such as print, radio and
television, providers of terminal-based financial news and data, web "portal"
companies and online brokerage firms. The Company's ability to compete depends
on many factors, including ease of delivery of products and use of its website,
performance, price, reliability customer service and support, identity of its
spokesperson and sales and marketing, as well as the quality, originality,
variety and timeliness of the Company's products and services.
Many of the Company's existing competitors, as well as a number of
potential new competitors, have longer operating histories, greater name
recognition, larger customer bases and significantly greater financial,
technical and marketing resources than the Company. This may allow them to
devote greater resources than the Company to the development and promotion of
their services and to the recruitment and hiring of analysts and other
personnel. These competitors may also engage in more extensive research and
development, undertake more extensive marketing campaigns, adopt more aggressive
pricing policies (including offering all or a portion of their financial news
for free) and make more attractive offers to existing and potential employees,
advertisers and strategic partners.
The Company also expects to compete with other websites, television, radio
and print media for a share of advertisers' total advertising budgets. If
advertisers perceive the Internet or the Company's website to be a limited or an
ineffective advertising medium, they may be reluctant to devote a portion of
their advertising budget to Internet advertising on the Company's website. See
"Business--Competition".
Management of Operations and Growth.
The Company has experienced rapid growth in its operations that has
placed, and could continue to place, a significant strain on the Company's
financial, management, accounting and other resources. To manage such growth,
the Company will have to continue to implement and improve its managerial
controls and procedures and operational and financial systems. In addition, the
Company's future success will depend on its ability to expand, train and manage
its work force. Although the Company believes it will be able to hire qualified
staff in all areas of the Company's operations, if it were unable to do so, the
Company's business and results of operations could be adversely affected.
Fluctuating Quarterly Results
The Company expects to experience significant fluctuations in quarterly
operating results due to a variety of factors, including, but not limited to,
(a) its ability to maintain and attract subscribers for its products and
services, (b) market acceptance of the Internet as a medium for consumers of
financial news and analysis, (c) the Company's ability to create and deliver
accurate and reliable content in order to attract users to its website to
subscribe for its products and services, and to attract advertisers to its
website, (d) intense competition from other providers of financial news and
analysis both over the Internet and through traditional media, (e) delays or
error in the Company's ability to effect e-commerce transactions, (f) the
Company's ability to upgrade and develop its systems and infrastructure in a
timely and effective manner, (g) technical difficulties, system downtime,
Internet brownouts, interruptions, delays or capacity problems experienced in
the Internet or with telephone communications, (h) seasonality of the industry,
(i) seasonality of advertising sales, (j) Company promotions and sales programs,
(k) the amount and timing of operating costs and capital expenditures relating
to expansion of the Company's business, operations and infrastructure and the
implementation of marketing programs, key agreements and strategic
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alliances, and (l) general economic conditions, economic conditions specific to
the Internet and the general state of the stock markets.
Governmental Regulations
Operation of the Company's website is dependent on the use of the Internet
and telephone connections. As at the date of this Registration Statement, there
are few laws that apply specifically to access to or commerce on the internet.
Due to the increasing popularity of use of the Internet, however, it is possible
that laws and regulations with respect to the Internet may be adopted at
Federal, state and even local levels, covering issues such as user privacy,
freedom of expression, pricing, characteristics and quality of products and
services, taxation, advertising, intellectual property rights, information
security and the convergence of traditional telecommunications services with
Internet communications. In addition, the telecommunications industry is subject
to regulatory control under various Federal statutes. Any amendments to current
regulations, statutes or new laws and regulations could have a material adverse
effect on the Company's business, results of operations and prospects. See
"Governmental Regulations".
Registration as an Investment Adviser
Wall Street Inc. has submitted to the SEC an application for registration
as an investment adviser under the Investment Advisers Act of 1940 (the
"Advisers Act") in order to be able to provide certain individualized products
and services to subscribers. The failure to obtain such registration could have
a material adverse effect upon the Company business and results of operations.
Even if such registration is obtained, the regulatory difficulties and
compliance obligations may adversely impact the Company's results of operations.
See "Products and Services--Contemplated Products and Services" and
"Governmental Regulations".
PRODUCTS AND SERVICES
Since 1991, Wall Street Inc. has provided independent research, analysis,
news and information, advice and commentary concerning investments and financial
markets to the investment community. This information is packaged in a range of
products tailored to the needs of particular types of investors and financial
professionals. The products are priced at different levels and subscribers pay
monthly fees ranging from $75 to $525, depending on the product and the medium
of communication requested. The Company currently delivers its products to
subscribers through a variety of media including phone, fax, e-mail, audio
recordings, newsletters, traditional mail and through its website via the
Internet. From time to time, the Company also offers special promotions such as
one week trial subscriptions for $9.95. The Company offers discounts if
subscribers purchase more than one product and if they elect quarterly or yearly
subscriptions. The Company also offers its Institutional Service pursuant to
which subscribers, for a monthly fee of between $2,000 to $8300, are provided
comprehensive information regarding the Company's recommendations regarding
individual securities. See "Existing Products and Services" below.
As of March 31, 2000, the Company had approximately 3,050 active
subscribers for one or more of the products offered. Historically, the Company
has marketed its products to institutional investors and financial
professionals, including mutual funds managers, portfolio managers and brokers.
Such persons have represented the bulk of the Company's subscribers. The Company
intends to continue to market its products to such persons and to increase the
number of such persons subscribing for the Company's products. However, the
Company has also attracted individual investors as subscribers and has adopted a
business strategy designed, among other things, to attract significant numbers
of individual investors as new subscribers. In addition, the Company's strategy
emphasizes the creation, launch and marketing of, and attraction of substantial
numbers of visitors and registered users to its website.
In recent years, there has been substantial growth in the individual
ownership of equity and fixed income securities worldwide. In a Fall 1999 survey
entitled "Equity Ownership in America," the Investment Company Institute and the
Securities Industry Association reported that the number of Americans owning
stocks directly or through mutual funds grew from an estimated 42.9 million in
1983 to almost 78.7 million in 1999. The survey further reported that total
holdings of equities by U.S. households rose from 17.2 per cent of household
financial assets in 1980 to 34.9 percent in 1998.
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The Company believes that various factors have contributed to the growth in
financial assets, including organization of increased numbers of mutual funds,
increased investment into mutual funds, the allocation by households of more
assets to equity investments, sustained high returns in the equity markets over
a number of years, and lower trading costs as a result of regulatory changes and
improved technologies. The proliferation in equity ownership and associated
trading activity has created a need for more investment research and market
information on the part of individual investors who seek higher returns on their
portfolios.
The Company believes that the World Wide Web (the "web") has rapidly
established itself as an effective means for investors to manage their
portfolios, research investments and trade securities. At the same time,
individuals have been taking greater control of their investments by directly
researching their investments, tracking their portfolios, purchasing no-load
mutual funds and playing a more proactive role in their relationships with
financial advisors. The web has facilitated these behavioral shifts by providing
individual investors with easy access to information that was once generally
available only to investment professionals, such as timely market news,
intra-day and historical quotes, charts, Securities and Exchange Commission
("SEC") filings and analysts' earnings estimates.
The Company believes that these trends evidence a fundamental change in the
way many individual investors manage their financial assets. As individual
investors seek to independently manage their financial assets, the demand for
independent financial analysis and research, including SEC filings, business and
financial news, stock quotes, stock price graphs and annual reports, has grown.
Such analysis and research represent key tools used by individual and
institutional investors in deciding whether to invest in a company or industry
and when to buy and sell a particular security.
The Company believes that by combining its existing products and services
with financial news and information and employing the interactive qualities of
the Internet to create a branded financial web site, it can capitalize on the
increased demand among individual investors for financial analysis and research
and attract such investors as new subscribers. For this reason, as part of the
business strategy adopted by Wall Street Inc. in the second calendar quarter of
1999, the Company launched the first phase of its website during January 2000.
Existing Products and Services
Charles Payne, the Company's Chief Executive Officer and principal analyst,
works with the Company's staff of five additional professional analysts and
researchers to produce commentary, analysis and stock selections on a daily
basis which provide the content for the Company's products. Mr. Payne edits all
product content and is the Company's featured personality and spokesperson,
appearing regularly on television and radio and speaking regularly at financial
seminars and other events and engagements. Mr. Payne does not receive fees for
appearances on behalf of the Company.
The Company currently offers subscribers a range of products incorporating
the Company's financial and market research, analysis, advice and commentary,
tailored to the needs and interests of investors and financial professionals
with various investment objectives. These products include:
First Alert
First Alert is a research service focusing specifically on equity
securities and issued to subscribers four times each trading day. Each First
Alert report consists of a stock selection with information on the stock's
current price, trading targets and, generally, a recommended stop loss. Reports
also include a brief synopsis of the reasons for the Company's stock selection
and the basis for the Company's belief that the selected stock is likely to
increase in value. The Company believes that First Alert generally appeals to
active traders holding equity investments on a short-term (i.e. one hour to one
month) basis. The base price for subscriptions to First Alert is $525 per month
(subject to discount based on the medium of delivery and whether the product is
bundled with other Company products). In 1999, subscriptions to First Alert
accounted for approximately 11% of the Company's total subscription revenues.
Hotline
Hotline provides subscribers with overall market commentary combined with a
stock selection. The commentary portion consists of an overall review of the
current market environment as well as an analysis of events
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that may impact the day's trading session, such as economic data, earnings
reports, and rumors. The stock selection portion usually consists of a single
stock pick the Company believes may outperform the broader market. The Company
believes that Hotline generally appeals to investors holding equity investments
for an intermediate to longer-term (i.e. thirty days to six months) period.
Subscribers receive the report twice each trading day. The base price for
subscriptions to Hotline is $350 per month (subject to discount based on the
medium of delivery and whether the product is bundled with other Company
products). In 1999, subscriptions to Hotline accounted for approximately 57% of
the Company's total subscription revenues.
Newsletter
The Newsletter is a monthly publication addressing equity securities. Each
issue of the Newsletter generally contains market commentary and two or three
specific selections of stocks the Company believes may be undervalued and/or
undiscovered and may outperform the broader market over the period held. The
Newsletter, which, the Company believes, generally appeals to longer-term
investors (i.e. more than three months), is designed to identify investment
opportunities Wall Street Inc. believes may be overlooked by traditional
brokerage research and the general media. The base price for subscriptions to
the Newsletter is $75 per month (subject to discount based on the medium of
delivery and whether the product is bundled with other Company products). In
1999, subscriptions to the Newsletter accounted for approximately 4% of the
Company's total subscription revenues.
Storyline
The Storyline is a daily publication reporting and assessing rumors and
takeover speculation gathered by Wall Street Inc.'s analysts from their network
of market contacts and professionals. The Storyline seeks to provide subscribers
with trading guidance and insight with respect to existing rumors and takeover
speculation. The base price for subscriptions to the Storyline is $200 per month
(subject to discount based on the medium of delivery and whether the product is
bundled with other Company products). In 1999, subscriptions to the Storyline
accounted for approximately 1% of the Company's total subscription revenues.
Institutional Service
The Institutional Service offers to subscribers comprehensive information
regarding the Company's recommendations as to individual securities. The
information provided pursuant to this service includes recommended trade prices,
stop loss prices, exit prices as well as updates. This service is geared toward
sophisticated, institutional size traders (i.e., those persons trading larger
blocks of securities). Monthly fees for the Institutional Service range from
$2,000 to $8,300. In 1999, the Institutional Service accounted for approximately
27% of the Company's total subscription revenues.
wstreet.com--The Company's Website
The Company's business strategy is designed, among other things, to
increase the total number of subscribers to the Company's products, by
attracting additional institutional subscribers and financial professionals, as
well as a significant number of individual investors. The Company's website,
wstreet.com (the "Site"), the first phase of which was launched in January 2000,
is designed to be a comprehensive financial news and information destination for
institutional and individual investors and financial professionals, enabling the
Company to build its subscriber base, draw substantial numbers of registered
users and visitors to Site areas available to them, and attract advertisers.
Through the Site, the Company delivers its products to subscribers in a
real-time, interactive medium, making the products more readily, immediately and
efficiently accessible than through the Company's historical delivery methods.
The Company will use the Site to combine its traditional products, available to
subscribers paying for access to product areas, with access to additional
financial news and information, stock quotes, community features such as message
boards, investment and analytical tools and other features.
The Company will offer subscribers to its First Alert, Hotline, Storyline
and Newsletter products the option to receive such products via the Site. In
addition to the Company's traditional products, the Site will offer the
following:
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Community Features
The Site will include interactive features designed to attract traffic to
the Site and build community among users and subscribers. Such features will
include message boards available for use by users and divided by topic, and
question and answer forums conducted after the close of trading sessions.
Investment Tools
The Site will include a variety of interactive investment tools provided by
or in conjunction with Standard & Poor's including real time and delayed stock
quotes, portfolio watch lists, charts, news headlines, news stories, company
profile overviews, company profile vital statistics, market statistics, market
commentary, mutual fund profiles and a learning center (including a glossary).
Third Party Investment Research
The Company has entered into a co-branding agreement with Zacks Investment
Research ("Zacks") which will enable the Site to include investment research and
information prepared by Zacks. Similarly, material prepared by the Company will
be offered on Zacks' website. See "Distribution of Products - Strategic
Distribution Relationships and Content Syndication."
Site Area Access
Specific Site areas and features will be accessible to the public at
different levels.
All visitors to the Site will have access to certain basic Site areas and
features including general information concerning the Company and its products.
Visitors will have the option of becoming "registered users" by completing a
simple registration process. Registered users will provide the Company with
certain basic demographic information about themselves, their investment
interests, histories and goals, thus enabling the Company to promote to such
registered users the products most likely to be of interest to them. The
demographic information is not sold or distributed to any third party.
Registered users will have access to twice daily market commentaries as well as
certain community features and investment tools, including delayed stock quotes
and the Company's proprietary portfolio tracking tools.
Paid subscribers to one or more of the Company's products will have access
via the Site to the products purchased, as well as to most Site areas, features
and investment tools including real time stock quotes and all Standard & Poor's
features. Subscribers will enter into a Subscriber Agreement with the Company
and will be charged for the products on a monthly, quarterly or annual basis.
The Company may, from time to time, make certain products and features available
to subscribers on a discounted basis or pursuant to introductory offers.
Website Status
In January 2000, the Company launched the initial phase of the Site; in the
initial phase, certain descriptive information concerning the Company and its
products is available to all visitors, with the Company's First Alert, Hotline,
Newsletter and Storyline products available to paid subscribers. The second
phase of the Company's site development, including introduction of the community
investment tools and third party investment research referred to above will be
completed during the first half of 2000. The Company expects to add additional
products, features and Site areas on an on-going basis.
Contemplated Products and Services
Wall Street Inc. has submitted to the SEC an application for registration
as an investment adviser under the Advisers Act. Wall Street Inc. is seeking to
become a registered investment adviser to enable it to provide certain
individualized products and services to subscribers for which registration as an
investment adviser is required. Additional products and services which the
Company expects to offer to subscribers upon and subject to approval of Wall
Street Inc.'s application include the following:
Enhanced Institutional Service
The "Enhanced Institutional Service" would provide more comprehensive and
customized information to subscribers, offering greater insight and analysis
than that available through the Company's other products (including the existing
Institutional Service). The Company believes that institutional investors
(generally, those
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investors with more than two years of trading experience and investments of
more than $250,000 in the equity markets) would be the audience most interested
in this service. Many such qualified investors would be subscribers to other
Company products who desire more intensive service.
Through the Enhanced Institutional Service, the Company would offer
subscribers the option of paying on the basis of the number of stock
recommendations made by the Company, which fee it is anticipated will
approximate the current charges for the existing Institutional Service (i.e.,
$2,000 to $8,300), but provide for a discount to those subscribers who intend to
obtain a large number of the Company's recommendations.
In addition, the Company intends to provide its Enhanced Institutional
Service subscribers with the opportunity to contact the Company to request
information regarding individual securities selected by the subscriber. This
service would not be offered to the subscribers to the Company's other products.
A limited number of such inquiries would be included in the cost of the Enhanced
Institutional Service, after which a fee would be charged for the information as
to the Company's opinion on the individual security. Customers would be advised
in advance of any such charge. It is expected that any such charge will be in
the range of $25.00.
Portfolio Tracking
Upon completion of the investment adviser registration process, Wall Street
Inc. will also offer subscribers paying for the service the opportunity to
notify Wall Street Inc. immediately and on an ongoing basis of their holdings
and transactions. Wall Street Inc. will enter the information provided into its
database and track subscribers' portfolios on an ongoing basis. By monitoring
participating subscribers' portfolios, Wall Street Inc. will be in a position to
provide subscribers with subsequent updates and information as well as its
latest opinions on the positions taken.
By operation of regulations promulgated by the SEC, the application for
registration as an investment adviser is deemed to be effective 45 days from its
submission. If the staff of the SEC seeks additional information or has comments
on the application, however, the approval of the application could be delayed or
denied. Wall Street Inc. intends to diligently pursue registration as an
investment adviser and to commence offering additional products and services
upon approval of its registration application.
DISTRIBUTION OF PRODUCTS
Since its inception in 1991, Wall Street Inc. has maintained an internal
direct sales department for the marketing and sale of its products. As of March
31, 2000, Wall Street Inc.'s sales and marketing staff numbered 16 persons. The
sales and marketing force, which is compensated based on subscriptions sold,
develops sales presentations and demonstrations for potential subscribers and
manages the Company's entire marketing and sales effort. In addition, the
Company uses a variety of other means to promote its products and the Wall
Street Strategies brand. Charles Payne, the Company's Chief Executive Officer
and principal analyst, is also the Company's featured personality and
spokesperson, regularly appearing on and promoting the Company through a variety
of media outlets, including television, radio, newspapers and magazines. Mr.
Payne also speaks at trade shows, conferences and seminars on a regular basis.
The Company expects to continue these marketing activities while also
undertaking new promotional initiatives in conjunction with the development of
the website and the efforts to attract additional subscribers including
significant numbers of individual investors. In particular, the Company plans to
conduct advertising and direct mail campaigns, establish strategic distribution
relationships and syndicate its content to other sites and outlets. Furthermore,
while the Company has, historically, directed its products primarily to United
States investors, the Company believes there may be a substantial market for its
products in Europe and expects to expand its marketing and distribution efforts
to European investors during calendar year 2000.
Advertising and Direct Mail
In connection with the launch and marketing of the Site, the Company
anticipates conducting a multi-faceted advertising campaign in print as well as
electronic media. The Company also expects to conduct direct mail marketing
initiatives targeting groups likely to be interested in the Company's products.
The precise strategy and budget for such campaigns are expected to be determined
during the first half of 2000.
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Strategic Distribution Relationships and Content Syndication
The Company intends to develop strategic relationships with third parties
for the distribution of the Company's products and services and for the
syndication and co-branded publication of portions of the content produced by
the Company. Strategic distribution relationships will provide the Company with
access to targeted groups of potential subscribers who are currently customers
or clients of third parties; revenue generated by sales of the Company's
products to such persons will be shared with third party distributors. Content
syndication will create targeted exposure of Wall Street Inc.'s name and
content, driving additional traffic to the Site. All such relationships are
designed to promote and brand Wall Street Inc. and its products to particular
audiences and to enable the Company to offer its products and services on a
targeted basis to persons likely to be interested in such products and services.
In October 1999, Wall Street Inc. and Zacks Investment Research ("Zacks")
agreed in principal to engage in a strategic relationship. Zacks agreed to
create a co-branded page in its Zacks.com "finance center" promoting Wall Street
Inc. and including information regarding Wall Street Inc. In turn, Wall Street
Inc. agreed to include on its website a link to the Zacks.com finance center.
The parties do not compensate each other for these reciprocal marketing
activities.
In November 1999, Wall Street Inc. and Data Broadcasting Communications
Corporation ("DBC"), a provider of real-time market data to individual
investors, agreed to cooperate in several areas. DBC hosts seminars to educate
individual traders with respect to trading. These seminars are often co-hosted
with on-line brokerage or financial information partners and feature guest
speakers. As part of the strategic relationship between Wall Street Inc. and
DBC, it is anticipated that Charles Payne, the Company's Chief Executive Officer
and principal analyst, will speak at various DBC seminars. To date, Mr. Payne
has been a featured speaker at two DBC seminars. Mr. Payne receives no
compensation for such appearances.
Wall Street Inc. is also working with DBC to create subscriber supported
reports for users of DBC's "eSignal" real-time streaming stock quotes service.
The precise content and pricing of such reports, as well as the allocation of
subscription fees attributable to such reports, has not yet been determined. It
is anticipated that the reports will be incorporated into eSignal by May 15,
2000. In addition, Wall Street Inc. and DBC have agreed to co-market DBC's
seminars and the Wall Street Inc. reports to be included in eSignal. Although
the precise nature of such co-marketing activities has not been determined, such
activities may include direct mail, website promotion, website links, mass
emails and print advertising.
COMPETITION
The Company competes with a substantial number of providers of financial
news and information, market analysis and stock selections for the attention of
subscribers and advertisers. The growth in consumer demand for such content has
been accompanied by enormous growth in the availability of such content and the
number and types of sources for such content. Among the sources of competition
are:
o Online services or websites focused on business, finance and investing,
such as CBS MarketWatch.com, The Wall Street Journal Interactive Edition,
CNNfn and The Street.com.
o Publishers and distributors of traditional media, including print, radio
and television, such as The Wall Street Journal, Investors' Daily, Barrons,
Fortune, CNN and CNBC.
o Providers of terminal-based financial news and data, such as Bloomberg
Business News, Reuters News Service, Dow Jones Markets and Bridge News
Service.
o Web "portal" companies such as Yahoo!, MSN and America Online.
o Online brokerage firms which provide financial and investment news and
information, such as Charles Schwab and E*TRADE.
o Online market analysis and stock analysis and selection companies such as
Clear Station, Polar Trading and Pristine Trading.
The market for the electronic distribution of investment research and
related services is intensely competitive and this competition is expected to
continue to increase. The Company seeks to differentiate itself from its
competitors based on numerous factors including ease of delivery of products and
use of the Site, performance,
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price, reliability, customer service and support, and sales and marketing
efforts, as well as the quality, originality, variety and timeliness of the
Company's products and services. The Company believes that its strategic
distribution and content syndication relationships also represent important
competitive advantages.
The Company also believes that competitive position within the financial
news and information, market analysis and stock selection market is, to a
significant degree, personality driven; spokesmen and analysts for enterprises
in such market are often highly visible and can be an important factor in
differentiating a business from its competition. The Company believes that
Charles Payne's role in its business and continuing visibility for the Company
provides it with an important competitive characteristic and advantage.
DEPENDENCE ON MAJOR CUSTOMERS
The Company's business is not dependent on one or a few major customers.
INTELLECTUAL PROPERTY
Although the Company's success depends on maintaining and protecting its
intellectual property, including its software, trademarks and tradenames, the
Company has not registered any of its trademarks in the United States or abroad.
The Company may in the future seek to protect its intellectual property under
applicable copyright and trademark laws in the countries in which it conducts
business. The Company may prosecute litigation against infringements of its
intellectual property. In order to protect its trade secrets and other
intellectual property, the Company has required some, and may in the future
require all of its employees, consultants, advisors and collaborators to enter
into confidentiality agreements which prohibit the disclosure of proprietary
information to third parties or the use of proprietary information for
commercial purposes.
GOVERNMENTAL REGULATIONS
Wall Street Inc. has applied for registration as an investment adviser
under the Advisers Act. If the application is approved (and provided that no
material limitation or condition is placed on Wall Street Inc.'s activities
pursuant to the grant of such application), Wall Street Inc. intends to provide
certain individualized services to current and new subscribers, as described
above. As a registered investment adviser, Wall Street Inc. will be subject to
various laws, rules, and regulations that may not otherwise be applicable to
persons whose business activities are exempt from registration, such as the
exemption relied on by Wall Street Inc. for publishers of bona fide business or
financial publications of general and regular circulation. In addition, there
are various costs and risks that will be incurred by persons acting in a
capacity requiring registration as an investment adviser. By way of example, and
not intended as a comprehensive discussion of all of the applicable regulatory
provisions, such persons are required to adopt and implement various policies
and procedures, including those designed to avoid the improper use of inside
information, maintain certain books and records, and refrain from engaging in
certain transaction with investment advisory clients or activities that could be
inconsistent with their client's interest. Moreover, persons acting as
investment advisers are subject to having their operations, including certain
books and records, examined by authorized state or federal regulators. While
Wall Street Inc. fully intends to comply with all applicable law, rules, and
regulations, if a regulator determines that a violation of applicable law has
occurred, such regulator could seek to impose a monetary fine or some
disciplinary measure, which could include limitations or cessation of certain or
all investment advisory activities. Any such action by the regulator would
likely occur only after inquiry of the facts and circumstances, in the event
that an investigation was commenced in the first instance; in that event,
however, Wall Street Inc. and/or the Company would incur costs associated with
preparing for and responding to such inquiry. Because Wall Street Inc. does not
intend to act as a "traditional" investment adviser (in that it will not hold
subscriber's securities or assets and will not have any authority, discretionary
or otherwise, over subscriber's assets or securities) it is anticipated that the
costs associated with complying with applicable regulations will be less than
those of traditional investment advisers.
Wall Street Inc. is subject to various federal and state securities and
other laws that may limit Wall Street Inc.'s activities and, under certain
circumstances, subject Wall Street Inc. to additional costs of compliance or the
imposition of sanctions if it did not comply. In addition, the laws and
regulations potentially applicable to an entity that engages in the activities
contemplated by Wall Street Inc. are subject to change or modification. Any such
change could subject Wall Street Inc. to additional costs in the form of changes
to its systems and procedures and/or potential limitations on its activities.
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EMPLOYEES
At March 31, 2000, the Company had a total of 39 employees, all of whom are
full-time employees. Of these persons, 16 are in sales and marketing, five are
analysts, researchers, writers or editorial personnel, and 18 are in accounting,
operations, administration and management. The Company is not subject to any
collective bargaining agreements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following analysis of the results of operations and financial condition
of the Company should be read in conjunction with the consolidated financial
statements, including the notes thereto, of the Company contained elsewhere in
this Registration Statement.
Overview
Since its founding in 1991, the Company has engaged in the business of
providing investment research and information services for institutional and
individual investors and financial professionals. The Company has historically
delivered its products, including financial and market information, analysis,
advice and commentary, to paying subscribers through a variety of media
including phone, fax, e-mail, audio recordings, newsletters and traditional
mail. Sales of subscriptions to the Company's products have represented the
Company's sole source of revenue, and the Company's subscribers have
predominantly been composed of institutional investors and financial
professionals.
During 1999, the Company adopted a business strategy designed to increase
the total number of its subscribers, including significant numbers of individual
investors, and to increase and diversify its sources of revenue. To those ends,
the Company has announced a number of initiatives, including the creation,
launch and marketing of its website and the establishment of strategic
distribution relationships through which the Company will reach both
institutional and individual investors. In particular, the Company expects to
use the website to build brand awareness, attract paying subscribers for its
products and generate advertising revenue.
In connection with the execution of its business strategy, in 1999, the
Company engaged various service providers including website designers and
providers of content for its website, purchased computer systems and software,
and hired additional management, sales, operational and administrative
personnel.
The Company anticipates that it will continue to develop its website during
2000, and will undertake a significant marketing and advertising program to
promote its brand and products. The Company will also pursue additional
strategic relationships and, as appropriate, hire additional personnel,
including management personnel, and purchase additional computer systems and
software.
As discussed below, the fiscal years ended December 31, 1998 and December
31, 1999 were characterized by significant sales increases offset by significant
expenses associated with sales commissions on subscriptions, increased personnel
and, in 1999, website design and other strategic and operational initiatives.
The Company expects operating losses to continue for the foreseeable future as
it intends to significantly increase its operating expenses to implement its
business strategy. As of December 31, 1998, the Company had 1,730 active
subscribers. Subscription revenue in 1998 totaled $2,226,726. As of December 31,
1999, the number of active subscribers increased to 2,700, and subscription
revenue for 1999 increased to $4,318,534.
Results of Operations
Comparison of the Year Ended December 31, 1998 to the Year Ended December 31,
1999
Revenues increased from $2,329,215 in 1998 to $4,474,699 in 1999, an
increase of 92%. Income from sales of subscriptions to the Company's products
represented nearly all of the Company's revenues in both years. The increase in
revenue resulted primarily from increased sales and promotional efforts, the
increased visibility of Charles Payne, the Company's chief analyst and
spokesperson, and the continued general growth in U.S. households' purchasing
and ownership of financial assets.
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The Company realized a loss of $14,769 on the sale of marketable securities
in 1999 as compared to a gain of $99,827 on the sale of marketable securities in
1998.
The Company experienced a substantial increase in operating expenses from
1998 to 1999, offsetting the increase in revenues over the same period. A
substantial portion of the increase in operating expenses is attributable to
stock compensation earned and charged to expense in connection with the issuance
of shares of Common Stock to certain key employees and new management personnel
recruited by the Company as part of the Company's expansion strategy. Total
operating expenses increased from $2,440,404 in 1998 to $8,689,176 in 1999, an
increase of 256%. Of these amounts, $7,001,997 represented salaries and
commissions in 1999, compared to $1,614,658 in 1998, an increase of 334%. The
portion of this 1999 expense attributable to the stock compensation earned and
charged to expense was $3,829,348. In the absence of these charges, salaries and
commissions would have increased to $3,172,649, a 97% increase over 1998.
Payroll taxes and employee benefits increased 14% over the same periods, from
$274,832 to $314,251; these amounts included a profit sharing contribution by
the Company of $100,000 during 1999 compared to $150,000 in 1998. Apart from the
charge to expense represented by stock compensation, increases in salaries and
commissions continued to represent a substantial portion of the overall increase
in operating expenses. Such increases were attributable to retention of existing
personnel and engagement of additional personnel, particularly management
personnel required to effect the Company's business strategy of growth and
expansion, as well as to increased commissions payable to sales representatives
in connection with increased subscription sales. The Company anticipates
continuing its efforts to retain and recruit personnel and corresponding
increases in expenses attributable to salaries and commissions, as well as
increased commissions payable as subscription sales increase. The Company
further anticipates significant additional charges to expense for earned stock
compensation during 2000 and 2001.
Rent and occupancy costs increased from $42,068 in 1998 to $82,759 in 1999,
an increase of 97%. The increase was attributable to the relocation of the
Company's offices in the Fall of 1998. Additional space was required to house
the increased number of employees and sales people hired or engaged by the
Company. The Company has signed a lease for new office space and expects to
relocate its offices to the new space by July 1, 2000. The Company's new
facility will be significantly larger than its existing office space, and,
accordingly, the Company anticipates substantial increases in its rent and
occupancy costs during 2000 and in subsequent years.
The Company experienced increased costs and expenses in 1999 as compared to
1998 in a number of other areas attributable to its expansion and the
implementation of its business strategy to increase the number of its
subscribers and to create its website. Telephone and communications costs
increased from $176,987 in 1998 to $264,321 in 1999, an increase of 49%. Travel
and promotion costs increased from $57,768 in 1998 to $104,335 in 1999, an
increase of 81%. Furthermore, the Company incurred website development costs for
the first time in 1999 in the amount of $115,967. The Company also incurred
increased professional and consulting fees in 1999 attributable to its
expansion. Professional fees increased from $36,525 in 1998 to $234,360 in 1999,
an increase of 542%. Consulting fees increased from $44,749 in 1998 to $218,597
in 1999, an increase of 388%.
General and administrative costs increased from $84,320 in 1998 to $121,101
in 1999, an increase of 44%. Other operating expenses increased by 128% from
1998 to 1999, from $98,474 to $224,400.
The Company experienced a net loss for 1999 of ($4,251,065), or ($0.37) per
share, as compared to a net loss for 1998 of ($109,619), or ($0.01) per share.
Management believes that the increase in the Company's net loss was primarily
due to the stock compensation charge described above, as well as increased
salaries and commissions paid to additional personnel and in respect of
increased subscriptions and other increased operating expenses.
Although the Company cannot accurately determine the precise effect of
inflation on its operations, it does not believe that inflation has had a
material effect on sales or results of operations in 1998 or 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company historically has financed its operations out of revenues from
subscriptions for its products. In September 1999, the Company received net
proceeds of $3,000,000 from the sale of 600,000 shares of its Common Stock (the
"Private Placement").
Net cash used in operating activities in 1999 was ($98,320) compared to net
cash provided by operating activities of $80,142 in 1998. This decrease was
primarily due to increased operating expenses incurred in
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connection with the implementation of the Company's business strategy. Net cash
used in investing activities grew from ($25,959) in 1998 to ($464,967) in 1999.
The increased cash used in investing activities was used for purchases of
property and equipment of $19,644, net investments in marketable securities of
$72,023, payment of deferred website development costs of $70,000, a lease
deposit of $272,000 and payments made for other assets in the amount of $31,300.
The net cash provided by financing activities for 1999 was $2,973,107, compared
to net cash used in financing activities of ($64,380) for 1998. The increase in
cash provided by financing activities was primarily attributable to the Private
Placement. At December 31, 1999, the Company had cash and cash equivalents on
hand of $2,506,505.
The Company anticipates increased cash demands to meet such requirements as
increased salary costs related to retention and attraction of personnel,
continuing costs of development, maintenance and expansion of the Company's
website, costs associated with advertising and marketing campaigns contemplated
for 2000, higher rent and occupancy expenses associated with the Company's move
to new and larger facilities currently planned for approximately July 1, 2000,
costs associated with upgrading internal accounting and other operating systems,
costs associated with becoming and remaining a reporting issuer and other
working capital and general corporate purposes.
The Company committed to spend approximately $350,000 during the period
November 1999 through April 2000, in connection with the acquisition of computer
and other equipment to support its website, of which all but $60,000 has been
paid as of the date of this Registration Statement. The Company is also
obligated to spend, on or before August 1, 2000, approximately $175,000 in
connection with its new facilities, including furniture and other equipment for
such facilities. The Company has no other commitments for capital expenditures.
The Company anticipates that during the next 12 months it may require cash
in addition to that on hand and that generated by operations to meet its cash
requirements if it is to continue to pursue aggressively its growth strategy,
particularly for advertising and marketing campaigns. Management believes that
equity financing would most likely serve as the source of such additional cash.
Any such equity financing would be expected to result in dilution to the holders
of the Company's Common Stock. The Company could also seek to finance such
expenses through debt financing. Any debt financing obtained by the Company
would be likely to include restrictive covenants limiting the Company's ability
to obtain additional capital, whether through additional debt or equity
financings, as well as restrictive covenants limiting the Company with respect
to various operational and financial matters. In any event, there can be no
assurance that additional financing, whether through sales of equity of debt,
will be available on terms and conditions acceptable to the Company, if
available at all. If such financing is required and cannot be obtained, the
Company would be required to reduce or postpone expenditures, particularly with
respect to advertising and promotional campaigns. Any such postponement could
have a material adverse effect on the Company's business and results of
operations.
In December 1999, the Company retained Joseph Charles & Associates, Inc.
("Joseph Charles"), to assist the Company with respect to matters relating to
the financing of the Company's business, recapitalizations, mergers and
acquisitions. The Company paid such firm an advance of $50,000 against future
fees and expense allowances that is non-refundable except under certain
circumstances. Joseph Charles is a securities brokerage and investment banking
firm, established in 1991, with corporate offices located in Boca Raton, Florida
and ten additional offices in principal cities throughout the United States.
YEAR 2000 ISSUES
To date, the Company has not experienced, and does not anticipate
experiencing, any problems due to year 2000 related issues.
ITEM 3. DESCRIPTION OF PROPERTY
Wall Street Inc. leases approximately 4,500 square feet of office space
occupying a part of the fourth floor at 130 William Street, New York, NY 10038,
from 130 William LLC, an unaffiliated party. The lease (the "William Lease") has
a remaining term of approximately three years and provides for annual lease
payments of $94,413 payable in equal monthly installments. Wall Street Inc.'s
obligations under the William Lease are guaranteed by its president, Charles V.
Payne. On April 11, 2000, Wall Street Inc., Charles V. Payne and the landlord
entered into an agreement pursuant to which the parties agreed that the William
Lease and Mr. Payne's guaranty will terminate and
16
<PAGE>
expire on June 30, 2000 or, at the Company's option, on June 15, 2000, provided
the Company surrenders and vacates the premises by June 30, 2000 or June 15,
2000, as the case may be. In consideration thereof, Wall Street Inc. has agreed
to pay the landlord $17,500, which payment is to be effected by deduction from
Wall Street Inc.'s security deposit of $24,000 under the William Lease, and the
balance of the security deposit is to be paid to Wall Street Inc. within 14 days
after surrender of the premises.
On November 23, 1999, the Company leased approximately 8,500 square feet of
office space occupying the entire 31st floor at 80 Broad Street, New York, NY
10004-2209, from Praedium II Broadstone LLC, an unaffiliated party. The lease
has a term of ten years and provides for annual lease payments of $253,680 for
the first three years payable in equal monthly installments; $270,592 for the
next three years and $287,504 for the balance of the lease term. The Company
anticipates that it will relocate its executive offices to the leased space by
July 1, 2000.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 31, 2000, based on
information obtained from the persons named below, with respect to the
beneficial ownership of the Common Stock by (i) each person known by the Company
to own beneficially 5% or more of the Common Stock, (ii) each director and
officer of the Company and (iii) all directors and officers as a group. The
number of shares of Common Stock owned are those "beneficially owned" as
determined under the rules of the SEC, including any shares of Common Stock as
to which a person has sole or shared voting or investment power and any shares
of Common Stock which the person has the right to acquire within 60 days through
the exercise of any option, warrant or right.
NUMBER OF %
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OWNED OWNED
- ------------------------------------ ------------- -----
Charles V. Payne(1)(2) 10,939,103 58.8%
c/o Wall Street Strategies Corporation
130 William Street, Suite 401
New York, NY 10038
Shawn D. Baldwin(3) 351,282 2.0%
c/o Wall Street Strategies Corporation
130 William Street, Suite 401
New York, NY 10038
David J. McCallen(4) 526,923 3.0%
c/o Wall Street Strategies Corporation
130 William Street, Suite 401
New York, NY 10038
Ian Rice(2) 150,000 *
Collier House
163/169 Brompton Road
London SW3 1PY
England
Stephen Gross(5) 100,000 *
2625 Cumberland Parkway
Atlanta, GA 30339
Gerald Turner(6) 102,000 *
3110 Fairview Park Drive
Suite 1400
Falls Church, VA 22042-4503
All executive officers and directors as
a group(1)(2)(3)(4)(5)(6) 11,141,103 59.2%
- ----------
* Less than 1%
17
<PAGE>
(1) Includes 800,000 shares held of record by Todd Moore. Pursuant to a Stock
Transfer Agreement between Messrs. Payne and Moore and a related
irrevocable proxy from Mr. Moore, Mr. Payne has the right, for a period of
up to one year ending not later than January 17, 2001, to vote the 800,000
shares held of record by Mr. Moore. Includes an aggregate of 1,258,205
shares held of record by certain employees of the Company. Mr. Payne has
the right in certain instances pursuant to a voting agreement with such
employees to direct the voting of the shares held by such employees. In
addition, includes 15,000 shares issuable upon exercise of currently
exerciseable options exerciseable within 60 days. Does not include 285,000
shares issuable upon exercise of options which are not currently
exerciseable.
(2) Includes 150,000 shares held of record by Ian Rice and 60,000 shares held
of record by Corporate Communications Network, Inc. ("CCN"). Pursuant to a
Voting Agreement among Mr. Payne, Mr. Rice, CCN and Sigma Limited, S.A.
("Sigma"), for a period of two years ending September 23, 2001, Mr. Payne
will vote his shares for the election to the Board of Directors of two
designees of Sigma (including Mr. Rice), and Mr. Rice and CCN will vote
their shares for the election to the Board of Directors of Mr. Payne and
two of his designees (who, pursuant to the terms of the Voting Agreement,
are Messrs. Turner and McCallen).
(3) Does not include 526,923 shares issuable upon exercise of options which are
not exerciseable within 60 days.
(4) Does not include 351,282 shares issuable upon exercise of options which are
not exerciseable within 60 days.
(5) Consists of 100,000 shares issuable upon exercise of currently exerciseable
stock options.
(6) Includes 100,000 shares issuable upon exercise of currently exerciseable
stock options.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age and position of each director
and executive officer of the Company.
NAME AGE POSITION
---- --- ----------
Charles V. Payne................. 37 Chief Executive Officer, President
and Director
Shawn D. Baldwin................. 33 Chief Strategy Officer
David J. McCallen................ 43 Executive Vice President, Secretary
and Director
Daliah Amar...................... 39 Chief Operating Officer
Ian Rice......................... 60 Chairman of the Board of Directors
Gerald Turner.................... 57 Director
Stephen Gross.................... 52 Director
Charles V. Payne has been Chief Executive Officer, President and a director
of the Company since the Company's acquisition of Wall Street Inc. in September
1999. Since 1991, Mr. Payne has been President, Chief Executive Officer,
director and chief analyst of Wall Street Inc. See Part II-Item 2-"Legal
Proceedings" below.
Shawn D. Baldwin joined the Company as Chief Operating Officer in October
1999, and became Chief Strategy Officer in March 2000. From October 1998 through
September 1999, Mr. Baldwin was with Melvin Securities LLC, an investment bank
located in Chicago, Illinois, where he served as Managing Director, Equity and
Fixed Income. From September 1996 through October, 1998, Mr. Baldwin was with
Optima Investment Research, an international research firm based in Chicago,
first as Vice President, Marketing and Business Development from September 1996
through November 1997, and then as Senior Vice President. From October 1995
through August 1996, Mr. Baldwin was Regional Sales Manager, Midwest Region for
First Bank Systems/US Bancorp, Chicago, Illinois. From 1993 through September
1995, Mr. Baldwin was Sales Manager - Unsecured Assets, for American Express
Company.
David J. McCallen became a director of the Company in August 1999 and has
been Executive Vice President and Secretary of the Company since September 1999.
From September 1997 to April 1999 Mr. McCallen was associated with Potomac
Capital Group, Inc., Falls Church, Virginia, a private investment bank, where he
focused on capital raising and strategy consulting. From July 1996 through June
1997, Mr. McCallen was Director of Marketing for Xybernaut Corp., Fair Lakes,
Virginia. From October 1995 to June 1996, Mr. McCallen was Marketing Director at
TELE-TV, a broadband interactive services firm formed as a joint venture by Bell
Atlantic,
18
<PAGE>
NYNEX and Pacific Telesis. Prior to October 1995, Mr. McCallen was director of
marketing for a computer networking company located in Los Gatos, California.
Ian Rice has been Chairman and a director of the Company since June 1999.
From June 1997 to date, Mr. Rice has been Chairman, Chief Executive Officer and
a director of Ikon Ventures, Inc. a holding company whose shares are traded in
the National Quotation Bureau Pink Sheets. From January 1994 until October 1996,
Mr. Rice was Chairman and a director of Asia Media Communications Ltd. (n/k/a
MyWeb Inc.com), then a holding company based in Switzerland whose shares are
traded on the OTC Electronic Bulletin Board. Since November 1985, Mr. Rice has
been a consultant to Sigma Limited, S.A., a private investment firm based in
Switzerland which is a consultant to the Company.
Daliah Amar joined the Company as Chief Operating Officer in March 2000.
From February 1999 through May 1999, Ms. Amar was the Vice President, Sales and
Marketing, at Big Apple Technologies Inc., a value added reseller and integrater
of computer equipment. From September 1996 through April 1998, Ms. Amar was the
Executive Vice President, Global Sales, of IPC Information Inc., a provider of
integrated equipment and services, including trading systems, international
voice and data network services and cabling infrastructure to the financial
community. From May 1994 through July 1996, Ms. Amar was the President of Bell
South Network Solutions Inc., a provider of network integration systems,
including consulting, design, implementation, management and support services to
BellSouth's largest customers.
Gerald Turner has been a director of the Company since August 1999. Mr.
Turner is Chairman and co-founder of Potomac Capital Group, Inc., an advisory
firm focusing on acquisition and divestiture services, capital raising, and
strategy consulting. Mr. Turner has been Chairman of Potomac Capital Group, Inc.
since before 1995.
Stephen Gross has been a director of the Company since August 1999. Mr.
Gross, a certified public accountant, was a founding member, and since November
1970, has been the Chairman of the Board of HLB Gross Collins, P.C., an
accounting firm located in Atlanta, Georgia, and its predecessor firms. During
the past five years, Mr. Gross has been a director of the following companies,
all of whose shares are publicly traded: Charter Bank & Trust from January 1987
to January 1997; Common Sense Trusts from January 1987 to date; Comstar.net,
Inc. from November 1999 to date; e-bank.com, Inc. from April 1998 to date; Ikon
Ventures, Inc. from June 1997 to date; Van Kampen American Capital Bond Fund,
Inc., SSB Concert Investment Series from January 1998 to date; Van Kampen
American Capital Exchange Fund from January 1996 to January 1998; Van Kampen
American Capital Convertible Securities from January 1996 to January 1998; Van
Kampen Capital Income Trust from January 1996 to January 1998; and WebMD, Inc.
from January 1997 to August 1998.
The Company's by-laws provide that the Board of Directors shall consist of
not less than one and no more than seven persons as resolved by the Board from
time to time. Members of the Board serve until the next annual meeting of
stockholders and until their successors are elected and qualified. Directors are
elected by plurality vote. At least one-fourth in number of the directors must
be elected annually. Meetings of the Board are held when and as deemed necessary
or appropriate. Officers are appointed by and serve at the discretion of the
Board. There are no family relationships among any of the Company's directors.
The Company has entered into a voting agreement with various parties fixing
the number of directors at five and identifying the individuals who are to act
as members of the Board. See "Description of Securities--Voting Agreements."
ADVISORY BOARD
In August 1999, the Company formed an advisory board (the "Advisory Board")
which currently consists of five members. The Company considers the Advisory
Board to be an important source of professional talent, as well as an important
resource for the development of organizational infrastructure and processes. In
addition, the Board is expected to assist the Company in enhancing awareness
about the Company's products, establishing strategy and financial relationships
and developing the Company's website.
The Company has entered into adviser agreements with each member of the
Advisory Board. The principal provisions of these agreements, which are similar
in their terms, provide for reimbursement of certain expenses and the grant of a
non-qualified stock option. On August 17, 1999, each member of the Advisory
Board was granted an option to purchase 15,000 shares of Common Stock at an
exercise price of $3.50 per share. Each such stock option
19
<PAGE>
is exerciseable in full for a period of two years from the date of grant or, if
sooner, thirty (30) days from the date of termination of such adviser as a
member of the Advisory Board (ninety (90) days in the case of the stock option
granted to Ari Kaufman). In the event of the death of a member of the Adivosry
Board, such options are exerciseable for a period of one year from the date of
death. Mr. Kaufman's stock option also remains exerciseable for a period of one
hundred eighty (180) days after termination as a member of the Advisory Board
due to disability. Each member of the Advisory Board has also agreed, pursuant
to such agreements, not to disclose any confidential information of the Company.
The members of the Company's Advisory Board are:
Kenneth C. Allen Vice President at Lehman Brothers Investment Banking Division.
Mr. Allen currently focuses on providing corporate finance to
technology companies, specifically, Internet consulting
businesses and systems integration firms.
Robert Boehm Vice President of Human Resources for the Americas for Baan
Company N.V., a Netherlands based global provider of
enterprise business management software.
Ari Kaufman Executive Vice President of Internet Operations at Zacks
Investment Research where he overseas Internet Advertising
Sales and Media. Mr. Kaufman is also the President of
AdBuyer.com, LLC, a new media Advertising Sales and Buying
consulting effort.
Joanna McGinley Director of Marketing at Morningstar, Inc. Ms. McGinley is
responsible for all product development and management of
institutional products for the investment company,
broker/dealer, bank and insurance company markets.
Steven Schwartz Research Scientist at the Massachusetts Institute of
Technology's Media Lab. Mr. Schwartz has been instrumental in
the creation of many technical innovations for the television
and film industry, including video and music scoring systems
for use in film production while serving as Chief Video
Engineer at Lucasfilm Ltd.
ITEM 6. EXECUTIVE COMPENSATION
On September 23, 1999, the Company entered into an employment agreement
with Charles Payne, the Company's President and Chief Executive Officer. The
agreement has a term of three years at an annual salary of $250,000 subject to
increases at the discretion of the Company's Board but no less than 10% per
annum. The agreement also provides for annual bonuses of no less than $125,000
provided that the Company reaches certain revenue milestones. The agreement
contains customary terms relating to expense reimbursement and benefits, as well
as confidentiality and non-compete provisions.
On December 7, 1999, the Company granted to Mr. Payne a stock option to
purchase 300,000 shares of Common Stock at an exercise price of $4.00 per share.
Mr. Payne's option becomes exerciseable in various increments over the two years
following the date of grant. The option remains exerciseable until five years
after the date of grant, but terminates upon Mr. Payne's termination as an
employee of the Company for any reason, provided that the option (to the extent
exerciseable, if at all) remains exerciseable for one year following Mr. Payne's
termination due to death, and ninety (90) days following termination due to
disability.
The Company has also entered into employment agreements, dated July 30,
1999, with Shawn Baldwin, the Company's Chief Strategy Officer, and David
McCallen, the Company's Executive Vice President. Mr. Baldwin's agreement has a
term of three years and provides for an annual salary of $175,000. Mr.
McCallen's agreement has a term of two years and provides for an annual salary
of $125,000. The agreements also provide for an incentive bonus of up to 40% of
base salary.
In addition, on July 30, 1999, the Company granted to Messers. Baldwin and
McCallen options for the purchase of 526,923 shares of Common Stock and 351,282
shares of Common Stock, respectively, at exercise prices of $3.50 per share. Mr.
Baldwin's option becomes exerciseable in nine equal consecutive quarter annual
increments of 58,547 shares each commencing on July 1, 2000. The option (to the
extent exerciseable, if at all) remains exerciseable until five years after the
date of grant or, if sooner, thirty (30) days after the date of termination of
Mr. Baldwin's employment (ninety (90) days in the case of termination for
disability and one year in the case of termination due to death).
20
<PAGE>
Mr. McCallen's option becomes exerciseable in six equal consecutive quarter
annual increments of 58,547 shares each commencing on June 23, 2000. The option
(to the extent exerciseable, if at all) remains exerciseable until five years
after the date of grant or, if sooner, thirty (30) days after the date of
termination of Mr. McCallen's employment (ninety (90) days in the case of
termination for disability and one year in the case of termination due to
death).
At the time Mr. McCallen commenced employment with the Company, the Company
extended to him an interest-free loan in the amount of $13,500 to defray
relocation costs. As of March 31, 2000, the balance of such loan was $10,800.
The loan is to be repaid in consecutive equal monthly installments of $2,700
each commencing August 1, 2000.
The Company has also entered into an employment agreement, dated April 7,
2000, with Daliah Amar, the Company's Chief Operating Officer. Ms. Amar's
agreement has a term of three years at an annual base salary of $175,000 subject
to annual review by the Board of Directors for possible increase. The agreement
also provide for an annual incentive bonus of up to 50% of base salary. In
addition, in accordance with the terms of the employment agreement, on April 7,
2000, the Company granted to Ms. Amar a stock option to purchase 500,000 shares
of Common Stock at an exercise price of $7.50 per share. The option vests and
becomes exerciseable (until five years after the date of grant) with respect to
125,000 shares on December 6, 2000, with respect to an additional 125,000 shares
on March 6, 2001, and with respect to the remaining shares in equal quarter
annual increments of 62,500 shares each over the following year.
If Ms. Amar's employment is terminated prior to December 6, 2000 by reason
of her death or disability, the option becomes exerciseable with respect to
125,000 shares of Common Stock. If Ms. Amar's employment is terminated between
December 6, 2000 and March 6, 2001 by reason of her death or disability, the
option becomes exerciseable with respect to an additional 62,500 shares. At any
time that Ms. Amar's employment is terminated by reason of her death or
disability, her stock option, to the extent vested, will be exerciseable for a
period of one year.
In the event of a change of control of the Company while Ms. Amar is
employed by the Company, the stock option becomes exerciseable in its entirety.
Furthermore, if Ms. Amar's employment is terminated by the Company after a
change of control, or by Ms. Amar if her duties are materially diminished by the
Company after a change of control, she will be entitled to receive salary and
benefits for one year following such termination.
If Ms. Amar's employment is terminated for cause, her stock option, to the
extent vested, will be exerciseable for a period of thirty (30) days. If the
Company terminates Ms. Amar's employment due to her failure to achieve specified
performance goals during the first 18 months of her employment, she will receive
salary and benefits for six months after termination, and will be entitled to
exercise her stock option, to the extent vested, for a period of ninety (90)
days. If Ms. Amar's employment terminates prior to the end of her employment
term for any other reason, the stock option will vest in its entirety and be
exerciseable for a period of one year and, in addition, Ms. Amar will be
entitled to receive salary and benefits for the lesser of one year or the
balance of her employment term.
Wall Street Inc. has entered into an employment agreement, dated March 20,
2000, with Joshua Eggert, the chief internet officer of Wall Street Inc. Mr.
Eggert's agreement has a term of three years at an annual base salary of
$175,000 subject to annual review by Wall Street Inc. for possible increase. The
agreement also provides for an annual incentive bonus of up to 50% of base
salary. In addition, in accordance with the terms of the employment agreement,
on March 20, 2000, the Company granted to Mr. Eggert a stock option to purchase
200,000 shares of Common Stock at an exercise price of $7.50 per share. The
option vests and becomes exerciseable (until five years after the date of grant)
with respect to 100,000 shares on March 20, 2001 and with respect to the
remaining shares in equal quarter annual increments of 25,000 shares each over
the following year. If Mr. Eggert's employment terminates prior to March 20,
2001 by reason of his death or disability, or if Mr. Eggert terminates his
employment by reason of a breach of the employment agreement by Wall Street
Inc., or if Wall Street Inc. terminates Mr. Eggert's employment prior to March
20, 2001 for any other reason (other than cause), the option will vest and
become exerciseable with respect to 100,000 shares of Common Stock.
If Mr. Eggert's employment terminates by virtue of his death or disability,
the option, to the extent vested, will be exerciseable for periods of one year
and ninety (90) days, respectively, from the date of termination. If Mr. Eggert
terminates his employment by reason of a breach of the employment agreement by
Wall Street Inc., or if Wall Street Inc. terminates Mr. Eggert's employment for
any reason other than death, disability or cause, the option,
21
<PAGE>
to the extent vested, will be exerciseable for a period of ninety (90) days from
the date of termination and, in addition, Mr. Eggert will be entitled to an
aggregate of six months annual base salary.
The following table sets forth the compensation paid to the Principal
Executive Officer, who was the only executive officer whose annual salary and
bonus exceeded $100,000 for services rendered to the Company and its
predecessors for the nine months ended September 30, 1999 and for the years
ended December 31, 1999, December 31, 1998 and December 31, 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
------------------------------------------------------- -------------------------
Other
Name and Annual
Principal Position Year Salary Bonus Compensation(1) Securities Underlying Options
- ---------------- ---- -------- ---------- --------------- -----------------------------
<S> <C> <C> <C> <C> <C>
Charles V. Payne 1999 $250,000 250,000(2) $27,104 300,000
President 1998 $134,835 $100,000(3) $ 5,470 -0-
1997 $ 65,516 -0- $ 4,800 -0-
</TABLE>
- ----------
(1) Other annual compensation in 1997 and 1998 consisted of a Company
parking allowance, and health insurance. Other annual compensation in
1999 consisted of life insurance, disability and health insurance and a
parking allowance.
(2) In accordance with the provisions of his Employment Agreement,
Mr. Payne received specified bonuses based on achievement by Wall
Street Inc. of revenue goals. No discretionary bonus was paid to Mr.
Payne.
(3) Mr. Payne was the sole shareholder and director of Wall Street Inc.
during 1998.
Stock Option Plans
The Company has adopted two separate stock option plans that provide for
the grant of options and other forms of incentive awards to selected officers,
employees, directors, and consultants to the Company or any subsidiary thereof.
The purpose of these plans is to promote the growth of the Company by enabling
the Company to attract and retain the best available persons for positions of
substantial responsibility and to provide certain key employees with additional
incentives to contribute to the success of the Company. Both plans are
administered by the Company's Board of Directors (unless it elects a committee
to administer the plans).
1996 Compensatory Stock Option Plan
The Company's 1996 Compensatory Stock Option Plan (the "1996 Stock Option
Plan") was adopted by the Board of Directors and approved by the Company's
stockholders in October 1996. Subject to adjustment in the event of certain
specified corporate events, options to purchase a maximum of 2,000,000 shares of
common Stock may be granted under the 1996 Stock Option Plan. The 1996 Stock
Option Plan has a term of ten years and no options may be granted after its
expiration. On December 7, 1999, the Company's Board of Directors determined
that no further awards will be made under the 1996 Stock Option Plan. As of such
date, options to purchase a total of 1,153,205 shares of Common Stock were
outstanding under the 1996 Stock Option Plan.
The 1996 Stock Option Plan provides solely for the grant of options that
are not intended to qualify as incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). Under
the terms of the 1996 Stock Option Plan, the exercise price of the options must
be at least 85% of the fair market value of the Company's Common Stock on the
date of grant. Options to be granted shall have a term not to exceed 10 years
from the date of grant and generally terminate automatically: upon termination
of employment for cause; within a period (specified in the individual option
grant) after termination of employment without cause; within twelve months after
the death of an employee; and, in the event of total disability, one year after
termination of employment unless otherwise specified in the grant. Generally,
options are not transferable other than by will or by operation of law.
22
<PAGE>
Options may be exercised by paying the cash exercise price, or, with the
consent of the Board of Directors, by delivering to the Company securities or a
personal recourse promissory note. At the discretion of the Board, as determined
in the individual options grant, an option may contain a cashless exercise
provision.
1999 Incentive Program
The Company's 1999 Incentive Program (the "1999 Program") was adopted by
the Board of Directors and approved by the Company's stockholders on December 7,
1999. The 1999 Program permits the granting of any or all of the following types
of awards: stock options, including incentive stock options, stock appreciation
rights in tandem with stock options or freestanding, and restricted stock
grants.
The aggregate number of shares of Common Stock that may be issued or
transferred under the 1999 Program is 5,000,000, subject to adjustment in the
event of certain specified corporate events, plus (i) any shares which are
forfeited under the 1999 Program or the 1996 Stock Option Plan, (ii) the number
of shares repurchased by the Company in the open market and otherwise with an
aggregate price no greater than the cash proceeds received by the Company from
the sale of shares under the 1999 Program and (iii) any shares surrendered to
the Company in payment of the exercise price of options issued under the 1999
Program. However, no award may be issued that would bring the total of all
outstanding awards under the 1999 Program to more than 15% of the total number
of shares of Common Stock of the Company at the time outstanding. The maximum
number of shares for which options and stock appreciation rights may be granted
under the 1999 Program to any person during any calendar year is 500,000
(subject to appropriate adjustment in the event of any changes in capitalization
of the Company).
Options may be exercised in cash or, with the Board of Director's approval,
by delivering shares of Common Stock already owned by the Grantee and having a
fair market value on the date of exercise equal to the option price, or a
combination of cash and shares. At the discretion of the Board of Directors, as
determined in the individual grant, an option may contain a cashless exercise
provision.
The Board of Directors may from time to time amend, alter, suspend or
discontinue the 1999 Program, subject to any requirement of stockholder approval
required by applicable law; provided, that no amendment shall be made without
stockholder approval if such amendment would (1) increase the maximum number of
shares of Common Stock available for issuance under the 1999 Program, (2) reduce
the minimum option price in the case of an option or the base price in the case
of a stock appreciation right, (3) effect any change inconsistent with Section
422 of the Code or (4) extend the term of the 1999 Program. The 1999 Program
terminates on the tenth anniversary of its effective date unless terminated
earlier by the Board or unless extended by the Board.
In the case of incentive stock options granted under the 1999 Program, the
following special rules apply:
The aggregate fair market value of the stock covered by incentive stock
options granted under the 1999 Program or any other stock option plan of the
Company or any subsidiary or parent of the Company that become exerciseable for
the first time by any optionee in any calendar year shall not exceed $100,000.
The period for exercise of such option shall not exceed ten years from the date
of the grant (or five years if the optionee is also a 10% stockholder). The
option price at which Common Stock may be purchased under an incentive stock
option shall be the fair market value (or 110% of the fair market value if the
optionee is a 10% stockholder) of the Common Stock on the date of the grant.
Incentive stock options may only be granted to employees (including officers) of
the Company or any subsidiary or parent of the Company. Such options by their
terms shall not be transferable by the optionee other than by the laws of
descent and distribution, and shall be exerciseable, during the lifetime of the
optionee, only by the optionee.
As of March 31, 2000, a total of 1,645,000 options were outstanding under
the 1999 Program.
The following table sets forth certain information concerning stock options
granted to the Principal Executive Officer during 1999. The exercise price for
the grant to such named person was the fair market value of the shares of Common
Stock on the date of grant, determined by reference to the closing price as
quoted in the OTC Electronic Bulletin Board on such date.
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<PAGE>
<TABLE>
<CAPTION>
Options Grants in Last Fiscal Year
Number of Percent of Total Options Exercise
Securities Granted to Employees or Base Expiration
Name Underlying Options in Fiscal Year Price Date
- ---- ------------------ -------------- ----- -----
<S> <C> <C> <C> <C> <C>
Charles Payne 300,000 14.3% $4.00 12/7/04
</TABLE>
The following table sets forth certain information with respect to the
Principal Executive Officer regarding the value of his unexercised options held
as of December 31, 1999. No options were exercised (or exerciseable) during
1999.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised in the
Options at Fiscal Year End Money Options at Fiscal Year End
Shares --------------------------- ----------------------------------
Acquired Value
Name On Exercise Realized Exerciseable Unexerciseable Exerciseable Unexerciseable
- ---- ----------- --------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Charles Payne -0- -0- -0- 300,000 -0- $656,000
</TABLE>
Profit Sharing Plan
Effective January 1, 1996, Wall Street Inc. adopted a profit sharing plan
(the "PS Plan"). Contributions to the PS Plan are made at the discretion of
management. No contributions are made by employees. Receipt of benefits under
the PS Plan is subject to vesting based on an employee's years of service. All
funds in the PS Plan are held in a separate trust of which Charles Payne is the
sole trustee. The Company contributed $150,000 to the plan in respect of fiscal
1998; no contributions were made to the plan in respect of fiscal 1997 or fiscal
1999.
In January 2000, the PS Plan was amended to add a salary deferral feature
under Section 401(k) of the Internal Revenue Code of 1986, as amended. Under
such feature, an employee may elect to have part of his or her compensation
contributed on a before-tax basis to the PS Plan. Such salary deferred
contributions are 100% vested at all times.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Company has not entered into any transactions during the last two
fiscal years with any director, executive officer, director nominee, 5% or more
shareholder, nor has the Company entered into transactions with any member of
the immediate families of the foregoing persons (including spouses, parents,
children, siblings and in-laws), except as previously described in this
registration statement, nor is any such transaction proposed except for the
following:
The Company is party to a Consulting Agreement dated September 23, 1999
with Sigma Limited, S.A., a company organized under the laws of Switzerland
("Sigma"), pursuant to which Sigma provides consulting services to the Company.
Sigma's consulting services to the Company are rendered by Ian Rice, the
Chairman of the Board of Directors of the Company. The term of the Consulting
Agreement is two years and the Corporation pays Sigma a consulting fee of
$50,000 per annum, plus a non-accountable expense allowance of $35,000 per
annum. All of the capital stock of Sigma is owned by a discretionary trust of
which Rice is neither a trustee nor a beneficiary. Among the discretionary
beneficiaries of the trust are member of Rice's family. Rice disclaims
beneficial ownership of Sigma. Since the date of the Consulting Agreement
between the Company and Sigma, Rice has not received any consulting fees from
Sigma.
It is the policy of the Company with respect to related party transactions,
that all transactions between the Company, its officers, directors, principal
stockholders and their affiliates be on terms no less favorable to the Company
than could be obtained from unrelated third parties in arms-length transactions,
and that all such transactions shall be approved by a majority of the
disinterested members of the Board of Directors. The Company believes that the
transaction described above complied with such policy.
In 1999, David McCallen, a director and officer of the Company, borrowed
$13,500 from the Company on an interest-free basis to defray relocation expenses
incurred by him. See "Item 6. Executive Compensation."
24
<PAGE>
ITEM 8. DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 50,000,000 shares
of common stock, $0.001 par value per share, of which 17,594,103 shares are
issued and outstanding, and 5,000,000 shares of preferred stock (the "Preferred
Stock"), none of which have been issued. The issued and outstanding common stock
is fully-paid and nonassessable.
Preferred Stock
The Board of Directors is authorized, subject to limitations prescribed by
law, to provide for the issuance of the Preferred Stock in series and by filing
a certificate with the Nevada Secretary of State to establish the number of
shares to be included in each series. The Preferred Stock may be issued either
as a class without series, or if so determined from time to time by the Board of
Directors, either in whole or in part in one or more series, each series to be
appropriately designated by a distinguishing number, letter or title prior to
the issue of any shares thereof.
The Board of Directors has the authority to fix the voting power, the
designations, preferences and relative, participating, optional or other special
rights, and the qualifications, limitations or restrictions of the Preferred
Stock in the resolution or resolutions adopted by the Board of Directors
providing for the issuance of the Preferred Stock. Any class or series of
Preferred Stock authorized by the Board of Directors may have rights,
preferences and privileges senior to those of the Common Stock.
Common Stock
Common Stock may be issued from time to time in one or more series as
determined by the Board of Directors. The Common Stock may have such voting
powers, designations, preferences and relative, participating, optional or other
special rights and be subject to such qualifications, limitations and
restrictions as the Board of Directors shall determine. Subject to the
provisions of law and the preferences of the Preferred Stock, dividends may be
paid on the Common Stock at such time and in such amounts as the Board of
Directors may deem advisable. All currently issued and outstanding shares of
Common Stock have equal dividend, voting and other rights.
The Company's by-laws provide that holders of 10% of the Company's Common
Stock may call a special meeting of shareholders.
General Provisions Applicable To Both Common And Preferred Stock
No holder of Common Stock or Preferred Stock has any preemptive right to
subscribe to stock, obligations, warrants, rights to subscribe to stock or other
securities of any class.
Subject to the provisions of law and the provisions of the Company's
Certificate of Incorporation, as amended, the Company may issue shares of its
Preferred Stock or Common Stock, from time to time for such consideration (not
less than the par value or stated value thereof) as may be fixed by the Board of
Directors. Shares so issued, for which the consideration has been paid or
delivered to the Company, shall be deemed fully paid stock, and shall not be
liable to any further call or assessments thereon, and the holders of such
shares shall not be liable for any further payments in respect of such shares.
Voting Agreement
The Company is a party to a voting agreement with Charles Payne, the
Company's President and largest shareholder, Sigma Limited, S.A., a Swiss
corporation and a consultant to the Company ("Sigma"), Ian Rice, the Company's
Chairman and a shareholder of the Company, and Corporate Communications Network,
Inc., a shareholder of and consultant to the Company ("CCN"), pursuant to which,
for a period of two years, Mr. Payne will vote his shares of Common Stock to
cause (i) the Company's Board of Directors to consist of five members and (ii)
the election to the Board of Directors of two designees of Sigma, one of which
designees is to be the Company's Chairman. Sigma designated Messrs. Rice and
Stephen Gross as the Chairman and a director, respectively. In addition, under
the agreement, each of Sigma, CCN and Mr. Rice are to vote its or his shares in
favor of Mr. Payne and two of his nominees. As set forth in the voting
agreement, Mr. Payne has designated Messrs. Gerald Turner and David McCallen as
his nominees.
25
<PAGE>
See, also, "Item 4 - Security Ownership of Certain Beneficial Owners and
Management -- footnotes (1) and (2)."
Transfer Agent
Madison Stock Transfer, Inc., 1813 East 24th Street, Brooklyn, New York
11229, is the transfer agent and registrar for the Common Stock.
26
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
Market Price For Common Stock and Related Shareholder Matters
The Common Stock has traded on the OTC Electronic Bulletin Board under the
symbol "VEMP" since August 20, 1999 and, since September 25, 1999, under the
symbol "WSST." The following table sets forth, for the periods indicated, the
high and low closing bid prices for the Common Stock.
1999 High Low
- ---- ---- ---
Third Quarter since August 20 $ 7.50 $ 4.00
Fourth Quarter $ 6.187 $ 2.437
2000
- ----
First Quarter $26.375 $ 6.625
Second Quarter through April 10 $26.375 $ +-10.50
------- --------
- --------------
The foregoing information reflects inter-dealer prices, without mark-up,
mark-down or commission, and may not represent actual transactions. On April 10,
2000, the closing bid price for the Common Stock was $11.00 per share.
Penny Stock Rules
Unless and until the Common Stock is quoted on the Nasdaq system or on a
national securities exchange and if and so long as the Common Stock trades below
$5.00 per share, the Common Stock would come within the definition of "penny
stock" as defined in the Exchange Act and be covered by Rule 15g-9 of the
Exchange Act. That rule imposes additional sales practices requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally institutions with assets in excess
of $5 million or individuals with net worth in excess of $1 million or annual
income exceeding $200,000 or $300,000 jointly with their spouse). For
transactions covered by Rule 15g-9, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to sale. Consequently, the applicability of
Rule 15g-9 may effect the ability or willingness of broker-dealers to sell the
Company's securities.
Rule 144 Resales
As of the date of the Registration Statement the Company has 17,594,103
shares of Common Stock issued and outstanding, of which approximately 5,364,778
shares are unrestricted and may be freely traded in the securities markets. The
remaining 12,229,325 shares of Common Stock, including 9,686,103 shares owned by
affiliates, are "restricted" shares within the meaning of Rule 144 under the
Securities Act. In general, Rule 144, as currently in effect, provides that a
person who acquired securities in a private placement transaction and has
beneficially owned those securities, fully paid, for a period of at least one
year may, under certain conditions, sell every three months, in brokerage
transactions, a number of shares that does not exceed one percent (1%) of the
issuer's outstanding common stock. For issuers whose shares are listed on a
stock exchange or NASDAQ, a shareholder may alternatively sell a number of
shares that does not exceed the average weekly trading volume during the four
calendar weeks prior to his or her sale.
However, if a person has beneficially owned securities for a period of at
least two years and has not been an affiliate (control person) of the issuer for
the preceding three-month period, the person may request that all restrictive
legends affecting the securities be removed, and there is no limit on the number
of shares that the non-affiliate may then sell. The sale of a substantial number
of shares of the Company under Rule 144 or under any other exemption from the
Act could have a depressive effect upon the price of the Common Stock.
Related Stockholder Matters
The Company has not agreed to register any shares of Common Stock under the
Act for sale by security holders except that the Company (i) has granted demand
and piggy-back registration rights to Charles V. Payne and his assigns with
respect to 9,455,898 shares of Common Stock, (ii) has granted piggy-back
registration rights to Bamby
27
<PAGE>
Investments Limited, HK Partners LLC and Gerald H. Turner and their respective
assigns with respect to an aggregate of 600,000 shares of Common Stock and (iii)
has granted piggy-back registration rights to Continental Capital & Equity
Corporation and its assigns with respect to 30,000 shares of Common Stock as
well as 100,000 shares of Common Stock underlying certain options granted to it.
The Company is not, and has not proposed to, publicly offer any shares of
Common Stock.
Number of Shareholders
As of February 4, 2000, there were approximately 66 holders of record of
Common Stock, and the number of beneficial owners was approximately 300.
Dividend Information
The Company has never paid a cash dividend on its Common Stock nor does the
Company anticipate paying cash dividends on its Common Stock in the near future.
It is the present policy of the Company not to pay cash dividends on the Common
Stock but to retain earnings, if any, to fund growth and expansion. Under Nevada
law, a company is prohibited from paying dividends if the company, as a result
of paying such dividends, would not be able to pay its debts as they come due,
or if the company's total liabilities and preferences to preferred shareholders
exceed total assets. Any payment of cash dividends on the Common Stock in the
future will be dependent upon the Company's financial condition, results of
operations, current and anticipated cash requirements, plans for expansion, as
well as other factors the Board of Directors deems relevant.
ITEM 2. LEGAL PROCEEDINGS
As of the date hereof, the Company is not a party to any legal proceeding
and is not aware of any threatened legal proceeding.
In a complaint dated June 13, 1997, the SEC brought an action against
various persons, including Wall Street Inc. and Charles Payne, alleging
violations of the federal securities laws. SEC v. Members Services Corp., et
al., No. 97 CV1146 (D.D.C.). As to Wall Street Inc. and Payne, the SEC alleged
the failure to disclose the receipt of compensation from an issuer that was the
subject of information circulated by Wall Street Inc. Without admitting or
denying the allegations in the complaint, Wall Street Inc. and Payne each
consented to the entry of a permanent injunction against violations of Section
17(b) of the Securities Act. In addition, Payne agreed to pay a civil penalty of
$25,000 and Wall Street Inc. agreed to pay a civil penalty of $10,000.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Lilling & Company LLP ("Lilling") was previously the principal accountants
for Wall Street Inc. On March 20, 2000, the engagement of such firm was
terminated by the Company's board of directors.
In connection with the audit by Lilling of Wall Street Inc. for the two
fiscal years ended December 31, 1998, there were no disagreements with Lilling
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures, which disagreements if not resolved
to their satisfaction would have caused Lilling to make reference in connection
with their opinion to the subject matter of the disagreement. Lilling has not
issued any opinion with respect to the financial statements of WSSC or Wall
Street Inc. for the fiscal year ended December 31, 1999.
None of the matters described in Item 304 (B) of Regulation S-B are
applicable.
On March 21, 2000, Hays & Company were engaged to audit the financial
statements of the Company for the fiscal year ended December 31, 1999. Hays &
Company had not previously provided any services to WSSC or Wall Street Inc.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
No securities that were not registered under the Securities Act have been
issued or sold by the Company within the past three years, except as described
below.
28
<PAGE>
1. On June 12, 1998, in connection with the merger of VECO and VET with and
into VEM (VEI-Colorado's wholly-owned subsidiary), VEI-Colorado issued 6,000,000
shares of its Common Stock to five individuals, who were the former
member-owners of VECO and VET in exchange for their entire membership interest
in and to VECO and VET. The shares were issued to sophisticated investors in
reliance upon the exemption provided by Section 4(2) of the Securities Act.
Effective March 31, 1999, the 1998 Merger was unwound and the 6,000,000 shares
issued in connection therewith were canceled.
2. In June 1998, VEI-Colorado completed a private placement of 550,000
shares of its common stock at $1.00 per share (an aggregate purchase price of
$550,000) to four sophisticated investors in reliance upon the exemption
provided by Rule 504 of Regulation D, as promulgated by the SEC under the
Securities Act. The shares were issued to the following investors:
Number of Shares
Name of Investor Purchased Amount Invested
- ---------------- ---------------- ---------------
Avarn Investments Inc. 250,000 $250,000
Avatar Business Corp. 250,000 $250,000
John D. Brasher, Jr. 25,000 $ 25,000
Corporate Communications Network Inc. 25,000 $ 25,000
3. On June 4, 1999, VEI-Colorado sold and issued to Ian Rice, a
sophisticated investor, 4,000,000 shares of its common stock for an aggregate
purchase price of $20,000 ($.0025 per share purchased). The shares were issued
in reliance upon the exemption provided by Section 4(2) of the Securities Act.
On or about September 23, 1999, 7,850,000 shares of Common Stock owned by Mr.
Rice were canceled.
4. On June 21, 1999, in connection with the merger of VEI-Colorado into
WSSC (its subsidiary), which merger was effected for the sole purpose of
reincorporating VEI-Colorado in the State of Nevada, WSSC issued 14,100,000
shares of Common Stock to the shareholders of VEI-Colorado in exchange for their
aggregate 7,050,000 shares of common stock in VEI-Colorado (representing all of
the issued and outstanding shares of capital stock of VEI-Colorado). The shares
were issued in reliance upon Rule 145(a)(2) as promulgated by the SEC under the
Securities Act.
5. On July 30, 1999, the Company sold an aggregate of 1,255,205 shares of
Common Stock at $0.0025 per share (an aggregate purchase price of $3,138) to ten
sophisticated individuals, eight of whom were employees of Wall Street Inc., and
two of whom subsequently became employees of the Company. The shares were issued
in reliance upon the exemption provided by Section 4(2) of the Securities Act.
6. On September 23, 1999, the Company issued to Charles V. Payne, a
sophisticated investor, 9,455,898 shares of Common Stock in exchange for Mr.
Payne's 100 shares of common stock of Wall Street Strategies, Inc. The issuance
of these shares was exempt from registration pursuant to Section 4(2) under the
Securities Act.
7. In September 1999, the Company completed a private placement of 600,000
shares of Common Stock at $5.00 per share (an aggregate purchase price of
$3,000,000) to three accredited investors in reliance upon the exemption
provided by Rule 506 of Regulation D, as promulgated under the Securities Act.
The shares were issued to the following investors:
Number of Shares
Name of Investor Purchased Amount Invested
- ---------------- ---------------- ---------------
Bamby Investments Limited 586,000 $ 2,930,000
HK Partners LLC 12,000 $ 60,000
Gerald H. Turner 2,000 $ 10,000
8. On February 9, 2000, the Company issued to Continental Capital & Equity
Corporation ("CCEC"), a sophisticated investor, 30,000 shares of Common Stock in
compensation for services to be rendered by CCEC to the Company pursuant to a
Market Access Program Marketing Agreement (the "CCEC Agreement") between the
parties dated January 26, 2000, and an option to purchase 100,000 shares of
Common Stock at prices ranging from $10.00 to $16.00 per share. On February 9,
2000, the closing bid price for the Common Stock was $14.875.
With respect to the issuances of securities referenced above, other than
those described in paragraphs 2 and 4, investors were furnished with information
regarding the Company and the offering and issuance, and each had the
29
<PAGE>
opportunity to verify the information supplied. Additionally, the Company
obtained a representation from each investor of such investor's intent to
acquire the securities for the purpose of investment only, and not with a view
toward the subsequent distribution thereof. The securities bear appropriate
restrictive legends, and the Company issued stop transfer instruction to its
transfer agent.
9. From time to time from August 1999 through April 7, 2000, the Company
granted stock options to officers, directors and employees of, and advisors and
consultants to the Company. These grants have been made at exercise prices
ranging from $3.50 to $11.50 per share. To date, no stock options have been
exercised. Options have been issued in reliance upon the exemption provided by
Section 4(2) of the Securities Act, and the securities have been appropriately
legended.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's certificate of incorporation generally provides for
indemnification of each director, officer, employee or agent as long as such
person acted in good faith and in a manner he or she believed to be in or not
opposed to the best interest of the Company and had no reasonable cause to
believe that such conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company, the
Company has been informed that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
PART F/S
The following financial statements of the Company are included in this Part
F/S.
Independent Auditor's Reports
Consolidated Balance Sheet for the year ended December 31, 1999
Consolidated Statements of Operations for the years ended December 31,
1999 and 1998
Consolidated Statement of Stockholders' Equity from January 1, 1997
to December 31, 1999
Consolidated Statements of Cash Flows for the years ended
December 31, 1999 and 1998
Notes to Consolidated Financial Statements
30
<PAGE>
PART III
See the attached Exhibit Index.
31
<PAGE>
Board of Directors and Shareholders
Wall Street Strategies Corporation
New York, New York
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying consolidated balance sheet of Wall Street
Strategies Corporation and subsidiary (the "Company") as of December 31, 1999
and the related consolidated statements of operations, shareholders' equity and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Wall Street
Strategies Corporation and subsidiary as of December 31, 1999 and results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/ Hays & Company
April 10, 2000
New York, New York
<PAGE>
Board of Directors and Shareholders
Wall Street Strategies Corporation
New York, New York
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying consolidated statement of operations,
shareholders' equity and cash flows of Wall Street Strategies Corporation and
subsidiary (the "Company") for the year ended December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
Wall Street Strategies Corporation and subsidiary for the year ended December
31, 1998 in conformity with generally accepted accounting principles.
/s/ Lilling & Company LLP
January 31, 2000
Great Neck, New York
F-2
<PAGE>
WALL STREET STRATEGIES CORPORATION
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Current assets
Cash and cash equivalents $ 2,506,505
Accounts receivable 70,500
Marketable securities, available for sale, at market value 58,898
Deferred commission expense 255,577
Other current assets 96,446
------------
Total current assets 2,987,926
Property and equipment, net 17,737
Deferred website development costs, net 63,584
Restricted cash deposit 272,000
Security deposits 46,023
Other assets 70,640
------------
$ 3,457,910
============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilites
Accrued expenses $ 259,315
Accrued compensation 264,548
Income taxes payable 20,457
Deferred subscription income 511,154
Accrued pension expense 100,000
------------
Total current liabilities 1,155,474
------------
Commitments and contingencies (Notes 5, 6, 7, 8 and 9)
Shareholders' equity
Preferred stock, $.001 par value; 5,000,000 shares authorized;
none issued and outstanding
Common stock, $.001 par value; 50,000,000 shares authorized;
17,564,103 shares issued and outstanding 17,564
Additional paid-in capital 13,081,092
Accumulated deficit (4,423,270)
Unearned compensation (6,250,458)
Accumulated other comprehensive loss (122,492)
------------
Total shareholders' equity 2,302,436
------------
$ 3,457,910
============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements. F-3
<PAGE>
WALL STREET STRATEGIES CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31,
----------------------------
1999 1998
------------ ------------
Revenue
Subscription income $ 4,318,534 $ 2,226,726
Consulting income 163,120 --
Interest and dividends 7,814 2,662
Realized (loss) gain on sale of
marketable securities (14,769) 99,827
------------ ------------
4,474,699 2,329,215
------------ ------------
Costs and expenses
Salaries and commissions 7,001,997 1,614,658
Payroll taxes and employee benefits 314,251 274,832
Telephone and communications 264,321 176,987
Professional fees 234,360 36,525
Other operating expenses 224,400 98,474
Consulting fees 218,597 44,749
General and administrative 121,101 84,320
Website development costs 115,967 --
Travel and promotion 104,335 57,768
Rent and occupancy 82,759 42,068
Depreciation and amortization 7,088 10,023
------------ ------------
8,689,176 2,440,404
------------ ------------
Loss before provision (benefit)
for income taxes (4,214,477) (111,189)
Provision (benefit) for income taxes 36,588 (1,570)
------------ ------------
Net loss $ (4,251,065) $ (109,619)
============ ============
Basic and diluted net loss per share $ (0.37) $ (0.01)
============ ============
Weighted average common shares
outstanding 11,463,918 9,455,898
============ ============
The accompanying notes are an integral part of
these consolidated financial statements. F-4
<PAGE>
WALL STREET STRATEGIES CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1999
<TABLE>
<CAPTION>
Common stock Additional
---------------------- paid-in Accumulated Unearned
Shares Amount capital deficit compensation
---------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Wall Street Strategies, Inc., January 1, 1998 100 $ 100 $ 1,400 $ (61,730) $ --
Recapitalization (Note 1)
Exchange of Wall Street Strategies, Inc. shares (100) (100) (1,400) 43,652 --
Issuance of common stock to owner of
Wall Street Strategies, Inc. 9,455,898 9,456 -- (51,608) --
Marketable securities valuation adjustment -- -- -- -- --
Net loss, year ended December 31, 1998 -- -- -- (109,619) --
---------- -------- ------------ ------------ ------------
Total comprehensive loss
Balance, December 31, 1998 9,455,898 9,456 -- (179,305) --
Outstanding common stock of Wall Street
Strategies Corporation (Note 1) 6,250,000 6,250 -- 7,100 --
Issuance of common stock for cash 600,000 600 2,999,400 -- --
Issuance of common stock and options for
services 1,258,205 1,258 10,081,692 -- (7,810,086)
Amortization of stock compensation -- -- -- -- 1,559,628
Marketable securities valuation adjustment -- -- -- -- --
Net loss, year ended December 31, 1999 -- -- -- (4,251,065) --
---------- -------- ------------ ------------ ------------
Total comprehensive loss
Balance, December 31, 1999 17,564,103 $ 17,564 $ 13,081,092 $ (4,423,270) $ (6,250,458)
========== ======== ============ ============ ============
<CAPTION>
Accumulated
other Total
comprehensive shareholders' Comprehensive
loss equity loss
------------- ------------ ------------
<S> <C> <C> <C>
Wall Street Strategies, Inc., January 1, 1998 $ -- $ (60,230)
Recapitalization (Note 1)
Exchange of Wall Street Strategies, Inc. shares -- 42,152
Issuance of common stock to owner of
Wall Street Strategies, Inc. -- (42,152)
Marketable securities valuation adjustment (68,612) (68,612) $ (68,612)
Net loss, year ended December 31, 1998 -- (109,619) (109,619)
------------- ------------ ------------
Total comprehensive loss $ (178,231)
============
Balance, December 31, 1998 (68,612) (238,461)
Outstanding common stock of Wall Street
Strategies Corporation (Note 1) -- 13,350
Issuance of common stock for cash -- 3,000,000
Issuance of common stock and options for
services -- 2,272,864
Amortization of stock compensation -- 1,559,628
Marketable securities valuation adjustment (53,880) (53,880) $ (53,880)
Net loss, year ended December 31, 1999 -- (4,251,065) (4,251,065)
------------- ------------ ------------
Total comprehensive loss $ (4,304,945)
============
Balance, December 31, 1999 $ (122,492) $ 2,302,436
============= ============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements. F-5
<PAGE>
WALL STREET STRATEGIES CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash flows from operating activities
Net loss $(4,251,065) $ (109,619)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities
Depreciation and amortization 13,504 10,023
Realized loss (gain) on sale of marketable securities 14,769 (99,827)
Stock compensation 3,829,348 --
Changes in operating assets and liabilities
Accounts receivable (57,100) (9,800)
Deferred commission expense (158,299) (43,552)
Other assets (138,852) (24,883)
Accrued expenses 190,554 44,833
Accrued compensation 264,548 --
Income taxes payable 11,057 (31,900)
Deferred subscription income 233,216 194,867
Accrued pension expense (50,000) 150,000
----------- -----------
Net cash (used in) provided by operating activities (98,320) 80,142
----------- -----------
Cash flows from investing activities
Purchase of property and equipment (19,644) (1,650)
Deferred website development costs paid (70,000) --
Cash paid for marketable securities (546,740) (124,136)
Proceeds from the sale of marketable securities 474,717 99,827
Restricted cash deposit (272,000) --
Payment made for other assets (31,300) --
----------- -----------
Net cash used in investing activities (464,967) (25,959)
----------- -----------
Cash flows from financing activities
Proceeds from issuance of common stock 3,003,145 --
Cash acquired in reverse acquistion 13,350 --
Repayment of loan from shareholder (43,388) (64,380)
----------- -----------
Net cash provided by (used in) financing activities 2,973,107 (64,380)
----------- -----------
Net increase (decrease) in cash and cash equivalents 2,409,820 (10,197)
Cash and cash equivalents, beginning of year 96,685 106,882
----------- -----------
Cash and cash equivalents, end of year $ 2,506,505 $ 96,685
=========== ===========
Supplemental disclosure of cash flow information
Income taxes paid $ 14,260 $ 30,300
=========== ===========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements. F-6
<PAGE>
WALL STREET STRATEGIES CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1 The Company
2 Organization
Wall Street Strategies Corporation (the "Company"), formerly Vacation
Emporium Corporation, was originally formed as a Nevada corporation on
April 2, 1999, and is the surviving entity in a merger with its then
corporate parent, The Vacation Emporium International, Inc., a Colorado
corporation formed under the name Rising Sun Capital Ltd. on May 12,
1988.
1 Reverse acquisition
Effective September 23, 1999, the Company acquired all of the
outstanding common stock of Wall Street Strategies, Inc. ("WSSI"), a
Delaware corporation, pursuant to an Agreement and Plan of Share
Exchange (the "Exchange Agreement") dated July 30, 1999.
Under the terms of the Exchange Agreement, the Company issued to the
sole shareholder of WSSI, 9,455,898 shares of the Company's common
stock in exchange for all of the issued and outstanding common stock of
WSSI. This issuance represented approximately 53.84% of the post-merger
issued and outstanding common shares of the Company. For accounting
purposes, this transaction has been treated as an acquisition of the
Company by WSSI and as a re-capitalization of WSSI. The acquisition of
the Company by WSSI has been recorded based on the fair value of the
Company's net tangible assets, which consisted of cash in the amount of
$13,350. The Company, prior to the acquisition, was an inactive shell
company. The historical financial statements prior to September 23,
1999 are those of WSSI. Since this transaction is in substance a
recapitalization of WSSI and not a business combination, pro forma
information is not presented. All costs associated with this
transaction have been expensed.
In connection with, and in contemplation of this transaction, on July
30, 1999, the Company sold 1,258,205 shares of common stock for $.0025
per share to certain key employees of WSSI, and to two other
individuals who entered into employment agreements with the Company.
These shares were placed in escrow and are subject to repurchase by the
Company over vesting periods, which range from two to three years, at
the same purchase price of $.0025 if the individuals' employment is
terminated other than by reason of death or disability. Additionally,
on September 23, 1999, the Company completed the sale of 600,000 shares
of common stock at $5.00 per share in a private placement to certain
accredited investors (Note 5).
1 Business
The Company, through its subsidiary (WSSI), provides investment
research and related information services for individual and
institutional investors and financial professionals. WSSI, which was
founded in 1991, delivers its products and services, including
financial and market information, analysis, advice and commentary, to
subscribers through a variety of media including telephone, facsimile,
e-mail, audio recordings, newsletters, the internet and traditional
mail.
F-7
<PAGE>
WALL STREET STRATEGIES CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
3 Significant accounting policies
4 Principles of consolidation
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, WSSI. All significant
intercompany transactions and balances have been eliminated in
consolidation.
1 Concentrations and fair value of financial instruments
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash investments,
trade receivables and marketable securities. At December 31, 1999, the
Company's cash investments are held at various financial institutions,
which limits the amount of credit exposure to any one financial
institution. The Company's trade receivables represent amounts due from
a large number of customers who are disbursed among numerous industries
and locations, which limits the amount of credit risk. Concentrations
of credit risk with respect to marketable securities are limited due to
the Company's varied portfolio, which limits the amount of credit
exposure to any one particular investment. Unless otherwise disclosed,
the fair value of financial instruments approximates their recorded
values.
1 Cash and cash equivalents
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.
1 Marketable securities
Marketable securities, which are classified as "available for sale,"
are valued at fair market value. Unrealized gains or losses are
recorded net of income taxes as "accumulated other comprehensive loss"
in shareholders' equity, whereas realized gains and losses are
recognized in the Company's statements of operations using the
first-in, first-out method.
1 Property and equipment
Property and equipment are stated at cost and depreciated on a
straight-line basis over the estimated useful lives of the related
assets, which range from five to seven years. Expenditures for
maintenance and repairs are charged to operations at the time the
expense is incurred. Expenditures determined to represent additions are
capitalized.
1 Start-up and organization costs
The Company accounts for start-up costs in accordance with Statement of
Position 98-5, "Reporting on the Costs of Start-up Activities" ("SOP
98-5"), issued by the American Institute of Certified Public
Accountants. SOP 98-5 requires the cost of start-up activities,
including organization costs, to be expensed as incurred.
F-8
<PAGE>
WALL STREET STRATEGIES CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1 2 Significant accounting policies (continued)
Website development costs
Costs incurred in the development of the core software for the
Company's website infrastructure are capitalized in accordance with
Statement of Position 98-1 "Accounting for the Costs of Software
Developed or Obtained for Internal Use" and are amortized over the
expected useful life of the developed software ranging from 1 - 3
years. Costs incurred in the development of content for the Company's
website and maintenance are expensed as incurred. During 1999, the
Company capitalized approximately $70,000 in costs associated with the
development of its website infrastructure and amortized $6,416 to
operations during the fourth quarter of 1999.
1 Income taxes
The Company accounts for income taxes using the liability method which
requires the determination of deferred tax assets and liabilities based
on the differences between the financial and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which
differences are expected to reverse. The net deferred tax asset is
adjusted by a valuation allowance, if, based on the weight of available
evidence, it is more likely than not that some portion or all of the
net deferred tax asset will not be realized.
The Company has net deferred tax assets arising principally from stock
compensation expenses, deferred subscription income and deferred
commission expense. The Company has fully reserved their net deferred
tax assets due to the uncertainty of their utilization.
1 Revenue recognition
The Company provides investment research and related information
services through subscription agreements with its customers for periods
which generally range in length from one month to one year.
Subscription income is earned ratably over the term of the agreement.
The unearned portion of such income is reflected as Deferred
subscription income in the accompanying consolidated balance sheet. The
Company also defers the accompanying commission expense related to the
deferred subscription income in the accompanying consolidated balance
sheet.
1 Basic and diluted earnings per common share
The Company displays earnings per share in a dual presentation of basic
and diluted earnings per share. Basic earnings per share includes no
dilution and is computed by dividing net income or loss available to
common shareholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share include the
potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock.
The effect of the recapitalization discussed in Note 1 has been given
retroactive application in the earnings per share calculation. The
common shares issued and outstanding with respect to the pre-merger
shareholders has been included since the effective date of the merger.
The issuance of the 1,285,205 common shares sold to employees and
officers at $.0025 per share have been
F-9
<PAGE>
WALL STREET STRATEGIES CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1 2 Significant accounting policies (continued)
2 Basic and diluted earnings per common share (continued)
included in the earnings per share calculation as and when they are
released from escrow in accordance with the agreements discussed in
Notes 1 and 5. Outstanding common stock options have not been
considered in the computation of diluted per share amounts, since the
effect of their inclusion would be antidilutive. Accordingly, basic and
diluted earnings per share amounts are identical.
1 Advertising
Advertising, which is conducted principally through electronic media
and direct mail marketing, is expensed as incurred or at the time the
advertising first takes place. Advertising expense amounted to $3,535
and $6,438 for the years ended December 31, 1999 and 1998,
respectively.
1 Stock based compensation
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation" ("SFAS 123"). The Company applies APB Opinion No. 25,
"Accounting for Stock Issued to Employees", and related
interpretations, in accounting for its plans and recognizes non-cash
compensation charges related to the intrinsic value of stock
compensation granted to employees.
1 Use of estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported
amounts of revenue and expenses during the reporting periods. Actual
results could differ from those estimates.
4 Marketable securities, available for sale
Marketable securities, available for sale, consist of the following:
<TABLE>
<CAPTION>
Unrealized Market
Cost loss value
------------- ------------- --------------
<S> <C> <C> <C>
December 31, 1999
U.S. equity securities $ 181,390 $ (122,492) $ 58,898
============= ============= =============
</TABLE>
F-10
<PAGE>
WALL STREET STRATEGIES CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
5 Property and equipment, net
Property and equipment consists of the following at December 31, 1999:
Estimated
useful life
-----------
Computer and office equipment 5 years $ 47,863
Furniture and fixtures 7 years 24,733
------------
72,596
Less accumulated depreciation (54,859)
------------
$ 17,737
6 Shareholders' equity
Common stock issued
On July 30, 1999, in contemplation of the acquisition by WSSI and the
execution of the Exchange Agreement described in (Note 1), the Company
entered into Subscription and Rights Agreements with ten individuals to
purchase 1,258,205 shares of the Company's common stock for $0.0025 per
share. These agreements, as amended and restated, provide as follows:
o Eight individuals who are employees of WSSI purchased 380,000
shares for $0.0025 per share. These shares are subject to
repurchase by the Company in declining increments over a
two-year period at $0.0025 per share if employment is
terminated for cause. The issuance of these shares has been
valued at $5.8125 per share, the closing market price of the
stock on September 23, 1999 as listed on the OTC Electronic
Bulletin Board. The issuance gave rise to Unearned
compensation in the amount of $2,207,800 at September 23, 1999
and is reflected in the accompanying consolidated statement of
shareholders' equity. The compensation will be earned and
charged to expense ratably over the two-year escrow period and
$297,146 has been expensed through December 31, 1999 and is
included in the accompanying consolidated statements of
operations.
o The Company's Executive Vice President (who is also a director
of the Company) purchased 526,923 shares for $0.0025 per
share. Simultaneously with this transaction, the executive
entered into a two-year employment agreement with the Company,
which commenced on September 23, 1999, the date of the closing
of the Company's acquisition. The executive granted to the
Company the right to repurchase these shares, in declining
increments, during the two-year period commencing September
23, 1999 if the executive's employment with the Company is
terminated for cause. The repurchase right is at the same
purchase price of $0.0025 per share. The issuance of these
shares has been valued at $5.8125 per share, the closing
market price of the stock on September 23, 1999 as listed on
the OTC Electronic Bulletin Board. The issuance gave rise to
Unearned compensation in the amount of $3,061,423 at September
23, 1999 and is reflected in the accompanying consolidated
statement of shareholders' equity. One third (175,641) of the
shares vested upon the closing of the Merger transaction on
September 23, 1999 and accordingly $1,020,474 of
F-11
<PAGE>
WALL STREET STRATEGIES CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1 5 Shareholders' equity (continued)
Common stock issued (continued)
a. compensation was earned and charged to expense in the
accompanying consolidated statement of operations on that
date. The balance of the Unearned compensation ($2,020,948)
will be earned and charged to expense ratably over the two
year escrow period and $274,690 has been expensed through
December 31, 1999 and is included in the accompanying
consolidated statement of operations.
In accordance with the terms of the executive's employment
agreement (Note 8), the Company granted the executive an
option under its 1996 Compensatory Stock Option Plan to
acquire 351,282 shares of the Company's common stock at an
exercise price of $3.50 per share. The options begin to vest
after six months and then vest in six equal quarterly
increments over an eighteen month period provided the
executive's employment is not terminated. The intrinsic value
of these options was measured using the share price of $5.8125
on September 23, 1999 and accounted for as compensatory
options in accordance with APB Opinion No. 25 and gave rise to
Unearned compensation in the amount of $812,340 at September
23, 1999 and is reflected in the accompanying consolidated
statement of shareholders' equity. The compensation will be
earned and charged to expense ratably over the two-year
vesting period of the options and $109,332 has been expensed
through December 31, 1999 and is included in the accompanying
consolidated statements of operations.
o The Company's Chief Strategy Officer purchased 351,282 shares
for $0.0025 per share. Simultaneously with this transaction,
the executive entered into a three-year employment agreement
with the Company, which commenced on October 1, 1999. The
executive granted to the Company the right to repurchase up to
263,461 of these shares, in declining increments, during the
period commencing October 1, 1999 through April 7, 2000 if the
executive's employment with the Company is terminated for
cause. The repurchase right is at the same purchase price of
$0.0025 per share. The issuance of these shares has been
valued at $5.8125 per share, the closing market price of the
stock on September 23, 1999 as listed on the OTC Electronic
Bulletin Board. The issuance gave rise to Unearned
compensation in the amount of $2,040,948 at September 23, 1999
and is reflected in the accompanying consolidated statement of
shareholders' equity. One fourth (87,821) of the shares vested
upon the closing of the Merger transaction on September 23,
1999 and accordingly $510,460 of compensation was earned and
charged to expense in the accompanying consolidated statement
of operations on that date. The balance of the Unearned
compensation ($1,530,489) will be earned and charged to
expense ratably through April 7, 2000, the escrow period, and
$769,129 has been expensed through December 31, 1999 and is
included in the accompanying consolidated statement of
operations.
In accordance with the terms of the executive's employment
agreement (Note 8), the Company granted the executive an
option under its 1996 Compensatory Stock Option Plan to
acquire 526,923 shares of the Company's common stock at an
exercise price of $3.50 per share. The options vest in nine
consecutive equal quarterly annual installments commencing on
the nine month anniversary of the agreement over a twenty
seven month period provided
F-12
<PAGE>
WALL STREET STRATEGIES CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1 5 Shareholders' equity (continued)
Common stock issued (continued)
the executive's employment is not terminated. The intrinsic
value of these options was measured using the share price of
$5.8125 on September 23, 1999 and accounted for as
compensatory options in accordance with APB Opinion No.25 and
gave rise to Unearned compensation in the amount of $1,218,509
at September 23, 1999 and is reflected in the accompanying
consolidated statement of shareholders' equity. The
compensation will be earned and charged to expense ratably
over the three-year vesting period of the options and $109,332
has been expensed through December 31, 1999 and is included in
the accompanying consolidated statement of operations.
o In contemplation of the acquisition of WSSI (Note 1), on
September 23, 1999 the Company completed the sale of 600,000
shares of common stock for $5.00 per share to accredited
investors in accordance with the terms of a private placement
offering.
7 Stock option plans
The Company has adopted two separate stock option plans that provide
for the grant of options and other forms of incentive awards to
selected officers, employees, directors and consultants of the Company.
The purpose of these plans is to promote the growth of the Company by
enabling the Company to attract and retain the best available persons
for positions of substantial responsibility and to provide certain key
employees with additional incentives and to contribute to the success
of the Company. The Company's Board of Directors administers both
plans.
1 1996 Compensatory Stock Option Plan
The Company's 1996 Compensatory Stock Option Plan ("1996 Plan") was
adopted by the Board of Directors and approved by the Company's
stockholders in October 1996. Options to purchase a maximum of
2,000,000 shares of common stock may be granted under the 1996 Plan.
The 1996 Plan has a term of ten years and no options may be granted
after expiration. On December 7, 1999, the Company's Board of Directors
determined that, after the grants discussed below, no further awards
will be made under the 1996 Plan.
The 1996 Plan provides for the grant of options that are not intended
to qualify as incentive stock options within the meaning of Section 422
of the Internal Revenue Code, as amended. Under the terms of the 1996
Plan, the exercise price of the options must be at least 85% of the
fair market value of the Company's common stock on the date of grant.
Options granted shall expire no later than ten years after the date of
grant.
During 1999, the Company granted to officers, directors, key employees
and advisors, options to purchase 1,153,205 shares of common stock
under the 1996 Plan. The options were issued as follows: (i) 878,205
options were granted to two of the Company's executive officers as
discussed in (Note 5) (ii) 200,000 options were granted to two of the
Company's directors which are exercisable at $3.50 per share and vested
immediately, and (iii) 75,000 options were granted to the Company's
Advisory Board members which are exercisable at $3.50 per share and
vested immediately.
F-13
<PAGE>
WALL STREET STRATEGIES CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1 6 Stock option plans (continued)
2 1996 Compensatory Stock Option Plan (continued)
The intrinsic value of the 200,000 options granted to the directors was
measured using the share price of $5.8125 per share on September 23,
1999 and accounted for as compensatory options in accordance with APB
Opinion No.25 and gave rise to earned compensation in the amount of
$462,500 on that date. The 75,000 options granted to the Company's
Advisory Board members (non-director advisors) were valued in
accordance with SFAS 123 on September 23, 1999 and gave rise to earned
compensation in the amount of $276,285 on that date.
1 1999 Incentive Stock Program
The Company's 1999 Incentive Stock Program ("1999 Program") was adopted
by the Board of Directors and approved by the stockholders during 1999.
The 1999 Program permits the granting of stock options, including
incentive stock options, stock appreciation rights with or without
stock options and restricted stock grants.
The actual number of shares that may be issued or transferred under the
1999 Program is 5,000,000 subject to certain adjustments. The maximum
number of shares for which options and stock appreciation rights may be
granted under the 1999 Program to any person during any calendar year
is 500,000.
During 1999, the Company granted to its officers and key employees
options to purchase 945,000 shares of common stock under the 1999
Program. Each of these grants are exercisable at $4.00 per share, the
fair value at the date of grant, and vest over two years commencing on
the date of issuance.
If the Company had elected to recognize compensation expense based upon
the fair value at the date of grant for awards under these plans,
consistent with the methodology prescribed by SFAS 123, the effect on
the Company's net loss would be as follows:
1
Year ended
December 31, Net loss
1999 per share
--------------- -------------
Net loss
As reported $ (4,251,065) (0.37)
Pro forma $ (5,140,437) (0.45)
The fair value of Company common stock options granted to employees
during the year ended December 31, 1999 approximated $8,331,000 and was
estimated on the date of grant using the Black-Scholes option-pricing
model with the following assumptions: (1) 90% expected volatility, (2)
risk-free interest rates ranging from 5.79% to 6.19% and (3) expected
lives of five years.
F-14
<PAGE>
WALL STREET STRATEGIES CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
9 Retirement plans
In January 1996, WSSI adopted a profit sharing plan on behalf of its
employees whereby contributions to the plan are made at the discretion
of management and no contributions are made by employees. During the
years ended December 31, 1999 and 1998, management elected to make
contributions to the plan in the amount of $100,000 and $150,000,
respectively.
10 Commitments and contingencies
11 Leases
On November 23, 1999, the Company entered into a ten-year lease
agreement for new office space located in New York City. The lease
provides for annual payments commencing on May 1, 2000 in the amount of
$253,680 per annum for the first three years; $270,592 per annum for
the next three years and $287,504 per annum for the remainder of the
lease term. In accordance with the terms of the lease agreement, the
Company issued a letter of credit to the lessor in the amount of
$272,000 for which the Company is required to maintain a cash deposit
as collateral in a separate interest bearing account.
Approximate future minimum required lease payments, not including
operating escalations or other charges are as follows:
Year ending December 31,
2000 $ 254,000
2001 254,000
2002 254,000
2003 271,000
2004 271,000
Thereafter 1,422,000
------------
$ 2,726,000
In April 2000, the Company negotiated a settlement for the early
termination of its existing lease. The agreement calls for a settlement
payment of $17,500 and the cancellation of the exiting lease and
surrender of the premises no later than June 30, 2000. Prior to the
surrender date, the lease remains in full force and effect. The
remaining commitment under this lease is approximately $46,000 through
June 30, 2000, exclusive of the $17,500 settlement payment.
1 Employment agreements
In conjunction with, and in contemplation of the Exchange Agreement
discussed in (Note 1), the Company entered into employment agreements
with its key executives as follows:
o A three year agreement with the Company's President and largest
shareholder who was formerly the sole shareholder of WSSI prior to the
acquisition by the Company. The agreement provides for a base salary of
$250,000 per annum with annual bonuses of up to $250,000 dependent upon
specified revenue targets. The agreement may be terminated by mutual
consent or by the Company for cause. For the year ended December 31,
1999 the Company recorded a bonus provision of $250,000 in accordance
with the terms of this agreement.
F-15
<PAGE>
WALL STREET STRATEGIES CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1 8 Commitments and contingencies (continued)
2 Employment agreements (continued)
o A three year agreement with the Company's Chief Strategy
Officer which provides for a base salary of $175,000 and an
annual bonus of up to 40% of base salary dependent upon
specified revenue targets. The agreement also provides for the
issuance of options under the 1996 Plan to acquire 526,923
shares of the Company's common stock (Note 5). This agreement
may be terminated by mutual consent or by the Company for
cause.
o A two year agreement with the Company's Executive Vice
President which provides for a base salary of $125,000 and an
annual bonus of up to 40% of base salary dependent upon
specified revenue targets. The agreement also provides for the
issuance of options under the 1996 Plan to acquire 351,282
shares of the Company's common stock (Note 5). This agreement
may be terminated by mutual consent or by the Company for
cause.
1 Consulting agreements
o On September 23, 1999, the Company entered into a two year
consulting agreement with Sigma Limited, S.A., a Swiss company
where the Company's Chairman is a consultant. The agreement
provides for an annual fee of $50,000 plus a non-accountable
expense allowance of $35,000 per annum.
o In October 1999, the Company entered into an agreement with
International Integrated Solutions for web and software
development and integration of the Company's website. The
agreement is for a term of six months through April 2000 and
the fee for the services is $350,000. Under the agreement,
$100,000 was paid in November 1999 and the balance is payable
in monthly installments of $50,000 each through April 2000. At
December 31, 1999, $28,333 is accrued under this agreement and
is included in Accrued expenses in the accompanying
consolidated balance sheet.
o In December 1999, the Company retained a securities brokerage
and investment banking firm to assist the Company with respect
to matters relating to the financing of the Company's
business, recapitalizations, mergers and acquisitions. The
Company paid the firm an advance of $50,000 (included in Other
assets in the accompanying consolidated balance sheet) against
future fees and expense allowances that are non-refundable
except under certain circumstances.
1 Regulatory matters
On August 11, 1999, the Company and its President reached an agreement
with the Securities and Exchange Commission in connection with certain
disclosures regarding the Company's relationship with a company being
recommended for purchase. The settlement calls for a consent injunction
prohibiting violations of Section 17(b) and the payment of civil
penalties of $10,000 and $25,000, respectively. The Company's costs
associated with this matter have been included in the accompanying
consolidated statements of operations.
F-16
<PAGE>
WALL STREET STRATEGIES CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
12 Subsequent events
o On January 26, 2000, the Company entered into a market access
program marketing agreement with Continental Capital and
Equity Corporation ("CCEC") whereby CCEC will provide
marketing and financial public relations services to the
Company. The term of the agreement is for twelve months. As
compensation under the agreement, CCEC received 30,000
restricted shares of the Company's common stock and options to
purchase 100,000 shares of the Company's stock at prices
ranging from $10 to $16 per share.
o On March 20, 2000 and April 7, 2000, the Company entered into
two employment agreements with two new executives. The terms
of the agreements are for three years and the executives will
each receive an annual base compensation of $175,000, plus
incentive compensation bonuses up to 50% of their annual base
per year predicated upon the achievement of specified
performance goals. In addition, the executives received
options under the Company's 1999 Incentive Program to acquire
200,000 and 500,000 shares, respectively, of the Company's
common stock at an exercise price of $7.50 per share, which
vest over a period of time in accordance with the agreements.
F-17
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
April 13, 2000
WALL STREET STRATEGIES CORPORATION
By: /s/ Charles V. Payne
------------------------------
Charles V. Payne, President
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2.1 Agreement and Plan of Share Exchange dated July 30, 1999, by and
between Charles V. Payne and Registrant*
3.1 Certificate of Incorporation*
3.2 Articles and Certificate of Merger*
3.3 Certificate of Amendment of Certificate of Incorporation*
3.4 By-laws as currently in effect*
4.1 Specimen Common Stock Certificate*
4.2 1996 Compensatory Stock Option Plan*
4.3 1999 Incentive Program*
4.4 Amendment to Registrant's 1999 Incentive Program
10.1 Agreement of Lease dated as of July 1, 1998, between 130 William
LLC and Wall Street Strategies, Inc.
10.2 Agreement of Lease dated as of November 23, 1999, between
Praedium II Broadstone LLC and Wall Street Strategies, Inc.*
10.3 Registration Rights Agreement dated as of September 23, 1999, by
and among the Registrant and Charles Payne*
10.4 Voting Agreement dated September 23, 1999, by and among Charles
Payne, Registrant, Sigma Limited, S.A., Ian Rice and Corporate
Communications Network, Inc.*
10.5 Employment Agreement dated September 23, 1999, among Wall Street
Strategies, Inc., Registrant and Charles Payne*
10.6 Employment Agreement dated July 30, 1999, by and between
Registrant and David McCallen*
10.7 Employment Agreement dated July 30, 1999, by and between
Registrant and Shawn Baldwin*
10.8 Amended and Restated Subscription and Rights Agreement dated
July 30, 1999, by and between the Registrant and David McCallen*
10.9 Amended and Restated Subscription and Rights Agreement dated
July 30, 1999, by and between the Registrant and Shawn Baldwin*
10.10 Form of Subscription and Rights Agreement by and between
Registrant and Subscriber*
10.11 Amended and Restated Escrow Agreement dated July 30, 1999, by
and among Registrant, David McCallen and Escrow Agent*
10.12 Amended and Restated Escrow Agreement dated July 30, 1999, by and
among Registrant, Shawn Baldwin and Escrow Agent*
10.13 Form of Escrow Agreement by and among Registrant, the Subscribers
for shares of Registrant's common stock and Escrow Agent*
10.14 Stock Option Agreement dated July 30, 1999, by and between the
Registrant and David McCallen*
10.15 Form of Advisor Agreement between the Registrant and each member
of the Advisory Board*
10.16 Form of Stock Option Agreement (Advisor)*
10.17 Consulting Agreement dated as of September 23, 1999, by and
between Registrant and Sigma Limited, S.A.*
10.18 Market Access Program Marketing Agreement dated January 26, 2000,
by and between Continental Capital & Equity Corporation and the
Registrant*
10.19 Engagement Letter dated December 23, 1999, by and between
Registrant and Joseph Charles & Assoc., Inc.
10.20 Employment Agreement dated April 7, 2000, by and between
Registrant and Daliah Amar
10.21 Employment Agreement dated March 20, 2000, by and between
Registrant and Joshua P. Eggert
10.22 Stock Option Agreement dated July 30, 1999, by and between
Registrant and Shawn Baldwin
10.23 Form of Stock Option Agreement (Employee)
10.24 Form of Stock Option Agreement (Director)
10.25 Letter of Intent dated October 19, 1999, by and between the
Registrant and Zacks Investment Research
10.26 Letter dated November 4, 1999, by and between Registrant and
Data Broadcasting Corporation
<PAGE>
10.27 Memorandum of Understanding dated November 22, 1999, by and
between Registrant and International Integrated Solutions, Ltd.
10.28 Letter Agreement dated April 11, 2000, by and between Registrant
and 130 William LLC
16.1 Letter from Lilling & Company LLP to Securities Exchange
Commission
27.1 Financial Data Schedule
* Previously filed with the Securities Exchange Commission as an Exhibit to
the Registration Statement on Form 10-SB, File No. 0-29499.
<PAGE>
Exhibit 4.4
WALL STREET STRATEGIES CORPORATION
1999 INCENTIVE PROGRAM
AMENDMENT
The Board of Directors and shareholders of Wall Street Strategies
Corporation have adopted and approved the following amendment to the 1999
Incentive Program of Wall Street Strategies Corporation (the "Program")
effective March 1, 2000.
RESOLVED, that the last sentence of paragraph 4 (a) of the
Program is hereby deleted in its entirety and in lieu thereof the
following shall be added: The maximum number of Shares for which
options and stock appreciation rights may be granted under the Program
to any person during any calendar year is 500,000 (subject to
appropriate adjustment in the event of any changes in capitalization of
the Company).
<PAGE>
Exhibit 10.1
AGREEMENT OF LEASE (hereinafter referred to as "Lease" or
"lease"), made as of this 23rd day of July, 1998 between 130 WILLIAM LLC, having
an address at 130 William Street, New York, New York 10038, party of the first
part (hereinafter referred to as "Landlord" or "Owner"), and WALL STREET
STRATEGIES, INC., a Delaware corporation, having an address at 50 Broad Street,
New York, New York 10004, party of the second part (hereinafter referred to as
"Tenant").
WITNESSETH: Landlord hereby leases to Tenant and Tenant hereby
hires from Landlord that portion of the 4th floor substantially as shown shaded
on the floor plan annexed hereto as Exhibit A (hereinafter called "premises,"
"demised premises" or "premises"), in the building known as 130 William Street,
New York, New York (hereinafter called "building" or "Building"), for the term
(hereinafter called "term" or "Term") to commence on the later of August 1, 1998
or the Substantial Completion Date (as defined hereinafter) (hereinafter called
the "Commencement Date"), and to the end on the last day of the month in which
the fifth (5th) year anniversary of the Commencement Date shall occur
(hereinafter called the "Expiration Date"), or until such term shall sooner
cease and expire as hereinafter provided, both dates inclusive, at an annual
rental as more particularly set forth in Article 37 hereof (hereinafter called
"rent" or "Fixed Rent"), together with all other sums of money as shall become
due and payable by Tenant under this lease (hereinafter called "additional rent"
or "Additional Rent" and together with Fixed Rent, "rent" or "Rent"), which
Tenant agrees to pay in lawful money of the United States which shall be legal
tender in payment of all debts and dues, public and private, at the time of
payment, in equal monthly installments in advance on the first day of each month
during said term, at the office of Landlord or such other place as Landlord may
designate, without any set off or deduction whatsoever, except that Tenant shall
pay the first monthly installments(s) on the execution hereof (unless this lease
be a renewal).
In the event that, at the commencement of the term of this lease, or thereafter,
Tenant shall be in default in the payment of rent to Landlord pursuant to the
terms of another lease with Landlord or with Landlord's predecessor in interest,
Landlord may at Landlord's option and without notice to Tenant add the amount of
such arrearages to any monthly installment of rent payable hereunder and the
same shall be payable to Landlord as additional rent.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
Rent: 1. Tenant shall pay the rent as above and as
hereinafter provided.
Occupancy: *2. Tenant shall use and occupy the demised
premises as executive, general and
administrative offices and for no other purpose.
*and to such other requirements as Owner may reasonably
impose, including without limitation, that all alterations by Tenant shall be
performed by Owner's designated contractors.
Tenant Alterations:
- ------------------
3. Tenant shall make no changes in or to the demised premises of any nature
without Owner's prior written consent. Subject to the prior written consent of
Owner, and to the provisions of this
<PAGE>
article, X Tenant, at Tenant's expense, may make alterations, installations,
additions or improvements which are non-structural and which do not affect
utility services or plumbing and electrical lines, in or to the interior of the
demised premises by using contractors or mechanics first approved in each
instance by Owner. Tenant shall, before making any alterations, additions,
installations or improvements, at its expense, obtain all permits, approvals and
certificates required by any governmental or quasi-governmental bodies and (upon
completion) certificates of final approval thereof and shall deliver promptly
duplicates of all such permits, approvals and certificates to Owner and Tenant
agrees to carry and will cause Tenant's contractors and sub-contractors to carry
such workman's compensation, general liability, personal and property damage
insurance as Owner may require. If any mechanic's lien is filed against the
demised premises, or the building of which the same forms a part, for work
claimed to have been done for, or materials furnished to, Tenant, whether or not
done pursuant to this article, the same shall be discharged by Tenant within
thirty days thereafter, at Tenants' expense, by payment of filing the bond
required by law. All fixtures and all paneling, partitions, railings and like
installations, installed in the premises at any time either by Tenant or by
Owner on Tenant's behalf, shall, upon installation, become the property of Owner
and shall remain upon and be surrendered with the demised premises unless Owner,
by notice to Tenant no later than twenty days prior to the date fixed as the
termination of this lease, elects to relinquish Owner's right thereto and to
have them removed by Tenant, in which event the same shall be removed from the
premises by Tenant prior to the expiration of the lease, at Tenant's expense.
Nothing in this Article shall be construed to give Owner title to or to prevent
Tenant's removal of trade fixtures, moveable office furniture and equipment, but
upon removal of any such from the premises or upon removal of other
installations as may be required by Owner. Tenant shall immediately and at its
expense, repair and restore the premises to the condition existing prior to
installation and repair any damage to the demised premises to the building due
to such removal. All property permitted or required to be removed, by Tenant at
the end of the term remaining in the premises after Tenant's removal shall be
deemed abandoned and may, at the election of Owner, either be retained as
Owner's property or may be removed from the premises by Owner, at Tenant's
expense.
Maintenance and Repairs:
- -----------------------
4. Tenant shall, throughout the term of this lease, take good care of the
demised premises and the fixtures and appurtenances therein. Tenant shall be
responsible for all damage or injury to the demised premises or any other part
of the building and the systems and equipment thereof, whether requiring
structural or nonstructural repairs caused by or resulting from carelessness,
omission, neglect or improper conduct of Tenant, Tenant's subtenants, agents,
employees, invitees or licensees, or which arise out of any work, labor, service
or equipment done for or supplied to Tenant or any subtenant or arising out of
the installation, use or operation of the property or equipment done for or
supplied to Tenant or any subtenant or arising out of the installation, use or
operation of the property or equipment of Tenant or any subtenant. Tenant shall
also repair all damage to the building and the demised premises cause by the
moving of Tenant's fixtures, furniture and equipment. Tenant shall promptly
make, at Tenant's expense, all repairs in and to the demised premises for which
Tenant is responsible, using only the contractor for the trade or trades in
question, selected from a list of at least two contractors per trade submitted
by Owner. Any other repairs in or to the building or the facilities and systems
thereof for which Tenant is responsible shall be performed by Owner at the
Tenant's expense. Owner
2
<PAGE>
shall maintain in good working order and repair the exterior and the structural
portions of the building, including the structural portions of its demised
premises, and the public portions of the building interior and the building
plumbing, electrical, heating and ventilating systems (to the extent such
systems presently exist) serving the demised premises. Tenant agrees to give
prompt notice of any defective condition in the premises for which Owner may be
responsible hereunder. There shall be no allowance to Tenant for diminution of
rental value and no liability on the part of Owner by reason of inconvenience,
annoyance or injury to business arising from Owner or others making repairs,
alterations, additions or improvements in or to any portion of the building or
the demised premises or in and to the fixtures, appurtenances or equipment
thereof. It is specifically agreed that Tenant shall not be entitled to any
setoff or reduction of rent by reason of any failure of Owner to comply with the
covenants of this or any other article of this Lease. Tenant agrees that
Tenant's sole remedy at law in such instance will be by way of an action for
damages for breach of contract. The provisions of this Article 4 shall not
apply in the case of fire or other casualty which are dealt with in Article 9
hereof.
Window Cleaning:
- ---------------
5. Tenant will not clean nor require, permit, suffer or allow any window in the
demised premises to be cleaned from the outside in violation of Section 202 of
the Labor Law or any other applicable law or of the Rules of the Board of
Standards and Appeals, or of any other Board or body having or asserting
jurisdiction.
Requirements of Law, Fire Insurance, Floor Loads:
- ------------------------------------------------
6. Prior to the commencement of the lease term, if Tenant is then in possession,
and at all times thereafter, Tenant, at Tenant's sole cost and expense, shall
promptly comply with all present and future laws, orders and regulations of all
state, federal, municipal and local governments, departments, commissions and
boards and any direction of any public officer pursuant to law and all orders,
rules and regulations of the New York Board of Fire Underwriters, Insurance
Services Office, or any similar body which shall impose any violation, order or
duty upon Owner or Tenant with respect to the demised premises, whether or not
arising out of Tenant's use or manner of use thereof, (inducing Tenant's
permitted use) or, with respect to the building if arising out of Tenant's use
or manner of use of the premises or the building (including the use permitted
under the lease). Nothing herein shall require Tenant to make structural repairs
or alterations unless Tenant has, by its manner of use of the demised premises
or method of operation therein, violated any such laws, ordinances, orders,
rules, regulations or requirements with respect thereto. Tenant may, after
securing Owner to Owner's satisfaction against all damages, interest, penalties
and expenses, including, but not limited to, reasonable attorney's fees, by cash
deposit or by surety bond in an amount and in a company satisfactory to Owner,
contest and appeal any such laws, ordinances, orders, rules, regulations or
requirements provided same is done with all reasonable promptness and provided
such appeal shall not subject Owner to prosecution for a criminal offense or
constitute a default under any lease or mortgage under which Owner may be
obligated, or cause the demised premises or any part thereof to be condemned or
vacated. Tenant shall not do or permit any act or thing to be done in or to the
demised premises with is contrary to law, or which will invalidate or be in
conflict with public liability, fire or other policies of insurance at any time
carried by or for the benefit of Owner with
3
<PAGE>
respect to the demised premises or the building of which the demised premises
form a part, or which shall or might subject Owner to any liability to
responsibility to any person or for property damage. Tenant shall not keep
anything in the demised premises except as now or hereafter permitted by the
Fire Department, Board of Fire Underwriters, Fire Insurance Rating Organization
or other authority having jurisdiction, and then only in such manner and such
quantity so as not to increase the rate for fire insurance applicable to the
building, nor use the premises in a manner which will increase the insurance
rate for the building or any property located therein over that in effect prior
to the commencement of Tenant's occupancy. Tenant shall pay all costs, expenses,
fines, penalties, or damages, which may be imposed upon Owner by reason of
Tenant's failure to comply with the provisions of this article and if by reason
of such failure the fire insurance rate shall, at the beginning of this lease or
at any time thereafter, be higher than it otherwise would be, then Tenant shall
reimburse Owner, as additional rent hereunder, for that portion of all fire
insurance premiums thereafter paid by Owner which shall have been charged
because of such failure by Tenant. In any action or proceeding wherein Owner and
Tenant are parties, a schedule or "make-up" of rate for the building or demised
premises issued by the New York Fire Insurance Exchange, or other body making
fire insurance rates applicable to said premises shall be conclusive evidence of
the facts therein stated and of the several items and charges in the fire
insurance rates then applicable to said premises. Tenant shall not place a load
upon any floor of the demised premises exceeding the floor load per square foot
area which it was designed to carry and which is allowed by law. Owner reserves
the right to prescribe the weight and position of all safes, business machines
and mechanical equipment. Such installations shall be placed and maintained by
Tenant, at Tenant's expense in settings sufficient, in Owner's judgment, to
absorb and prevent vibration, noise and annoyance.
Subordination:
- -------------
7. This lease is subject and subordinate to all ground or underlying leases and
to all mortgages which may now or hereafter affect such leases or the real
property of which demised premises are a part and to all renewals,
modifications, consolidation, replacements and extensions of any such underlying
leases and mortgages. This clause shall be self-operative and no further
instrument of subordination shall be required by any ground or underlying lessor
or by any mortgagee, affecting any lease or the real property of which the
demised premises are a part. In confirmation of such subordination, Tenant shall
from time to time execute promptly any certificate that Owner may request.
Property Loss, Damage, Reimbursement Indemnity:
- ----------------------------------------------
8. Owner or its agents shall not be liable for any damage to property of Tenant
or of others entrusted to employees of the building, nor for loss of or damage
to any property of Tenant by theft or otherwise, nor for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused
by or due to the negligence of Owner, its agents, servants or employees. Owner
or its agents will not be liable for any such damage caused by other tenants or
persons in, upon or about said building or caused by operations in construction
of any private, public or quasi public work. If at any time any windows of the
demised premises are temporarily closed, darkened or bricked up (or permanently
closed, darkened or bricked up, if required by law) for any reason whatsoever
including, but not limited to Owner's own acts, Owner shall not be liable for
any damage Tenant may sustain thereby and
4
<PAGE>
Tenant shall not be entitled to any compensation therefor nor abatement or
diminution of rent nor shall the same release Tenant from its obligations
hereunder nor constitute an eviction. Tenant shall indemnify and save harmless
Owner against and from all liabilities, obligations, damages, penalties, claims,
costs and expenses for which Owner shall not be reimbursed by insurance,
including reasonable attorneys fees, paid, suffered or incurred as a result of
any breach by Tenant, Tenant's agents, contractors, employees, invitees or
licensees, Tenant's liability under this lease extends to the acts and omissions
of any covenant or condition of this lease, or the carelessness, negligence or
improper conduct of the Tenant, Tenant's agents, contractors, employees,
invitees or licensees. Tenant's liability under this lease extends to the acts
or omissions of any sub-tenant, and any agent, contractor, employee, invitee or
licensee of any sub-tenant. In case any action or proceeding is brought against
Owner by reason of any such claim, Tenant, upon written notice from Owner, will
at Tenant's expense, resist or defend such action or proceeding by counsel
approved by Owner in writing, such approval not to be unreasonably withheld.
Destruction, Fire and Other Casualty:
- ------------------------------------
9. (a) If the demised premises or any part thereof shall be damaged by fire or
other casualty, Tenant shall give immediate notice thereof to Owner and this
lease shall continue in full force and effect except as hereinafter set forth
(b) If the demised premises are partially damaged or rendered partially unusable
by fire or other casualty, the damages thereto shall be repaired by and at the
expense of Owner and the rent and other items of additional rent, until such
repair shall be substantially completed, shall be apportioned from the day
following the casualty according to the part of the premises which is usable.
(c) If the demised premises are totally damaged or rendered wholly unusable by
fire or other casualty, then the rent and other items of additional rent as
hereinafter expressly provided shall be proportionately paid up to the time of
the casualty and thenceforth shall cease until the date when the premises shall
have been repaired and restored by Owner (or sooner reoccupied in part by Tenant
then rent shall be apportioned as proved in subsection (b) above), subject to
Owner's right to elect not to restore the same as hereinafter provided. (d) If
the demised premises are rendered wholly unusable or (whether or not the demised
premises are damaged in whole or in part) if the building shall be so damaged
that Owner shall decide to demolish it or to rebuilt it, then, in any of such
events, Owner may elect to terminate this lease by written notice to Tenant,
given within 90 days after such fire or casualty, or 30 days after adjustment of
the insurance claim for such fire or casualty, or 30 days after adjustment of
the insurance claim for such fire or casualty, whichever is sooner, specifying a
date for the expiration of the lease, which date shall not be more than 60 days
after the giving of such notice, and upon the date specified in such notice the
term of this lease shall expire as fully and completely as if such date were the
date set forth above for the termination of this lease and Tenant shall
forthwith quit, surrender and vacate the premises without prejudice however, to
Landlord's rights and remedies against Tenant under the lease provisions in
effect prior to such termination, and any rent owing shall be paid up to such
date and any payment of rent made by Tenant which were on account of any period
subsequent to such date shall be returned to Tenant. Unless Owner shall serve a
termination notice as provided for herein, Owner shall make the repairs and
restorations under the conditions of (b) and (c) hereof, with all reasonable
expedition, subject to delays due to adjustment of insurance claims, labor
troubles and causes beyond Owner's control. After any such casualty, Tenant
shall cooperate with Owner's restoration by removing from the premises as
promptly as reasonably possible, all of Tenant's salvageable inventory and
moveable equipment, furniture, and other property. Tenant's liability for rent
shall resume five (5) days after written notice from Owner that the premises are
substantially ready for Tenant's occupancy or such earlier date on which such
repairs would have been completed but for delays caused by Tenant, including
delays in
5
<PAGE>
submitting plans, (e) Nothing contained hereinabove shall relieve Tenant from
liability that may exist as a result of damage from fire or other casualty.
Notwithstanding the foregoing, including Owner's obligation to restore under
subparagraph (b) above, each party shall look first to any insurance in its
favor before making any claim against the other party for recovery for loss
or damage resulting from fire or other casualty, and to the extent that such
insurance is in force and collectible and to the extent permitted by law, Owner
and Tenant each hereby releases and waives all right of recovery with respect to
subparagraphs (b), (d), and (e) above, against the other or any one claiming
through or under each of them by way of subrogation or otherwise. The release
and waiver herein referred to shall be deemed to include any loss or damage to
the demised premises and/or to any personal property, equipment, trade fixtures,
goods and merchandise located therein. The foregoing release and waiver shall be
in force only if both releasors' insurance policies contain a clause providing
that such a release or waiver shall not invalidate the insurance. If, and to the
extent, that such waiver can be obtained only by the payment of additional
premiums, then the party benefiting from the waiver shall pay such premium
within ten days after written demand or shall be deemed to have agreed that the
party obtaining insurance coverage shall be free of any further obligation under
the provisions hereof with respect to waiver of subrogation. Tenant acknowledges
that Owner will not carry insurance on Tenant's furniture and/or furnishings or
any fixtures or equipment, improvements, or appurtenances removable by Tenant
and agrees that Owner will not be obligated to repair any damage thereto or
replace the same. (f) Tenant hereby waives the provisions of Section 227 of the
Real Property Law and agrees that the provisions of this article shall govern
and control in lieu thereof.
Eminent Domain:
- --------------
10. If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this lease shall cease and terminate from the
date of title vesting in such proceeding and Tenant shall have no claim for the
value of any unexpired term of said lease and assigns to Owner, Tenant's entire
interest in any such award. Tenant shall have the right to make an independent
claim to the condemning authority of the value to Tenant's moving expenses and
personal property, trade fixtures and equipment, provided Tenant is entitled
pursuant to the terms of the lease to remove such property, trade fixture and
equipment at the end of the term and provided further such claim does not reduce
Owner's award.
Assignment, Mortgage, Etc.:
- -------------------------
11. Tenant, for itself, its heirs, distributees, executors, administrators,
legal representative, successor and assigns, expressly covenants that it shall
not assign, mortgage or encumber this agreement, nor underlet, or suffer or
permit the demised premises or any part thereof to be used by others, without
the prior written consent of Owner in each instance. Transfer of the majority of
the stock of a corporate Tenant or the majority partnership interest of a
partnership Tenant shall be deemed an assignment. If this lease be assigned, or
if the demised premises or any part thereof be underlet or occupied by anybody
other than Tenant, Owner may, after default by Tenant, collect rent from the
assignee, under-tenant or occupant, and apply the net amount collected to the
rent herein reserved, but no such assignment, underletting, occupancy or
6
<PAGE>
collection shall be deemed a waiver of this covenant, or the acceptance of the
assignee, under-tenant or occupant as tenant, or a release of Tenant from the
further performance by Tenant of covenants on the part of Tenant herein
contained. The consent by Owner to an assignment or underletting shall not in
any wise be construed to relieve Tenant from obtaining the express consent in
writing of Owner to any further assignment or underletting.
Electric Current:
- ----------------
12. Rates and conditions in respect to submetering or rent inclusion, as the
case may be, to be added in RIDER attached hereto. Tenant covenants and agrees
that at all times its use of electric currents shall not exceed the capacity of
existing feeders to the building or the risers or wiring installation and Tenant
may not use any electrical equipment which, in Owner's opinion, reasonably
exercised, will overload such installations or interfere with the use thereof by
other tenants of the building. The change at any time of the character of
electric service shall in no wise make Owner liable or responsible to Tenant,
for any loss, damages or expenses which Tenant may sustain.
Access to Premises:
- ------------------
13. Owner or Owner's agents shall have the right (but shall not be obligated) to
enter the demised premises in any emergency at any time, and at other reasonable
times, to examine the same and to make such repairs, replacements and
improvements as Owner may deem necessary and reasonably desirable to the demised
premises or to any other portion of the building of which Owner may elect to
perform. Tenant shall permit Owner to use and maintain and replace pipes and
conduits in and through the demised premises and to erect new pipes and conduits
therein provided they are concealed within the walls, floor, or ceiling. Owner
may, during the progress of any work in the demised premises, take all necessary
materials and equipment into said premises without the same constituting and
eviction nor shall the Tenant be entitled to any abatement of rent while such
work is in progress nor to any damages by reason of loss or interruption of
business or otherwise. Throughout the term hereof Owner shall have the right to
enter the demised premises at reasonable hours for the purpose of showing the
same to prospective purchasers or mortgagees of the building, and during the
last six months of the term for the purpose of showing the same to prospective
tenants. If Tenant is not present to open and permit an entry into the demised
premises, Owner or Owner's agents may enter the same whenever such entry may be
necessary or permissible by master key or forcibly and provided reasonable care
is exercised to safeguard Tenant's property, such entry shall not render Owner
or its agents liable therefor, nor in any event shall the obligations of Tenant
hereunder be affected. If during the last month of the term Tenant shall have
removed all or substantially all of Tenant's property therefrom Owner may
immediately enter, alter, renovate or redecorate the demised premises without
limitation or abatement of rent, or incurring liability to Tenant for any
compensation and such act shall have no effect on this lease or Tenant's
obligations hereunder.
Vault, Vault Space, Area:
- ------------------------
14. No Vaults, vault space or area, whether or not enclosed or covered, not
within the property line of the building is leased hereunder, anything contained
in or indicated on any
7
<PAGE>
sketch, blue print or plan, or anything contained elsewhere in this lease to the
contrary notwithstanding. Owner makes no representation as to the location of
the property line of the building. All vaults and vault space and all such areas
not within the property line of the building, which Tenant may be permitted to
use and/or occupy, is to be used and/or occupied under a revocable license, and
if any such license be revoked, or if the amount of such space or area be
diminished or required by any federal, state or municipal authority or public
utility. Owner shall not be subject to any liability nor shall Tenant be
entitled to any compensation or diminution or abatement of rent, nor shall such
revocation, diminution or requisition deemed constructive or actual eviction.
Any tax, fee or charge of municipal authorities for such vault or area shall be
paid by Tenant.
Occupancy:
- ---------
15. Tenant will not at any time use or occupy the demised premises in violation
of the certificate of occupancy issued for the building of which the demised
premises are a part. Tenant has inspected the premises and accepts them as is,
subject to the riders annexed hereto with respect to Owner's work, if any. In
any event, Owner makes no representation as to the condition of the premises and
Tenant agrees to accept the same subject to violations, whether or not of
record.
Bankruptcy:
- ----------
16. (a) Anything elsewhere in this lease to the contrary notwithstanding, this
lease may be cancelled by Owner by the sending of a written notice to Tenant
within a reasonable time after the happening of any one or more of the following
events: (1) the commencement of a case in bankruptcy or under the laws of any
state naming Tenant as the debtor; or (2) the making by Tenant of an assignment
or any other arrangement for the benefit of creditors under any state statute.
Neither Tenant nor any person claiming through or under Tenant, or by reason of
any statute or order of court, shall thereafter be entitled to possession of the
premises demised but shall forthwith quit and surrender the premises. If this
lease shall be assigned in accordance with its terms, the provisions of this
Article 16 shall be applicable only to the party then owning Tenant's interest
in this lease.
(b) it is situated and agreed that in the event of the termination of
this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any
other provisions of this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rent reserved hereunder for the unexpired portion of the term demised and
the fair and reasonable rental value of the demised premises for the same
period. In the computation of such damages the difference between any
installment of rent becoming due hereunder after the date of termination and the
fair and reasonable rental value of the demised premised for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of four percent (4%) per annum. If such premises or any
part thereof be re-let by the Owner for the unexpired term of said lease, or any
part thereof, before presentation of proof of such liquidated damages to any
court, commission or tribunal, the amount of rent reserved upon such re-letting
shall be deemed to be the fair and reasonable rental value for the
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part or the whole of the premises so re-let during the term of the re-letting.
Nothing herein contained shall limit or prejudice the right of the Owner to
prove for and obtain as liquidated damages by reason of such termination, an
amount equal to the maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, such damages are to be
proved, whether or not such amount be greater, equal to, or less than the amount
of the difference referred to above.
Default:
- -------
17. (1) If Tenant defaults in fulfilling any of the covenants of this lease
including the covenants for the payment of rent or additional rent; or if the
demised premises become vacant or deserted; or if any execution or attachment
shall be issued against Tenant or any of Tenant's property whereupon the demised
premises shall be taken or occupied by someone other than Tenant; or if this
lease be rejected under Section 235 of Title 11 of the U.S. Code (bankruptcy
code); or if Tenant shall fail to move into or take possession of the premises
within thirty (30) days after the commencement of the term of this lease, then,
in any one or more of such events, upon Owner serving a written fifteen (15)
days notice upon Tenant specifying the nature of said default and upon the
expiration of said fifteen (15) days, if Tenant shall have failed to comply with
or remedy such default, or if the said default or omission complained of shall
be of a nature that the same cannot be completely cured or remedied within said
fifteen (15) day period, and if Tenant shall not have diligently commenced
curing such default within such fifteen (15) day period, and shall not
thereafter with reasonable diligence and in good faith, proceed to remedy or
cure such default, then Owner may serve a written five (5) days' notice of
cancellation of this lease upon Tenant, and upon the expiration of said five (5)
days of this lease and the term thereunder shall end and expire as fully and
completely as if the expiration of such five (5) day period were the day herein
definitely fixed for the end and expiration of this lease and the term thereof
and Tenant shall ten quit and surrender the demised premises to Owner but Tenant
shall remain liable as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been given, and
the term shall expire as aforesaid; or if Tenant shall make default in the
payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein required;
then and in any of such events Owner may without notice, re-enter the demised
premises either by force or otherwise, and dispossess Tenant by summary
proceedings or otherwise, and the legal representative of Tenant or other
occupant of demised premises and remove their effects and hold the premises as
if this lease had not been made, and Tenant herein waives the service of notice
of intention to re-enter or to institute legal proceedings to that end. If
Tenant shall make default hereunder prior to the date fixed as the commencement
of any renewal or extension of this lease. Owner may cancel and terminate such
renewal or extension agreement by written notice.
Remedies of Owner and Waiver of Redemption:
- ------------------------------------------
18. In case of any such default, re-entry, expiration and/or dispossess by
summary proceedings or otherwise, (a) the rent shall become due thereupon and be
paid up to the time of
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such re-entry, dispossess and/or expiration, (b) Owner may re-let the premises
or any part or parts thereof, either in the name of Owner or otherwise, for a
term or terms, which may at Owner's option be less than or exceed the period
which would otherwise have constituted the balance of the term of this lease and
may grant concessions or free rent or charge a higher rental than that in this
lease, and/or (c) Tenant or the legal representatives of Tenant shall also pay
Owner as liquidated damages for the failure of Tenant to observe and perform
said Tenant's covenants herein contained, any deficiency between the rent hereby
reserved and/or covenanted to be paid and the net amount, if any, of the rents
collected on account of the lease or leases of the demised premises for each
month of the period which would otherwise have constituted the balance of the
term of this lease. The failure of Owner to re-let the premises or any part or
parts thereof shall not release or affect Tenant's liability for damages. In
computing such liquidated damages there shall be added to the said deficiency
such expenses as Owner may incur in connection with re-letting, such as legal
expenses reasonable attorneys' fees, brokerage, advertising and for keeping the
demised premises in good order or for preparing the same for re-letting. Any
such liquidated damages shall be paid in monthly installments by Tenant on the
rent day specified in this lease and any suit brought to collect the amount of
the deficiency for any month shall not prejudice in any way the rights of Owner
to collect the deficiency for any subsequent month by a similar proceeding.
Owner, in putting the demised premises in good order or preparing the same for
re-rental may, at Owner's option, make such alterations, repairs, replacements,
and/or decorations in the demised premises as Owner, in Owner's sole judgment,
considers advisable and necessary for the purpose of re-letting the demised
premises, and the making of such alterations, repairs, replacements, and/or
decorations shall not operate or be construed to release Tenant from liability
hereunder as aforesaid. Owner shall in no event be liable in any way whatsoever
for failure to re-let the demised premises, or in the event that the demised
premises are re-let, for failure to collect the rent thereof under such
re-letting, and in no event shall Tenant be entitled to receive any excess, if
any, of such net rents collected over the sums payable by Tenant to Owner
hereunder. In the event of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Owner shall have the right of injunction and the
right to invoke any remedy allowed at law or in equity as if re-entry, summary
proceedings and other remedies were not herein provided for. Mention in this
lease of any particular remedy, shall not preclude Owner from any other remedy,
in law or in equity. Tenant hereby expressly waives any and all rights of
redemption granted by or under any present or future laws in the event of Tenant
being evicted or dispossessed for any cause, or in the event of Owner obtaining
possession of demised premises, by reason of the violation by Tenant of any of
the covenants and conditions of this lease, or otherwise.
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Fees and Expenses:
- -----------------
19. If Tenant shall default in the observance or performance of any term or
covenant on Tenant's part to be observed or performed under or by virtue of any
of the terms or provisions in any article of this lease, after notice if
required and upon expiration of any applicable grace period if any, (except in
an emergency), then, unless otherwise provided elsewhere in this lease. Owner
may immediately or at any time thereafter and without notice perform the
obligation of Tenant thereunder. If Owner, in connection with the foregoing or
in connection with any default by Tenant in the covenant to pay rent hereunder,
makes any expenditures or incurs any obligations for the payment of money,
including but not limited to reasonable attorneys' fees, in instituting,
prosecuting or defending any action or proceeding, and prevails in any such
action or proceeding then Tenant will reimburse Owner for such sums so paid or
obligations incurred with interest and costs. The foregoing expenses incurred by
reason of Tenant's default shall be deemed to be additional rent hereunder and
shall be paid by Tenant to Owner within ten (10) days of rendition of any bill
or statement to Tenant therefor. If Tenant's lease term shall have expired at
the time of making of such expenditures or incurring of such obligations, such
sums shall be recoverable by Owner, as damages.
Buildings, Alterations and Managements:
- --------------------------------------
20. Owner shall have the right at any time without the same constituting an
eviction and without incurring liability to Tenant therefor to change the
arrangement and/or location of public entrances, passageways, doors, doorways,
corridors, elevators, stairs, toilets or other public parts of the building and
to change the name, number or designation by which the building may be known.
There shall be no allowance to Tenant for diminution of rental value and no
liability on the part of Owner by reason of inconvenience, annoyance or injury
to business arising from Owner or other Tenants making any repairs in the
building or any such alterations, additions and improvements. Furthermore,
Tenant shall not have any claim against Owner by reason of Owner's imposition of
such controls of the manner of access to the building by Tenant's social or
business visitors as the Owner may deem necessary for the security of the
building and its occupants.
No Representations by Owner:
- ---------------------------
21. Neither Owner nor Owner's agents have made any representation or promises
with respect to the physical condition of the building, the land upon which it
is erected or the demised premises, the rents, leases, expenses of operation or
any other matter or thing affecting or related to the premises except as herein
expressly set forth and no rights, easements or licenses are acquired by Tenant
by implication or otherwise except as expressly set forth in the provisions of
this lease. Tenant has inspected the building and the demised premises and is
thoroughly acquainted with their condition and agrees to take the same "as is"
and acknowledges that the taking of possession of the demised premises by Tenant
shall be conclusive evidence that the said premises and the building of which
the same form a part were in good and satisfactory condition at the time such
possession was so taken, except as to latent defects. All understandings and
agreements heretofore made between the parties hereto are merged in this
contract, which alone
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fully and completely expresses the agreement between Owner and Tenant and any
executory agreement hereafter made shall be ineffective to change, modify,
discharge or effect an abandonment of it in whole or in part, unless such
executory agreement is in writing and signed by the party against whom
enforcement of the change, modification, discharge or abandonment is sought.
End of term:
- -----------
22. Upon the expiration or other termination of the term of this lease, Tenant
shall quit and surrender to Owner the demised premises, boom clean, in good
order and condition, ordinary war and damages which Tenant is not required to
repair as provided elsewhere in this lease excepted, and Tenant shall remove all
its property. Tenant's obligation to observe or perform this covenant shall
survive the expiration or other termination of this lease. If the last day of
the term of this Lease or any renewal thereof, falls on Sunday, this lease shall
expire at noon on the preceding Saturday unless it be a legal holiday in which
case it shall expire at noon on the preceding business day.
Quiet Enjoyment:
- ---------------
23. Owner covenants and agrees with Tenant that upon Tenant paying the rent and
additional rent and observing and performing all the terms, covenants and
conditions, on Tenant's part to be observed and performed, Tenant may peaceably
and quietly enjoy the premises hereby demised, subject, nevertheless, to the
terms and conditions of this lease including, but not limited to Article 31
hereof and to the ground leases, underlying leases and mortgages hereinbefore
mentioned.
Failure to Give Possession:
- --------------------------
24. If Owner is unable to give possession of the demised premises on the date of
the commencement of the term hereof, because of the holding-over or retention of
possession of any tenant, undertenant or occupants or if the demised premises
are located in a building being constructed, because such building has not been
sufficiently completed to make the premises ready for occupancy or because of
the fact that a certificate of occupancy has not been procured or for any other
reason, Owner shall not be subject to any liability for failure to give
possession on said date and the validity of the lease shall not be impaired
under such circumstances, nor shall the same be construed in any wise to extend
the term of this lease, but the rent payable hereunder shall be abated (provided
Tenant is not responsible for Owner's inability to obtain possession or complete
construction) until after Owner shall have given Tenant written notice that the
Owner is able to deliver possession in condition required by this lease. If
permission is given to Tenant to enter into the possession of the demised
premises or to occupy premises other than the demised premises prior to the date
specified as the commencement of the term of this lease. Tenant covenants and
agrees that such possession and/or occupancy shall be deemed to be under all the
terms, covenants, conditions and provisions of this lease except the obligation
to pay the fixed annual rent set forth in the preamble to this lease.
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The provisions of this article are intended to continue "an express provision to
the contrary" within the meaning of Section 223 a of the New York Real Property
Law.
No Waiver.
- ---------
25. The failure of Owner to seek redress for violation of, or to insist upon the
strict performance of any covenant or condition of this lease or of any of the
Rules or Regulations, set forth or hereafter adopted by Owner, shall not prevent
a subsequent act which would have originally constituted a violation from having
all the force and effect of an original violation. The receipt by Owner of rent
and/or additional rent with knowledge of the breach of any covenant of this
lease shall not be deemed a waiver of such breach and no provision of this lease
shall be deemed to have been waived by Owner unless such waiver be in writing
signed by Owner. No payment by Tenant or receipt by Owner of a lesser amount
than the monthly rent herein stipulated shall be deemed to be other than on
account of the earliest stipulated rent, nor shall any endorsement or statement
of any check or any letter accompanying any check or payment as rent be deemed
an accord and satisfaction, and Owner may accept such check or payment without
prejudice to Owner's right to recover the balance of such rent or pursue any
other remedy in this lease provided. No act or thing done by Owner or Owner's
agents during the term hereby demised shall be deemed an acceptance of a
surrender of said premises, and no agreement to accept such surrender shall be
valid unless in writing signed by Owner. No employee of Owner or Owner's agent
shall have any power to accept the keys of said premises prior to the
termination of the lease and the delivery of keys to any such agent or employee
shall not operate as a termination of the lease or a surrender of the premises.
Waiver of Trial by Jury.
- -----------------------
26. It is mutually agreed by and between Owner and Tenant that the respective
parties hereto shall and they hereby do waive trial by jury in any action
proceeding or counterclaim brought by either of the parties hereto against the
other (except for personal injury or property damage) on any matters whatsoever
arising out of or in any way connected with this lease, the relationship of
Owner and Tenant. Tenant's use of or occupancy of said premises, and any
emergency statutory or any other statutory remedy. It is further mutually agreed
that in the event Owner commences any proceeding or action for possession
including a summary proceeding for possession of the premises, Tenant will not
interpose any counterclaim of whatever nature or description in any such
proceeding including a counterclaim under Article 4 except for statutory
mandatory counterclaims.
Inability to Perform:
- --------------------
27. This lease and the obligation of Tenant to pay rent hereunder and perform
all of the other covenants and agreements hereunder on part of Tenant to be
performed shall in no wise be affected, impaired or excused because Owner is
unable to fulfill any of its obligations under this lease or to supply or is
delayed in supplying any service expressly
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or impliedly to be supplied or is unable to make, or is delayed in making any
repair, additions, alterations or decorations or is unable to supply or is
delayed in supplying any equipment, fixtures, or other materials if Owner is
prevented or delayed from so doing by reason of strike or labor troubles or any
cause whatsoever including, but not limited to, government preemption or
restrictions or by reason of any rule, order or regulation of any department or
subdivision thereof of any government agency or by reason of the conditions
which have been or are affected either directly or indirectly, by war or other
emergency.
Bills and Notices:
- -----------------
28. Except as otherwise in this lease provided, a bill, statement, notice or
communication which Owner may desire or be required to give to Tenant, shall be
deemed sufficiently given or rendered if, in writing, delivered to Tenant
personally or sent by registered or certified mail addressed to Tenant at the
building of which the demised premises form a part or at the last known
residence address or business address of Tenant or left at any of the aforesaid
premises addressed to Tenant, and the time of the rendition of such bill or
statement and of the giving of such notice or communication shall be deemed to
be the time when the same is delivered to Tenant, mailed, or left at the
premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail addressed to Owner at the address first hereinabove
given or at such other address as Owner shall designate by written notice.
Services Provided by Owners:
- ---------------------------
29. As long as Tenant is not in default under any of the covenants of this lease
beyond the applicable grace period provided in this lease for the curing of such
defaults. Owner shall provide: (a) necessary elevator facilities on business
days from 8 a.m. to 6 p.m. and have one elevator subject to call at all other
times: (b) heat to the demised premises when and as required by law, on business
days from 8 a.m. to 6 p.m.: (c) water for ordinary lavatory purposes, but if
Tenant uses or consumes water for any other purposes or in unusual quantities
(of which fact Owner shall be the sole judge), Owner may install a water meter
at Tenant's expense which Tenant shall thereafter maintain at Tenant's expense
in good working order and repair to register such water consumption and Tenant
shall pay for water consumed as shown on said meter as additional rent as and
when bills are rendered; (d) cleaning service for the demised premises
substantially in accordance with the standards attached hereto as Exhibit B on
business days at Owner's expense provided that the same are kept in order by
Tenant. If, however, said premises are to be kept clean by Tenant, it shall be
done at Tenant's sole expense, in a manner reasonably satisfactory to Owner and
no one other than persons approved by Owner shall be permitted to enter said
premises or the building of which they are a part for such purpose. Tenant shall
pay Owner the cost of removal of any of Tenant's refuse and rubbish from the
building; (e) if the demised premises are serviced by Owner's air
conditioning/cooling and ventilating system, air conditioning/cooling will be
furnished to tenant from May 15th through September 30th on business days
(Mondays through Fridays, holidays
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<PAGE>
excepted) from 8:00 a.m. to 6:00 p.m., and ventilation will be furnished on
business days during the aforesaid hours except when air conditioning/cooling is
being furnished as aforesaid. It Tenant required air conditioning/cooling or
ventilation for more extended hours on Saturdays, Sundays or on holidays, as
defined under Owner's contract with Operating Engineers Local 94-94A, Owner will
furnish the same at Tenant's expense. RIDER to be added in respect to rates and
conditions for such additional service: (f) Owner reserves the right to stop
services of the heating, elevators, plumbing, air-conditioning, electric, power
systems or cleaning or other services, if any, when necessary by reason of
accident or for repairs, alterations, replacements or improvements necessary or
desirable in the judgment of Owner for as long as may be reasonably required by
reason thereof. If the building of which the demised premises are a part
supplies manually operated elevator service, Owner at any time may substitute
automatic control elevator service and proceed diligently with alterations
necessary therefor without in any wise affecting this lease or the obligation of
Tenant hereunder.
Captions:
- --------
30. The Captions are inserted only as a matter of convenience and for reference
and in no way define, limit or describe the scope of this lease nor the intent
of any provisions thereof.
Definitions.
- -----------
31. The term "office", or "offices", wherever used in this lease, shall not be
construed to mean premises used as a store or stores, for the sale or display,
at any time, of goods, wares or merchandise, of any kind, or as a restaurant,
shop, booth, bootblack or other stand, barber shop, or for other similar
purposes or for manufacturing. The term "Owner" means a landlord or lessor, and
as used in this lease means only the owner, or the mortgagee in possession, for
the time being of the land and building (or the owner of a lease of the building
or of the land and building) of which the demised premises form a part, so that
in the event of any sale or sales of said land and building or of said lease, or
in the event of a lease of said building, or of the land and building, the said
Owner shall be and hereby is entirely freed and relieved of all covenants and
obligations of Owner hereunder, and it shall be deemed and construed without
further agreement between the parties or their successors in interest, or
between the parties and the purchaser, at an such sale, or the said lessee of
the building, or of the land and building, that the purchaser or the lessee of
the building has assumed and agreed to carry out any and all covenants and
obligations of Owner, hereunder. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal meaning. The term
"business days" as used in this lease shall exclude Saturdays, Sundays and all
days as observed by the State or Federal Government as legal holidays and those
designated as holidays by the applicable building service union employees
service contract or by the applicable Operating Engineers contract with respect
to HVAC service. Wherever it is expressly provided in this lease that consent
shall not be unreasonably withheld, such consent shall not be unreasonably
delayed.
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Adjacent Excavation-Shorting:
- ----------------------------
32. If an excavation shall be made upon land adjacent to the demised premises,
or shall be authorized to be made, Tenant shall afford to the person causing or
authorized to cause such excavation, license to enter upon the demised premises
for the purpose of doing such work as said person shall deem necessary to
preserve the wall or the building of which demised premises form a part from
injury or damage and to support the same by proper foundations without any claim
for damages or indemnity against Owner, or diminution or abatement of rent.
Rules and Regulations:
- ---------------------
33. Tenant and Tenant's servants, employees, agents, visitors, and licensees
shall observe faithfully, and comply strictly with, the Rules and Regulations
and such other and further reasonable Rules and Regulations as Owner or Owner's
agents may from time to time adopt. Notice of any additional rules or
regulations shall be given in such manner as Owner may elect. In case Tenant
disputes the reasonableness of any additional Rule or Regulation hereafter made
or adopted by Owner or Owner's agents the parties hereto agree to submit the
question of the reasonableness of such Rule or Regulation for decision to the
New York office of the American Arbitration Association, whose determination
shall be final and conclusive upon the parties hereto. The right to dispute the
reasonableness of any additional Rule or Regulation upon Tenant's part shall be
deemed waived unless the same shall be asserted by service of a notice, in
writing upon Owner within fifteen (15) days after the giving of notice thereof.
Nothing in this lease shall be construed to impose upon Owner any duty or
obligation to enforce the Rules and Regulations or terms, covenants of
conditions in any other lease, as against any other tenant and Owner shall not
be liable to Tenant for violation of the same by any other tenant, its servants,
employees, agents, visitors or licensees.
Security:
- --------
34. Tenant has deposited with Owner the sum of $24,883.00 as security for the
faithful performance and observance by Tenant of the terms, provisions and
conditions of this lease; it is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this lease, including,
but not limited to, the payment of rent and additional rent, Owner may use,
apply or retain the whole or any part of the security so deposited to the extent
required for the payment of any rent and additional rent or any other sum as to
which Tenant is in default or for any sum which Owner may expend or may be
required to expend by reason of Tenant's default in respect of any of the terms,
covenants and conditions of this lease, including, but not limited to, any
damages or deficiency in the re-letting of the premises, whether such damages or
deficiency accrued before or after summary proceedings or other re-entry by
Owner. In the event that Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of this lease, the security
shall be returned to Tenant after the date fixed as the
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<PAGE>
end of the Lease and after delivery of entire possession of the demised premises
to Owner. In the event of a sale of the land and building or leasing of the
building, of which the demised premises form a part, Owner shall have the right
to transfer the security to the vendee or lessee and Owner shall thereupon be
released by Tenant from all liability for the return of such security; and
Tenant agrees to look to the new Owner solely for the return of said security,
and it is agreed that the provisions hereof shall apply to every transfer or
assignment made of the security to a new Owner. Tenant further covenants that it
will not assign or encumber or attempt to assign or encumber the monies
deposited herein as security and that neither Owner nor its successors or
assigns shall be bound by any such assignment, encumbrance, attempted assignment
or attempted encumbrance.
Estoppel Certificate.
- --------------------
35. Tenant, at any time, and from time to time, upon at least 10 days' prior
notice by Owner, shall execute, acknowledge and deliver to Owner, and/or to any
other person, firm or corporation specified by Owner, a statement certifying
that this Lease is unmodified an in full force and effect (or, if there have
been modifications, that the same is in full force and effect as modified and
stating the modifications), stating the dates to which the rent and additional
rent have been paid, and stating whether or not there exists any default by
Owner under this Lease, and, if so, specifying each such default.
Successors and Assigns:
- ----------------------
36. The covenants, conditions and agreements contained in this lease shall bind
and inure to the benefit of Owner and Tenant and their respective heirs,
distributees, executors, administrators, successors and except as otherwise
provided in this lease, their assigns. Tenant shall look only to Owner's estate
and interest in the land and building, for the satisfaction of Tenant's remedies
for the collection of a judgment (or other judicial process) against Owner in
the event of any default by Owner hereunder, and no other property or assets of
such Owner (or any partner, member, officer or director thereof, disclosed or
undisclosed), shall be subject to levy, execution or other enforcement procedure
for the satisfaction of Tenant's remedies under or with respect to this lease,
the relationship of Owner and Tenant hereunder, or Tenant's use and occupancy of
the demised premises.
See Riders attached hereto and made an integral part hereof
17
<PAGE>
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and
sealed this lease as of the day and year first above written.
130 WILLIAM LLC
Witness for Owner: /s/ Robert Danial
---------------------------
___________________________ By: Robert Danial, Member
WALL STREET STRATEGIES, INC.,
Witness for Tenant:
/s/ Charles Payne
----------------------------
___________________________ By: Name:
Title: ____________________________
IMPORTANT - PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND MADE A PART OF THIS LEASE IN ACCORDANCE
WITH ARTICLE 33.
1. The sidewalks, entrances, driveways, passages, courts, elevators, vestibules,
stairways, corridors or halls shall not be obstructed or encumbered by any
Tenant or used for any purpose other than for ingress or egress from the demised
premises and for delivery of merchandise and equipment in a prompt and efficient
manner using elevators and passageways designated for such delivery by Owner.
There shall not be used in any space, or in the public hall of the building,
either by any Tenant or by jobbers or others in the delivery or receipt of
merchandise, any hand trucks, except those equipped with rubber tires and
sideguards. If said premises are situated on the ground floor of the building,
Tenant thereof shall further at Tenant's expense, keep the sidewalk and curb in
front of said premises clean and free from ice, snow, dirt and rubbish.
2. The water and wash closets and plumbing fixtures shall not be used for any
purposes other than those for which they were designed or constructed and no
sweeping, rubbish, rags, acids or other substances shall be deposited therein,
and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors shall have caused it.
3. No carpet, rug or article shall be hung or shaken out of any window of the
building and no Tenant shall sweep or throw or permit to be swept or thrown from
the demised premises any dirt or other substances into any of the corridors or
halls, elevators, or out of the doors or windows or stairways of the building
and Tenant shall not use, keep
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<PAGE>
or permit to be used or kept any foul or noxious gas or substance in the demised
premises, or permit or suffer the demised premises to be occupied or used in a
manner offensive or objectionable to Owner or other occupants of the building by
reason of noise, odors, and/or vibrations, or interfere in any way with other
Tenants or those having business therein, nor shall any bicycles, vehicles,
animals, fish or birds be kept in or about the building. Smoking or carrying
lighted cigars or cigarettes in the elevators of the building is prohibited.
4. No awnings or other projections shall be attached to the outside walls of the
building without the prior written consent of Owner.
5. No sign, advertisements, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside of the
demised premises or the building or on the inside of the demised premise if the
same is visible from the outside of the premises without the prior written
consent of Owner, except that the name of Tenant may appear on the entrance door
of the premises. In the event of the violation of the foregoing by any Tenant,
Owner may remove same without any liability, and may charge the expense incurred
by such removal to Tenant or Tenants violating this rule. Interior signs on
doors and directory tablet shall be inscribed, painted or affixed for each
Tenant by Owner at the expense of such Tenant, and shall be of a size, color and
style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any part of the
demised premises or the building of which they form a part. No boring, cutting
or stringing of wired shall be permitted, except with the prior written consent
of Owner, and as Owner may direct. No Tenant shall lay linoleum, or other
similar floor covering, so that the same shall come in direct contact with the
floor of the demised premises, and, if linoleum or other similar floor covering
is desired to be used in interlining of builder's deadening felt shall be first
affixed to the floor, by a paste or other material, soluble in water, the use of
cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by any Tenant, nor shall any changes be made in existing locks
or mechanism thereof. Each Tenant must, upon the termination of his Tenancy,
restore to Owner all keys of stores, offices and toilet rooms, either furnished
to, or otherwise procured by, such Tenant, and in the event of the loss of any
keys, so furnished, such Tenant shall pay to Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter of any
description shall be delivered to and removed from the premises only on the
freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations of the
lease or which these Rules and Regulations are a part.
19
<PAGE>
9. Canvassing, soliciting and peddling in the building is prohibited and each
Tenant shall cooperate to prevent the same.
10. Owner reserves the right to exclude from the building all persons who do not
present a pass to the building signed by Owner. Owner will furnish passes to
persons for whom any Tenant requests same in writing. Each Tenant shall be
responsible for all persons for whom he requests such pass and shall be liable
to Owner for all acts of such person. Tenant shall not have a claim against
Owner by reason of Owner excluding from the building any person who does not
present such pass.
11. Owner shall have the right to prohibit any advertising by an Tenant which in
Owner's opinion, tends to impair the reputation of the building or its
desirability as a building for offices, and upon written notice from Owner,
Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the demised
premises, any inflammable, combustible, explosive, or hazardous fluid, material,
chemical or substance, or cause or permit any odors of cooking or other
processes or any unusual or other objectionable odors to permeate in or emanate
from the demised premises.
13. If the building contains central air conditioning and ventilation, Tenant
agrees to keep all windows closed at all times and to abide by all rules and
regulations issued by Owner with respect to such services. If Tenant requires
air conditioning or ventilation after the usual hours, Tenant shall give notice
in writing to the building superintendent prior to 3:00 p.m. in the case of
services required on week day, and prior to 3:00 p.m on the day prior in case of
after hours service required on weekends or on holidays. Tenant shall cooperate
with Owner in obtaining maximum effectiveness of the cooling system by lowering
and closing venetian blinds and/or drapes and curtains when the sun's rays fall
directly on the windows of the demised premises.
14. Tenant shall not move any safe, heavy machinery, heavy equipment, bulky
matter, or fixtures into or out of the building without Owner's prior written
consent. If such safe, machinery, equipment, bulky matter or fixtures requires
special handling, all work in connection therewith shall comply with the
Administrative Code of the City of New York and all other laws and regulations
applicable thereto and shall be done during such hours as Owner may designate.
15. Refuse and Trash. (1) Compliance by Tenant. Tenant covenants and agrees, at
its sole cost and expense, to comply with all present and future laws, orders,
and regulations of all state, federal municipal, and local governments,
departments, commissions and boards regarding the collection, sorting,
separation and recycling of waste products, garbage, refuse and trash. Tenant
shall sort and separate such waste products, garbage, refuse and trash into such
categories as provided by law. Each separately sorted category of waste
products, garbage, refuse and trash shall be placed in separate receptacles
reasonably approved by Owner. Such separate receptacles may, at Owner's option,
be removed from the demised premises in accordance with a collection schedule
prescribed by law. Tenant shall remove, or cause to be removed by a contractor
acceptable to Owner, at Owner's sole discretion, such items as Owner may
expressly designate. (2) Owner's Rights in Event of Noncompliance. Owner has the
option to refuse to collect or
20
<PAGE>
accept from Tenant waste products, garbage, refuse or trash (a) that is not
separated and sorted as required by law or (b) which consists of such items as
Owner may expressly designate for Tenant's removal, and to require Tenant to
arrange for such collection at Tenant's sole cost and expense, utilizing a
contractor satisfactory to Owner. Tenant shall pay all costs, expenses, fines,
penalties, or damages that may be imposed on Owner or Tenant by reason of
Tenant's failure to comply with the provisions of this Building Rule 15, and, at
Tenant's sole cost and expense, shall indemnity, defend and hold Owner harmless
(including reasonable legal fees and expenses) from and against any actions,
claims and suits arising from such noncompliance, utilizing counsel reasonably
satisfactory to Owner.
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<PAGE>
ESCALATION RIDER ANNEXED TO
AGREEMENT OF LEASE BETWEEN
130 WILLIAM LLC,
AS LANDLORD, AND
WALL STREET STRATEGIES., AS TENANT
ESCALATION:
A. As used herein:
(a) The term "Taxes" shall mean (a) all real estate taxes,
assessments (special or otherwise), sewer rents, vault taxes or
charges, rates and charges, or any other governmental charge of a
similar or dissimilar nature, whether general, special, ordinary
or extraordinary, which may be levied or assessed on or with
respect to al or any part of the Building or the parcel of land
on which the Building is located (hereinafter called "Real
Property") by the City or County of New York or any other taxing
authority and (b) any expenses, including attorneys' fees and
disbursements, incurred by Landlord in contesting any of the
foregoing or the assessed valuation of al or any part of the Real
Property. If, however, by law, any assessment may be divided and
paid in annual installments, then, for the purposes of this
Rider, (a) such assessment shall be deemed to have been so
divided into the maximum number of annual installments permitted
by law, and (b) there shall be deemed included in Taxes for each
calendar year the annual installment of such assessment becoming
payable during such calendar year, together with interest payable
during such calendar year on such annual installment and on all
installments thereafter becoming due as provided by law, all as
if such assessment had been so divided.
(b) The term "Landlord's Basic Tax Liability" shall mean the tax
liability of Landlord for the fiscal year July 1, 1998 - June 30,
1999 for Taxes.
(c) The term "Landlord's Base Tax Year" shall mean the fiscal year
July 1, 1998 - June 30, 1999.
(d) The term "Tenant's Proportionate Share" shall mean 3.61%.
(e) The term "Wages" shall mean the minimum regular hourly wage rate
payable to porters (one such person, a "Porter") employed at
Class A office buildings pursuant to the commercial building
agreement (the "Commercial Building Agreement") between the
Realty Advisory Board on Labor Relations, Inc. and Local 32B-32J
Service Employees International Union, AFL-CIO, or successor
parties, or as required by law. The terms of the immediately
preceding sentence shall be effective whether or not the Building
of which the demised premises forms a part is a Class A office
building or employs such a Porter, as Wages is intended to be a
substitute comparative index as opposed to an actual operating
expense escalation calculation and is not intended to reflect the
actual cost of
<PAGE>
wages and other expenses for the Building or increases or
decreases thereto. If the Commercial Building Agreement expires
or is otherwise terminated, then until commencement of the new
Commercial Building Agreement Wages shall be determined in
accordance with the last effective Commercial Building Agreement,
except the minimum regular hourly wage rate shall be deemed to
increase annually by the average of its annual percentage
increases over the term of the last effective Commercial Building
Agreement; the terms of any new Commercial Building Agreement
shall be applied and payments shall be adjusted retroactively to
the first day of coverage thereunder. If any classification,
category, definition, description, entity or party referred to in
this Rider is succeeded (or modified), replaced or eliminated,
the successor or replacement, or a substitute determined by
Landlord in Landlord's sole judgement in the event of an
elimination, shall be utilized to make calculations under this
Rider; it being the intention of Landlord and Tenant that
sufficient factors shall always exist to determine Wages in a
manner materially the same as the manner employed by Landlord on
the date of this Lease.
(f) The term "Basic Wages" shall mean the Wages in effect on January
1, 198
(g) The term "Landlord's Statement" shall mean an instrument
containing a computation of any Additional Rent due pursuant to
the provisions of the Lease. Nothing herein contained shall
restrict Landlord from issuing Landlord's Statements at any time
that there is an increase in Taxes during any fiscal year or an
increase in Wages during any calendar year.
B. (a) If Taxes payable in any fiscal yearn falling wholly or partially
within the Term shall be in such amount as shall constitute an increase
above Landlord's Basic Tax Liability, Tenant shall pay as Additional
Rent for such fiscal year a sum equal to Tenant's Proportionate Share
of the amount by which Taxes for such fiscal year exceed Landlord's
Basic Tax Liability.
(b) On the first day of each month following rendition of each
Landlord's Statement which shows payment of Additional Rent due
from Tenant pursuant to this Rider, Tenant shall pay to Landlord
on account of the estimated Additional Rent for the fiscal year
following the fiscal year for which Landlord's Statement shall
have been rendered, a sum equal to one-twelfth (1/12th) of the
total Additional Rent shown on such Landlord's Statement. Such
Additional Rent shall be due and payable at the same time as each
monthly installment of Fixed Rent.
(c) A reconciliation shall be made upon each Landlord's Statement as
follows: Tenant shall be debited with any Additional Rent shown
on such Landlord's Statement and credited with the aggregate of
the total amount, if any, paid by Tenant in accordance with the
provisions of paragraph(b) on account of the estimated Additional
Rent for the fiscal year in question, and within ten (10) days
following rendition of such Landlord's Statement, Tenant shall
pay to Landlord the amount of any net debit balance shown
thereon, or Landlord shall apply
2
<PAGE>
against the next ensuing installments of Fixed Rent any net
credit balance shown thereon.
(d) If, as a result of any application or proceeding brought by or on
behalf of Landlord for reduction in the assessed valuation of the
Real Property affecting any fiscal year commencing after
Landlord's Base Tax Year, there shall be a decrease in Taxes for
any such fiscal year with respect to which Landlord shall have
previously rendered a Landlord's Statement, Landlords Statement
next following such decrease shall include an adjustment for such
fiscal year reflecting such decrease in Taxes (less all costs and
expenses, including counsel fees, incurred by Landlord in
connection with the application or proceeding to reduce the Taxes
with respect to any fiscal year occurring after Landlord's Base
Tax Year).
C. The annual Fixed Rate payable under this Lease shall be adjusted from
time to time in the manner provided for in this Rider,
(a) If an annual Fixed Rent increase shall become effective, or if
Wages shall increase any time under the terms of the Commercial
Building Agreement or by virtue of amendments or successions to
the Commercial Building Agreement, including without limitation,
increases in the minimum regular hourly wage and/or the accrual
of benefits based on the Porter's seniority, then effective from
the date of such increase in the annual Fixed Rate or Wages, the
annual Fixed Rent payable under this Lease shall be increased
(the "Adjustment") as stated in this Lease and/or by 1% of the
total amount of annual Fixed Rent payable under this Lease for
each one percent (1%) and pro rata for any fraction of one
percent (1%) by which Wages shall exceed Base Wages.
(b) Landlord shall furnish to Tenant, prior to the commencement of
each calendar year, a written statement setting forth Landlord's
estimate of Tenant's Adjustments for such calendar year, and the
method of calculation of Tenant's Adjustments for such calendar
year. Tenant shall pay to Landlord on the first day of each month
during such calendar year an amount equal to one-twelfth (1/12th)
of Landlord's estimate for a calendar year subsequent to the
commencement thereof, then (x) until the first day of the month
following the month in which such estimate is furnished to
Tenant, Tenant shall pay to Landlord on the first day of each
month an amount equal to the monthly sum payable by Tenant to
Landlord under this Rider in respect of the last month of the
preceding calendar year; (y) promptly after such estimate is
furnished to Tenant or together therewith, Landlord shall give
notice to Tenant stating whether the installments of Tenant's
Adjustments previously made for such calendar year were greater
or less than the installments of Tenant's Adjustments to be made
for such calendar year in accordance with such estimate, and (i)
if there shall be a deficiency, Tenant shall pay the amount
thereof within ten (10) days after demand therefor, or (ii) if
there shall have been an overpayment, Landlord shall promptly
either refund to Tenant the amount thereof or permit Tenant to
credit the amount thereof against subsequent payments under this
Rider; and (z) on the first day of the month
3
<PAGE>
following the month in which such estimate is furnished to
Tenant, and monthly thereafter throughout the remainder of such
calendar year, Tenant shall pay to Landlord an amount equal to
one-twelfth (1/12th) of Tenant's Adjustments shown on such
estimate. Landlord may at any time or from time to time furnish
to Tenant a revised statement of Landlord's estimate of Tenant's
Adjustments for such calendar year, based upon either of the
methods set forth in the Rider for computing Tenant's
Adjustments; and in such case, Tenant's Adjustments for such
calendar year shall be adjusted and paid or refunded, as the case
may be, substantially in the same manner as provided in the
preceding sentence.
(c) After the end of each calendar year Landlord shall furnish to
Tenant a Landlord's Statement for such calendar year. If the
Landlord's Statement shall show ha the sums paid by Tenant
hereunder exceeded Tenant's Adjustments required to be paid by
Tenant for such calendar year, Landlord shall refund to Tenant
the amount of such excess or, at Landlord's election, credit the
amount of such excess against subsequent payments under this
Rider; and if the Landlord's Statement for such calendar year
shall show that the sums so paid by Tenant were less than
Tenant's Adjustments required to be paid by Tenant for such
calendar year, Tenant shall pay the amount of such deficiency
within ten (10) days after demand therefor.
D. In no event shall Fixed Rent ever be reduced by operation of this
Rider.
E. Landlord's Statement shall be rendered to Tenant in accordance with the
provisions of Article 28 of this lease. Landlord's failure to render
Landlord's Statements with respect to any such increase in Taxes or
Wages during any fiscal or calendar year shall not prejudice Landlord's
right to render a Landlord's Statement with respect thereto or with
respect to any subsequent fiscal or calendar year. Nothing herein
contained shall restrict Landlord from issuing Landlord's Statements at
any time there is an increase in Wages or Taxes during any fiscal or
calendar year or any time thereafter. The obligations of Landlord and
Tenant under the provisions of this Rider with respect to any
Additional Rent shall survive the Expiration Date or any sooner
termination of the Term.
F. Each Landlord's Statement shall be conclusive and binding upon Tenant
unless within thirty (30) days after receipt of such Landlord's
Statement, time being deemed of the essence, Tenant shall notify
Landlord that it disputes the correctness of Landlord's Statement,
specifying the respects in which Landlord's Statement is claimed to be
incorrect as well as any and all relevant additional information tenant
may reasonably request of Landlord. Pending the determination of any
such dispute by agreement or otherwise, Tenant shall pay Additional
Rent in accordance with the applicable Landlord's Statement, and such
payment shall be without prejudice to Tenant's position. Tenant's right
to contest set forth immediately above is subject to and contingent
upon Tenant's (i) timely paying in full Landlord's statement in
question, (ii) paying all Landlord's reasonable expenses incurred in
connection with Tenant's dispute and/or request for information
including without limitation out of pocket expenses, and wages and
benefits of Landlord's and Landlord's agent's employees for said
employees' hours of work directly relating to Tenant's dispute and/or
request for information, and (iii) being
4
<PAGE>
represented in connection with Tenant's dispute only be Tenant's
principals, officers and employees, and outside parties, if any,
compensated only by hourly fee or flat rate and not by a percentage of
Tenant's related recovery. Tenant acknowledges that Landlord's books
and records are confidential and are not available for examination. If
the dispute shall be determined in Tenant's favor, Landlord shall
forthwith pay to Tenant the amount of Tenant's overpayment of
Additional Rent resulting from compliance with Landlord's Statement.
Any Adjustment for less than a year or for less than a month shall be
prorated. No computation under this Rider shall result in a reduction
to the annual Fixed Rent in effect at the time of the subject
computation. Tenant's liability under this Rider shall survive the
termination of this Lease.
G. The computations of Additional Rent under this Rider are intended to
constitute a formula for an agreed rental adjustment and may or may not
constitute an actual reimbursement to Landlord for costs and expenses
paid by Landlord with respect to the Building.
LANDLORD: 130 WILLIAM LLC TENANT: WALL STREET STRATEGIES, INC.
/s/ Robert Danial /s/ Charles Payne
------------------------ --------------------------------
ROBERT DANIAL, Member NAME: Charles Payne
TITLE:
5
<PAGE>
ELECTRICITY RIDER TO
AGREEMENT OF LEASE BETWEEN
130 WILLIAM LLC,
AS LANDLORD, AND
WALL STREET STRATEGIES, INC., AS TENANT
ELECTRICITY:
A. (i) Electricity shall be provided to Tenant in the Premises on a so-called
"rent inclusion" basis. Tenant agrees that the portion of the Fixed Rent set
forth in Article 37 presently attributed to the finishing of electric current is
the annual sum of $12,513.00 and is subject to increase as hereinafter provided.
Landlord will furnish electricity to Tenant through presently installed
electrical facilities for Tenant's reasonable use of such lighting, electrical
appliances, air conditioning systems and equipment as presently exist or as
Tenant may be permitted to install in the Premises, subject to Landlord's
consent which will not be unreasonably withheld or delayed. Tenant agrees that
an electrical engineer or utility consultant, selected by Landlord, may, from
time to time during the Term, make a survey of the electric lighting and power
load by metering or otherwise to determine Tenant's average monthly electrical
energy consumption in the Premises ("Tenant's Electric Consumption") based upon
(i) the connected load rating of each item consuming electric energy, (ii)
Tenant's usage which shall be determined by multiplying the connected load
rating of each item by the hours of usage as determined by the consultant, and
(iii) the electric rates in Service Classification No. 4 of Consolidated Edison
Company of New York, Inc. or any successor thereto applicable to Landlord,
inclusive of all surcharges or taxes thereon including any sales tax as a result
of the resale of such energy to Tenant. The findings of such engineers or
consultant as to the proper Fixed Rent increase based on Tenant' s Electric
Consumption shall be conclusive and binding upon the parties and the amount
thereof shall be added to the Fixed Rent payable monthly on the first day of
each and every month in advance for each month from the date the change in
electrical energy consumption occurred (as determined by Landlord's electrical
engineer or utility consultant).
(ii) If the Electric Rates on which the initial determination of said
consultant shall be increased, then the sum included in Fixed Rent by reason of
this Article shall be increased by the same percentage as such change in the
Electric Rates, retroactive to the date of such increase in such Electric Rates,
and the amount payable from the effective date of such increase to the last day
of the month in which Tenant shall be billed therefor shall be paid within 10
days after Landlord furnishes Tenant with a statement thereof. The term
"Electric Rates" shall be deemed to mean the rates at which Landlord purchases
electrical energy from the public utility supplying electrical service to the
Building, including any surcharges or charges incurred or taxes payable by
Landlord in connection therewith or in connection with the furnishing of
electrical energy by Landlord on a rent-inclusion basis or increase or decrease
thereof by reason of fuel adjustment or any substitutions for such Electric
Rates or additions thereto.
(iii) In the event Landlord elects to purchase capital equipment or
make other capital expenditures to reduce Landlord's cost of electricity,
Landlord shall receive the full benefit of such capital expenditure, and Tenant
shall continue to pay Fixed Rent for electricity, and such
<PAGE>
Fixed Rent shall be calculated s hereinabove described, without regard to the
fact that Landlord has reduced its cost of electricity by virtue of such capital
expenditure.
(iv) In no event shall the amount charged Tenant for the furnishing of
electric current be reduced by operation of this Article from the amount
included in Fixed Rent above.
B. At the option of Landlord, in lieu of providing electricity on a "rent
inclusion" basis, electricity may be provided to the Premises by Landlord so
long as legally permissible in the Building to service the Premises for the uses
herein permitted and in such event, Tenant covenants and agrees to purchase the
same from Landlord or Landlord's designated agent, Landlord shall install a
meter(s) or submeter(s) to measure Tenant's consumption of electrical energy in
the Premises. The costs incurred in connection with the installation of such
meter(s) or submeter(s) shall be credited towards Landlord's Contribution (as
defined in Exhibit C attached hereto). The portion of Fixed Rent attributed to
Tenant's electrical consumption as set forth in paragraph A shall be reduced
from Tenant's Fixed Rent and Tenant shall pay Landlord as Additional Rent, the
amounts as determined by such meter(s) or submeter(s) for the purpose of
measuring such consumption calculated by applying to Tenant's measured
electrical demand and consumption the public utility rate schedule then
applicable to Landlord for the purchase of electricity for the Building, without
regard to the electricity used in the rest of the Building, including any
surcharges or charges incurred or taxes payable by Landlord in connection
therewith or increase or decrease thereof by reason of fuel adjustment or any
substitutions for such electric rates or additions thereto, plus an additional
seven percent (7%) of such aggregate amount. Where more than one meter measures
the service to the Premises, the service rendered through each meter shall be
aggregated and billed in accordance with the provisions set forth above. Bills
shall be rendered at such times as Landlord may elect and, commencing the
earlier of (i) Tenant's occupancy of any of the Premises or (ii) the
Commencement Date, the amounts computed from such meter readings shall be
Additional Rent and shall be due and payable, without setoff or deduction, upon
the rendition of such bills. If any tax is imposed upon Landlord's receipts for
the sale or resale of electrical energy to Tenant, the pro rata share allocable
to the electrical energy service received by Tenant shall be passed on to Tenant
to the extent permitted by law. If electricity is furnished on the basis of this
Paragraph B, the Fixed Rent set forth in Article 37 shall be reduced by the
amount contained in Paragraph A above effective upon the furnishing of
electricity in the manner provided in this Paragraph B.
C. Tenant's use of electrical energy in the Premises shall never exceed the
portion of the capacity allocable to Tenant of (i) the existing feeders to the
Building or the electricity available to Tenant through then existing risers or
wiring installations to the Premises or (ii) any of the electrical conductors,
machinery and equipment in or otherwise serving the Premises (in any event,
giving due consideration to the needs of existing and potential tenants using
the same risers, wiring installations or other equipment, as well as to
Landlord's electrical needs in connection with the operation of the Building and
the provision of emergency services). No additional riser or risers or other
equipment to supply Tenant's electrical requirements shall be installed without
Landlord's prior approval, which may be withheld in Landlord's sole and absolute
discretion. In order to insure that the electrical capacity of the Building's
electrical facilities is not exceeded and to avert possible adverse effect upon
the Building's electrical system. Tenant shall not, without the prior consent of
Landlord, make or perform or permit any
2
<PAGE>
alteration to wiring installations or other electrical facilities in or serving
the Premises or any additions to the electrical fixtures, business machines or
office equipment or appliances (other than typewriters and similar low energy
consuming office machines) in the Premises which utilize electrical energy. Any
additional risers, feeders, or other equipment proper or necessary to supply
Tenant's electrical requirements,, upon written request of Tenant, will be
installed by Landlord at the sole cost and expense of Tenant, if, in Landlord's
sole judgment, the same will not interfere with Landlord's present or
anticipated future electrical needs with respect to the Building and/or existing
or future tenants of the Building or cause permanent damage or injury to the
Building or entail excessive or unreasonable alterations or interfere with or
disturb other tenants. Landlord, its agents and engineers and consultants may
survey the electrical fixtures, appliances and equipment in the Premises and
Tenant's use of electrical energy therein from time to time to determine whether
Tenant is complying with its obligations under this Article. All such surveys
shall be made at the sole cost and expense of Tenant. Each increase in Fixed
Rent under this Article shall be effective on the date such additional
electrical energy is made available to Tenant.
D. Landlord shall have no liability to Tenant for any loss, damage or expense
which tenant may sustain or incur by reason of any change, failure, inadequacy
or defect in the supply or character of the electrical energy furnished to the
Premises or if the quantity or character of the electrical energy is no longer
available or suitable for Tenant's requirements except for any actual damage
suffered by Tenant by reason of any such failure, inadequacy or defect cause by
Landlord's negligence, and then only after actual notice as provided in Article
28.
E. Provided that such termination is effected on a Building-wide basis and is
made applicable to all other tenants and occupants of the Building as well as to
Tenant, Landlord reserves the right to terminate the furnishing of electrical
energy at any time, upon sixty (60) days' prior notice to Tenant unless such
notice is not feasible under the circumstances, in which event Landlord will
give Tenant such reasonable notice as is possible. If Landlord shall so
discontinue the furnishing of electrical energy, (i) Tenant shall arrange to
obtain electrical energy directly from the public utility company furnishing
electrical energy to the Building, (ii) Landlord shall permit the existing
feeders, risers, wiring and other electrical facilities serving the Premises to
be used by Tenant for such purpose the extent that they are available, suitable,
legally permissible and clean, (iii) from and after the effective date of such
discontinuance Landlord shall not be obligated to furnish electrical energy to
Tenant and, if electricity is then being provided on a rent-inclusion basis, the
Fixed Rent payable under this lease shall be reduced to the amount which would
have been then payable as Fixed Rent as of such date but for the adjustment
under Paragraph A above, (iv) this lease shall otherwise remain in full force
and effect and such discontinuance shall be without liability of Landlord to
Tenant and (v) if Landlord shall discontinue the furnishing of electrical energy
as a result of any Legal Requirement or Insurance Requirement, Landlord shall,
at Tenant's expense, install at locations in the Building selected by Landlord
and maintain any necessary electrical meter equipment, panel boards, feeders,
risers, wiring and other conductors and equipment which may be required to
obtain electrical energy directly from the public utility supplying the same,
otherwise Landlord shall pay the cost of the same, Landlord, at its option,
before commencing any work to be paid by Tenant hereunder or at any time
thereafter, may require Tenant to furnish to Landlord such security, whether by
surety bond issued by a corporation satisfactory to Landlord in form and amount
and licensed to do
3
<PAGE>
business in New York State or otherwise as Landlord shall deem necessary to
assure the payment for such work by Tenant.
LANDLORD: 130 WILLIAM LLC TENANT: WALL STREET STRATEGIES, INC.
/s/ Robert Danial /s/ Charles Payne
------------------------ --------------------------------
ROBERT DANIAL, Member NAME:
TITLE:
4
<PAGE>
ASSIGNMENT / SUBLETTING RIDER TO
AGREEMENT OF LEASE BETWEEN
130 WILLIAM LLC,
AS LANDLORD, AND
WALL STREET STRATEGIES, INC., AS TENANT
SUBLETTING AND ASSIGNMENT:
A. If Tenant desires to assign this Lease or sublet the demised premises in part
or in its entirety (the "Designated Premises"), Tenant shall submit to Landlord
a written request for Landlord's consent to such assignment or subletting, which
request shall contain or be accompanied by the following information:
(i) the name and address of the proposed assignee or subtenant; (ii) the terms
and conditions of the proposed assignment or subletting; (iii) the nature and
character of the business of the proposed assignee or subtenant and of its
proposed use of the demised premises; (iv) current financial information; (v) a
description of the proposed assigned or sublet space; and (vi) any other
information as Landlord may reasonably request with respect to the proposed
assignee or subtenant. Landlord shall have the option, to be exercised by notice
given to Tenant within fifteen (15) days after the later of (a) receipt of
Tenant's request for consent or (b) receipt of such further information as
Landlord may reasonably request pursuant to clause (vi) above, to require a
surrender of the Designated premises as of a date to be specified in said notice
(the "Termination Date") which shall be not earlier than one (1) day before the
effective date of the proposed assignment or subletting or later than sixty one
(61) days after said effective date, in which event Tenant shall vacate and
surrender the Designated Premises on or before the Termination Date and the term
of this lease relating to the Designated Premises shall end on the Termination
Date as if that were the Expiration Date.
B. If Landlord shall not exercise its option under Paragraph A above, Landlord
shall not unreasonably withhold, condition or delay its consent to the proposed
assignment or subletting referred to in Tenant's notice given pursuant to
Paragraph A above, provided the proposed assignment or subletting is in writing
and that the following further conditions shall be fulfilled:
(a) there shall be no advertisement or public communication of any kind whatever
related to the proposed assignment or subletting which mentions or refers to a
rental rate (but Tenant may negotiate or consummate a sublease at a lesser rate
of rent) or to any other matter which directly or indirectly might adversely
reflect on the dignity or prestige of the Building;
(b) the lease shall not be assigned, and no space shall be sublet to another
tenant, or to a related corporation of any other tenant or to any other occupant
of the Building, if Landlord shall then have comparable space in the Building
available for rent;
(c) in the case of a subletting, the subletting shall be expressly subject to
all of the provisions of this lease and the obligations of Tenant hereunder and,
without limiting the generality of the foregoing, the sublease shall impose at
least the same restrictions and conditions with respect to
<PAGE>
use as are contained in Article 2 and shall specifically provide that there
shall be no further subletting of the sublet premises;
(d) any such assignment or subletting will result in there being no more than
one (1) occupant of the Premises other than Tenant;
(e) the rent for such subletting is not less than the then going market rental
rate for comparable space and for a comparable term;
(f) the proposed assignee or subtenant shall not be a person then negotiating
with Landlord for the rental of any space in the Building;
(g) Landlord shall be furnished with a duplicate original of the sublease or
assignment within ten (10) days after the date of its execution;
(h) Tenant shall pay to Landlord as Additional Rent, a sum equal to 100% of (x)
any fixed rent and additional rent or other consideration paid to Tenant by any
assignee or subtenant which is in excess of the Fixed Rent and Additional Rent
then being paid by Tenant to Landlord pursuant to the terms hereof, and (y) any
other profit or gain realized by Tenant from any such assignment or subletting.
If only a part of the demised premises is sublet, then the rent paid therefor by
Tenant to Landlord shall be equitably apportioned;
(i) there shall be no default by Tenant under this lease when Landlord's consent
to any such assignment or subletting is requested or upon the commencement of
the term of any such proposed assignment or sublease;
(j) the proposed assignee or sublessee is engaged in a business, and shall use
the Premises, in a manner which is in keeping with the standards of the Building
and its other tenancies;
(k) the proposed assignee or sublessee is a reputable person or entity of good
character and with sufficient financial worth and Landlord has been furnished
with reasonable proof thereof;
(l) Tenant shall pay all of Landlord's costs and expenses in connection with
such assignment or subletting, including without limitation, costs of making
investigations as to the acceptability of a proposed subtenant or assignee; and
(m) the written instrument evidencing the proposed assignment or subletting
contains affirmative language whereby the assignee or subtenant acknowledges and
agrees that its interest shall be subject and subordinate to any mortgage on the
Building and the other matters set forth in Article 7.
C. No assignment of this lease shall be binding upon Landlord unless Tenant
shall deliver to Landlord (a) a duplicate original instrument of assignment in
form and substance reasonably satisfactory to Landlord, duly executed by Tenant,
and (b) an agreement, in form and substance reasonably satisfactory to Landlord,
duly executed by the assignee, whereby the assignee shall unconditionally assume
observance and performance of all of the terms and conditions of this lease on
Tenant's part to be observed or performed.
2
<PAGE>
D. If this lease be [sic] assigned, whether or not in violation of the terms of
this lease, Landlord may collect rent from the assignee. If the demised premises
or any part thereof be sublet or be used or occupied by anybody other than
Tenant, whether or not in violation of this lease, Landlord may, after default
by Tenant and expiration of Tenant's time to cure such default, if any, collect
rent from the subtenant or occupant. In either event, Landlord may apply the net
amount collected to the rent herein reserved, but no such assignment,
subletting, occupancy or collection shall be deemed a waiver of any of the
provisions of Article 11 of this lease or this Article, or the acceptance of the
assignee, subtenant or occupant as a tenant, or a release of Tenant from the
further performance by Tenant of Tenant's obligations under this lease. The
consent by Landlord to an assignment, transfer, encumbering or subletting
pursuant to any provision of this lease shall not in any way be considered to
relieve Tenant from obtaining the express prior consent of Landlord to any other
or further assignment, transfer, encumbering or subletting. The listing of any
name other than that of Tenant on any door of the demised premises or on any
directory or in any elevator in the Building, or otherwise, shall not operate to
vest in the person so named any right or interest in this lease or the demised
premises. Tenant agrees to pay Landlord's reasonably attorneys' fees and
disbursements in connection with any proposed assignment of this lease or any
proposed subletting of the demised premises or any part thereof. Neither any
assignment of this lease, nor any subletting, occupancy or use of the demised
premises or any part thereof by any person other than Tenant, nor any collection
of rent by Landlord from any person other than Tenant, nor any application of
any such rent as provided in this Article shall, under any circumstances,
relieve, impair, release or discharge Tenant of its obligations fully to perform
the terms of this lease on Tenant's part to be performed.
E. The transfer of a majority of the issued and outstanding capital stock of any
corporate Tenant, subtenant or permitted assignee of this lease, the transfer of
a majority of the interest in any limited liability company Tenant, subtenant or
permitted assignee, or the transfer of a majority of the interest in any
partnership Tenant, subtenant or permitted assignee, however accomplished, and
whether in a single transaction or in a series of related or unrelated
transactions, shall be deemed an assignment of this lease or such sublease.
F. If required by applicable law, Tenant shall complete, swear to and file any
questionnaires, tax returns, affidavits or other documentation which may be
required to be filed as a result of an assignment, sublease or sale of this
Lease by Tenant (a) with the New York State Department of Taxation and Finance
in connection with Article 31-B of the Tax Law of the State of New York, (b)
with the Commissioner of Finance of the City of New York in connection with the
New York City Real Property Transfer Tax and (c) with the appropriate
governmental agency in connection with any other tax which may now or hereafter
be in effect in connection with any such assignment, sublease or sale of this
Lease. Tenant further agrees to pay any amounts which may be assessed in
connection with any of such taxes and to indemnify Landlord against and to hold
Landlord harmless from any claims for payment of such taxes. The provisions of
this Article shall survive the expiration or sooner termination of this lease.
3
<PAGE>
LANDLORD: 130 WILLIAM LLC TENANT: WALL STREET STRATEGIES, INC.
/s/ Robert Danial /s/ Charles Payne
------------------------ --------------------------------
ROBERT DANIAL, Member NAME: Charles Payne
TITLE:
4
<PAGE>
GUARANTY
In consideration of, and as an inducement to 130 WILLIAM LLC
("Landlord") to enter that certain lease of even date herewith (the "Lease")
with WALL STREET STRATEGIES, INC. ("Tenant") for a portion of the fourth (4th)
floor of the building having an address at 130 William Street, New York, New
York 10038 and in further consideration of the premises and other good and
valuable consideration, the receipt of which is hereby acknowledged, the
undersigned ("Guarantor"), hereby guarantees, absolutely and unconditionally, to
Landlord the full and prompt performance of all terms, covenants, conditions and
agreements to be performed and observed by Tenant under the Lease and any and
all amendments, modifications and other instruments relating thereto, whether
now or hereafter existing, and the full and prompt payment of all damages, costs
and expenses which shall at any time be recoverable by Landlord from Tenant by
virtue of the Lease and any amendments, modifications and other instruments
relating thereto (hereinafter called "Liabilities of Tenant"); and Guarantor
hereby covenants and agrees to and with Landlord, its successors and assigns,
that if Tenant, its successors and assigns, shall default at any time in the
payment of Fixed Rent and Additional Rent (both as defined in the Lease), or any
other sums or charges payable by Tenant under the Lease or in the performance of
any of the terms, covenants, provisions or conditions contained in the Lease,
Guarantor will forthwith pay to Landlord, its successors and assigns, such Fixed
Rent and Additional Rent and other sums and charges and will forthwith
faithfully perform and fulfill all of such terms, covenants, conditions and
provisions of the Lease and will forthwith pay to Landlord all damages that may
arise in consequence of any such default by Tenant.
Guarantor agrees that, with or without notice or demand,
Guarantor will reimburse Landlord, to the extent that such reimbursement is not
made by Tenant, for all expenses (including reasonable attorneys' fees and
disbursements) incurred by Landlord in connection with any default by Tenant
under the Lease or the default by Guarantor under this Guaranty.
All moneys available to Landlord for application in payment or
reduction of the Liabilities of Tenant may be applied by Landlord, in such
manner and in such amounts and at such time or times as it may see fit, to the
payment or reduction of such of the Liabilities of Tenant as Landlord may elect.
This Guaranty shall be a continuing guaranty, and the
liability of the Guarantor hereunder shall in no way be affected, modified or
diminished by reason that any security for the Liabilities of Tenant is
exchanged, surrendered or released or the Lease or any other obligation of
Tenant is changed, altered, renewed, extended, continued, surrendered,
compromised, waived or released in whole or in part, or that any default with
respect thereto is waived, whether or not notice thereof is given to Guarantor,
and it is understood and agreed that Landlord may fail to set off and may
release, in whole or in part, any credit on its books in favor of Tenant, and
may extend further credit in any manner whatsoever to Tenant, and generally deal
with Tenant or any such security as Landlord may see fit; and Guarantor shall
remain bound under this Guaranty notwithstanding any such exchange, surrender,
release, change, alteration, renewal, extension, continuance, compromise,
waiver, inaction, extension of further credit or other dealing.
<PAGE>
Notwithstanding any provision to the contrary contained
herein, Guarantor hereby unconditionally and irrevocably waives (a) any and all
rights of subrogation (whether arising under contract, 11 U.S.C. ss. 509 or
otherwise) to the claims, whether existing now or arising hereafter, Landlord
may have against Tenant, and (b) any and all rights of reimbursement,
contribution or indemnity against Tenant which may have heretofore arisen or may
hereafter arise in connection with any guaranty or pledge or grant of any lien
or security interest made in connection with the Lease. Guarantor hereby
acknowledges that the waiver contained in the preceding sentence (the
"Subrogation Waiver") is given as an inducement to Landlord to enter into the
Lease and, in consideration of Landlord's willingness to enter into the Lease,
Guarantor agrees not to amend or modify in any way the Subrogation Waiver
without Landlord's prior written consent. If any amount shall be paid to
Guarantor by Tenant on account of any claim set forth at any time when all the
Liabilities of Tenant shall not have been paid in full, such amount shall be
held in trust by Guarantor for Landlord's benefit, shall be segregated from the
other funds of Guarantor and shall forthwith be paid over to Landlord to be
applied in whole or in part by Landlord against the Liabilities of Tenant,
whether matured or unmatured. Nothing herein contained is intended or shall be
construed to give to Guarantor any rights of subrogation or right to participate
in any way in Landlord's right, title or interest in the Lease, notwithstanding
any payments made by Guarantor to or toward any payments due from Guarantor
under this Guaranty, all such rights of subrogation and participation being
hereby expressly waived and released.
Guarantor hereby expressly waives (a) notice of acceptance of
this Guaranty; (b) presentment and demand for payment of any of the Liabilities
of Tenant; (c) protest and notice of dishonor or default to Guarantor or to any
other party with respect to any of the Liabilities of Tenant; (d) all other
notice to which Guarantor might otherwise be entitled; and (e) any demand for
payment under this Guaranty; and Guarantor hereby expressly agrees that the
validity of this Guaranty and the obligations of Guarantor hereunder shall not
be terminated, affected or impaired by reason of the assertion or the failure to
assert by Landlord against Tenant, or Tenant's successors and assigns, of any of
the rights or remedies reserved to Landlord pursuant to provisions of the Lease.
This is an absolute and unconditional guaranty of payment and
not of collection and Guarantor further waives any right to require that any
action be brought against Tenant or any other person or entity or to require
that resort be had to any security or to any balance of any deposit account or
credit on the books of Landlord in favor of Tenant or any other person or
entity. Successive recoveries may be had hereunder. No invalidity, irregularity
or unenforceability of all or any part of the Lease shall affect, impair or be a
defense to this Guaranty and this Guaranty shall constitute a primary obligation
of the undersigned.
Each reference herein to Landlord shall be deemed to include
its successors and assigns, in whose favor the provisions of this Guaranty shall
also inure. Each reference herein to Guarantor shall be deemed to include the
heirs, distributees, executors, administrators, legal representatives,
successors and assigns of Guarantor, all of whom shall be bound by the
provisions of this Guaranty.
No delay on the part of Landlord in exercising any rights
hereunder or failure to exercise the same shall operate as a waiver of such
rights; no notice to or demand on Guarantor shall be deemed to be a waiver of
the obligation of Guarantor or of the right of Landlord to take further action
without notice or demand as provided herein; nor in any event shall any
modification or waiver of the provisions of this
<PAGE>
Guaranty nor any termination hereof be effective unless in writing signed by
Landlord, nor shall any waiver be applicable except in the specific instance for
which given.
This Guaranty shall continue to be effective or be reinstated,
as the case may be, if any payment of Guarantor on account of the Liabilities of
Tenant must be returned by Landlord upon the insolvency, bankruptcy or
reorganization of Tenant, Guarantor, or otherwise, as though such payment had
not been made.
This Guaranty is, and shall be deemed to be, a contract
entered into under and pursuant to the laws of the State of New York shall be in
all respects governed, construed, applied and enforced in accordance with the
laws of such State; and no defense given or allowed by the laws of any other
State or Country shall be interposed in any action or proceeding hereon unless
such defense is also given or allowed by the laws of the State of New York. In
any action or proceeding arising out of this Guaranty, Guarantor agrees to
submit to personal jurisdiction in the State of New York. Guarantor agrees to
pay all costs and expenses, including, without limitation, reasonable attorneys'
fees, which are incurred by Landlord in the enforcement of this Guaranty.
This Guaranty may be executed in one or more counterparts,
each of which counterparts shall be an original. If Guarantor is a corporation,
partnership, joint venture or unincorporated association, each individual
executing this Guaranty on behalf of such entity represents and warrants that he
or she is duly authorized to execute and deliver this Guaranty on behalf of such
entity and that this Guaranty is binding upon such entity in accordance with its
terms.
All of Landlord's rights and remedies under the Lease or under
this Guaranty are intended to be distinct, separate and cumulative and no such
right and remedy therein or herein mentioned is intended to be in exclusion of
or a waiver of any of the others.
As a further inducement to Landlord to accept the Lease and in
consideration thereof, Landlord and Guarantor covenant and agree that in any
action or proceeding brought on, under or by virtue of this Guaranty, Landlord
and the Guarantor shall and do hereby waive trial by jury.
This Guaranty shall not be affected by any assignment of the
Lease by Tenant.
Any notices which either party herein may desire to give to
the other shall be made in writing and shall be given by certified or registered
mail, postage prepaid, return receipt requested, or by a nationally recognized
overnight courier, such as Federal Express or Airborne Express, and shall be
deemed to be given on the third (3rd) business day after the date of posting in
a United States Post Office or branch post office or one day after delivery to
the overnight courier, and shall be delivered to Landlord, c/o Craven Management
Corporation, 126 East 56th Street New York, New York 10022, Attention: Property
Manager for 130 William Street. Notices for Guarantor(s) shall be sent to the
address(es) set forth below. Either party may, by notice as aforesaid actually
received, designate a different address or addresses for communications intended
for it.
<PAGE>
Notwithstanding anything herein to the contrary, Landlord shall not
take any action pursuant to this Guaranty or otherwise enforce this Guaranty if,
in anticipation of, upon or following an event of default by Tenant under the
Lease:
(i) Tenant agrees to terminate the Lease by written
notice ("Termination Notice"), which termination
shall be effective on a date which shall be at least
sixty days following the date the Termination Notice
was given ("Termination Date");
(ii) Tenant voluntarily surrenders and vacates the
Premises on or prior to the Termination Date without
causing Landlord to incur any unreimbursed damage, or
out-of-pocket cost or expense in connection with such
event of default or Termination Notice and executes a
surrender agreement and/or a stipulation or warrant
of eviction in a form acceptable to Landlord; and
(iii) Tenant and/or Guarantor (x) cure such event of
default and all other past events of defaults, if
any, whether monetary or otherwise, including,
without limitation, any late charges and/or penalties
(including the Fronted Expenses set forth in
paragraph 37(B)), (y) make all payments due and
perform all of Tenant's obligations under and in
accordance with the Lease through the Termination
Date.
In the event all of the foregoing conditions are not
satisfied, it hereby understood and agreed that the Guaranty shall continue in
full force and effect and Landlord shall have the right to enforce the terms of
the Guaranty to the fullest extent possible.
IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of
the day of July, 1998.
CHARLES PAYNE
Residing at 237 Elm Avenue, Teaneck, NJ 07666
Social Security Number(s): CHARLES PAYNE 102 - 56 - 4248
Guarantor Notice Address: 237 Elm Avenue, Teaneck, NJ 07666
STATE OF NEW YORK)
ss.:
COUNTY OF NEW YORK)
On the 21st day of July in the year 1998 before me, the undersigned, a
notary public in and for said state, personally appeared CHARLES PAYNE,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is (are) subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by
<PAGE>
his/her/their signature(s) on the instrument, the individual(s), or the person
upon behalf of which the individual(s) acted, executed the instrument.
Notary Public
<PAGE>
GUARANTY
by
CHARLES PAYNE
of
LEASE
dated July 23, 1998
Between
130 WILLIAM LLC,
Landlord,
AND
WALL STREET STRATEGIES, INC.,
Tenant.
Premises:
Portion of Fourth (4th) Floor
130 William Street
New York, New York 10038
<PAGE>
RIDER ANNEXED TO
AGREEMENT OF LEASE BETWEEN
130 WILLIAM LLC,
AS LANDLORD, AND
WALL STREET STRATEGIES, INC., AS TENANT
FIXED RENT; LATE PAYMENT CHARGE:
<PAGE>
37. A. Commencing on the Commencement Date, Tenant shall pay to Landlord in
accordance with the terms of this lease and without notice or demand, annual
Fixed Rent, inclusive of any payment for electricity pursuant to the electricity
rider attached hereto, in accordance with the following schedule:
(i) in the amount of $85,313.00 per annum for the period
beginning on the Commencement Date and ending on the last day of the
month in which the twelfth (12th) monthly anniversary of the
Commencement Date shall occur, payable in advance in equal monthly
installments of $7,109.38;
(ii) in the amount of $89,863.00 per annum for the period
beginning on the first day of the month in which the thirteenth (13th)
monthly anniversary of the Commencement Date and ending on the last day
of the month in which the twenty fourth (24th) monthly anniversary of
the Commencement Date shall occur, payable in advance in equal monthly
installments of $7,488.54; and
(iii) in the amount of $94,413.00 per annum for the period
beginning on the first day of the month in which the twenty fifth
(25th) monthly anniversary of the Commencement Date shall occur and
ending on the Expiration Date, payable in advance in equal monthly
installments of $7,867.71.
B. Provided this Lease shall be in full force and effect and Tenant
shall not be in default hereunder beyond the expiration of any applicable notice
and cure period, then, notwithstanding the foregoing, the Fixed Rent payable by
Tenant in an amount equal to $6,066.67 per month (the "Abatement Amount") shall
be abated for a period of two (2) months beginning on the Commencement Date
(hereinafter called the "Abatement Period"). Notwithstanding anything to the
contrary contained herein, if Tenant is in default hereunder, Tenant shall not
be entitled to any further Abatement Amount and Tenant shall immediately pay to
Landlord the Fixed Rent otherwise abated pursuant to this Article. Furthermore,
if this Lease shall terminate due to a default by Tenant hereunder or if this
Lease shall be rejected in the case of a bankruptcy, the Fixed Rent otherwise
abated pursuant to this Article shall be immediately due and payable and Tenant
shall immediately pay to Landlord as Additional Rent: (1) any and all payments
of Fixed Rent which have theretofore been waived and (2) the unamortized cost of
any tenant improvement expenses incurred by Landlord, which shall be equal to
the product of (a) the tenant improvement expenses incurred by Landlord, and (b)
a fraction, the numerator of which shall be the number of months and/or portions
thereof from the date of the occurrence of the Event of Default to the
Expiration Date, and the denominator of which shall be the number of months
and/or portions thereof in the Term and (3) the unamortized cost of any
brokerage commission expenses incurred by Landlord, which shall be equal to the
product of (a) the brokerage commission expenses incurred by Landlord, and (b) a
fraction, the numerator of which shall be the number of months and/or portions
thereof from the date of the occurrence of the Event of Default to the
Expiration Date, and the denominator of which shall be the number of months
and/or portions thereof in the Term (collectively, the "Fronted Expenses").
C. If Tenant fails to pay any Fixed Rent or Additional Rent within five
(5) days after the date the same is due, Tenant shall pay a late charge of $.05
for each $1.00 which thereafter remains unpaid to compensate Landlord for
additional expenses incurred by Landlord in processing such late payment.
D. If Tenant fails to pay when due any installment or payment of Fixed
Rent or Additional Rent for ten (10) days after the date on which it is due,
Tenant shall pay interest thereon at a rate ("Interest Rate") equal to the
lesser of 15% per annum or the maximum legal rate from the due date of such
installment or payment to the date of payment thereof, and such interest shall
be deemed to be Additional Rent.
E. Fixed Rent for any period less than one (1) month shall be prorated
based on the number of days in such month.
2
<PAGE>
RENT RESTRICTIONS:
38. If the Fixed Rent or any Additional Rent shall be or become uncollectible by
virtue of any law or governmental order, Tenant shall take such action (without
additional expense to Tenant) as Landlord may request, as may be legally
permissible, to permit Landlord to collect the maximum Fixed Rent and Additional
Rent which may, from time to time during the continuance of such legal rent
restriction, be legally permissible, but not in excess of the amounts of Fixed
Rent or Additional Rent payable under this lease. Upon the termination of such
legal rent restriction prior to the Expiration Date, (a) the Fixed Rent and
Additional Rent, after such termination, shall become payable under this lease
in the amount of the Fixed Rent and Additional Rent set forth in this lease for
the period following such termination, and (1)) Tenant shall pay to Landlord, if
legally permissible, an amount equal to (i) the Fixed Rent and Additional Rent
which would have been paid pursuant to this lease, but for such rent
restriction, less (ii) the Fixed Rent and Additional Rent paid by Tenant to
Landlord during the period that such rent restriction was in effect.
ADDITIONAL CLEANING:
39. A. Tenant shall pay to Landlord on demand Landlord's charges for cleaning
work in the Premises or the Building required because of (i) misuse or neglect
on the part of Tenant or its agents, employees, contractors, subcontractors or
visitors, (ii) use of portions of the Premises for preparation, serving, or
consumption of food or beverages, data processing or computer operations,
private lavatories or toilets, or other special purposes requiring greater or
more difficult cleaning work than office areas, (iii) interior glass surfaces,
(iv) non building standard materials or finishes installed by Tenant or at its
request and (v) increases in frequency or scope in any of the items set forth on
Exhibit B as shall have been requested by Tenant.
B. If Tenant is permitted hereunder to and does have a separate area
for the storage, preparation, service or consumption of food or beverages in the
Premises, Tenant, at Tenant's expense, shall cause all portions of the Premises
so used to be cleaned daily in a manner satisfactory to Landlord, and to be
exterminated against infestation by vermin, roaches or rodents regularly and, in
addition, whenever there shall be evidence of any infestation.
C. The cleaning services required to be furnished by Landlord hereunder
may be furnished by a contractor or contractors employed by Landlord and Tenant
agrees that Landlord shall not be deemed in default of any of its cleaning
obligations hereunder unless such default shall continue for an unreasonable
period of time after notice from Tenant to Landlord setting forth the specific
nature of such default.
BROKERAGE:
40. Tenant and Landlord, each represents that in the negotiation of this lease
it dealt with no broker or brokers other than Sylvan Lawrence Company, Inc.
Tenant and Landlord, each hereby agrees to indemnify and hold the other harmless
from and against any and all claims, liabilities, suits, costs and expenses
including reasonable attorneys' fees and disbursements arising out of any
inaccuracy or alleged inaccuracy of the above representation. Landlord shall
have no liability for any brokerage commissions arising out of a sublease or
assignment by Tenant. The provisions of this Article shall survive the
expiration or sooner termination of this lease.
NON-LIABILITY:
3
<PAGE>
41. A. Neither Landlord nor Landlord's agents, officers, directors,
shareholders, partners or principals (disclosed or undisclosed) shall be liable
to Tenant or Tenant's agents, employees, contractors, invitees or licensees or
any other occupant of the Premises, and Tenant shall save Landlord, any
mortgagee of the Building and/or the land on which the Building is located (the
"Land; the Land and the Building, collectively, the "Real Property") and their
respective agents, employees, contractors, officers, directors, shareholders,
partners and principals (disclosed or undisclosed) harmless from any loss, cost,
liability, claim, damage, expense (including reasonable attorneys' fees and
disbursements), penalty or fine incurred in connection with or arising from any
injury to Tenant or to any other person or for any damage to, or loss (by theft
or otherwise) of, any of Tenant's property or of the property of any other
person, irrespective of the cause of such injury damage or loss (including the
acts or negligence of any tenant or of any owners or occupants of adjacent or
neighboring property or caused by operations in construction of any private,
public or quasi-public work) unless due to the negligence of Landlord or
Landlord's agents without contributory negligence on the part of Tenant, its
employees, agents, contractors, invitees or licensees, it being understood that
no property, other than such as might normally be brought upon or kept in the
Premises as incidental to the reasonable use of the Premises for the purposes
herein permitted will be brought upon or be kept in the Premises; provided,
however; that even if due to any such negligence of Landlord or Landlord's
agents, Tenant waives, to the full extent permitted by law, any claim for
consequential or punitive damages in connection therewith and Landlord and
Landlord's agents shall not be liable, to the extent of Tenant's insurance
coverage, for any loss or damage to any person or property even if due to the
negligence of Landlord or Landlord's agents. Any Building employee to whom any
property shall be entrusted by or on behalf of Tenant shall be deemed to be
acting as Tenant's agent with respect to such property and neither Landlord nor
Landlord's agents shall be liable for any loss of or damage to any such property
by theft or otherwise.
B. Neither any (a) performance by Landlord, Tenant or others of any
repairs, alterations or improvements in or to the Real Property, Building or
Premises, (b) failure of Landlord or others to make any such repairs or
improvements, (c) damage to the Building, Premises or Tenant's property in the
Premises, (d) any injury to any persons, caused by other tenants or persons in
the Building, or by operations in the construction of any private, public or
quasi-public work, or by any other cause, (e) latent defect in the Building or
Premises, nor (f) inconvenience or annoyance to Tenant or injury to or
interruption of Tenant's business by reason of any of the events or occurrences
referred to in the foregoing subdivisions (a) through (f) shall impose any
liability on Landlord or Landlord's agent to Tenant, other than such liability
as may be required or imposed upon Landlord by law for Landlord's negligence or
the negligence of Landlord's agents in the operation or maintenance of the
Building or for the breach by Landlord of any express covenant of this lease on
Landlord's part to be performed or observed. No representation, guaranty or
warranty is made or assurance given that any communications or security systems,
devices or procedures of the Building, if any, will be effective to prevent
injury to Tenant or any other person or damage to, or loss (by theft or
otherwise) of, any of Tenant's property or of the property of any other person,
and Landlord reserves the right to discontinue or modify at any time such
communications or security Systems or procedures without liability to Tenant.
C. Tenant shall pay to Landlord as Additional Rent, within ten (10)
days following rendition by Landlord to Tenant of bills or statements therefor,
sums equal to all losses, costs, liabilities, claims, damages, fines, penalties
and expenses referred to in the indemnification contained in Article 8 hereof.
D. Notwithstanding anything to the contrary contained herein, Tenant
shall look only to Landlord's estate in the Building (or the proceeds thereof)
for the satisfaction of Tenant's remedies for the collection of a judgment (or
other judicial process) requiring the payment of money by Landlord in the event
of any default by Landlord hereunder, and no other property or assets of
Landlord or its agents, directors, officers, shareholders, partners or
principals (disclosed or undisclosed) shall be subject to levy, execution or
other enforcement procedure for the satisfaction of Tenant's remedies under or
with respect to this lease, the relationship of Landlord and Tenant hereunder or
under law or Tenant's use or occupancy of the Premises or any other liability of
Landlord to Tenant.
4
<PAGE>
E. The provisions of this Article shall survive the expiration or
sooner termination of this lease.
INSURANCE:
42. Tenant, at its expense, shall maintain at all times during the Term (a) "all
risk" property insurance covering Tenant's property and improvements and
betterments to a limit of not less than the full replacement cost thereof and
(b) comprehensive general liability insurance covering bodily injury, personal
injury and property damage, with such limits as may reasonably be requested by
Landlord from time to time, but not less than $1,000,000 in respect to bodily
injury or death arising out of any one occurrence and $1,000,000 for property
damage. The policy or policies evidencing such insurance shall include Landlord
and such parties as Landlord shall designate as a named additional insured. The
limits of such insurance shall not limit the liability of Tenant. All policies
required to be maintained pursuant to the provisions of this lease shall be
issued by an insurance company or companies having a Best's rating (or any
successor publication of comparable standing) of at least A/XIV and authorized
to do business in the State of New York. All policies required to be maintained
pursuant to the provisions of this lease shall have a written undertaking from
the insurer to notify all insureds thereunder at least sixty (60) days prior to
cancellation thereof. Upon the execution of this lease, Tenant shall deliver to
Landlord and any additional insureds such fully paid for policies or
certificates of insurance evidencing any such policy. Tenant shall procure,
maintain and place such insurance and pay all premiums and charges therefor and
upon failure to do so Landlord may, but shall not be obligated to, procure,
maintain and place such insurance or make such payments, and in such event the
Tenant agrees to pay the amount thereof, plus interest at the rate of two (2%)
percent above the rate announced from time to time by Citibank, N.A. New York)
as its base corporate lending rate, to Landlord on demand and said sum shall be
in each instance collectible as Additional Rent on the first day of the month
following the date of payment by Landlord. During such times as Tenant shall be
performing any alteration, installation, addition or improvement to the Premises
(collectively, "Alterations"), Tenant shall carry or cause to be carried (and
shall provide Landlord with evidence thereof) (i) worker's compensation
insurance covering all persons employed in connection with the Alteration in
statutory limits, (ii) broad form comprehensive general liability insurance
including a completed operations endorsement with limits of liability of not
less than $1,000,000 combined single limit bodily injury and property damage,
(iii) builder's risk insurance, completed value non-reporting form, covering all
physical loss, in an amount reasonably satisfactory to Landlord, (iv) an
umbrella policy in amounts required by Landlord, and (v) such other insurance,
and in such amounts as Landlord deems reasonably necessary to protect Landlord's
interest in the Premises and the Building from any act or omission of Tenant's
contractors and subcontractors. Tenant's failure to provide and keep in force
the aforementioned insurance shall be regarded as a material default hereunder
entitling Landlord to exercise any or all of the remedies provided in this lease
in the event of Tenant's default.
COMPLIANCE WITH LOCAL LAW NO. 5:
43. Notwithstanding anything contained to the contrary elsewhere in this lease,
Tenant acknowledges with respect to any alterations made by Tenant within the
demised premises either by Tenant, in accordance with other applicable
provisions of this lease, or performed by Landlord on Tenant's behalf or
pursuant to a work letter agreement executed between the parties at the time of
entering this lease, that it will be Tenant's responsibility and obligation to
comply with all fire safety requirements and controls imposed by Local Law 5 of
the City of New York, as same now exists or may hereafter be amended, as well as
with any and all other laws, rules and obligations of the City of New York or of
any governmental agency or department thereof having jurisdiction with respect
to the demised premises. The performance of any of the foregoing Local Law 5
required work, installations and alterations shall be performed by Tenant in
accordance with all applicable provision of this lease (including but not
limited to Articles 3 and 6 thereof) and of law.
44. [INTENTIONALLY OMITTED.]
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MISCELLANEOUS PROVISIONS:
45. A. If any of the provisions of this lease, or the application thereof to any
person or circumstance, shall, to any extent, be invalid or unenforceable, the
remainder of this lease, or the application of such provision or provisions to
persons or circumstances other than those as to whom or which it is held invalid
or unenforceable, shall not be affected thereby, and every provision of this
lease shall be valid and enforceable to the fullest extent permitted by law.
B. (a) Tenant hereby indemnifies and agrees to hold Landlord harmless
from and against any loss, cost, liability, claim, damage, fine, penalty and
expense (including reasonable attorneys' fees and disbursements) resulting from
delay by Tenant in surrendering the Premises upon the termination of this lease
as provided in Article 22, including any claims made by any succeeding tenant or
prospective tenant founded upon such delay.
(b) In the event Tenant remains in possession of the Premises after
the expiration or sooner termination of this lease without the execution of a
new lease, Landlord shall be entitled to immediately reenter the Premises and
dispossess Tenant. In the event of any holding over by Tenant, Tenant shall pay
as holdover rental for each month of the holdover tenancy an amount equal to two
(2) times the Fixed Rent and Additional Rent payable during the last month of
the Term, subject to all of the other terms of this lease insofar as the same
are applicable to such holdover tenancy. The acceptance of any rent paid by
Tenant pursuant to this Article shall in no event preclude Landlord from
commencing and prosecuting a holdover or summary eviction proceeding and the
provisions of this Article shall be deemed be an "agreement expressly providing
otherwise" within the meaning of Section 232-c of the Real Property Law of the
State of New York and any successor or similar law of like import. Nothing
contained in this Article shall (i) imply any right of Tenant to remain in the
Premises after the expiration or sooner termination of this lease without the
execution of a new lease, (ii) imply any obligation of Landlord to grant a new
lease or (iii) be construed to limit any right or remedy that Landlord has
against Tenant as a holdover tenant or trespasser.
C. Each of the persons executing this lease on behalf of Tenant and
Landlord hereby represents and warrants that he/she has been duly authorized to
execute this lease for and on behalf of Tenant or Landlord, as the case may be.
D. Notwithstanding the provisions of Article 3 no approval of plans or
specifications by Landlord or consent by Landlord allowing Tenant to make any
alterations, installations, additions or improvements in the Premises at any
time during the Term shall in any way be deemed to be an agreement, a
representation or warranty by Landlord that the contemplated alterations,
installations, additions or improvements comply with any legal requirements or
any certificate of occupancy for the Building nor shall it be deemed to be a
waiver by Landlord of such compliance by Tenant or of any of the terms of this
lease. Notice is hereby given that neither Landlord, Landlord's agent, nor any
mortgagee of the Building shall be liable for any labor or materials furnished
or to be furnished to Tenant upon credit, and that no mechanic's or other lien
for such labor or material shall attach to or affect any estate or interest of
Landlord or any such mortgagee in and to the Premises or the Building. Tenant
shall keep records of all alterations, installations, additions or improvements
costing in excess of $10,000 and the cost thereof, and within fifteen (15) days
after demand by Landlord, Tenant shall furnish to Landlord copies of such
records if Landlord shall request the same.
E. If Tenant is a partnership (or is comprised of two (2) or more
persons, individually, or as joint venturers or as co-partners of a partnership)
or if Tenant's interest in this lease shall be assigned to a partnership (or to
two (2) or more persons, individually, or as joint venturers or as co-partners
of a partnership) (any such partnership and such persons are referred to in this
Article as "Partnership Tenant"), the following provisions shall apply to such
Partnership Tenant:
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(a) the liability of each of the parties comprising Partnership Tenant shall be
joint and several, and (b) each of the parties comprising Partnership Tenant
hereby consents in advance to and agrees to be bound by, any modifications,
termination, discharge or surrender of this lease which may hereafter be made
and by any notices, demands, requests or other communications which may
hereafter be given, by Partnership Tenant or by any of the parties comprising
Partnership Tenant, and (c) any bills, statements, notices, demands, requests or
other communications given or rendered to Partnership Tenant or to any of the
parties comprising Partnership Tenant shall be deemed given or rendered to
Partnership Tenant or to any of the parties comprising Partnership Tenant and
shall be binding upon Partnership Tenant and all parties, and (d) if Partnership
Tenant shall admit new partners, all such new partners shall, by their admission
to Partnership Tenant, be deemed to have assumed performance of all of the
terms, covenants and conditions of this lease on Tenant's part to be observed
and performed and (e) Partnership Tenant shall give prompt notice to Landlord of
the admission of any such new partners, and upon demand of Landlord, shall cause
each such new partner to execute and deliver to Landlord an agreement in form
satisfactory to Landlord, wherein each such new Partner shall assume performance
of all of the terms, covenants and conditions of this lease on Tenant's part to
be observed and performed (but neither Landlord's failure to request any such
agreement nor the failure of any such new partner to execute or deliver any such
agreement nor the failure of any such new partner to execute or deliver any such
agreement to Landlord shall vitiate the provisions of Subdivision (d) of this
Article E).
F. All exhibits to this lease and any and all rider provisions attached
to this lease are hereby incorporated into this lease. If any provision
contained in any rider hereto is inconsistent or in conflict with any printed
provision of this lease, the provision contained in such rider shall supersede
said printed provision and shall control.
G. Wherever it is specifically provided in this lease that a party's
consent is not to be unreasonably withheld, a response to a request for such
consent shall also not be unreasonably delayed. If either Landlord or Tenant
considers that the other has unreasonably withheld or delayed a consent, it
shall so notify the other party within ten (10) days after receipt of notice of
denial of the requested consent or, in case notice of denial is not received
within twenty (20) days after making its request for the consent, then within
thirty (30) days after making such request. Tenant hereby waives any claim
against Landlord which it may have based upon any assertion that Landlord has
unreasonably withheld or unreasonably delayed any such consent, and Tenant
agrees that its sole remedy shall be an action or proceeding to enforce any such
provision or for specific performance, injunction or declaratory judgment. In
the event of such a determination, the requested consent shall be deemed to have
been granted; however, Landlord shall have no liability to Tenant for its
refusal or failure to give such consent. The sole remedy for Landlord's
unreasonably withholding or delaying of consent shall be as provided in this
Article.
H. Landlord hereby covenants and agrees that Landlord shall, at its
sole cost and expense, cause the improvements which are set forth on Exhibit C
attached hereto to be made in and to the Premises, using materials of Building -
standard quality, color and design ("Landlord's Work"). Landlord shall not be
required to perform any work to the Premises, except as provided in this Article
45(H). Landlord shall use reasonable efforts (without being obligated to employ
overtime labor or to incur any extraordinary expenses in connection therewith)
to complete Landlord's Work in a timely manner. Tenant acknowledges, however,
that the performance by Landlord of Landlord's Work may disturb Tenant's quiet
enjoyment of, and access to, the Premises. Tenant hereby accepts such conditions
as modifications and limitations on its right to use the Premises and hereby
waives any and all claims for damages to its property or its business which may
be caused by the effects of any such work. Except for Landlord's Work, Tenant
shall accept the Premises in its present "AS IS" condition.
I. Landlord shall notify Tenant of the anticipated date of substantial
completion of Landlord's Work ("Substantial Completion Date") in a notice given
at least five (5) business days prior to the Substantial Completion Date stated
therein. The phrase "substantial completion" shall mean that, with the exception
of punch-list items which would not
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prevent the use or occupancy of the Premises for the permitted uses, Landlord's
Work shall have been completed in accordance with the final plans and all
mechanical systems serving or affecting the Premises shall then be in working
order. Landlord and Tenant shall thereupon set a mutually convenient time for
Tenant, Tenant's architect and engineer, Landlord and Landlord's contractor to
inspect the Premises and Landlord's Work, at which time Tenant's architects and
engineers shall prepare and submit to Landlord a punch list of items to be
completed. Upon completion of the inspection, Tenant shall acknowledge in
writing that substantial completion of Landlord's Work has occurred, subject to
any punch list items to be completed. Landlord shall endeavor to complete the
punch list items within thirty (30) days thereafter. In the event Tenant shall
fail to confer with Landlord with respect to the substantial completion of
Landlord's Work within five (5) days of Landlord's notice setting forth the
Substantial Completion Date, Landlord's Work shall be deemed completed and
satisfactory in all respects and the Commencement Date shall be deemed to have
occurred on the date set forth in Landlord's notice as the Substantial
Completion Date. In the event of any dispute, a certificate of Landlord's
architect or engineer to the effect that the Premises are substantially complete
and in the condition required by this Lease shall control.
J. Notices given by counsel for Landlord or Tenant which are given in
accordance with Article 28 of this lease shall be deemed valid notices.
K. If and to the extent that there is a conflict between any
provision contained in the printed portion of the lease to which this Rider is
attached and the provisions contained in this Rider, then the provision
contained in this Rider shall govern and be controlling, to the extent necessary
to resolve such conflict.
L. Tenant shall, throughout the term of this Lease, maintain, repair,
service and replace when necessary, all doors leading into and out of the
Demised Premises and all hardware appurtenant thereto, including, but not
limited to, locks, hinges, silencers, door stops, door jams, door closers,
latches, light bulbs, door frames, thresholds and door knobs. Landlord shall
have no liability or obligation whatsoever regarding the maintenance, repair,
service and replacement of the foregoing.
M. Tenant shall not use, occupy, suffer or permit the Demised Premises,
or any part thereof, to be used in any manner, or suffer or permit any thing to
be brought into or kept therein, which would, in Landlord's reasonable judgment:
(a) violate any of the provisions of any recorded mortgage to which this Lease
is subject; (b) violate any legal requirement or insurance requirement of
Landlord; (c) make void or voidable any insurance policy then in force with
respect to the Demised Premises, and/or the Building; (d) cause or be likely to
cause, injury or damage to the Building; (e) constitute a public or private
nuisance; (f) violate any certificate of occupancy which may now be issued or
hereinafter be obtained for the Demised Premises and/or the Building; (g) emit
objectionable noise which can be detected outside the Demised Premises; (h)
impair or interfere with the effectiveness or accessibility of the Building
equipment or any Building service; (i) impair or interfere with the use of any
area of the Building, or occasion annoyance or inconvenience to Landlord or any
tenant of the Building; and (j) interfere with access to the Building, or the
Demised Premises by fire prevention personnel and/or equipment.
N. All common areas and facilities not located within the Demised
Premises, which Tenant may use, are to be used on a non-exclusive basis, and the
amount of such areas shall not be diminished or eliminated, if doing so would
materially adversely affect Tenant's use of or access to the Premises. Subject
to the preceding sentence, Landlord shall not be subject to liability nor shall
Tenant be entitled to any compensation or diminution, reduction or abatement of
rent, nor shall such diminution or elimination of such areas be deemed
constructive or actual eviction.
O. Tenant shall not: (i) encumber or obstruct or permit to be
encumbered or obstructed any sidewalk, hallway, service elevator, stairway or
passageway in the Building; (ii) have or cause to have brought or delivered from
the street to the Demised Premises any stock, supplies or merchandise in such a
manner as would block the hallways, passageway in the Building, surrounding
sidewalks and street or the entrance to the Building for any period of time;
(iii)
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permit employees, guests, clients or other persons to congregate, loiter or
assemble in the hallways or about the Demised Premises or the Building; and (iv)
encumber, obstruct, use, or permit any hallway, passageway in the Building,
sidewalk or sidewalk area to be used for the storage, sale, display or
advertisement of any services, stock, supplies or merchandise. In the event that
Tenant fails to comply with this subparagraph 45(O), and in addition to any
other rights the Landlord may have under this Lease and applicable law, Landlord
may immediately, upon three (3) days notice, have any such items removed at
Tenant's expenses and without any liability therefor, and may dispose of such in
the manner that the Landlord, in its sole judgment, deems proper. Landlord shall
have no liability or responsibility for any of the items so removed and this
subparagraph 45(O) shall not confer, nor is to be construed or intended to
confer any rights to any third parties.
P. No payment by Tenant or receipt by Landlord of a lesser amount than
the Rent payable hereunder shall be deemed to be other than a payment on account
of the earliest stipulated Rent, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment for Rent be deemed on
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such Rent or pursue any
other remedy provided herein or by law.
BUILDING DIRECTORY
46. At the written request of Tenant, Landlord shall list on the building
directory the name of the Tenant, any trade name under which Tenant has the
right to operate, any other entity permitted to occupy any portion of the
demised premises under term of this lease, and the officer and employees of each
of foregoing entities, provided the number of name so listed does not exceed
Tenant's Proportionate Share (as defined in the Escalation Rider attached
hereto) of the capacity of such directory. If requested by Tenant, Landlord may
(but shall not be required to) list the name of Tenant's subsidiaries and
affiliates, however, the listing of any name other than that of Tenant shall
neither grant such party or entity any right or interest in this lease or in the
demised premises nor constitute Landlord's consent to any assignment or sublease
to, or occupancy of the demised premises by such party or entity. Except for the
name of Tenant, any such listing may be terminated by Landlord, at any time,
without notice.
TRANSMITTAL OF LEASE
47. The submission of this document for examination and review does not
constitute an option, an offer to lease space, or an agreement to lease space.
This document shall have no binding effect on the parties hereto unless and
until executed and delivered by both Landlord and Tenant and will be effective
only upon Landlord's execution and delivery of same. Except as expressly
contained herein, (i) neither Landlord nor Landlord's agent or attorneys have
made representations, warranties or promises with respect to the Premises or
this Lease; and (ii) Landlord shall have no obligation to do any work in and to
the Premises in order to prepare the Premises for occupancy and use by Tenant.
NON-DISTURBANCE
48. Landlord shall request and use reasonable efforts to obtain a
non-disturbance agreement from the holder of any mortgage now or hereafter
encumbering the Building or from the lessor under any superior lease now or
hereafter affecting the Building in the standard form of any such holder or
lessor which shall provide in substance that so long as Tenant is not in default
under this Lease beyond any applicable notice and grace period (a) Tenant shall
not be joined as a party defendant (unless required by applicable law) (i) in
any action or proceeding which may be instituted or taken by any lessor under a
superior lease for the purpose of terminating the superior lease by reason of
any default thereunder or (ii) in any foreclosure action or proceeding which may
be instituted by the holder of a mortgage, and (b) Tenant shall not be evicted
from the Premises, nor shall Tenant's leasehold estate or right to possession of
the Premises be terminated or disturbed by reason of
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any default under any superior lease or mortgage. Any non-disturbance agreement
may also provide that Tenant will, at the option of the holder of any mortgage
or the lessor under any superior lease, either (i) attorn to such holder or
lessor and perform for its benefit all the terms, covenants and conditions to be
performed by Tenant under this Lease with the same force and effect as if the
lessor or holder were the Landlord originally named in this Lease or (ii) enter
into a new lease with the lessor under the superior lease or the holder of any
mortgage or their respective successors or assigns for the balance of the Term
on the same terms and conditions as contained in this Lease. Landlord's failure
to obtain a non-disturbance agreement shall not relieve or release Tenant from
any of its obligations under this Lease.
ESTOPPEL CERTIFICATE
49. At any time and from time to time upon written request by Landlord, Tenant
hereby agrees to deliver within ten (10) days after request, a certificate to
Landlord or to any present or proposed (a) mortgagee, (b) lessor under a
superior lease, or (c) purchaser designated by Landlord, in the form supplied,
certifying: (1) that Tenant has accepted the Premises (or, if Tenant has not
done so, that Tenant has not accepted the Premises, and specifying the reasons
therefor); (2) that this Lease is in full force and effect and has not been
modified (or if modified, setting forth all modifications), or, if this Lease is
not in full force and effect, the certificate shall so specify the reasons
therefor; (3) the Commencement Date, the Expiration Date and the terms of any
extension options of Tenant, if any; (4) the date to which the Fixed Rent and
Additional Rent have been paid under this Lease and the amount thereof then
payable; (5) the amount of the Security Deposit and prepaid rent, if any, being
held by Landlord; (6) whether there are then any existing defaults by Landlord
in the performance of its obligations under this Lease, and, if there are any
such defaults, specifying the nature and extent thereof; (7) that no notice has
been received by Tenant of any default under this Lease which has not been
cured, except as to defaults specified in the certificate; (8) the capacity of
the person executing such certificate, and that such person is duly authorized
to execute the same on behalf of Tenant; and (9) any other information
reasonably requested by Landlord or its present or proposed purchaser, the
holder of any mortgage, or lessor under a superior lease.
ATTORNEYS' FEES
50. In the event of any action or proceeding brought by Landlord against Tenant
under this Lease, Landlord shall be entitled to recover court costs and the fees
and disbursements of its attorneys in such action or proceeding (whether at the
administrative, trial or appellate levels) in such amount as the court or
administrative body may judge reasonable. Landlord shall also be entitled to
recover attorneys' fees and disbursements incurred in connection with a Tenant
default hereunder which does not result in the commencement of any action or
proceeding.
LOWER MANHATTAN REAL PROPERTY TAX ABATEMENT
51. (A) Pursuant to the provisions of Title 4 of Article 4 of the Real Property
Tax Law of the State of New York (the "Tax Law"), Landlord hereby notifies
Tenant that Tenant may be entitled to receive certain tax abatements and, if
such be the case, Tenant shall be entitled to receive the benefits thereof which
shall reduce in the manner set forth in this Article the Fixed Rent payable
hereunder.
(B) Provided Tenant provides Landlord with any and all applications
Landlord is required to file, whether concurrently or not, with Tenant, Landlord
and Tenant shall file an application for a certificate of abatement pursuant to
Section 499-d of the Tax Law with the Department of Finance of the City of New
York (the "Finance Department") promptly after the execution and delivery
hereof, but in no event later than sixty (60) days following the Commencement
Date days before the date Tenant applies for building permits with the
department of buildings. Such application shall comply with the requirements of
Section 499-d of the Tax Law, if and to the extent applicable. Any charges
imposed by
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the Finance Department to defray expenses in administering the abatement program
shall be promptly paid by Tenant. Tenant shall prepare and submit all annual
certificates of continuing eligibility required under Section 499-f of the Tax
Law and Landlord shall join all such annual certificates and shall cooperate
with Tenant to the completion thereof. Landlord covenants not to cause the
revocation of any abatements otherwise due under this Article by reason of
Landlord's failure to comply with Section 499-f(4) of the Tax Law, so long as
such compliance does not cause landlord to incur any expenses.
(C) For purposes of this Article, "Tenant's Percentage Share," which
shall have the meaning accorded in Section 499-a(28) of the Tax Law, shall mean
3.61%.
(D) In the event that the application for abatement of the real
property taxes is granted with respect to the Premises, the Fixed Rent payable
hereunder shall be proportionately reduced by the amount of such abatement
granted pursuant to such application and each monthly installment thereof shall
be ratably reduced to amortize such abatement over the entire applicable lease
year. However, the term "Taxes" as defined in the escalation rider attached
hereto, shall be calculated without regard to such abatement.
(E) In the event that such abatement is revoked, unless due to
Landlord's unwarranted voluntary act, the Fixed Rent shall no longer be reduced
to reflect such abatement, retroactive to the date of such revocation and Tenant
shall pay Landlord any interest and penalties charged by the City of New York on
any taxes payable as a result of such revocation.
(F) and Tenant agrees to take such further actions as may be reasonably
necessary, or appropriate to implement the intention and purpose of this
Article.
THE FOLLOWING ADDITIONAL RIDERS ARE HEREBY ATTACHED HERETO AND MADE A PART
HEREOF:
1. Escalation Rider
2. Electricity Rider
3. Assignment and Subletting Rider
LANDLORD: 130 WILLIAM LLC TENANT: WALL STREET STRATEGIES, INC.
/S/ Robert Danial /s/ Charles Payne
------------------------ ------------------------
ROBERT DANIAL, Member Name: Charles Payne
Title:
<PAGE>
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Exhibit 10.19
ENGAGEMENT LETTER
December 23, 1999
Charles Payne
Chief Executive Officer
Wall Street Strategies Corporation
130 William Street
Suite 401
New York, NY 10038
Re: Wall Street Strategies Corporation
Dear Mr. Payne:
This engagement letter (the "Engagement Letter" or, this "Agreement")
shall serve to set forth the terms upon which Joseph Charles & Assoc., Inc.
("JCA"), will render to Wall Street Strategies Corporation together with its
subsidiaries (the "Company") certain investment banking services. On the basis
of several discussions held between JCA and the Company's representatives, and
subject to the terms and conditions of this Engagement Letter, JCA and the
Company agree that JCA is engaged to act as the Company's Investment Banker and
Placement Agent to assist the Company with respect to matters relating to the
financing of the Company's businesses, recapitalizations and mergers and
acquisitions ("Projects"), pursuant to the following terms and conditions:
1. Terms of Engagement; Exclusive Agency. The term of the Investment
Banking Engagement established hereby is eighteen (18) months from the date of
completion of at least seven and a half million dollars ($7,500,000) of the
initial project contemplated in Section 5 herein (the "Term"). Unless waived in
writing by JCA, JCA shall be the Company's exclusive agent with respect to
investment banking services relating to any Project contemplated by the Company
during the Term. During the Term, the Company agrees not to engage any other
investment banking firm or financial intermediary which provide financing, or to
directly contact institutions regarding and/or relating to their investment
banking services. JCA will have the first right of first
Initial ----- -----
<PAGE>
Wall Street Strategies
December 23, 1999
Page 2
refusal on any private or public financing of the Company's debt or equity
during the Term. Prior to proceeding with any private or public offering of its
securities, the Company will provide notice to JCA in writing of its intention
to make such offering, and shall afford JCA a period of thirty (30) days from
the date of receipt of such notice by JCA for JCA to determine to act as the
placement agent, underwriter or principal investor in such offering. In the
event that JCA fails to respond timely in writing to the Company exercising its
right of first refusal within such thirty (30) day period, the Company shall be
free to pursue said offering without the services of JCA. In the event that any
material term or terms of the proposed offering changes subsequent to the
issuance of a notice contemplated hereby to JCA, the Company shall be obligated
to send a new notice offering JCA the opportunity to participate in the revised
offering in accordance with the procedure set forth hereinabove. Notwithstanding
any other provision of any offering proposed to be made by the Company, in the
event that JCA exercises its right of first refusal, the Company shall be
obligated to pay JCA a non-refundable deposit of $50,000 at the time of such
exercise. This non-refundable deposit shall be offset against any fee or expense
reimbursement payable to JCA under the terms of the proposed financing.
2. Termination.
(a) The Company may terminate this Agreement for cause. In the
event of such termination, JCA shall be entitled to all items of compensation
and expenses (including any amounts deferred) payable to JCA pursuant hereto as
of the date of termination. For purposes of this Agreement, "cause" shall be
defined as any material breach of this Engagement Letter by JCA which is not
cured within 30 days after written notice of such breach is given by the Company
to JCA. In addition, should JCA fail to procure investors before the expiration
of the Initial Offering Period (defined in Section 5(d)) or extension thereof
for securities of the Company totaling no less than four million dollars
($4,000,000) at current market value, then the Company may terminate this
Agreement upon payment of all items of compensation and expenses (including any
amounts deferred) payable to JCA pursuant hereto as of the date of termination.
(b) JCA may terminate this Agreement at any time, without
advance notice, with or without cause, effective immediately upon written notice
thereof in which event the Company shall have no further liability or obligation
to JCA.
(c) If the Company terminates this Agreement in a manner other
than as described in paragraph 2(a) and 2(d), the Company shall be obligated to
pay immediately to JCA a breakup fee of $50,000 in addition to all other items
of compensation and expenses (including any amounts deferred) payable to JCA
pursuant hereto as of the date of termination; provided that notwithstanding
such termination, any transactions completed during the eighteen (18) months
Initial ----- -----
<PAGE>
Wall Street Strategies
December 23, 1999
Page 3
following the termination of this Agreement between the Company and any investor
introduced to the Company by JCA, will obligate the Company to pay the
compensation to JCA in the amount set forth in paragraph 5(b)(i) below.
(d) If the Company terminates this agreement without cause
prior the expiration of the Initial Offering Period or any extension thereof,
the Company shall be obligated to immediately pay a break-up fee of three
hundred thousand dollars ($300,000) and forty percent (40%) of the warrants
which would have been earned for the maximum raise contemplated in Section 5.
The Company and JCA agree that the foregoing fees are an acceptable measure of
compensation to JCA for the contemplated Private Placement. Such fee shall be in
addition to payment for expenses and fees.
3. Representations and Indemnification. The Company represents and
warrants to JCA that:
(a) the Company will not cause or knowingly permit any action
to be taken in connection with any Project which violates the Securities Act of
1933 (including Regulation D thereunder), the Securities Exchange Act of 1934,
the Investment Company Act of 1940, or any state securities laws;
(b) all information and statements provided by the Company in
connection with all Projects will be true and correct;
(c) current Company management, as disclosed to JCA, will
continue in place after the Initial Project for a reasonable period of time;
(d) the financial statements provided by the Company to JCA
fairly reflect the financial condition of the Company and the results of its
operations at the time and for the periods covered by such financial statements;
(e) the Company is not aware of any facts adversely affecting
the financial condition of the Company;
(f) the Company has prepared and delivered to JCA its most
recent projections of sales, earnings and cash flows; and
Initial ----- -----
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Wall Street Strategies
December 23, 1999
Page 4
(g) with respect to each Project (including the Initial
Project, as described below), the Company will execute a placement agreement or
other type of definitive agreement as may be appropriate for each Project
containing mutual indemnification and other terms and conditions customary for
agreements of that type, acceptable in form and substance to JCA and the
Company; but failure to execute such agreement shall not relieve the Company of
its obligations to reimburse JCA for all costs and expenses incurred by JCA in
connection with the contemplated Project to the extent provided herein.
(h) JCA represents to the Company that JCA is registered with
the National Association of Securities Dealers (NASD) and Securities Investor
Protection Corporation (SIPC). Information on JCA can be accessed via the
internet at www.NASDR.com. JCA is in good corporate standing with the State of
Florida, the NASD, and the Securities and Exchange Commission (SEC). JCA has the
ability to execute the project(s) contemplated herein.
4. Conditions of Performance by JCA, Due Diligence by JCA. During the
Term, JCA shall be authorized to conduct necessary due diligence in connection
with Projects, including, but not limited to, inspection of the Company's
facilities and operations, review of current financial statements and
projections, interviews with the Company's advisors, interviews with the
Company's senior management and other employees and contacts with the Company's
customers, suppliers and sources of credit. This engagement is specifically
subject to and conditional upon successful completion of these due diligence
procedures, the results of which shall be satisfactory to JCA in its sole
determination. JCA agrees that it will maintain the confidentiality of the
Company's financial information regarding plans, strategies, cash flows, sales
and earnings estimates; any such dissemination of financial information shall,
if requested by the Company, be made under the protection of a confidentiality
agreement reasonably and mutually acceptable to JCA and the Company. JCA intends
to effect each Project, including the Initial Project, as soon as practicable
after the Company has complied with all applicable statutes, laws, rules and
regulations and conclusion of all due diligence; provided, however that JCA
reserves the right not to proceed with any Project, if, in its sole judgment,
market conditions are not suitable for the completion of such Project or
information comes to its attention relating to the Company, its management or
its position in the industry which could, in JCA's sole judgment, preclude a
successful completion of any Project.
5. Initial Project. The initial Project for which JCA is being engaged
(the "Initial Project") is the following:
Initial ----- -----
<PAGE>
Wall Street Strategies
December 23, 1999
Page 5
(a) JCA shall act as the Company's Investment Banker and
Placement Agent in a private placement offering (the "Private Placement" or the
"Financing"). The Company proposes to issue up to $10,000,000 of a proposed
issue of securities (the "Securities"), the percentage such Securities represent
of the equity securities of the Company on a post-offering basis shall be
determined by JCA and the Company after the execution hereof. The stated
percentages will include those Securities issued to the investors in the Private
Placement as well as those Securities issued to JCA as compensation pursuant
hereto. The offering will be made on a "best efforts, all or none" basis with
respect to the first $1,000,000 (the "Minimum Amount"), and on a "best efforts"
basis with respect to the balance.
(b) Compensation to JCA - JCA shall be entitled to receive the
following items of compensation for the services rendered hereunder.
(i) Placement Fee. JCA shall be entitled to receive a
Placement Fee equal to nine percent (9%) of total gross proceeds raised from the
Financing.
(ii) Warrants. As additional consideration, the
Company will sell to JCA, at each closing under the Private Placement, a five
year warrant (exercise period to begin after one year after date of issuance) to
purchase a number of shares of Common Stock equal to forty percent (40%) of the
shares of Common Stock or equivalents placed in the Private Placement (the
"Warrant"). The purchase price of the Warrant shall be $.0001 times the number
of shares available for purchase pursuant to the Warrant, and the exercise price
of fifty percent (50%) of the total warrants sold shall be one-hundred and
twenty percent (120%) of the offering price of the shares in the Private
Placement not to exceed five dollars and fifty cents ($5.50). The remaining
fifty percent (50%) of the total warrants sold shall be one-hundred and thirty
percent (130%) of the offering price of the shares in the Private Placement not
to exceed five dollars and fifty cents ($5.50). The Warrant shall contain
standard demand registration and piggyback registration rights and anti-dilution
provisions for below market-price issuances, stock splits, stock dividends,
re-combinations, reorganizations, a cashless exercise provision, and shall be
acceptable in form and substance to JCA.
(iii) Merger or Sale of Assets. In addition, if prior
to sale of Securities in the Private Placement the Company merges or sells all
or substantially all of its assets, or sells a block of stock equal to or in
excess of twenty percent (20%) of the issued and outstanding shares of equity
securities of the Company (determined prior to issuance), and the offering
contemplated hereby is abandoned by the Company, JCA shall be entitled to
receive the following break up fee from the Company: a cash fee of $25,000 or
five percent (5%) of the outstanding value (not to exceed $300,000) of the
transaction, whichever is greater. The Company and JCA agree that the
Initial ----- -----
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Wall Street Strategies
December 23, 1999
Page 6
foregoing fee is an acceptable measure of compensation to JCA for the
contemplated Private Placement. Such cash fee shall be in addition to payment
for expenses and fees discussed.
(c) Expenses. The Company is responsible for the preparation
of the private placement documents, legal, printing, accounting, travel and
accommodations expenses, background searches regarding the Company and its
officers and directors as well as Blue Sky qualification of the Securities and
related filing and registration fees and expenses; such Blue Sky legal services
will be performed by JCA's counsel for a fixed fee of $15,000 (plus such fees
and expenses). JCA will incur expenses in connection with the Private Placement
including due diligence expenses, counsel, and other expenditures. In
consideration of the undertaking by JCA to use its best efforts herein, the
Company agrees to pay three percent (3%) of the gross proceeds of the Private
Placement as a non-accountable expense reimbursement to JCA. Fifty thousand
dollars ($50,000) of the non-accountable expense reimbursement will be paid in
the form of a non-refundable deposit, with twenty-five thousand dollars
($25,000) payable upon signing this Engagement Letter and twenty-five thousand
dollars ($25,000) payable at the completion of the sale ready Private Placement
Memorandum. The remaining amount is to be paid upon each closing of the Private
Placement.
(d) Placement Agency Agreement. The Company and JCA shall
promptly negotiate a definitive Placement Agency Agreement with respect to this
Initial Project. This Placement Agency Agreement shall contain language
stipulating that JCA shall complete the offering within forty-five (45) days
from the date of the Private Placement Memorandum being sales ready (the
"Initial Offering Period"); the Company and JCA may mutually agree to extend the
Initial Offering Period for an additional forty-five (45) days. Furthermore, the
form and substance of the Placement Agency Agreement is expected to be similar
to previous Placement Agency Agreements which JCA has been a party thereof.
6. Notice. All notices and other communications required or permitted
to be given under this Engagement Letter shall be in writing and either
personally delivered; sent by first class certified mail, return receipt
requested, postage prepaid; sent by overnight delivery via a nationally
recognized delivery service; or transmitted by confirmed facsimile transmission,
to the respective party at the following address or fax number:
To the Company at: Wall Street Strategies Corporation
130 William Street, Suite 401
New York, NY 10038
Attention: Charles Payne
Facsimile No.: 212-514-9582
Initial ----- -----
<PAGE>
Wall Street Strategies
December 23, 1999
Page 7
To JCA at: Joseph Charles & Assoc., Inc.
2500 N. Military Trail, Suite 300
Boca Raton, FL 33431
Attention: Joseph C. Visconti
Facsimile No.: (561) 997-9855
or, as to either party, to such other address and/or facsimile number as such
party designates by written notice to the other party or parties. Notice shall
be deemed given when personally delivered or transmitted by facsimile; the day
after delivery to such overnight delivery services; and three business days
after deposit with the U.S. Postal Service.
7. Choice of Laws and Arbitration. This Engagement Letter shall be
construed pursuant to the laws of the State of Florida. Any controversy arising
hereunder shall be resolved by binding arbitration pursuant to the rules of the
American Arbitration Association. Proceedings arising from a controversy(s)
shall be conducted in Atlanta, Georgia. The non-prevailing party shall pay all
costs of arbitration.
If this Engagement Letter correctly sets forth our agreement, please so
indicate by signing and returning the enclosed copy of this letter.
Very truly yours,
JOSEPH CHARLES & ASSOC., INC.
By: /s/ Joseph C. Visconti
----------------------
Joseph C. Visconti, President
AGREED TO AND ACCEPTED
this ___ day of December, 1999
WALL STREET STRATEGIES CORPORATION
By: /s/ Charles Payne
-------------------------------
Charles Payne
Chief Executive Officer
Initial ----- -----
<PAGE>
Exhibit 10.20
EMPLOYMENT AGREEMENT
AGREEMENT, made this 7th day of April 2000, by and between WALL STREET
STRATEGIES CORPORATION, a Nevada corporation with its offices at 130 William
Street, Suite 401, New York, New York 10038 (the "Company"), and DALIAH AMAR, an
individual residing at 300 East 34th Street, New York, New York 10016 (the
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to retain the services of Executive to
render services to the Company on the terms and conditions hereinafter set
forth; and
WHEREAS, Executive desires to render such services to the Company on
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Employment. Subject to all of the terms and conditions hereof, the
Company does hereby employ the Executive as the Chief Operating Officer of the
Company for a period (the "Employment Period") of three (3) years commencing on
March 6, 2000 (the "Commencement Date"), and the Executive does hereby accept
such employment and agrees to devote her full business time and attention to the
performance of her duties hereunder and to perform such duties faithfully,
competently, diligently, and in such manner as to effect her best efforts.
2. Duties of Executive. In her capacity as Chief Operating Officer of
the Company, Executive shall perform the duties customarily performed by a chief
operating officer and such other duties, consistent with those customarily
performed by an executive officer, as may, from time to time, be assigned to her
by the Chief Executive Officer and/or the Board of Directors of the Company.
Executive's duties will be subject to the direction and control of the Company's
Board of Directors and Chief Executive Officer, to whom Executive will report.
Without limiting the generality of the foregoing, Executive shall be responsible
for the day-to-day operations of the Company, and for providing overall
management, direction and support of the Company's operations.
3. Compensation and Related Matters.
(a) Annual Base Salary. During the Employment Period, the Executive
shall receive a salary of $175,000 per annum (the "Annual Base Salary"). The
Annual Base Salary will be payable in equal bi-weekly installments or otherwise
in accordance with the Company's policies for executive officers in effect from
time to time. The Company's Board of Directors (or the Compensation Committee of
the Board of Directors) will review the Annual Base Salary on or about each
anniversary of the Commencement Date for possible increase (but not decrease)
based on performance and
<PAGE>
such other factors as the Board of Directors (or Compensation Committee) may
deem appropriate; any such increase shall, however, be in the discretion of the
Board of Directors (or the Compensation Committee) and nothing contained herein
shall be deemed to obligate the Company to increase the Annual Base Salary at
such time, or at any other time.
(b) Expenses. The Company shall reimburse the Executive for
reasonable business expenses incurred by the Executive in the performance of her
duties under this Agreement upon evidence of payment by Executive of such
expenses and otherwise in accordance with Company policies then in effect, as
such policies may change from time to time.
(c) Benefits. (i) The Executive shall be entitled to participate in
any health insurance, profit sharing (if and when available), life insurance,
unmatched 401(k) plan or any other similar plan or benefit afforded by the
Company to its executives generally, if and to the extent that the Executive is
eligible to participate in accordance with the provisions of any such insurance,
plan or benefit generally. Nothing contained herein is intended, or shall be
construed, to require the Company to institute or retain any, or any particular,
insurance plan or benefit.
(ii) Notwithstanding the provisions of Section 3(c)(i), the
Company agrees to purchase for the Executive a $250,000 term life insurance
policy, as well as short-term and long-term disability insurance in amounts, the
proceeds of which, in the event of the Executive's disability, will approximate
the Executive's Annual Base Salary .
(d) Incentive Bonus. Commencing with her performance in the year
ended December 31, 2000, the Executive shall be entitled to earn an annual
incentive bonus ("Incentive Bonus") of up to 50% of the Annual Base Salary, pro
rated in the case of the year ended December 31, 2000 and any other short year,
if applicable, based on the achievement of performance goals to be mutually
determined within 60 days after the date of this Agreement (with respect to the
year ended December 31, 2000), and prior to or within 60 days after January 1 of
each year during the Employment Period). The Incentive Bonus, to the extent
payable, will be paid within 30 days after the end of each calendar year or
other applicable period, in cash.
(e) Stock Option. On the date of this Agreement, the Company will
grant to Executive a five year, non-qualified option (the "Option") under the
Company's 1999 Incentive Program (the "Program") to acquire 500,000 shares (the
"Shares") of the Company's common stock (the "Common Stock") at an exercise
price of $7.50 per Share. The Option shall vest and become exercisable, subject
to and in accordance with the terms and provisions of the Program, as follows:
(i) the Option shall vest with respect to 125,000 Shares on December 6, 2000
(the "First Vesting Date"); (ii) the Option shall vest with respect to an
additional 125,000 Shares on March 6, 2001 (the "Second Vesting Date"); and
(iii) the Option shall vest with respect to an additional 62,500 Shares on the
sixth day of each of the fifteenth, eighteenth, twenty-first and twenty-fourth
month after the Commencement Date. Notwithstanding the foregoing, (x) in the
event of the
2
<PAGE>
termination of the Executive's employment prior to the First Vesting Date by
reason of her death or Disability (as hereinafter defined), the Option shall
vest with respect to 125,000 Shares as of the date of such termination and
become exercisable subject to and in accordance with the terms of the Program
and the stock option agreement referred to below, and (y) in the event of the
termination of the Executive's employment on or after the First Vesting Date and
prior to the Second Vesting Date by reason of her death or Disability, the
Option shall vest with respect to 62,500 Shares (aggregating, together with the
portion of the Option vesting on First Vesting Date, a total of 187,500 Shares)
as of the date of such termination and become exercisable subject to and in
accordance with the terms of the Program and the stock option agreement. In the
event of a Change of Control of the Company (as hereinafter defined), provided
the Executive is then in the employ of the Company, the Option shall vest in its
entirety and become exercisable subject to and in accordance with the terms of
the Program and the stock option agreement. The Executive and the Company will
enter into a stock option agreement more fully setting forth the terms of such
Options on or as soon as practicable after the date hereof.
(f) Vacation. The Executive shall be entitled to twenty (20)
business days of annual vacation to be used each year (and not carried over) at
times mutually convenient to the Company and Executive.
(g) Deductions and Withholdings. All amounts payable or which become
payable hereunder shall be subject to all deductions and withholding required by
law.
4. Executive Covenants.
(a) Notice of Creation. Executive will both during and after the
Employment Period promptly and fully disclose to the Company any and all
inventions, discoveries, improvements, ideas, devices, designs, models,
prototypes, processes, compositions, know-how, information, works (including
computer programs and written and graphics materials), mask works and data,
whether of a business, technical or other nature and whether or not protectable
under U.S. or foreign patent, copyright, trade secret or other law
(collectively, "Works"), that concern or relate directly to Competitive
Activities (as defined in Section 4(d) below) and that are first conceived,
reduced to practice, fixed in a tangible medium of expression or are otherwise
made by Executive solely or jointly with others during the Employment Period,
whether during regular business hours or otherwise (the "Intellectual
Property").
(b) Ownership of Intellectual Property. Upon its respective
conception, reduction to practice, fixation in a tangible of expression or other
making, an item of Intellectual Property and all worldwide right, title and
interest in and to that Intellectual Property, including all common law,
statutory, treaty and convention rights, including the right to sue for all
past, present and future infringement, shall immediately become and forever
remain the property of the Company without any further act or deed being
required and without any additional consideration from the Company to Executive,
and Executive hereby irrevocably assigns to the Company, and the Company hereby
3
<PAGE>
accepts, all such Intellectual Property and all such worldwide right, title and
interest. The Executive hereby waives and agrees not to assert any moral rights
or similar rights under the laws of any jurisdiction with respect to any
Intellectual Property.
(c) Further Assurances. Executive will from time to time, both
during and after the Employment Period, upon the request and at the expense of
the Company, but without further consideration from the Company, (i) make
application through the attorneys for the Company for Letters Patent, utility
models, copyright registrations and other forms of intellectual property
protection for and on the Intellectual Property in the United States and in
countries foreign thereto, (ii) cooperate with the attorneys in the prosecution,
maintenance, reissue, renewal, extension and defense of, and suit upon, all such
applications and resulting Letters Patent, utility models, copyright
registrations and other forms of intellectual property protection, and (iii) do
and perform all acts, including executing documents, believed by the attorneys
to be necessary or desirable in furtherance of the foregoing and for assigning
and perfecting all right, title and interest in and to the Intellectual Property
in the Company or its successors or assigns, including executing applications
and assignment documents. All decisions concerning such applications and
resulting Letters Patent, utility models, copyright registrations and other
forms of intellectual property protection, including all decisions concerning
their filing, prosecution, maintenance, reissue, renewal, extension, defense and
suits upon them, shall be solely those of the Company, and Executive shall have
no claim or cause of action against the Company arising out of or concerning any
such decisions or the results of those decisions.
(d) Non-Competition. In order to induce the Company to enter into
this Agreement, the Executive hereby expressly covenants and agrees that, during
the Employment Period and, following termination of the Executive's employment
hereunder, for so long after such termination (if at all) as the Executive
continues to receive payment of Annual Base Salary in accordance with the terms
of this Agreement, she shall not, without the express written consent of the
Company, for her own account or jointly with any other person, for any reason
(i) participate in, engage in or be connected in any way with, directly or
indirectly, as a proprietor, contractor, employee, principal, partner, officer,
stockholder, member, advisor, consultant, agent or licensor (whether paid or
unpaid), Competitive Activities (as defined below) anywhere in the world in
which the Company conducts business, (ii) directly or indirectly, own, manage,
operate, join, control, loan money to, invest in, or otherwise participate in,
or be connected with, or become or act as an officer, employee, consultant,
representative or agent of any Competitor (defined below), or (iii) intervene in
or interfere with any relationships between the Company and its vendors or
customers or prospective customers or disrupt its customer markets, anywhere in
the world in which the Company conducts business. Notwithstanding the foregoing,
the Executive may at any time own, solely as an inactive investor, securities of
any entity, whether or not in competition with the Company, if (A) such
securities are publicly traded on a nationally-recognized stock exchange or on
NASDAQ, and (B) the aggregate holdings of such securities by the Executive and
her immediate family do not exceed five percent (5%) of the voting power or five
percent (5%) of the capital stock of such entity. As used herein, "Competitive
Activities" means the preparation, marketing, sale or provision of investment
research or financial
4
<PAGE>
information services or content through the internet or traditional media; and
"Competitor" means any person whose principal business consist of Competitive
Activities, or any combination thereof. For purposes of this Section 4 and
determining the scope of Competitive Activities hereunder, "Company" means Wall
Street Strategies Corporation and its direct or indirect wholly-owned
subsidiaries and shall not include any successor or parent company which may
hereafter acquire the Company or into which the Company may be combined (whether
by merger, stock or asset acquisition or otherwise) to the extent that the
business or activities of such successor are different than those of the Company
at the time of such acquisition or combination. Executive acknowledges that she
is agreeing to be bound by the restrictions contained in this Section 4(d) in
consideration of the various benefits to be provided to her under Section 3
hereof, including, specifically, but without limitation, the stock option grant
referenced in Section 3(e) hereof.
(e) Reasonableness of Restrictions. The Executive acknowledges and
agrees that the covenants contained herein with respect to non-competition are
reasonable in scope, geographic application and duration, in view of the
economic bargain contained herein. The Executive represents and warrants to the
Company that her experience, background and skills are such that she is able to
obtain employment on reasonable terms and conditions without violation of the
restrictive covenant contained herein with respect to non-competition; and that
such covenant does not and will not pose any undue hardship to the Executive.
(f) Tangible Things. Executive covenants and agrees that (i) all
tangible things, including confidential memoranda, notes, notebooks, drawings,
lists (including, without limitation, mailing and customer lists), record and
other confidential documents (and all copies thereof), made or compiled by
Executive or made available to Executive concerning the Company's business shall
be the property of the Company, and (ii) if such tangible things are in the
possession or control of Executive, Executive shall deliver them to the Company
promptly following the Employment Period or at any other time upon request of
the Company.
(g) No Improper Disclosure. Executive represents and warrants that
Executive has not disclosed, and will not disclose, to the Company any
information, whether confidential, proprietary or otherwise, that the Executive
possesses and that Executive is not legally free to disclose. Executive further
agrees to defend, indemnify and hold harmless the Company against all claims,
demands, losses, damages or expenses, including attorneys' fees, suffered or
incurred as a result of any violation of the representations contained in this
subsection 4(g).
(h) No Executive Solicitation. The Executive hereby agrees that
during the Employment Period and for a period of twelve (12) months thereafter,
she shall not, directly or indirectly, for her own account or jointly with
another, or for or on behalf of any entity, as principal, agent or otherwise,
solicit, induce or hire or in any manner attempt to solicit, induce or hire any
person employed by the Company or any of its affiliates to leave such
employment, whether or not such employment is pursuant to a written contract
with the Company or otherwise.
5
<PAGE>
(i) Trade Secrets. Executive acknowledges that Executive's work for
the Company is expected to bring Executive into close contact with various
confidential technical and research data, confidential business data and other
information of the Company not readily available to the public. The Executive
expressly covenants and agrees that she will not at any time, whether during or
after the Employment Period, directly or indirectly, on any basis for any
reason, use or permit third parties within his control, the use of any trade
secrets, confidential information or proprietary information of, or relating to,
the Company, or any affiliate of the Company (including, without limitation,
data and other information relating to any of the Company's processes,
apparatus, products, software, packages, programs, trends in research, product
development techniques or plans, research and development programs and plans or
any works and all secrets, customer lists, lists of Executives, sales
representatives and their territories, mailing lists, details of consultant
contracts, pricing policies, operational methods, marketing plans or strategies,
business acquisition plans, new personnel acquisition plans, designs and design
projects and other confidential business affairs concerning the Company and the
Company's business), in connection with any activity or business, whether for
his own account or otherwise, and will not divulge such trade secrets,
confidential information or proprietary information to any person, firm,
corporation or other entity whatsoever. The Executive shall not be prohibited
from divulging information deemed to be trade secret or confidential or
proprietary information of the Company: (i) if and to the extent that disclosure
of any such information is pursuant to appropriate safeguards on confidentiality
and (x) necessary and appropriate in connection with the submission of bids by
the Company in the ordinary course of business or (y) required pursuant to the
Company's marketing efforts directed to specific clients or bona fide
prospective clients or the provision of services to existing clients in the
ordinary course of business or (z) is made to other Executives of the Company or
independent contractors thereof in the ordinary course of the Company's
business, (ii) if the specific item of information becomes generally available
to the public without violation of this Agreement or any other confidentiality
agreement among the Executive and the Company or any other confidentiality
agreement to which the Executive is a party, or (iii) if such disclosure is
compelled by law, in which event the Executive agrees to give the Company prior
written notice of any disclosure to be made pursuant to this clause (iii), and
the Executive, at the Company's expense, shall cooperate fully with the Company
to obtain protective orders, confidential treatment or other such protective
action as may be available to preserve the confidentiality of the information
required to be disclosed.
(j) Remedies. It is expressly understood and agreed that the
services to be rendered hereunder by the Executive are special, unique and of
extraordinary character, and in the event of the breach by the Executive of any
of the terms and conditions of this Agreement on her part to be performed
hereunder, or in the event of the breach or threatened breach by the Executive
of the terms and provision, of this Section 4 of this Agreement, then the
Company shall be entitled, if it so elects, to institute and prosecute any
proceedings in any court of competent jurisdiction, either in law or equity, for
such relief as it deems appropriate, including without limiting the generality
of the foregoing, any proceedings to obtain damages for any breach of this
Agreement or to enforce the specific performance thereof by the Executive or to
enjoin the Executive from performing services which are prohibited by this
Agreement for any other person, firm or corporation. If the Executive violates
any provision of this Section 4, the time period set
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<PAGE>
forth herein with respect to such provision, if any, shall be extended, until
six (6) months after the date of entry of final judgment enforcing such
provision and the time for appeal has lapsed. If Executive is held by a court of
competent jurisdiction to have breached this Agreement, Executive shall be
liable for any attorneys' fees and costs incurred by the Company in enforcing
its rights hereunder.
(k) Enforcement. It is hereby expressly agreed by the Company and
the Executive that if any portion of the restrictive covenants and provisions
set forth in this Section 4 is held to be unreasonable, arbitrary, against
public policy or otherwise unenforceable for any reason, then each such covenant
or provision shall be considered divisible as to scope, time and geographical
area, with each month of a specified period being deemed a separate period of
time and each county within any geographical area being deemed a separate
geographic area. The parties hereto expressly agree that notwithstanding their
mutual expectation that the covenants and restrictions contained herein will be
enforceable and enforced, a lesser scope, period of time or geographic area
shall be enforced to the extent that the covenants contained herein may be
unenforceable as written. The Company and the Executive also agree that in the
event that any court of competent jurisdiction determines a portion of the
restrictive covenants contained herein to be non-enforceable, such determination
by such court shall be deemed to have applicability only within the jurisdiction
in which such court is located and shall not be deemed to be effective in any
other jurisdiction. The existence of any claim or cause of action by the
Executive against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
the restrictive covenants contained in this Section 4.
(l) Covenants Non-Exclusive. The Executive acknowledges and agrees
that the covenants contained in this Section 4 shall not be deemed exclusive of
any common law rights of the Company in connection with the relationships
contemplated hereby; and that the Company shall have any and all rights as may
be provided by law in connection with the relationships contemplated hereby.
5. Termination. The Executive's employment hereunder may be terminated
prior to the expiration of the Employment Period under the following
circumstances:
(a) Death. The Executive's employment hereunder shall terminate upon
her death. In the case of the Executive's death, the Company shall pay to the
Executive's beneficiaries or estate, as appropriate, promptly after her death,
any accrued but unpaid Annual Base Salary, any accrued but unpaid Incentive
Bonus and all expenses for which she is entitled to be reimbursed pursuant to
Section 3 through the date of her termination. In addition, the Option shall
vest in accordance with, and to the extent (if any) described in, Section 3(e)
hereof and, to the extent vested on the date of termination, shall be
exercisable for a period of one year from the date of termination. The Executive
and her beneficiaries and estate, as appropriate, shall be entitled to no other
compensation under this Agreement following, or as a result of, a termination on
account of the death of the Executive.
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(b) Disability.
(i) If a Disability (as defined below) of the Executive occurs
during the Employment Period, the Company may give the Executive written notice
of its intention to terminate her employment. In such event, the Executive's
employment with the Company shall terminate on the effective date specified in
such notice. In the case of a termination as a result of a Disability, the
Company shall pay to the Executive promptly after her termination any accrued
but unpaid Annual Base Salary, any accrued but unpaid Incentive Bonus and all
expenses for which she is entitled to be reimbursed pursuant to Section 3
through the date of her termination. In addition, the Option shall vest in
accordance with, and to the extent (if any) described in, Section 3(e) hereof
and, to the extent vested on the date of termination, shall be exercisable for a
period of one year from the date of termination. The Executive and her
beneficiaries and estate, as appropriate, shall be entitled to no other
compensation under this Agreement following, or as a result of, a termination on
account of the Disability of the Executive.
(ii) For the purpose of this subsection 5(b), "Disability" shall
mean the Executive's inability to perform her normal duties as Chief Operating
Officer of the Company, with or without reasonable accommodation, due to a
mental or physical impairment, for a period of at least two (2) consecutive
months or three (3) months in the aggregate in any twelve (12) month period. The
Executive agrees to submit to a reasonable number of examinations by a medical
doctor selected by the Company and reasonably acceptable to the Executive (or
her legal representative) making the determination of disability under this
Section 5(b)(ii), and the Executive hereby authorizes the disclosure and release
to the Company of such determination and all supporting medical records.
(c) Termination by the Company for Cause.
(i) The Company may terminate the Executive's employment
hereunder for Cause (as defined below) at any time upon written notice to the
Executive. In such event, the Executive's employment shall terminate on the
effective date specified in such notice. In the case of the Executive's
termination for Cause, the Company shall promptly pay to the Executive any
accrued but unpaid Annual Base Salary, any accrued but unpaid Incentive Bonus
and all expenses for which she is entitled to be reimbursed pursuant to Section
3 through the date of her termination. In addition, at any time during the 30
day period following the date of termination for Cause, the Executive shall have
the right to exercise the Option to the extent vested on the date of termination
for Cause in accordance with the terms of Program and the stock option
agreement. The Executive and her beneficiaries shall be entitled to no other
compensation under this Agreement following, or as a result of, a termination
for Cause.
(ii) For purposes of this Agreement, "Cause" shall mean (A) any
act of gross negligence, malfeasance or gross misconduct by the Executive
materially detrimental to the Company or its affiliates; (B) any willful
misappropriation or embezzlement by the Executive of the property of the Company
(whether or not a felony or misdemeanor); (C) any indictment for a felony; (D)
the commission by the
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Executive of any misdemeanor involving theft, fraud, dishonesty or
misrepresentation; (E) repeated unexcused absences of the Executive; (F) the
material breach by the Executive of any of her covenants and obligations
hereunder, including, without limitation, the covenants contained in Section 4
hereof); or (G) the refusal of the Executive to accept the lawful directions of
the Company consistent with the terms of this Agreement or other willful
disobedience or material breach by the Executive of any of the Company's written
rules, instructions or orders; provided, however that in the event of (A), (E),
(F)(except with respect to a breach of the covenants contained in Section 4
hereof) and (G), Executive shall first have been given written notice setting
forth the details of such Cause and shall have failed to cure the breach set
forth in such notice within fifteen (15) days after the delivery of such notice
by the Company.
(d) Termination by the Company Upon Failure to Achieve Performance
Goals.
(i) If, as of the date which is 18 months after the Commencement
Date, the Executive has not achieved the performance goals to be agreed upon by
the Company and the Executive and set forth in an addendum to this Agreement
within sixty (60) days after the date hereof, the Company may, at any time
within thirty (30) days thereafter, terminate the Executive's employment
hereunder upon written notice to the Executive. In such event, the Executive's
employment shall terminate on the effective date specified in such notice. If
Executive's employment hereunder is terminated by the Company pursuant to this
Section 5(d), the Company shall pay to the Executive any accrued but unpaid
Annual Base Salary, any accrued but unpaid Incentive Bonus and expenses for
which she is entitled to be reimbursed pursuant to Section 3 through the
effective date of termination. In addition, if the Executive's employment
hereunder is terminated by the Company pursuant to this Section 5(d), in lieu of
any other payments or other compensation or benefits pursuant hereto, or
available at law or equity, the Executive shall receive continuation of her
Annual Base Salary and the benefits described in Section 3(c)(i) for a period of
six (6) months from the effective date of termination, and shall be entitled to
exercise the Option, to the extent vested as of the effective date of
termination, for a period of ninety (90) days after the effective date of
termination. The Executive and her beneficiaries shall be entitled to no other
compensation under this Agreement following, or as a result of, a termination on
account of failure to achieve performance goals.
(e) Other Termination by the Company. The Company may terminate the
Executive's employment hereunder for any reason other than death, Disability,
Cause, failure to achieve performance goals (in accordance with Section 5(d)) or
Change in Control (pursuant to Section 5(g)) upon written notice to the
Executive. In such event, the Executive's employment shall terminate on the
effective date specified in such notice. If the Executive's employment hereunder
is terminated by the Company pursuant to this Section 5(e), the Company shall
pay to the Executive any accrued but unpaid Annual Base Salary, any accrued but
unpaid Incentive Bonus and all expenses for which she is entitled to be
reimbursed pursuant to Section 3 through the effective date of her termination.
In addition, in lieu of any other payments or other compensation or benefits
pursuant hereto, or available at law or in equity, the Executive shall receive
continuation
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of her Annual Base Salary and the benefits described in Section 3(c)(i) for a
period equal to the lesser of (i) one year from the date of termination and (ii)
the balance of the Employment Period (had employment not been so terminated),
and the Option, to the extent not then vested, shall vest in its entirety and
become exercisable for a period of one year after the effective date of
termination in accordance with the terms of the Program and the stock option
agreement. The Executive and her beneficiaries shall be entitled to no other
compensation under this Agreement following, or as a result of, a termination
pursuant to this Section 5(e).
(f) Termination by the Executive for Good Reason. The Executive may
terminate her employment hereunder upon written notice to the Company in the
event of a material and continuing breach of the terms of this Agreement by the
Company, or a material diminution by the Company of the Executive's duties and
responsibilities from those contemplated under Section 2, which breach or
diminution is not cured within fifteen (15) days after delivery by the Executive
to the Company of written notice of such breach specifying the details of such
breach. In such event, the Executive's employment shall terminate on the
effective date specified in the notice of termination. If the Executive
terminates her employment hereunder pursuant to this Section 5(f), the Company
shall pay to the Executive any accrued but unpaid Annual Base Salary, any
accrued but unpaid Incentive Bonus and all expenses for which she is entitled to
be reimbursed pursuant to Section 3 through the effective date of termination.
In addition, in lieu of any other payments or other compensation or benefits
pursuant hereto, or available at law or in equity, the Executive shall receive
continuation of her Annual Base Salary and the benefits described in Section
3(c)(i) for a period equal to the lesser of (i) one year from the effective date
of termination and (ii) the balance of the Employment Period (had employment not
been so terminated), and the Option, to the extent not then vested, shall vest
in its entirety and become exercisable for a period of one year after the
effective date of termination in accordance with the terms of the Program and
the stock option agreement. The Executive and her beneficiaries shall be
entitled to no other compensation under this Agreement following, or as a result
of, a termination by the Executive for good reason pursuant to this Section
5(f).
(g) Change of Control. (i) If the Company terminates the Executive's
employment hereunder within three (3) months after a "Change of Control" of the
Company (as hereinafter defined) for any reason other than death, Disability,
Cause or failure to achieve performance goals in accordance with Section 5(d),
then the Executive's employment shall terminate on the effective date specified
in a written notice of such termination delivered to the Executive.
(ii) The Executive may terminate her employment hereunder in the
event of a material diminution by the Company of the Executive's duties and
responsibilities from those contemplated in Section 2 within ninety (90) days
after a Change of Control of the Company. In such event, the Executive's
employment shall terminate on the effective date specified in the notice of
termination (which notice of termination must be delivered within one hundred
five (105) days after the Change of Control).
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(iii) If the Executive's employment is terminated pursuant to
this Section 5(g), the Company shall pay to the Executive any accrued but unpaid
Annual Base Salary, any accrued but unpaid Incentive Bonus and all expenses for
which she is entitled to be reimbursed pursuant to Section 3 through the
effective date of termination. In addition, in lieu of any other payments or
other compensation or benefits pursuant hereto, or available at law or equity,
the Executive shall receive continuation of her Annual Base Salary and the
benefits described in Section 3(c)(i) for a period of one year from the date of
termination. The Executive and her beneficiaries shall be entitled to no other
compensation under this Agreement following, or as a result of, a termination
following a Change of Control pursuant to this Section 5(g) except as provided
in Section 3(e) regarding the Option.
(iv) As used herein, "Change in Control" of the Company shall
mean the happening of any of the following events:
(A) A change in control of the direction and administration
of the Company's business of a nature such that if any securities of the Company
were registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), such change would be required to be reported in response to (I)
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act,
or (II) Item 1(a) of Form 8-K under the Exchange Act as each is in effect on the
date hereof and any successor provision of such regulations under the Exchange
Act (irrespective of whether the Company is then subject to such reporting
requirements); or
(B) Any "person" or "group" (as such term is used in
connection with Section 13(d) and 14(d)(2) of the Exchange Act) but excluding
any employee benefit plan of the Company or any "affiliate" or "associate" of
the Company (as defined in Regulation 12b-2 under the Exchange Act) (I) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's outstanding
securities then entitled ordinarily (and apart from rights accruing under
special circumstances) to vote for the election of directors or (II) acquires by
proxy or otherwise 50% or more of the combined voting securities of the Company
having the right to vote for the election of directors of the Company, for any
merger or consolidation of the Company, for the election of directors, or for
any other matter; or
(C) During any period of twenty-four (24) consecutive
months, the individuals who at the beginning of such period constitute the Board
of Directors of the Company or any individuals who would be "Continuing
Directors" (as hereinafter defined) cease for any reason to constitute at least
a majority thereof; or
(D) There shall be consummated (I) any consolidation,
merger or recapitalization of the Company or any similar transaction involving
the Company, irrespective of whether the Company is the continuing or surviving
corporation, pursuant to which shares of the Company's Common Stock, would be
converted into cash, securities or other property, other than a merger of the
Company in
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which the holders of Common Stock immediately prior to the merger have the same
proportion and ownership of common stock of the surviving corporation
immediately after the merger, (II) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company or (III) the adoption of a plan
of complete liquidation of the Company (whether or not in connection with the
sale of all or substantially all of the Company's assets) or a series of partial
liquidations of the Company that is de jure or de facto part of a plan of
complete liquidation of the Company; provided, that the divestiture of less than
substantially all of the assets of the Company in one transaction or a series of
related transactions, whether effected by sale, lease, exchange, spin-off, sale
of the stock or merger of a Subsidiary or otherwise, or a transaction solely for
the purpose of reincorporating the Company in another jurisdiction, shall not
constitute a "Change in Control"; or
(E) The Board of Directors of the Company shall approve any
merger, consolidation or like business combination or reorganization of the
Company, the consummation of which would result in the occurrence of any event
described in Section 5(g)(ii) (A), (B) or (D) above.
(F) For purposes of this Agreement, "Continuing Directors"
shall mean the directors of the Company in office on the date hereof and any
successor to any such director and any additional director who after the date
hereof (I) was nominated or selected by a majority of the Continuing Directors
in office at the time of his nomination or selection and (II) who is not an
"affiliate" or "associate" (as defined in Regulation 12b-2 under the Exchange
Act) of any person who is the beneficial owner, directly or indirectly, of
securities representing ten percent (10%) or more of the combined voting power
of the Company's outstanding securities then entitled ordinarily to vote for the
election of directors.
(h) Mutual Agreement. The Executive's employment may be terminated
by written mutual agreement of the Executive and the Company at any time.
6. Assignment; Successors and Assigns. The Executive agrees that she
will not assign, sell, transfer, delegate or otherwise dispose of, whether
voluntarily or involuntarily, any rights or obligations under this Agreement,
nor shall the Executive's rights be subject to encumbrance of the claims of
creditors. Any purported assignment, transfer, delegation, disposition or
encumbrance in violation of this Section 6 shall be null and void and of no
force or effect. Nothing in this Agreement shall prevent the consolidation or
merger of the Company with or into any other entity, or the sale by the Company
of all or any portion of its respective properties or assets, or the assignment
by the Company of this Agreement and the performance of its obligations
hereunder to any subsidiary of the Company, or any successor in interest or any
other affiliated entity, and the Executive hereby consents to any and all such
assignments. Subject to the foregoing, this Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective heirs, legal
representatives, successors, and permitted assigns, and shall not benefit any
person or entity other than those enumerated above.
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7. Choice of Law; Venue. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York without
giving effect to any choice or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York. The Executive
irrevocably consents to the service of any and all process in any action or
proceeding arising out of or relating to this Agreement by the mailing of copies
of such process to such Executive at the address specified in Section 10. The
parties hereto irrevocably submit to the jurisdiction of the United States
District Court for the Southern District of New York or any state court located
in New York County, State of New York over any dispute arising out of or
relating to this Agreement or any of the transactions contemplated hereby. Each
party hereby irrevocably agrees that all claims in respect of such dispute or
proceeding may be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute brought in such court or any defense of inconvenient forum in
connection therewith.
8. Severability of Provisions. In the event that any provision or any
portion thereof should ever be adjudicated by a court of competent jurisdiction
to exceed the limitations permitted by applicable law, as determined by such
court in such action, then such provisions will be deemed reformed to the
maximum limitations permitted by applicable law, the parties hereby
acknowledging their desire that in such event such action be taken. In addition
to the above, the provisions of this Agreement are severable, and the invalidity
or unenforceability of any provision or provisions of this Agreement or portions
thereof will not affect the validity or enforceability of any other provision,
or portion of this Agreement, which will remain in full force and effect as if
executed with the unenforceable or invalid provision or portion thereof
eliminated. Notwithstanding the foregoing, the parties hereto affirmatively
represent and acknowledge that this Agreement and each of its provisions is
enforceable in accordance with its terms, and expressly agree not to challenge
the enforceability of the Agreement or any of its provisions in the future. The
parties hereto are expressly relying upon this representation and acknowledgment
in determining to enter into this Agreement.
9. Warranty. As an inducement to the Company to enter into this
Agreement, the Executive represents and warrants to the Company that she is not
a party to any other agreement or obligation for personal services, and that
there exists no impediment or restraint, contractual or otherwise, on her power,
right or ability to enter into this Agreement and to perform her duties and
obligations hereunder.
10. Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method upon receipt of telephonic or electronic confirmation; the day after it
is sent, if sent for next day delivery to a domestic address by recognized
overnight delivery service (e.g., Federal Express); and upon receipt, if sent by
certified or registered mail, return receipt requested. In each case notice
shall be sent to:
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If to the Executive, addressed to:
Daliah Amar
300 East 34th Street
New York, New York 10016
If to the Company addressed to:
130 William Street
Suite 401
New York, New York 10038
With a copy to:
Bryan Cave LLP
245 Park Avenue
New York, New York 10163-0034
Attn: Steven A. Saide, Esq.
or to such other place and with such other copies as either party may designate
as to itself or herself by written notice to the others.
11. Cumulative Remedies. All rights and remedies of either party hereto
are cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other right or remedies.
12. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Agreement.
13. Entire Agreement; Amendments and Waivers. This Agreement and the
agreements and documents referred to herein are intended by the parties to be,
and are, the complete, exclusive and final expression of their agreement with
respect to the subject matter hereof. Moreover, this Agreement supersedes, and
may not be contradicted by, or modified or supplemented by, evidence of any
prior or contemporaneous agreement as to the subject matter hereof, and no
extrinsic evidence whatsoever may be introduced in any judicial, administrative
or other legal proceeding to vary the terms of this Agreement. No amendment,
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by each party to be bound thereto. No waiver of any of the
provisions of this Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed or be construed as a further, continuing or
subsequent waiver of any such provision or as a waiver of any other provision of
this Agreement. No failure to exercise and no delay in exercising any right,
remedy or power hereunder shall preclude any other or further exercise of any
other right, remedy or power provided herein or by law or in equity.
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14. Representation of Counsel; Mutual Negotiation. Each party has had
the opportunity to be represented by counsel of its choice in negotiating this
Agreement. This Agreement shall therefore be deemed to have been negotiated and
prepared at the joint request, direction and construction of the parties, at
arm's-length, with the advice and participation of counsel, and shall be
interpreted in accordance with its terms without favor to any party.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
EXECUTIVE
/s/ Daliah Amar
-----------------------------------------
Daliah Amar
WALL STREET STRATEGIES
CORPORATION
By: /s/ Charles V. Payne
--------------------------------------
Name: Charles V. Payne
Title: Chief Executive Officer
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Exhibit 10.21
EMPLOYMENT AGREEMENT
AGREEMENT, made as of March 20, 2000, by and between WALL STREET
STRATEGIES INC., a Delaware corporation with its offices at 130 William Street,
Suite 401, New York, New York 10038 (the "Company") and JOSHUA P. EGGERT, an
individual residing at 1781-D West Altgeld Street, Chicago, Illinois 60614 (the
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to retain the services of Executive to
render services to the Company on the terms and conditions hereinafter set
forth; and
WHEREAS, Executive desires to render such services to the Company on
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Employment. Subject to all of the terms and conditions hereof, the
Company does hereby employ the Executive as the Chief Internet Officer of the
Company for a period (the "Employment Period") of three (3) years commencing on
March 20, 2000 (the "Commencement Date"), and the Executive does hereby accept
such employment and agrees to devote his full business time and attention to the
performance of his duties hereunder and to perform such duties faithfully,
competently, diligently, and in such manner as to effect his best efforts.
2. Duties of Executive. In his capacity as Chief Internet Officer of
the Company, Executive shall perform the duties customarily performed by a chief
internet officer and such duties as may, from time to time, be assigned to him
by the Chief Executive Officer and/or the Chief Operating Officer of the
Company. Executive's duties will be subject to the direction and control of the
Company's Board of Directors, Chief Executive Officer and Chief Operating
Officer. Executive will report to the Chief Operating Officer. Without limiting
the generality of the foregoing, Executive shall be responsible for the
day-to-day internet operations of the Company, providing overall management,
direction and support of the Company's internet operations, including
development and marketing of the Company's internet operations. Without limiting
the forgoing, Executive shall provide day-to-day management of the build-out,
maintenance, expansion, development and marketing of the Company's website in
consultation with and subject to oversight and direction by the Chief Operating
Officer.
3. Compensation and Related Matters.
(a) Annual Base Salary. During the Employment Period, the Executive
shall receive a salary of $175,000 per annum (the "Annual Base Salary"). The
Annual Base Salary will be payable in equal bi-weekly installments or otherwise
<PAGE>
in accordance with the Company's policies in effect from time to time. The
Company will review the Annual Base Salary on or about the anniversary of the
Commencement Date of the Executive's employment for possible increase; any such
increase shall, however, be in the Company's discretion and nothing contained
herein shall be deemed to obligate the Company to increase the Annual Base
Salary at such time, or at any other time.
(b) Expenses. The Company shall reimburse the Executive for
reasonable business expenses incurred by the Executive in the performance of his
duties under this Agreement upon evidence of payment by Executive of such
expenses and otherwise in accordance with Company policies then in effect, as
such policies may change from time to time.
(c) Benefits. The Executive shall be entitled to participate in any
health insurance, profit sharing, life insurance, unmatched 401(k) plan or any
other similar plan or benefit afforded by the Company to the Company's executive
officers generally, if and to the extent that the Executive is eligible to
participate in accordance with the provisions of any such insurance, plan or
benefit generally. Nothing contained herein is intended, or shall be construed,
to require the Company to institute or retain any, or any particular, insurance
plan or benefit. In addition, the Company will, during the Employment Period,
pay tuition associated with Executive's attendance of the Northwestern
University Executive Masters Program, subject to and upon submission to the
Company of the invoices for such tuition.
(d) Incentive Bonus. Commencing with his performance in the current
year, the Executive shall be entitled to earn an annual incentive bonus of up to
50% of the Annual Base Salary, pro rated for a short year, if applicable, based
upon the achievement of performance goals to be mutually determined within 30
days after the Commencement Date (with respect to the first year of the
Employment Period), and prior to or within 30 days after each anniversary date
of the date of this Agreement (with respect to subsequent years of the
Employment Period). The performance goals will be directly tied to the
Executive's duties as set forth in Section 2 of this Agreement and will include
reasonable specifications regarding Company support for Executive's efforts to
meet his performance goals. Achievement of the performance goals will be
reviewed and measured quarter-annually, and the incentive bonus, to the extent
payable, will be paid within 30 days after the end of each quarter.
(e) Stock Options. On the Commencement Date, Wall Street Strategies
Corporation ("WSSC") will grant to Executive options under WSSC's 1999 Incentive
Program (the "Program") to acquire 200,000 shares of WSSC's common stock (the
"Options") at an exercise price of $7.50 per share. Such Options shall vest and
become exerciseable, for a period of five (5) years, subject to and in
accordance with the terms of the Program, as follows, subject to the Executive's
continued employment by the Company at the time of exercise of such Options: (i)
fifty (50%) percent of such Options shall vest on the first anniversary of the
Commencement Date; (ii) twelve and one-half (12.5%) percent shall vest on each
of the fifteen, eighteen, twenty-one and twenty-four month anniversaries of the
Commencement Date. Notwithstanding the foregoing, upon the termination of the
Executive's employment prior to the first annual anniversary of the Commencement
Date by reason of his death, Disability (as hereinafter defined) or
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Involuntary Termination Without Cause (as hereinafter defined), fifty (50%)
percent of the Options shall vest immediately and become exerciseable subject to
and in accordance with the terms of the Program. The Options granted will be
non-qualified stock options. The Executive and WSSC will enter into a stock
option agreement more fully setting forth the terms of such Options as soon as
practicable after the Commencement Date.
(f) Vacation. The Executive shall be entitled to ten business days
of annual vacation to be used (and not carried over) each year (including 2000,
without pro ration for the short year) at times mutually convenient to the
Company and Executive.
(g) Signing Bonus. The Company will pay to the Executive, upon
execution of this Agreement by both parties, a signing bonus of $25,000.
(h) Deductions and Withholdings. All amounts payable or which become
payable hereunder shall be subject to all deductions and withholding required by
law.
4. Executive Covenants.
(a) Notice of Creation. Executive will both during and after the
Employment Period promptly and fully disclose to the Company any and all
inventions, discoveries, improvements, ideas, devices, designs, models,
prototypes, processes, compositions, know-how, information, works (including
computer programs and written and graphics materials), mask works and data,
whether of a business, technical or other nature and whether or not protectable
under U.S. or foreign patent, copyright, trade secret or other law
(collectively, "Works"), that concern or relate directly to Competitive
Activities (as defined in Section 4(d) below) and that are first conceived,
reduced to practice, fixed in a tangible medium of expression or are otherwise
made by Executive solely or jointly with others during the Employment Period,
whether during regular business hours or otherwise (the "Intellectual
Property").
(b) Ownership of Intellectual Property. Upon its respective
conception, reduction to practice, fixation in a tangible of expression or other
making, an item of Intellectual Property and all worldwide right, title and
interest in and to that Intellectual Property, including all common law,
statutory, treaty and convention rights, including the right to sue for all
past, present and future infringement, shall immediately become and forever
remain the property of Company without any further act or deed being required
and without any additional consideration from Company to Executive, and
Executive hereby irrevocably assigns to Company, and Company hereby accepts, all
such Intellectual Property and all such worldwide right, title and interest. The
Executive hereby waives and agrees not to assert any moral rights or similar
rights under the laws of any jurisdiction with respect to any Intellectual
Property.
(c) Further Assurances. Executive will from time to time, both
during and after the Employment Period, upon the request and at the expense of
the Company, but without further consideration from the Company, (i) make
application through the attorneys for the Company for Letters Patent, utility
models, copyright registrations and
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other forms of intellectual property protection for and on the Intellectual
Property in the United States and in countries foreign thereto, (ii) cooperate
with the attorneys in the prosecution, maintenance, reissue, renewal, extension
and defense of, and suit upon, all such applications and resulting Letters
Patent, utility models, copyright registrations and other forms of intellectual
property protection, and (iii) do and perform all acts, including executing
documents, believed by the attorneys to be necessary or desirable in furtherance
of the foregoing and for assigning and perfecting all right, title and interest
in and to the Intellectual Property in the Company or its successors or assigns,
including executing applications and assignment documents. All decisions
concerning such applications and resulting Letters Patent, utility models,
copyright registrations and other forms of intellectual property protection,
including all decisions concerning their filing, prosecution, maintenance,
reissue, renewal, extension, defense and suits upon them, shall be solely those
of the Company, and Executive shall have no claim or cause of action against the
Company arising out of or concerning any such decisions or the results of those
decisions.
(d) Non-Competition. In order to induce the Company to enter into
this Agreement, the Executive hereby expressly covenants and agrees that he
shall not, without the express written consent of the Company, for his own
account or jointly with any other person, for the Employment Period, and for a
period of six (6) months thereafter, for any reason (i) participate in, engage
in or be connected in any way with, directly or indirectly, as a proprietor,
contractor, employee, principal, partner, officer, stockholder, member, advisor,
consultant, agent or licensor (whether paid or unpaid), Competitive Activities
(as defined below) anywhere in the United States where the Company conducts
business, (ii) directly or indirectly, own, manage, operate, join, control, loan
money to, invest in, or otherwise participate in, or be connected with, or
become or act as an officer, employee, consultant, representative or agent of
any Competitor (defined below), or (iii) intervene in or interfere with any
relationships between the Company and its vendors or customers or prospective
customers or disrupt its customer markets, anywhere in the United States where
the Company conducts business. Notwithstanding the foregoing, the Executive may
at any time own, solely as an inactive investor, securities of any entity,
whether or not in competition with the Company, if (A) such securities are
publicly traded on a nationally-recognized stock exchange or on NASDAQ, and (B)
the aggregate holdings of such securities by the Executive and his immediate
family do not exceed five percent (5%) of the voting power or five percent (5%)
of the capital stock of such entity. As used herein, "Competitive Activities"
means business activities primarily involving the preparation, marketing, and/or
sale of investment research or financial information services or content through
the internet or traditional media; and "Competitor" means any person whose
principal business activities consist of Competitive Activities, or any
combination thereof. For purposes of this Section 4 and determining the scope of
Competitive Activities hereunder, "Company" means Wall Street Strategies
Corporation and its direct or indirect wholly-owned subsidiaries and shall not
include any successor or parent company which may hereafter acquire the Company
or into which the Company may be combined (whether by merger, stock or asset
acquisition or otherwise) to the extent that the business or activities of such
successor are different than those of the Company at the time of such
acquisition or combination. Executive acknowledges that he is agreeing to be
bound by the
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restrictions contained in this Section 4(d) in consideration of the various
benefits to be provided to him under Section 3 hereof, including, specifically,
but without limitation, the stock option grant referenced in Section 3(e)
hereof.
(e) Reasonableness of Restrictions. The Executive acknowledges and
agrees that the covenants contained herein with respect to non-competition are
reasonable in scope, geographic application and duration, in view of the
economic bargain contained herein. The Executive represents and warrants to the
Company that his experience, background and skills are such that he is able to
obtain employment on reasonable terms and conditions without violation of the
restrictive covenant contained herein with respect to non-competition; and that
such covenant does not and will not pose any undue hardship to the Executive.
(f) Tangible Things. Executive covenants and agrees that (i) all
tangible things, including confidential memoranda, notes, notebooks, drawings,
lists (including, without limitation, mailing and customer lists), record and
other confidential documents (and all copies thereof), made or compiled by
Executive or made available to Executive concerning the Company's business shall
be the property of the Company, and (ii) if such tangible things are in the
possession or control of Executive, Executive shall deliver them to the Company
promptly following the Employment Period or at any other time upon request of
the Company.
(g) No Improper Disclosure. Executive represents and warrants that
Executive has not disclosed, and will not disclose, to the Company any
information, whether confidential, proprietary or otherwise, that the Executive
possesses and that Executive is not legally free to disclose. Executive further
agrees to defend, indemnify and hold harmless the Company against all claims,
demands, losses, damages or expenses, including attorneys' fees, suffered or
incurred as a result of any violation of the representations contained in this
subsection 4(g).
(h) No Employee Solicitation. The Executive hereby agrees that
during the Employment Period and for a period of two (2) years thereafter, he
shall not, directly or indirectly, for his own account or jointly with another,
or for or on behalf of any entity, as principal, agent or otherwise, solicit,
induce or hire or in any manner attempt to solicit, induce or hire any person
employed by the Company or any of its affiliates to leave such employment,
whether or not such employment is pursuant to a written contract with the
Company or otherwise.
(i) Trade Secrets. Executive acknowledges that Executive's work for
the Company is expected to bring Executive into close contact with various
confidential technical and research data, confidential business data and other
information of the Company not readily available to the public. The Executive
expressly covenants and agrees that he will not at any time, whether during or
after the Employment Period, directly or indirectly, on any basis for any
reason, use or permit third parties within his control, the use of any trade
secrets, confidential information or proprietary information of, or relating to,
the Company, or any affiliate of the Company (including, without limitation,
data and other information relating to any of the Company's processes,
apparatus, products, software,
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packages, programs, trends in research, product development techniques or plans,
research and development programs and plans or any works and all secrets,
customer lists, lists of Executives, sales representatives and their
territories, mailing lists, details of consultant contracts, pricing policies,
operational methods, marketing plans or strategies, business acquisition plans,
new personnel acquisition plans, designs and design projects and other
confidential business affairs concerning the Company and the Company's
business), in connection with any activity or business, whether for his own
account or otherwise, and will not divulge such trade secrets, confidential
information or proprietary information to any person, firm, corporation or other
entity whatsoever. The Executive shall not be prohibited from divulging
information deemed to be trade secret or confidential or proprietary information
of the Company: (i) if and to the extent that disclosure of any such information
is pursuant to appropriate safeguards on confidentiality and (x) necessary and
appropriate in connection with the submission of bids by the Company in the
ordinary course of business or (y) required pursuant to the Company's marketing
efforts directed to specific clients or bona fide prospective clients or the
provision of services to existing clients in the ordinary course of business or
(z) is made to other Executives of the Company or independent contractors
thereof in the ordinary course of the Company's business, (ii) if the specific
item of information becomes generally available to the public without violation
of this Agreement or any other confidentiality agreement among the Executive and
the Company or any other confidentiality agreement to which the Executive is a
party, or (iii) if such disclosure is compelled by law, in which event the
Executive agrees to give the Company prior written notice of any disclosure to
be made pursuant to this clause (iii), and the Executive, at the Company's
expense, shall cooperate fully with the Company to obtain protective orders,
confidential treatment or other such protective action as may be available to
preserve the confidentiality of the information required to be disclosed.
(j) Remedies. It is expressly understood and agreed that the
services to be rendered hereunder by the Executive are special, unique and of
extraordinary character, and in the event of the breach by the Executive of any
of the terms and conditions of this Agreement on his part to be performed
hereunder, or in the event of the breach or threatened breach by the Executive
of the terms and provision, of this Section 4 of this Agreement, then the
Company shall be entitled, if it so elects, to institute and prosecute any
proceedings in any court of competent jurisdiction, either in law or equity, for
such relief as it deems appropriate, including without limiting the generality
of the foregoing, any proceedings to obtain damages for any breach of this
Agreement or to enforce the specific performance thereof by the Executive or to
enjoin the Executive from performing services which are prohibited by this
Agreement for any other person, firm or corporation. If the Executive violates
Section 4(d), the time period set forth herein with respect to such provision
shall be extended (or shall be deemed to have been extended), until six months
after the date of entry of final judgment enforcing such provision and the time
for appeal has lapsed, provided that in no event shall such time period be
extended beyond the date which is 12 months after the end of the Employment
Period. If Executive is held by a court of competent jurisdiction to have
breached this Agreement, Executive shall be liable for any attorneys' fees and
costs incurred by the Company in enforcing its rights hereunder.
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(k) Enforcement. It is hereby expressly agreed by the Company and
the Executive that if any portion of the restrictive covenants and provisions
set forth in this Section 4 is held to be unreasonable, arbitrary, against
public policy or otherwise unenforceable for any reason, then each such covenant
or provision shall be considered divisible as to scope, time and geographical
area, with each month of a specified period being deemed a separate period of
time and each county within any geographical area being deemed a separate
geographic area. The parties hereto expressly agree that notwithstanding their
mutual expectation that the covenants and restrictions contained herein will be
enforceable and enforced, a lesser scope, period of time or geographic area
shall be enforced to the extent that the covenants contained herein may be
unenforceable as written. The Company and the Executive also agree that in the
event that any court of competent jurisdiction determines a portion of the
restrictive covenants contained herein to be non-enforceable, such determination
by such court shall be deemed to have applicability only within the jurisdiction
in which such court is located and shall not be deemed to be effective in any
other jurisdiction. The existence of any claim or cause of action by the
Executive against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
the restrictive covenants contained in this Section 4.
(l) Covenants Non-Exclusive. The Executive acknowledges and agrees
that the covenants contained in this Section 4 shall not be deemed exclusive of
any common law rights of the Company in connection with the relationships
contemplated hereby; and that the Company shall have any and all rights as may
be provided by law in connection with the relationships contemplated hereby.
5. Termination. This Agreement may be terminated under the following
circumstances:
(a) Death. The Executive's employment hereunder shall terminate upon
his death. In the case of the Executive's death, the Company shall pay to the
Executive's beneficiaries or estate, as appropriate, promptly after his death,
any accrued but unpaid Annual Base Salary, and all expenses for which he is
entitled to be reimbursed pursuant to Section 3 through the date of his
termination. The Executive and his beneficiaries and estate, as appropriate,
shall be entitled to no other compensation under this Agreement following, or as
a result of, a termination under these circumstances.
(b) Disability.
(i) If a Disability (as defined below) of the Executive occurs
during the Employment Period, the Company may give the Executive written notice
of its intention to terminate his employment. In such event, the Executive's
employment with the Company shall terminate on the effective date specified in
such notice, which shall be not less than 14 days after the date of such notice.
In the case of a termination as a result of a Disability, the Company shall pay
to the Executive promptly after his termination any accrued but unpaid Annual
Base Salary, and all expenses for which he is entitled to be reimbursed pursuant
to Section 3 through the date of his termination. The Executive and his
beneficiaries and estate, as appropriate, shall be entitled to no other
compensation
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under this Agreement following, or as a result of, a termination under these
circumstances.
(ii) For the purpose of this subsection 5(b), "Disability" shall
mean the Executive's inability to perform his normal duties as Chief Marketing
Officer of the Company, with or without reasonable accommodation, due to a
mental or physical impairment, for a period of at least three (3) consecutive
months or six (6) months in the aggregate in any twelve (12) month period. The
Executive agrees to submit to a reasonable number of examinations by a medical
doctor selected by the Company and reasonably acceptable to the Executive (or
his legal representative) making the determination of disability under this
Section 5(b)(ii), and the Executive hereby authorizes the disclosure and release
to the Company of such determination and all supporting medical records.
(c) Termination by the Company for Cause.
(i) The Company may terminate the Executive's employment
hereunder for Cause (as defined below) at any time upon written notice to the
Executive. In such event, the Executive's employment shall terminate on the
effective date specified in such notice. In the case of the Executive's
termination for Cause, the Company shall promptly pay to the Executive any
accrued but unpaid Annual Base Salary and all expenses for which he is entitled
to be reimbursed pursuant to Section 3 through the date of his termination. The
Executive and his beneficiaries shall be entitled to no other compensation under
this Agreement following, or as a result of, a termination under these
circumstances.
(ii) For purposes of this Agreement, "Cause" shall mean (A) any
act of gross negligence, malfeasance or gross misconduct by the Executive
materially detrimental to the Company or its affiliates; (B) any willful
misappropriation or embezzlement by the Executive of the property of the Company
(whether or not a felony or misdemeanor); (C) any indictment for a felony; (D)
the commission by the Executive of any misdemeanor involving theft, fraud,
dishonesty or misrepresentation; (E) the material breach by the Executive of any
of his covenants and obligations hereunder, including, without limitation, the
covenants contained in Section 4 hereof which breach shall not have been cured
within fifteen (15) days after delivery of the written notice referred to in
Section 5(c)(i) (other than a breach of Section 4 hereof with respect to which
such cure period shall not apply); or (F) the refusal of the Executive to accept
the lawful directions of the Company (consistent with his duties and
responsibilities hereunder) or other willful disobedience or material breach by
the Executive of any of the Company's written rules, instructions or orders,
which breach shall not have been cured within fifteen (15) days after delivery
of the written notice referred to in Section 5(c)(i).
(d) Involuntary Termination by the Company Without Cause. In the
event of the Executive's "Involuntary Termination Without Cause," the Company
shall pay to the Executive any accrued but unpaid Annual Base Salary and
expenses to which he is entitled pursuant to Section 3 through the date of his
termination. In addition, the Executive shall receive continuation of his Annual
Base Salary for a period of three (3)
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months from the date of termination and, commencing on the date which is three
months after such date of termination, three additional monthly payments, each
in an amount equal to one month's Annual Base Salary. The Executive and his
beneficiaries shall be entitled to no other compensation under this Agreement
following, or as a result of, a termination under these circumstances. As used
herein "Involuntary Termination Without Cause" means:
(i) The Company's termination of the Executive's employment
hereunder by written notice to the Executive for any reason other than death,
Disability or Cause, in which case the Executive's employment shall terminate on
the effective date specified in such notice; or
(ii) The Executive's termination of his employment hereunder by
written notice to the Company upon the material and continuing breach by the
Company of any of its material covenants and obligations hereunder, which breach
shall not have been cured within fifteen (15) days after delivery of such
written notice or upon the Company's failure to provide the Executive with an
office in Chicago, Illinois, together with reasonable customary office
resources, provided that after the first year of the Employment Period, such
failure shall not constitute grounds for Executive's termination of his
employment pursuant to this Section 5(d) if the Company offers to relocate
Executive to its principal executive offices and to provide Executive with
reasonable relocation expenses.
(e) Mutual Agreement. The Executive's employment may be terminated
by written mutual agreement of the Executive and the Company at any time.
6. Assignment; Successors and Assigns. The Executive agrees that he
will not assign, sell, transfer, delegate or otherwise dispose of, whether
voluntarily or involuntarily, any rights or obligations under this Agreement,
nor shall the Executive's rights be subject to encumbrance of the claims of
creditors. Any purported assignment, transfer, delegation, disposition or
encumbrance in violation of this Section 6 shall be null and void and of no
force or effect. Nothing in this Agreement shall prevent the consolidation or
merger of the Company with or into any other entity, or the sale by the Company
of all or any portion of its respective properties or assets, or the assignment
by the Company of this Agreement and the performance of its obligations
hereunder to any subsidiary of the Company, or any successor in interest or any
other affiliated entity, and the Executive hereby consents to any and all such
assignments. Subject to the foregoing, this Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective heirs, legal
representatives, successors, and permitted assigns, and shall not benefit any
person or entity other than those enumerated above.
7. Choice of Law; Venue. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York without
giving effect to any choice or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York. The Executive
irrevocably consents to the service of any and all process in any action or
proceeding arising out of or relating to this Agreement by the mailing of copies
of such process to such Executive at the address specified in Section 10. The
parties hereto irrevocably submit to the jurisdiction of the United States
District Court for the Southern District of New York or any state court located
in New York County, State of New York over any dispute arising out of or
relating to this
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Agreement or any of the transactions contemplated hereby. Each party hereby
irrevocably agrees that all claims in respect of such dispute or proceeding may
be heard and determined in such courts. The parties hereby irrevocably waive, to
the fullest extent permitted by applicable law, any objection which they may now
or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum in connection therewith.
8. Severability of Provisions. In the event that any provision or any
portion thereof should ever be adjudicated by a court of competent jurisdiction
to exceed the limitations permitted by applicable law, as determined by such
court in such action, then such provisions will be deemed reformed to the
maximum limitations permitted by applicable law, the parties hereby
acknowledging their desire that in such event such action be taken. In addition
to the above, the provisions of this Agreement are severable, and the invalidity
or unenforceability of any provision or provisions of this Agreement or portions
thereof will not affect the validity or enforceability of any other provision,
or portion of this Agreement, which will remain in full force and effect as if
executed with the unenforceable or invalid provision or portion thereof
eliminated. Notwithstanding the foregoing, the parties hereto affirmatively
represent and acknowledge that this Agreement and each of its provisions is
enforceable in accordance with its terms, and expressly agree not to challenge
the enforceability of the Agreement or any of its provisions in the future. The
parties hereto are expressly relying upon this representation and acknowledgment
in determining to enter into this Agreement.
9. Warranty. (a) As an inducement to the Company to enter into this
Agreement, the Executive represents and warrants to the Company (subject to the
provisions of Section 9(b)) that there exists no impediment or restraint,
contractual or otherwise, on his power, right or ability to enter into this
Agreement and to perform his duties and obligations hereunder.
(b) Notwithstanding the provisions of Section 9(a), the Executive
and the Company acknowledge that the Executive is a party to a certain
Assignment of Inventions and Company Information Agreement dated October 2, 1995
by and between the Executive and Zacks Investment Research, Inc. (the "Zacks
Agreement"), a true and correct copy of which has been delivered by the
Executive to the Company. The Company agrees to defend, indemnify and hold
harmless the Executive from and against all claims, demands, losses, damages or
expenses, including reasonable attorneys' fees, suffered or incurred by the
Executive as a result of a breach by him of Section IV of the Zacks Agreement
occasioned solely by his employment by the Company hereunder.
10. Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method upon receipt of
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telephonic or electronic confirmation; the day after it is sent, if sent for
next day delivery to a domestic address by recognized overnight delivery service
(e.g., Federal Express); and upon receipt, if sent by certified or registered
mail, return receipt requested. In each case notice shall be sent to:
If to the Executive, addressed to:
Joshua P. Eggert
1781-D West Altgeld Street
Chicago, Illinois 60614
With a copy to:
Patzik, Frank & Samotny Ltd.
150 S. Wacker Drive
Suite 900
Chicago, Illinois 60606
Attn: Chad I. Buttell, Esq.
If to the Company addressed to:
130 William Street
Suite 401
New York, New York 10038
With a copy to:
Bryan Cave LLP
245 Park Avenue
New York, New York 10163-0034
Attn: Steven A. Saide, Esq.
or to such other place and with such other copies as either party may designate
as to itself or himself by written notice to the others.
11. Cumulative Remedies. All rights and remedies of either party hereto
are cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other right or remedies.
12. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Agreement.
13. Entire Agreement; Amendments and Waivers. This Agreement is
intended by the parties to be, and is, the complete, exclusive and final
expression of their agreement with respect to the subject matter hereof.
Moreover, this Agreement supersedes, and may not be contradicted by, or modified
or supplemented by, evidence of
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any prior or contemporaneous agreement as to the subject matter hereof,
including, without limitation, that certain letter dated March 2, 2000 between
the Company and the Executive, and no extrinsic evidence whatsoever may be
introduced in any judicial, administrative or other legal proceeding to vary the
terms of this Agreement. No amendment, supplement, modification or waiver of
this Agreement shall be binding unless executed in writing by each party to be
bound thereto. No waiver of any of the provisions of this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed or be
construed as a further, continuing or subsequent waiver of any such provision or
as a waiver of any other provision of this Agreement. No failure to exercise and
no delay in exercising any right, remedy or power hereunder shall preclude any
other or further exercise of any other right, remedy or power provided herein or
by law or in equity.
14. Representation of Counsel; Mutual Negotiation. Each party has had
the opportunity to be represented by counsel of its choice in negotiating this
Agreement. This Agreement shall therefore be deemed to have been negotiated and
prepared at the joint request, direction and construction of the parties, at
arm's-length, with the advice and participation of counsel, and shall be
interpreted in accordance with its terms without favor to any party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
EXECUTIVE
/s/ Joshua P. Eggert
--------------------------------
Joshua P. Eggert
WALL STREET STRATEGIES INC.
By: /s/ Shawn Baldwin
-----------------------------
Name: Shawn Baldwin
-----------------------
Title: Chief Strategy Officer
----------------------
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Exhibit 10.22
VACATION EMPORIUM CORPORATION
STOCK OPTION AGREEMENT
(Executive - Non-Qualified)
- --------------------------------------------------------------------------------
Optionee Name: Shawn Baldwin
Optionee Address:
Number of Shares of Exercise Price per
Common Stock: 526,923 Share: US $3.50
------- ---------
Date of Grant: July 30, 1999
- --------------------------------------------------------------------------------
STOCK OPTION AGREEMENT (this "Agreement") made as of the Date of Grant
set forth above (the "Date of Grant"), between VACATION EMPORIUM CORPORATION, a
Nevada corporation (the "Company"), and the Optionee identified above
("Optionee"), residing at the address set forth above.
WHEREAS, the Optionee is an executive officer of the Company; and
WHEREAS, pursuant to the Company's 1996 Compensatory Stock Option Plan
(the "Plan"), the Company desires to grant a stock option to Optionee to
purchase certain shares of its common stock, par value $.001 per share (the
"Common Stock"); and
WHEREAS, this Agreement consists of this Agreement and the Plan
attached hereto as Exhibit A;
NOW, THEREFORE, the Company and the Optionee hereby agree as follows:
W I T N E S S E T H:
- - - - - - - - - -
1. Definitions. In this Agreement, except where the context otherwise
indicates, the following definitions apply:
1.1 Terms defined in the Plan shall have the same meanings when used
herein as defined therein.
1.2 The term "Option" shall have the meaning set forth in Section 3
hereof.
<PAGE>
1.3 The term "Optionee" when used herein shall include the
Optionee's legal representative when the context requires.
1.4 The term "Plan Administrator" shall have the same meaning as
"Compensation Committee" as set forth in the Plan.
2. Representations, Warranties and Acknowledgements of the Optionee.
2.1 The Optionee's address set forth above is his or her true and
correct residence.
2.2 The Optionee has had an opportunity to ask questions and receive
answers from the officers and directors of the Company, or a person or persons
acting on its behalf, concerning the terms and conditions of this Agreement and
the business and affairs of the Company. The Optionee has a sufficient business
and personal relationship with one or more of the officers and directors of the
Company, and has sufficient business or financial experience, so as to be able
to protect his or her own interests in connection with the issuance of the
Option (as hereinafter defined) and the issuance of any Common Stock upon any
exercise of the Option.
2.3 The Optionee acknowledges that the Option and the Common Stock
to be issued upon the exercise of the Option, if any, are speculative
investments and involve a substantial degree of risk of loss by the Optionee.
The Optionee represents and warrants to the Company that he or she is acquiring
the Option, and the Common Stock to be issued upon the exercise of the Option
(if the Option is exercised), solely for investment purposes and not with a view
towards distribution or transfer. The Optionee acknowledges that the Option may
or may not be of any value, based on numerous circumstances and conditions, many
of which may be beyond the control of Optionee.
2.4 The Optionee acknowledges that the Option and the Common Stock
to be issued upon the exercise of the Option constitute a part of the Optionee's
compensation arrangement with the Company.
2.5 The Optionee confirms that neither the Company nor any officer,
director or representative thereof has made any representation, prediction, or
forecast as to the value or possible future value of the Option or the Common
Stock. The Optionee has not been induced to accept the Option by any
representation or promise by or on behalf of the Company.
2.6 The Optionee has had an opportunity to consult with his or her
legal, tax and investment advisors, to the extent the Optionee deems necessary,
concerning the Option.
2.7 This Agreement consists of this document and the terms and
provisions contained in the Plan, as it may be amended from time to time, which
are hereby incorporated by reference herein and made a part hereof. Unless
otherwise expressly stated herein, in the case of any conflict or inconsistency
between the terms of this document and the terms of the Plan, the terms of the
Plan shall control.
2.8 The Optionee acknowledges that the Option and the shares of
Common Stock to be issued upon exercise thereof have not been registered under
the Securities Act of 1933, as amended (the "Act"), in reliance on an exemption
from registration contained in Section 4(2) of the Act based, in part, on the
representations and warranties made by the Optionee hereunder. Optionee agrees
that the certificates evidencing the shares of Common Stock acquired by him or
her upon exercise of all or part of the Option may bear a restrictive legend, if
appropriate,
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<PAGE>
indicating that the shares have not been registered under the Act and are
subject to restrictions on the transfer thereof.
3. Grant of Option. The Company, subject to the terms of the Plan,
hereby grants to the Optionee as of the Date of Grant, as a matter of separate
inducement and agreement and not in lieu of salary or other compensation for
services, a non-qualified stock option (the "Option") to purchase in the
aggregate the number of shares of the Common Stock of the Company set forth in
the box on the first page hereof (the "Shares"). Optionee understands that the
Option granted under this Agreement is not intended to and will not qualify for
special tax treatment under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
4. Exercise Price. The exercise price (the "Exercise Price") of the
Option is the amount per share set forth in the box on the front page hereof,
subject to adjustment as provided in Section 9 of the Plan.
5. Option Non-Transferable. The Option shall not be transferable by the
Optionee otherwise than by will, or by the laws of descent and distribution, and
shall be exercised during the lifetime of the Optionee only by the Optionee.
Neither the Option nor any interest therein may be transferred, sold, assigned,
pledged or hypothecated by the Optionee during the Optionee's lifetime, whether
by operation of law or otherwise, or be made subject to execution, attachment or
similar process.
6. Exercisability of Option. The Option shall not be exercisable and
none of the Shares may be purchased until the nine (9) month anniversary of the
date the Optionee enters the employ of the Company (the "Date of Employment")
and on such date and thereafter, during the term of the Option, the Option shall
be and become exercisable as follows: on and after the nine (9) month
anniversary of the Date of Employment, the Optionee may purchase up to one-ninth
(1/9) of the Shares; and on and after each of the quarterly anniversaries
following the nine (9) month anniversary of the Date of Employment, the Optionee
may purchase up to an additional one-ninth (1/9) of the Shares, so that upon
expiration of thirty-three (33) months after the Date of Employment, and
thereafter during the term of the Option, the Optionee will have become eligible
to purchase all of the Shares. The foregoing right to exercise the Option is
subject to the provisions of Section 8 and 9 hereof.
7. Exercise of Option. The Option may be exercised only in accordance
with the provisions of the Plan. In no event may the Option or any part thereof
be exercised after the expiration of five (5) years from the date hereof.
Payment of the Exercise Price, for each of the Shares purchased by Optionee,
shall be delivered in full to the Company at the time of exercise, in accordance
with the terms and provisions of Section 7 of the Plan. None of the Shares that
are exercised by Optionee shall be issued until full payment is made therefor,
except in the case of, with prior approval of the Plan Administrator, election
by Optionee of an Option Exchange in accordance with the terms and provisions of
subsection 7(e) of the Plan and any requirements and procedures the Plan
Administrator may require. No shares of Common Stock may be tendered in exercise
of this Option if such shares were acquired by Optionee through the exercise of
an Incentive Stock Option, unless (a) such shares have been held by Optionee for
at least one (1) year, and (b) at least two (2) years have elapsed since such
Incentive Stock Option was granted. The Option may be exercised before or after
the exercise of any other options granted to the Optionee under the Plan or any
of the Company's other stock option programs or compensation plans.
8. Termination of Option. Subject to the terms hereof, all rights of
the Optionee in and to the Option, to the extent that they have not been
exercised, shall terminate on the date which is the fifth annual anniversary of
the Date of Grant or, if sooner, thirty (30) days after
3
<PAGE>
the Optionee's termination as an employee of the Company for any reason,
including voluntary resignation. Notwithstanding the foregoing, in the event of
the death of Optionee while employed by the Company and in the event of
termination of employment of Optionee by reason of disability (within the
meaning of Section 22(e)(3) of the Code), the Option, to the extent of the
applicable portion thereof which is exercisable as of such date, may be
exercised solely within one (1) year after death or ninety (90) days after the
termination of employment by reason of disability.
9. Death of Optionee. The Option granted hereunder and outstanding on
the date of Optionee's death may be exercised, to the extent otherwise
exercisable, by Optionee's personal representative or his or her transferees by
will or intestate distribution at any time prior to the termination of such
Option pursuant to Section 8 above. The Plan Administrator may require an
indemnity and/or such evidence or other assurances as it may deem necessary in
connection with an exercise by a legal representative, guardian, or beneficiary.
10. Fraud, Dishonesty, or Similar Acts. Notwithstanding anything
contained herein to the contrary, if it is determined by the Plan Administrator
that fraud, dishonesty, or similar acts were committed by Optionee at any time
while in the employ of the Company, or that Optionee has at any time disclosed
to any person, firm, corporation or other entity any of the Company's
"proprietary information" (defined below) without the express written consent of
the Board of Directors or except as such disclosure may have been required in
connection with the Optionee's employment by the Company, all option and other
rights with respect to all Option(s) granted to Optionee hereunder shall
immediately terminate and be null and void. For the purposes of this Section 10,
the term "proprietary information" shall mean all confidential or secret
customer lists, prospective customer lists, trade secrets, processes, computer
programs, object codes, source codes, inventions, improvements, manufacturing or
systems techniques, formulas, development or experimental work, work in process,
business, data disclosed to the Company by or for the benefit of the Company's
customers, information relating to the Company's business contracts (including
without limitation contracts with service providers, medical insurers and claims
administrators), marketing and competitive strategies, and any other secret or
confidential matter relating or pertaining to the products, services, sales or
other business of the Company.
11. Reserve. The Company shall at all times during the term of the
Option reserve such number of shares of its Common Stock as will be sufficient
to satisfy the requirements of this Agreement.
12. Withholding Taxes. The Optionee acknowledges that it is a condition
to the obligation of the Company to deliver the Shares, upon the exercise of the
Option, to pay the Company such amount, if any, as may be requested by the
Company for the purpose of satisfying any liability for any federal, state or
local income, or other taxes required by law to be withheld with respect to such
delivery; provided that the Optionee may elect, in accordance with applicable
law, to pay a portion or all of such withholding taxes in shares of Common Stock
held by the Optionee for at least six (6) months and the Optionee hereby
authorizes the Company to withhold and agrees to surrender back to the Company,
on or about the date such withholding tax is determinable, shares previously
owned by the Optionee or a portion of the shares that were or otherwise would be
distributed to the Optionee pursuant hereto so qualifying and having a fair
market value equal to the amount of such withholding taxes to be paid in shares.
13. No Right to Continued Employment. Nothing contained herein shall be
construed to require the Company to continue to employ the Optionee for any
particular period of time and the Optionee shall not be deemed to have any right
to continued employment or to employment for any particular period of time by
virtue hereof.
4
<PAGE>
14. Governing Law. The Plan, this Agreement and all action taken under
each shall be governed, as to construction and administration, by the laws of
the State of Nevada.
IN WITNESS WHEREOF, the Company and the Optionee have duly executed
this Agreement as of the day and year first above written.
ATTEST: VACATION EMPORIUM CORPORATION
_________________________ By: /s/ Ian Rice
-----------------
Name: Ian Rice
Title: Chairman
ACCEPTED AND AGREED:
By: /s/ Shawn Baldwin
------------------
Shawn Baldwin
5
<PAGE>
Exhibit 10.23
WALL STREET STRATEGIES CORPORATION
STOCK OPTION AGREEMENT
(Employees - ISO)
- --------------------------------------------------------------------------------
Optionee Name:
Optionee Address:
Number of Shares of Exercise Price per
Common Stock: 75,000 Share: US $
------ ----------
Date of Grant: December , 1999
------------------
- --------------------------------------------------------------------------------
STOCK OPTION AGREEMENT (this "Agreement") made as of the Date
of Grant set forth above (the "Date of Grant"), between Wall Street Strategies
Corporation, a Nevada corporation (collectively, with any wholly-owned
subsidiaries, the "Company"), and the Optionee identified above ("Optionee"),
residing at the address set forth above.
WHEREAS, the Optionee is an employee of the Company; and
WHEREAS, pursuant to the Company's 1999 Incentive Program (the
"Program"), the Company desires to grant a stock option to Optionee to purchase
certain shares of its common stock, par value $.001 per share (the "Common
Stock"); and
WHEREAS, this Agreement consists of this Agreement and the
Program attached hereto as Exhibit A;
NOW, THEREFORE, the Company and the Optionee hereby agree as
follows:
W I T N E S S E T H:
- - - - - - - - - -
1. Definitions. In this Agreement, except where the context
otherwise indicates, the following definitions apply:
1.1 Terms defined in the Program shall have the same
meanings when used herein as defined therein.
1.2 The term "Option" shall have the meaning set forth in
Section 3 hereof.
1.3 The term "Optionee" when used herein shall include the
Optionee's legal representative when the context requires.
2. Representations, Warranties and Acknowledgements of the
Optionee.
<PAGE>
2.1 The Optionee's address set forth above is his or her
true and correct residence.
2.2 The Optionee has had an opportunity to ask questions
and receive answers from the officers and directors of the Company, or a person
or persons acting on its behalf, concerning the terms and conditions of this
Agreement and the business and affairs of the Company. The Optionee has a
sufficient business and personal relationship with one or more of the officers
and directors of the Company, and has sufficient business or financial
experience, so as to be able to protect his or her own interests in connection
with the issuance of the Option (as hereinafter defined) and the issuance of any
Common Stock upon any exercise of the Option.
2.3 The Optionee acknowledges that the Option and the
Common Stock to be issued upon the exercise of the Option, if any, are
speculative investments and involve a substantial degree of risk of loss by the
Optionee. The Optionee represents and warrants to the Company that he or she is
acquiring the Option, and the Common Stock to be issued upon the exercise of the
Option (if the Option is exercised), solely for investment purposes and not with
a view towards the distribution or transfer thereof, except as may be permitted
under applicable federal and state laws. The Optionee acknowledges that the
Option may or may not be of any value, based on numerous circumstances and
conditions, many of which may be beyond the control of Optionee.
2.4 The Optionee acknowledges that the Option and the
Common Stock to be issued upon the exercise of the Option constitute a part of
the Optionee's compensation arrangement with the Company.
2.5 The Optionee confirms that neither the Company nor any
officer, director or representative thereof has made any representation,
prediction, or forecast as to the value or possible future value of the Option
or the Common Stock. The Optionee has not been induced to accept the Option by
any representation or promise by or on behalf of the Company.
2.6 The Optionee has had an opportunity to consult with his
or her legal, tax and investment advisors, to the extent the Optionee deems
necessary, concerning the Option.
2.7 This Agreement consists of this document and the terms
and provisions contained in the Program, as it may be amended from time to time,
which are hereby incorporated by reference herein and made a part hereof. Unless
otherwise expressly stated herein, in the case of any conflict or inconsistency
between the terms of this document and the terms of the Program, the terms of
the Program shall control.
2.8 The Optionee acknowledges that the Option and the
shares of Common Stock to be issued upon exercise thereof have not been
registered under the Securities Act of 1933, as amended (the "Act"), in reliance
on an exemption from registration contained in Section 4(2) of the Act based, in
part, on the representations and warranties made by the Optionee hereunder.
Optionee agrees that the certificates evidencing the shares of Common Stock
acquired by him or her upon exercise of all or part of the Option may bear a
restrictive legend, if appropriate, indicating that the shares have not been
registered under the Act and are subject to restrictions on the transfer
thereof.
3. Grant of Option. The Company, subject to the terms of the
Program, hereby grants to the Optionee as of Date of Grant, as a matter of
separate inducement and agreement and not in lieu of salary or other
compensation for services, an Incentive Stock Option (the "Option") to purchase
in the aggregate the number of shares of the Common Stock of the Company set
forth in the box on the first page hereof (the "Shares"). Optionee understands
that the Option granted under
2
<PAGE>
this Agreement is an Incentive Stock Option intended to qualify for special tax
treatment under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code").
4. Exercise Price. The exercise price (the "Exercise Price")
of the Option is the amount per share set forth in the box on the first page
hereof, subject to adjustment as provided in Section 4(b) of the Program.
5. Option Non-Transferable. The Option shall not be
transferable by the Optionee otherwise than by will, or by the laws of descent
and distribution, and shall be exercised during the lifetime of the Optionee
only by the Optionee. Neither the Option nor any interest therein may be
transferred, sold, assigned, pledged or hypothecated by the Optionee during the
Optionee's lifetime, whether by operation of law or otherwise, or be made
subject to execution, attachment or similar process.
6. Exercisability of Option. The Option shall not be
exercisable and none of the Shares may be purchased until the ninetieth day
following the Date of Grant and on such date and thereafter, during the term of
the Option, the Option shall be and become exercisable as follows: on and after
the ninetieth following the Date of Grant, Optionee may purchase up to 5% of the
Shares; on and after each of the one hundred eightieth and the two hundred
seventieth day following the Date of Grant, Optionee may purchase an additional
5% of the Shares; on and after the first annual anniversary of the Date of
Grant, the Optionee may purchase an additional 25% of the Shares; on and after
each of the quarterly anniversaries following first annual anniversary of the
Date of Grant, the Optionee may purchase an additional 10% of the Shares; and on
and after the second annual anniversary of the Date of Grant, the Optionee may
purchase an additional 30% of the Shares, so that upon expiration of the second
year of the term of the Option, and thereafter during the term of the Option,
Optionee will have become eligible to purchase all of the Shares. The foregoing
right to exercise the Option is subject to the provisions of Section 8 and 9
hereof.
7. Exercise of Option. The Option may be exercised only in
accordance with the provisions of the Program. In no event may the Option or any
part thereof be exercised after the expiration of five (5) years from the date
hereof. The Exercise Price may be paid for (a) in cash, (b) in the discretion of
the Plan Administrator, by tender, either actually or by attestation, to the
Company of shares of Common Stock already owned by Optionee and registered in
his or her name or held for his or her benefit by a registered holder, having a
fair market value equal to the cash Exercise Price of that portion of the Option
being exercised, (c) in the discretion of the Plan Administrator, by a
combination of methods of payment specified in clauses (a) and (b), or (d) in
the discretion of the Plan Administrator, by a cashless exercise election, all
in accordance with Section 5 of the Program. No shares of Common Stock may be
tendered in exercise of this Option if such shares were acquired by Optionee
through the exercise of an Incentive Stock Option, unless (a) such shares have
been held by Optionee for at least one (1) year, and (b) at least two (2) years
have elapsed since such Incentive Stock Option was granted. The Option may be
exercised before or after the exercise of any other options granted to the
Optionee under the Program or any of the Company's other stock option programs
or compensation plans.
8. Termination of Option. Subject to the terms hereof, all
rights of the Optionee in and to the Option, to the extent that they have not
been exercised, shall terminate on the date which is the fifth annual
anniversary of the Date of Grant or, if sooner, immediately, after Optionee's
termination as an employee of the Company for any reason, including voluntary
resignation. Notwithstanding the foregoing, in the event of the death of the
Optionee while employed by the Company or termination of employment of Optionee
by reason of disability (within the meaning of Section 22(e)(3) of the Code),
the Option, to the extent of the applicable portion thereof which is exercisable
as of such date, may be exercised solely within one (1) year after death or
ninety (90) days after termination of employment by reason of disability.
3
<PAGE>
9. Death of Optionee. The Option granted hereunder and
outstanding on the date of Optionee's death may be exercised, only if and to the
extent Optionee was entitled to exercise the Option at the date of his or her
death, by Optionee's personal representative or his or her transferees by will
or intestate distribution at any time prior to the termination of such Option
pursuant to Section 8 above. The Plan Administrator may require an indemnity
and/or such evidence or other assurances as it may deem necessary in connection
with an exercise by a legal representative, guardian, or beneficiary.
10. Fraud, Dishonesty, or Similar Acts. Notwithstanding
anything contained herein to the contrary, if it is determined by the Plan
Administrator that fraud, dishonesty, or similar acts were committed by Optionee
at any time while in the employ of the Company, or that Optionee has at any time
disclosed to any person, firm, corporation or other entity any of the Company's
"proprietary information" (defined below) without the express written consent of
the Board of Directors or except as such disclosure may have been required in
connection with the Optionee's employment by the Company, all option and other
rights with respect to all Option(s) granted to Optionee hereunder shall
immediately terminate and be null and void. For the purposes of this Section 10,
the term "proprietary information" shall mean all confidential or secret
customer lists, prospective customer lists, trade secrets, processes, computer
programs, object codes, source codes, inventions, improvements, manufacturing or
systems techniques, formulas, development or experimental work, work in process,
business, data disclosed to the Company by or for the benefit of the Company's
customers, information relating to the Company's business contracts (including
without limitation contracts with service providers, medical insurers and claims
administrators), marketing and competitive strategies, and any other secret or
confidential matter relating or pertaining to the products, services, sales or
other business of the Company.
11. Reserve. The Company shall at all times during the term of
the Option reserve such number of shares of its Common Stock as will be
sufficient to satisfy the requirements of this Agreement.
12. Withholding Taxes. The Optionee acknowledges that it is a
condition to the obligation of the Company to deliver the Shares, upon the
exercise of the Option, to pay the Company such amount, if any, as may be
requested by the Company for the purpose of satisfying any liability for any
federal, state or local income, or other taxes required by law to be withheld
with respect to such delivery; provided that the Optionee may elect, in
accordance with applicable law, to pay a portion or all of such withholding
taxes in shares of Common Stock held by the Optionee for at least six (6) months
and the Optionee hereby authorizes the Company to withhold and agrees to
surrender back to the Company, on or about the date such withholding tax is
determinable, shares previously owned by the Optionee or a portion of the shares
that were or otherwise would be distributed to the Optionee pursuant hereto so
qualifying and having a fair market value equal to the amount of such
withholding taxes to be paid in shares.
13. No Right to Continued Employment. Nothing contained herein
shall be construed to require the Company to continue to employ the Optionee for
any particular period of time and the Optionee shall not be deemed to have any
right to continued employment or to employment for any particular period of time
by virtue hereof.
4
<PAGE>
14. Governing Law. The Program, this Agreement and all action
taken under each shall be governed, as to construction and administration, by
the laws of the State of Nevada.
IN WITNESS WHEREOF, the Company and the Optionee have duly
executed this Agreement as of the day and year first above written.
ATTEST: WALL STREET STRATEGIES CORPORATION
By:
- ------------------------------ ------------------------------
Name:
Title:
ACCEPTED AND AGREED:
---------------------------------
5
<PAGE>
Exhibit 10.24
VACATION EMPORIUM CORPORATION
STOCK OPTION AGREEMENT
(Directors - Non-Qualified)
- --------------------------------------------------------------------------------
Optionee Name:
Optionee Address:
Number of Shares of Exercise Price per
Common Stock: 100,000 Share: US $3.50
------- --------
Date of Grant:
August 9, 1999
--------------
- --------------------------------------------------------------------------------
STOCK OPTION AGREEMENT (this "Agreement") made as of the Date
of Grant set forth above (the "Date of Grant"), between VACATION EMPORIUM
CORPORATION, a Nevada corporation (the "Company"), and the Optionee identified
above ("Optionee"), residing at the address set forth above.
WHEREAS, the Optionee is a member of the Company's Board of
Directors; and
WHEREAS, pursuant to the Company's 1996 Compensatory Stock
Option Plan (the "Plan"), the Company desires to grant a stock option to
Optionee to purchase certain shares of its common stock, par value $.001 per
share (the "Common Stock"); and
WHEREAS, this Agreement consists of this Agreement and the
Plan attached hereto as Exhibit A;
NOW, THEREFORE, the Company and the Optionee hereby agree as
follows:
W I T N E S S E T H:
- - - - - - - - - -
1. Definitions. In this Agreement, except where the context
otherwise indicates, the following definitions apply:
1.1 Terms defined in the Plan shall have the same meanings
when used herein as defined therein.
1.2 The term "Option" shall have the meaning set forth in
Section 3 hereof.
1.3 The term "Optionee" when used herein shall include the
Optionee's legal representative when the context requires.
<PAGE>
1.4 The term "Plan Administrator" shall have the same
meaning as "Compensation Committee" as set forth in the Plan.
2. Representations, Warranties and Acknowledgements of the
Optionee.
2.1 The Optionee's address set forth above is his or her
true and correct residence.
2.2 The Optionee has had an opportunity to ask questions
and receive answers from the officers and directors of the Company, or a person
or persons acting on its behalf, concerning the terms and conditions of this
Agreement and the business and affairs of the Company. The Optionee has a
sufficient business and personal relationship with one or more of the officers
and directors of the Company, and has sufficient business or financial
experience, so as to be able to protect his or her own interests in connection
with the issuance of the Option (as hereinafter defined) and the issuance of any
Common Stock upon any exercise of the Option.
2.3 The Optionee acknowledges that the Option and the
Common Stock to be issued upon the exercise of the Option, if any, are
speculative investments and involve a substantial degree of risk of loss by the
Optionee. The Optionee represents and warrants to the Company that he or she is
acquiring the Option, and the Common Stock to be issued upon the exercise of the
Option (if the Option is exercised), solely for investment purposes and not with
a view towards distribution or transfer. The Optionee acknowledges that the
Option may or may not be of any value, based on numerous circumstances and
conditions, many of which may be beyond the control of Optionee.
2.4 The Optionee acknowledges that the Option and the
Common Stock to be issued upon the exercise of the Option constitute a part of
the Optionee's compensation arrangement with the Company.
2.5 The Optionee confirms that neither the Company nor any
officer, director or representative thereof has made any representation,
prediction, or forecast as to the value or possible future value of the Option
or the Common Stock. The Optionee has not been induced to accept the Option by
any representation or promise by or on behalf of the Company.
2.6 The Optionee has had an opportunity to consult with his
or her legal, tax and investment advisors, to the extent the Optionee deems
necessary, concerning the Option.
2.7 This Agreement consists of this document and the terms
and provisions contained in the Plan, as it may be amended from time to time,
which are hereby incorporated by reference herein and made a part hereof. Unless
otherwise expressly stated herein, in the case of any conflict or inconsistency
between the terms of this document and the terms of the Plan, the terms of the
Plan shall control.
2.8 The Optionee acknowledges that the Option and the
shares of Common Stock to be issued upon exercise thereof have not been
registered under the Securities Act of 1933, as amended (the "Act"), in reliance
on an exemption from registration contained in Section 4(2) of the Act based, in
part, on the representations and warranties made by the Optionee hereunder.
Optionee agrees that the certificates evidencing the shares of Common Stock
acquired by him or her upon exercise of all or part of the Option may bear a
restrictive legend, if appropriate, indicating that the shares have not been
registered under the Act and are subject to restrictions on the transfer
thereof.
2
<PAGE>
3. Grant of Option. The Company, subject to the terms of the
Plan, hereby grants to the Optionee as of the Date of Grant set forth in the box
on the first page hereof (the "Date of Grant"), as a matter of separate
inducement and agreement and not in lieu of salary or other compensation for
services, a non-qualified stock option (the "Option") to purchase in the
aggregate the number of shares of the Common Stock of the Company set forth in
the box on the first page hereof (the "Shares"). Optionee understands that the
Option granted under this Agreement is not intended to and will not qualify for
special tax treatment under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
4. Exercise Price. The exercise price (the "Exercise Price")
of the Option is the amount per share set forth in the box on the front page
hereof, subject to adjustment as provided in Section 9 of the Plan.
5. Option Non-Transferable. The Option shall not be
transferable by the Optionee otherwise than by will, or by the laws of descent
and distribution, and shall be exercised during the lifetime of the Optionee
only by the Optionee. Neither the Option nor any interest therein may be
transferred, sold, assigned, pledged or hypothecated by the Optionee during the
Optionee's lifetime, whether by operation of law or otherwise, or be made
subject to execution, attachment or similar process.
6. Exercisability of Option. The Option shall be exercisable
in its entirety at any time on and after the date hereof. The foregoing right to
exercise the Option is subject to the provisions of Sections 8 and 9 hereof.
7. Exercise of Option. The Option may be exercised only in
accordance with the provisions of the Plan. In no event may the Option or any
part thereof be exercised after the expiration of [five (5)] years from the date
hereof. Payment of the Exercise Price, for each of the Shares purchased by
Optionee, shall be delivered in full at the time of exercise, in accordance with
the terms and provisions of Section 7 of the Plan and none of the Shares shall
be issued until full payment is made therefor, except in the case of, with prior
approval of the Plan Administrator, election by Optionee of an Option Exchange
in accordance with the terms and provisions of subsection 7(e) of the Plan and
any requirements and procedures as the Plan Administrator may require. No shares
of Common Stock may be tendered in exercise of this Option if such shares were
acquired by Optionee through the exercise of an Incentive Stock Option, unless
(a) such shares have been held by Optionee for at least one (1) year, and (b) at
least two (2) years have elapsed since such Incentive Stock Option was granted.
The Option may be exercised before or after the exercise of any other options
granted to the Optionee under the Plan or any of the Company's other stock
option programs or compensation plans.
8. Termination of Option. Subject to the terms hereof, all
rights of the Optionee in and to the Option, to the extent that they have not
been exercised, shall terminate on the date which is the fifth annual
anniversary of the Date of Grant or, if sooner, thirty (30) days after the
Optionee's termination as a member of the Company's Board of Directors for any
reason, including voluntary resignation. Notwithstanding the foregoing, in the
event of the death of Optionee, while serving as a member of the Board of
Directors of the Company, and in the event of termination of service by Optionee
as a member such board by reason of disability (within the meaning of Section
22(e)(3) of the Code), the thirty (30) day period referred to in the preceding
sentence shall be one (1) year after death and ninety (90) days, respectively.
9. Death of Optionee. The Option granted hereunder and
outstanding on the date of Optionee's death may be exercised, to the extent
otherwise exercisable, by Optionee's personal representative or his or her
transferees by will or intestate distribution at any time prior to the
termination of such Option pursuant to Section 8 above. The Plan Administrator
may require
3
<PAGE>
an indemnity and/or such evidence or other assurances as it may deem necessary
in connection with an exercise by a legal representative, guardian, or
beneficiary.
10. Fraud, Dishonesty, or Similar Acts. Notwithstanding
anything contained herein to the contrary, if it is determined by the Plan
Administrator that fraud, dishonesty, or similar acts were committed by Optionee
at any time while serving as a member of the Board of Directors of the Company,
or that Optionee has at any time disclosed to any person, firm, corporation or
other entity any of the Company's "proprietary information" (defined below)
without the express written consent of the Board of Directors or except as such
disclosure may have been required in connection with the Optionee's service as a
member of the Board of Directors of the Company, all option and other rights
with respect to all Option(s) granted to Optionee hereunder shall immediately
terminate and be null and void. For the purposes of this Section 10, the term
"proprietary information" shall mean all confidential or secret customer lists,
prospective customer lists, trade secrets, processes, computer programs, object
codes, source codes, inventions, improvements, manufacturing or systems
techniques, formulas, development or experimental work, work in process,
business, data disclosed to the Company by or for the benefit of the Company's
customers, information relating to the Company's business contracts (including
without limitation contracts with service providers, medical insurers and claims
administrators), marketing and competitive strategies, and any other secret or
confidential matter relating or pertaining to the products, services, sales or
other business of the Company.
11. Reserve. The Company shall at all times during the term of
the Option reserve such number of shares of its Common Stock as will be
sufficient to satisfy the requirements of this Agreement.
12. Withholding Taxes. The Optionee acknowledges that it is a
condition to the obligation of the Company to deliver the Shares, upon the
exercise of the Option, to pay the Company such amount, if any, as may be
requested by the Company for the purpose of satisfying any liability for any
federal, state or local income, or other taxes required by law to be withheld
with respect to such delivery; provided that the Optionee may elect, in
accordance with applicable law, to pay a portion or all of such withholding
taxes in shares of Common Stock held by the Optionee for at least six (6) months
and the Optionee hereby authorizes the Company to withhold and agrees to
surrender back to the Company, on or about the date such withholding tax is
determinable, shares previously owned by the Optionee or a portion of the shares
that were or otherwise would be distributed to the Optionee pursuant hereto so
qualifying and having a fair market value equal to the amount of such
withholding taxes to be paid in shares.
13. No Right to Continued Employment. Nothing contained herein
shall be construed to require the Company to continue to employ the Optionee for
any particular period of time and the Optionee shall not be deemed to have any
right to continued employment or to employment for any particular period of time
by virtue hereof.
14. Governing Law. The Plan, this Agreement and all action
taken under each
4
<PAGE>
shall be governed, as to construction and administration, by the laws of the
State of Nevada.
IN WITNESS WHEREOF, the Company and the Optionee have duly
executed this Agreement as of the day and year first above written.
ATTEST: VACATION EMPORIUM CORPORATION
By:
- ------------------------------ ------------------------------
Name:
Title:
ACCEPTED AND AGREED:
---------------------------------
5
<PAGE>
Exhibit 10.25
Memorandum
To: Shawn Baldwin, Chief Operating Officer - Wall Street Strategies, Inc.
From: Ari Kaufman, Jamieson Brown - Zacks Investment Research
Date: 10/19/99
Re: Letter of Intent
- ------------------------------------------------------------------------------
Letter of Understanding (for discussion purposes only)
This letter confirms Zacks.com's and Wall Street Strategies, Inc.'s respective
intent to enter into the strategic partnership described below. This letter does
not constitute a formal agreement and each party is still free to walk away from
this proposal.
Zacks.com Agrees to:
Partnership
Zacks.com agrees to accept Wall Street Strategies into the Zacks.com Joint
Marketing Program. The Joint Marketing program is a co-branded finance
center, including a Company Snapshot, Annual Balance Sheet, Annual Income
Statement and Daily EPS Surprises.
Zacks.com agrees to create co-branded pages for the finance center,
described above.
Zacks.com agrees to provide Wall Street Strategies with a ticker-driven
remote to link to the co-branded Zacks.com and Wall Street Strategies
research center.
Wall Street Strategies Agrees to:
Terms Commitment
Wall Street Strategies will agree to a one (1) year term with an automatic
renewal, a year at a time, following this term.
Wall Street Strategies will agree to prominently promote and display the
ticker-driven remote, described above, linking to the Zacks.com Joint
Marketing Free Research Center, described above.
Wall Street Strategies agrees to provide Zacks.com with company artwork for
co-branding.
These pages will be co-branded and titled, "Wall Street Strategies in
partnership with Zacks.com."
By: /s/ Jamieson P. Brown By: /s/ Shawn D. Baldwin
------------------------------------ ----------------------
Name: Jamieson P. Brown Name: Shawn D. Baldwin
---------------------------------- ------------------
Title: Director, Affiliate Marketing Title: Chief Operating Officer
--------------------------------- -------------------------
Date: 10/19/99 Date: 10/19/99
---------------------------------- ----------
<PAGE>
Exhibit 10.26
DATA BROADCASTING CORPORATION
3955 Point Eden Way
PO Box 5028
Hayward, California 94540-5028
Tel: (510) 266-6000 Fax: (510) 266-____________
November 4, 1999
Dear Mr. Baldwin:
DBC is very interested in working with Wall Street Strategies in the following
areas and would like to actively pursue these opportunities:
1. Participating in DBC seminars. DBC hosts several seminars to educate
individual traders on trading. These events are often co-hosted with an
online brokerage partner to demonstrate to attendees the power of using
eSignal, DBC's premiere real-time streaming quotes service, and direct
trading with an online broker. To enhance the educational value of the
seminar and to increase interest and attendance to these events, we
often feature a well-known speaker. We would be very interested in
having Charles Payne present at our seminars. As we discussed, Charles
Payne will be speaking at our Online Trading Seminar on December 8 in
New York and December 9 in Philadelphia.
2. Wall Street Strategies reports. Our intent is to work with Wall Street
Strategies to create a revenue generating report for eSignal users.
eSignal users, totaling more than 16,000, will be able to access this
report from eSignal's Research menu. Wall Street Strategies will create
daily free content that will be available as a teaser to the premium
service. Initially one or two premium reports will be available should
the user wish to subscribe to these reports. These new services will be
incorporated into eSignal in the first quarter of 2000.
3. Co-marketing. DBC will work closely with Wall Street Strategies to
promote Charles Payne in our seminars and the Wall Street Strategies
reports. Such marketing may include direct mail, website promotion,
website links, mass emails, and print advertising.
We look forward to working closely with Wall Street Strategies on these exciting
opportunities.
Sincerely,
/s/ Robin Verdeross
- -------------------
Robin Verdeross
Director, Product Management
<PAGE>
Exhibit 10.27
November 22, 1999
Mr. John Iacone
International Integrated Solutions, Ltd.
100-9 Patco Court
Islandia, NY 11722
Re: Memorandum of Understanding for Wall Street Strategies' (WSS)
Web Development Project
Dear John:
This memorandum sets forth the terms and conditions that we have agreed upon
verbally.
International Integrated Solutions/Hub City Media (IIS) will be WSS' Web
developer, responsible for all software development and integration for the WSS
Web site. It is understood that IIS shall dedicate the resources of at least 3
of its employees, as well as a significant portion of a Project Manager's time,
to the project over a 6 month time period that began 10/25/99 and runs thru
4/25/00.
The scope of work is understood to include timely implementation of Phase I and
Phase II functionality, as outlined in IIS' previous proposal, subsequent
features and functionality, customized content syndication development, and
additional development that our strategic partners and marketing ventures
require to be implemented. The work includes the custom database application
being developed for WSS. The initial Phase I Web site functionality is scheduled
to be completed and live by 12/23/99.
Fees: A total of $350,000 for the 6 month period to be paid as follows: $100,000
upon execution and $250,000 in 5 equal monthly installments of $50,000 beginning
with the period 11/26 - 12/25/99 and ending with the period 3/26/00 - 4/25/99.
Agreed to by:
/s/ David McCallen /s/ John Iacone
- ------------------------------- ------------------------
David McCallen John Iacone
Wall Street Strategies IIS
<PAGE>
Exhibit 10.28
WALL STREET STRATEGIES, INC.
130 William Street
Suite 401
New York, New York 10038
CHARLES PAYNE
237 Elm Avenue
Teaneck, New Jersey 07666
April 11, 2000
130 William LLC
130 William Street
New York, New York 10038
Re: Portion of the 4th Floor (Suite 401) of 130 William Street,
New York, New York (the "Premises")
-----------------------------------------------------------
Dear Sir:
Reference is made to that certain Lease dated as of July 23, 1998 (the
"Lease"), between Wall Street Strategies, Inc. ("Tenant") and 130 William LLC
("Landlord") and guaranteed by Charles Payne ("Guarantor") as set forth in and
pursuant to the terms of that certain Guaranty of even date therewith (the
"Guaranty"). Tenant, Landlord and Guarantor hereby agree by this letter
agreement (this "Agreement") that the Lease and the Guaranty shall be modified
as follows:
1. Unless the context otherwise clearly indicates a contrary intent or
unless specifically provided herein, each defined term used in this
Agreement shall be deemed to have the meaning set forth in the Lease.
2. The Lease and the Guaranty shall terminate and expire on June 30, 2000,
provided, however, that Tenant may, at Tenant's sole option, elect to
accelerate such date of termination or June 15, 2000, by giving notice
of such election to Landlord in writing no later than April 15, 2000.
Provided Tenant surrenders and vacates the Premises by the Surrender
Date, the Lease and the Guaranty shall terminate and expire on such
termination date (the "Surrender Date") with the same force and effect
as if such date were the expiration date provided for in the Lease.
<PAGE>
130 William LLC
April 11, 2000
Page 2
3. In consideration of such acceleration of the expiration date of the
Lease and the Guaranty, Tenant shall pay to Landlord the sum of
seventeen thousand five hundred dollars ($17,500.00) (the "Surrender
Payment").
4. Tenant shall pay the Surrender Payment by crediting the same against
the security deposit being held by Landlord pursuant to the terms of
Paragraph 34 of the Lease. Landlord shall refund the balance of the
security deposit (together with the interest earned thereon, if any) to
which Tenant is entitled under the terms of the Lease within fourteen
(14) days after the Surrender Date.
5. From and after the Surrender Date, (a) neither Landlord nor Tenant
shall have any further obligation or liability to the other under the
Lease or with respect to the Premises, except for obligations and
liabilities created by this Agreement or which expressly or by their
nature survive the termination or sooner expiration of the Lease, and
(b) Guarantor shall not have any obligation or liability to Landlord
under the Lease or the Guaranty or with respect to the Premises.
6. Each of Tenant and Landlord represents and warrants to the other that
it has dealt with no broker in connection with this Agreement other
than Richard Kusack (the "Broker"), and each indemnifies and holds the
other harmless from and against any and all costs, claims, losses,
damages, liabilities and expenses (including reasonable attorneys' fees
and disbursements) arising out of (a) the claims or alleged claims of
any broker (other than the Broker) or any other person claiming to have
dealt with the indemnitor in connection with this Agreement and the
surrender of the Premises, and (b) any inaccuracy of the foregoing
representation. Tenant shall be responsible for payment of any
consideration that may be due to the Broker with respect to this
Agreement.
7. The terms, covenants and conditions contained in this Agreement shall
bind and benefit each of Landlord, Tenant and Guarantor and their
respective successors and assigns with the same effect as if mentioned
in each instance where a party is named or referenced.
8. This Agreement, together with the Lease and the Guaranty, constitutes
the entire agreement between the applicable parties hereto with respect
to the matters stated herein and may not be amended or modified unless
such amendment or modification shall be in writing and signed by all of
the parties hereto.
9. This Agreement shall be construed in accordance with the laws of the
State of New York without regard to the principles of conflicts of
laws.
2
<PAGE>
130 William LLC
April 11, 2000
Page 3
10. Except as hereby modified, the Lease and the Guaranty are hereby
ratified and confirmed and continue in full force and effect.
Please acknowledge your agreement to the foregoing by executing and returning to
the undersigned the enclosed copy of this Agreement.
Very truly yours,
WALL STREET STRATEGIES, INC.
By: /s/ Charles Payne
------------------------------
Name: Charles Payne
Title: Chief Executive Officer
/s/ Charles Payne
----------------------------------
Charles Payne
AGREED:
130 WILLIAM LLC
By: /s/ Francis Moezinia
------------------------
Name: Francis Moezinia
Title: Member
3
<PAGE>
Exhibit 16.1
Securities and Exchange Commission
450 Fifth Avenue, N.W.
Washington, D.C. 20549
Re: Wall Street Strategies Corporation
We have read the statements that we understand Wall Street Strategies
Corporation will include under Part II, Item 3 of Form 10-SB/A it will file
regarding the recent change of auditors. We agree with such statements made
regarding our firm. We have no basis to agree or disagree with other statements
made under Item 3.
/s/ Lilling & Company LLP
March 20, 2000
Great Neck, New York
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