______________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________________________________
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
______________________________________________________
FOR THE YEAR ENDED DECEMBER 31, 1996
COMMISSION FILE NUMBER 0-8640
SYNCOR INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 85-0229124
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6464 CANOGA AVENUE, WOODLAND HILLS, CALIFORNIA 91367-2407
(Address of principal executive offices) (Zip Code)
(818) 737-4000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK $.05 PAR VALUE
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X NO
___ ___
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulations S-K (Sections 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. X
___
The aggregate market value of the voting stock held by
non-affiliates of the Registrant, computed by reference to the
average bid and asked prices of such stock on March 3, 1997 is
$114,016,073. The number of shares outstanding(excluding
treasury shares) of the Registrant's $0.05 par value common
stock as of March 28, 1997 was 9,946,494 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Annual Report to Stockholders for the
year ended December 31, 1996, are incorporated by reference into
Parts I, II and IV of this report.
Portions of Registrant's definitive Proxy Statement for
Registrant's Annual Meeting of Stockholders on June 18, 1997, are
incorporated by reference into Part III of this report.
_________________________________________________________________
SYNCOR INTERNATIONAL CORPORATION
TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT
December 31, 1996
PART I Page
Item 1. BUSINESS . . . . . . . . . . . . . . . . . . . . 1
Item 2. PROPERTIES.. . . . . . . . . . . . . . . . . . . 5
Item 3. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . 6
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS . . . . . . . . . . . . . . . . . . 6
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS . . . . . . . . 6
Item 6. SELECTED FINANCIAL DATA. . . . . . . . . . . . . 6
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . 7
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL
DATA. . . . . . . . . . . . . . . . . . . . 7
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . 7
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. . 7
Item 11. EXECUTIVE COMPENSATION. . . . . . . . . . . . . . . . 7
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT . . . . . . . . . . . . . . . . . . . 7
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . 8
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K . . . . . . . . . . . . . . . . . . . . 8
<PAGE>
PART I
ITEM 1. BUSINESS.
Unless otherwise indicated, the term "Syncor" or the "Company" as
used in this report refers to Syncor International Corporation,
incorporated in 1985 under the laws of the State of Delaware, and
its consolidated subsidiaries.
GENERAL DEVELOPMENT OF BUSINESS
The general development of the Company's business for the year
ended December 31, 1996, is covered in the letter from the
Chairman of the Board and the President and Chief Executive
Officer to the Company's stockholders in the Company's Annual
Report to Stockholders for said year and is hereby incorporated
herein by reference. A copy of the Company's Annual Report to
Stockholders is attached hereto as Exhibit 13.
DESCRIPTION OF BUSINESS
PRINCIPAL PRODUCTS PRODUCED AND SERVICES RENDERED
The Company is primarily a pharmacy services company engaged in
compounding, dispensing and distributing radiopharmaceutical
products and services to hospitals and clinics through its
network of 121 nuclear pharmacy service centers in the United
States and ten nuclear pharmacy service centers outside of the
United States. The Company's pharmacies process
radiopharmaceutical prescriptions in convenient packaging for the
customer, called "unit dose". The unit dose is then applied to a
specific patient for diagnostic imaging of physiological
functions and organ systems and for monitoring and treatment of
diseases.
In addition, the Company provides various services in connection
with the sale of radiopharmaceuticals, including
radiopharmaceutical record keeping required by federal and state
government agencies, and radiopharmaceutical technical
consulting. The Company also markets and distributes imaging cold
kits, isotopes, medical reference sources, and nuclear and
pharmacy equipment and accessories. The Company estimates that
its pharmacies service approximately 7,000 hospitals and clinics
in 40 states throughout the United States.
In June 1996, the Company, in a joint venture with CTI Services,
Inc. ("CTI"), formed P.E.T.Net-Trademark- Pharmaceutical
Services-Trademark-, LLC ("P.E.T.Net") to operate ten positron
emission tomography ("PET") distribution centers that
manufacture, compound, dispense and distribute positron
radiopharmaceuticals. The Company transferred its four existing
PET centers to P.E.T.Net in connection with the joint venture.
In March 1997, the Company entered into an agreement to sell all
of its interest in P.E.T.Net to PETNet Partners, LLC in exchange
for, among other things, preferred distribution rights to
P.E.T.Net products within the United States, a secured note
payable to the Company in the amount of $2,250,000, royalties
from the sale of PETNet products in an aggregate amount of
$1,500,000, and exclusive rights to distribute CTI-manufactured
cyclotrons in Taiwan for two years.
The description of Syncor's various activities in the Company's
Annual Report to Stockholders for the year ended December 31,
1996 are hereby incorporated herein by reference.
NEW VENTURES
In February 1997, the Company, together with National Diagnostic
Services, Inc., formed Syncor Diagnostics, LLC, for the purpose
of owning and operating magnetic resonance imaging ("MRI")
centers using a new MRI design that features an open, permanent
magnet. Syncor Diagnostics, LLC plans to open ten MRI centers
during its first year of operations.
In February 1997, the Company also entered into an agreement in
March 1997 to acquire the assets of Golden Pharmaceuticals, Inc.
relating to Iodine 123, including the building and equipment
used to manufacture Iodine 123 and the New Drug Application for
Iodine 123 capsules. Golden Pharmaceuticals, Inc. currently
supplies most of its Iodine 123 to the Company, and upon the
consummation of the acquisition, the Company will enhance
its ability to maintain a reliable supply of Iodine 123 for its
customers and their patients. In addition, the Company
anticipates that the proposed acquisition will improve the
Company's overall gross profit margin, and will enable the
Company to package and distribute a broad range of Iodine 123
pharmaceutical products.
SOURCES AND AVAILABILITY OF RAW MATERIALS
The Company's pharmacies dispense approximately sixty different
radiopharmaceutical products, which are obtained primarily from
six suppliers. The Company's principal supplier of
radiopharmaceutical products is the Radiopharmaceutical Division
of The DuPont Merck Pharmaceutical Company ("DuPont"), with whom
the Company has had a long-standing relationship with respect to
the distribution of DuPont's unit dose products. Since February
1, 1994, the Company has participated in a long-term distribution
agreement with DuPont, pursuant to which the Company is the
primary distribution channel for DuPont's bulk
radiopharmaceutical products, as well as its unit dose products,
in the United States. The agreement has been amended from time
to time to enhance the margins and cash flow for the Company.
In 1996, the Company entered into an agreement with Mallinckrodt
Medical, Inc. to distribute its proprietary products, in addition
to the MAG3 product that the Company already distributed, an
agreement with Medi-Physics, Inc. to distribute
Ceretec-Registered Trademark-, a radiopharmaceutical used for
brain imaging and white blood cell labeling, and an agreement
with Neoprobe Corporation to distribute RIGScan-Registered
Trademark-, a radiopharmaceutical used to detect colorectal
cancer. In March 1997, the Company entered into an agreement to
act as the preferred distributor for positron
radiopharmaceuticals produced by P.E.T.Net. The Company also
maintains distribution agreements with other suppliers.
If DuPont is not able to supply its proprietary products to the
Company, the Company's operations could be negatively impacted.
Management believes, however, that if any one of the suppliers of
radiopharmaceuticals to the Company failed to supply products,
the Company's other current suppliers would be able to supply
additional products to make up most of the shortfall. The failure
of two or more suppliers to provide products at a particular
time, however, could have an adverse effect on the Company's
business. Although periodic product outages and shortages occur,
to date, the Company's pharmacies have not experienced any
significant difficulty in securing sufficient supplies of
radiopharmaceutical products.
The Company is consistently in pursuit of improving its
relationships with current suppliers and developing new long-term
relationships.
PATENTS, TRADEMARKS, AND LICENSES
The Company owns a number of trademarks and patents, including
patent rights to the SECURE-Trademark- System, a safety insert
container system used for the safe delivery, handling and
disposal of unit dose products. The Company also licenses its
proprietary Unit Dose Manager-Trademark-, NucLink-Trademark- and
SYNtrac-Trademark- integrated software and hardware systems to
its customers to assist their nuclear medicine departments and to
facilitate electronic communication between the Company's local
radiopharmacies and customers. As of December 31, 1996, the
Company had approximately 1,347 customers who were active
licensees of the software systems. The foregoing trademarks,
patents and licenses are key components to the Company's ability
to operate its pharmacies efficiently, provide high quality
customer service, and build mutually beneficial long-term
relationships with the Company's customers.
DEPENDENCE ON CUSTOMERS
The Company has primarily two types of customers. The first type
of customer is a national account customer, which may be a
national managed care provider or a group purchasing
organization, and which owns, manages or negotiates contracts for
a network of hospitals and clinics that purchase most of their
radiopharmaceutical requirements from the Company. National
account customers include Amerinet, Columbia/HCA, TENET and
Health Service Corporation of America. In January 1997, the
Company signed a five year, $270 million sole source national
contract with VHA, Inc. The second type of customer is an
individual hospital or clinic that is not affiliated with a
national managed care provider or group purchasing organization.
National account sales represented nearly 52% of the Company's
total sales in 1996.
The Company's operations are such that none of its business is
dependent upon a single customer. If two or more national
account customers were to merge and their affiliated or member
hospitals and clinics cease to use the Company's services, such a
loss could have a short-term negative impact on the Company's
operations.
In February 1997, the Company announced the termination of its
agreement to distribute radiopharmaceuticals to Premier members
formerly affiliated with AmHS and SunHealth. The Company
believes, however, that it will continue to provide
radiopharmaceutical products and services to many of the Premier
members in spite of the termination of the agreement.
COMPETITIVE CONDITIONS
The nuclear medicine market is divided into two segments: the
market for bulk products and the market for unit dose products.
In 1996, the nuclear medicine market was valued at approximately
$600 million, with unit dose sales accounting for approximately
70 to 75 percent of the market, and bulk product sales accounting
for the remaining 25 to 30 percent.
With respect to the bulk sales market, the Company competes with
radiopharmaceutical manufacturers that sell their products
directly to hospitals and clinics or indirectly through
radiopharmacies. The hospital or clinic, in turn, compounds the
bulk product into unit doses. Through its distribution
agreements with manufacturers, primarily with DuPont, the Company
is able to compete with manufacturers for bulk business,
notwithstanding the Company's lack of a manufacturing base.
The core of the Company's business, however, is in unit dose
sales, which generate higher profit margins than bulk sales. In
1996, the Company's unit dose sales represented 86% of the
Company's total sales. The Company's management believes that the
advantages to customers of using a centralized radiopharmacy to
compound unit doses rather than preparing their own
radiopharmaceutical products include: (i) reduced risk of
radiation exposure to hospital personnel; (ii) cost savings due
to the Company's volume purchasing power; (iii) better
utilization of time-sensitive products purchased from the
radiopharmaceutical manufacturers; and (iv) reduction in the time
needed to maintain extensive records required by regulatory
agencies.
The Company's radiopharmacies compete for unit dose sales
primarily with two radiopharmaceutical manufacturers that have
also set up their own centralized radiopharmacies to supply unit
doses to customers. The Company also competes with a number of
independent entities, each of which operates one or more
radiopharmacies. In certain markets, there is competition with
universities which own and operate centralized radiopharmacies.
In 1996, the Company, which owns approximately half of the
radiopharmacies in the United States, held approximately 65 to 70
percent of the market share for unit dose sales.
The Company differentiates itself from its competitors, and adds
value to its customers, by providing: (i) unit dose
radiopharmaceuticals under rigorous quality control standards; (ii)
a comprehensive nuclear medicine product line; (iii) professional
consultation and delivery services; (iv) the SECURE-Trademark- System
for the safe delivery, handling and disposal of unit dose
products; and (v) the Unit Dose Manager-Trademark- and
SYNtrac-Trademark- software and hardware systems to allow
customers to better manage their nuclear medicine departments.
In brief, the Company distinguishes itself from its competitors
by providing radiopharmaceutical products with a Service
Difference-Service Mark- Guarantee.
GOVERNMENT REGULATION
Each of the Company's pharmacies is licensed by and must comply
with the regulations of the United States Nuclear Regulatory
Commission ("NRC") or corresponding state agencies. In addition,
each pharmacy is licensed and regulated by the Board of Pharmacy
in the state where it is located.
Periodic inspections of the Company's pharmacies are conducted by
the NRC and various other federal and state agencies.
Unsatisfactory inspection results could lead to escalated
enforcement action, the imposition of fines or the suspension,
revocation or denial of renewal of the licenses for the location
inspected. The Company devotes substantial human and financial
resources to ensure continued regulatory compliance and believes
that it is currently in compliance with all material rules and
regulations.
The Company is subject to the various federal and state
regulations relating to occupational safety and health and the
use and disposal of bio-hazardous materials. In addition, the
Company's products are subject to federal and state regulations
relating to drugs and medical devices.
Compliance with the applicable environmental control laws and
regulations, such as those regulating the use and disposal of
radioactive materials, is inherent in the industry and the normal
operations of the Company's pharmacies. Historically, compliance
with such laws and regulations has not had a material adverse
effect on the capital expenditures, earnings or competitive
position of the Company.
FOREIGN OPERATIONS
The Company owns and operates established nuclear pharmacies in
nine foreign markets: Kowloon (Hong Kong, B.C.C.); Taipei,
Taichung and Kaoshiung (Taiwan Republic of China); Manila
(Republic of the Philippines); Mexico City (United Mexican
States); and Bangkok (Kingdom of Thailand). The Company
continues its joint ventures in Beijing and Shanghai (People's
Republic of China).
In 1996, the Company established subsidiaries in San Juan (Puerto
Rico), Seoul (Republic of Korea), Sydney (Commonwealth of
Australia), Auckland (New Zealand) and Johannesburg (Republic of
South Africa); only San Juan was operational as of December 31,
1996. By the end of 1998, the Company aims to have an
international pharmacy service network with a presence in twenty
five foreign markets.
The Company's foreign operations are not immune to the inherent
uncertainties and risks of currency fluctuations, political and
civil unrest, trade restrictions, and inconsistent market and
regulatory conditions.
EMPLOYEES
As of December 31, 1996, Syncor employed approximately 2,262
people. However, the full-time equivalent personnel for the same
period was approximately 1,371 people.
Item 2. PROPERTIES.
The Company and its consolidated subsidiaries lease (and in one
location own) and operate a number of pharmacies whose locations
are set forth in the following table:1
<TABLE>
<CAPTION>
STATE LOCATION
_____ ________
<S> <C>
ALABAMA Birmingham
Mobile
ARIZONA Gilbert (Mesa)
Phoenix
Tucson
ARKANSAS Little Rock
CALIFORNIA Bakersfield
Berkeley
Colton
Fresno
Modesto
Placentia
Sacramento
San Diego
San Jose
Torrance
Van Nuys (Los Angeles)
COLORADO Colorado Springs
Denver
CONNECTICUT Glastonbury (Hartford)
Stamford
DELAWARE Seaford
FLORIDA Fort Myer
Gainesville
Jacksonville
Jupiter (West Palm Beach)
Miami Lakes (Miami)
Pensacola
Pompano Beach (Ft. Lauderdale)
Sarasota
Tampa
Winter Park (Orlando)
GEORGIA Augusta
Columbus
Doraville (Atlanta)
Rome
ILLINOIS Des Plaines
Chicago
Springfield
INDIANA Ft. Wayne
Indianapolis
Munster
West Lafayette (Purdue)
IOWA Des Moines
KANSAS Wichita
KENTUCKY Lexington
Louisville
LOUISIANA New Orleans
MARYLAND Silver Springs
Timonium (Baltimore)
MASSACHUSETTS Woburn (Boston)
MICHIGAN Grand Rapids
Southfield (Detroit)
Swartz Creek (Flint)
MINNESOTA Moorhead (Fargo ND)
St. Paul
MISSISSIPPI Flowood (Jackson)
Gulfport
Tupelo
MISSOURI Kansas City
Overland (St. Louis)
Springfield
NEBRASKA Lincoln
Omaha
NEVADA Las Vegas
Reno
NEW JERSEY Kenilworth (Newark)
NEW MEXICO Albuquerque
NEW YORK The Bronx
Cheektowaga (Buffalo)
Franklin Square(Long Island)
Newburgh
Rochester
Syracuse
Troy (Albany)
NORTH CAROLINA Charlotte
Greensboro
OHIO Cincinnati
Columbus
Girard (Youngstown)
Holland (Toledo)
Miamisburg (Dayton)
Uniontown/Green (Akron)
Valley View (Cleveland)
OKLAHOMA Oklahoma City
Tulsa
OREGON Portland
PENNSYLVANIA Allentown
Bloomsburg
Bristol (N. Philadelphia)
Duncansville (Altoona)
Hummelstown (Harrisburg)
Pittsburgh
Sharon Hill (Philadelphia)
RHODE ISLAND Providence
SOUTH CAROLINA Columbia
TENNESSEE Chattanooga
Jackson
Knoxville
Memphis
Memphis (Med-Center)
Nashville
TEXAS Amarillo
Austin
Beaumont
Corpus Christi
Dallas
El Paso
Fort Worth
Houston
Lubbock
North Dallas
San Antonio
VIRGINIA Richmond
Virginia Beach
WASHINGTON Seattle
Spokane
Tacoma
WEST VIRGINIA Huntington
WISCONSIN Appleton (Green Bay)
Wauwatosa (Milwaukee)
</TABLE>
[FN]
1 The Company also owns an interest in pharmacies in: Salt
Lake City, Utah; Midland, Texas; and Huntsville, Alabama.
Pharmacy lease terms vary from less than one year to
approximately ten years, and average approximately five
years. Leased areas average approximately 4,500 square feet.
The Company's corporate headquarters is located in Woodland
Hills, California. The Company relocated to Woodland Hills
pursuant to a lease that commenced on March 1, 1997. The lease
is for a term of ten years with one five-year renewal option.
Presently, the Company leases approximately 60,967 square feet at
such location, which is adequate for the Company's current needs.
The Company also leases an administrative office facility in
Duluth, Georgia, pursuant to a lease that commenced on October
18, 1996. The lease is for a term of ten years. Presently, the
Company leases approximately 19,666 square feet at such location,
which is adequate for the Company's current needs.
Item 3. LEGAL PROCEEDINGS.
There are various litigation proceedings in which the Company and
its subsidiaries are involved. Many of the claims asserted
against the Company in these proceedings are covered by
insurance. The results of litigation proceedings cannot be
predicted with certainty. However, in the opinion of the
Company's General Counsel, such proceedings either are without
merit or do not have a potential liability which would materially
affect the financial condition of the Company and its
subsidiaries on a consolidated basis.
The case of Syncor v. Pyramid Diagnostic Services, Inc.
("Pyramid"), which was filed on April 6, 1995 in the United
States District Court Western District of Michigan - Southern
Division, was described in the Form 10-K for the year ended
December 31, 1995. After a Stipulated Judgment was filed on
October 5, 1995 in favor of the Company in the amount of $6
million, Pyramid filed for bankruptcy. In connection with the
bankruptcy, on November 13, 1995, Syncor purchased all of
Pyramid's assets for $3,150,000. As a result, three new sites
were added to the Company's pharmacy network (of eight sites
purchased from Pyramid, five were closed). Pyramid thereafter
liquidated its assets. Syncor expects to receive approximately
$3,155,000 million from Pyramid on or before June 1, 1997.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The information relating to the Company's Common Stock which
appears in the Company's Annual Report to Stockholders for the
year ended December 31, 1996, under Note 12, "Selected Quarterly
Results of Operations" and Stockholder Information, included in
this Form 10-K Annual Report as Exhibit 13, is hereby
incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA.
The selected financial data which appears in the Company's Annual
Report to Stockholders for the year ended December 31, 1996,
under the heading of "Selected Financial Data", included in this
Form 10-K Annual Report as Exhibit 13, is hereby incorporated
herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Management's discussion and analysis of financial condition and
results of operations which appears in the Company's Annual
Report to Stockholders for the year ended December 31, 1996,
under the heading of "Management's Discussion and Analysis of
Financial Condition and Results of Operations", included in this
Form 10-K Annual Report as Exhibit 13, is hereby incorporated
herein by reference.
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL
DATA.
The consolidated financial statements and the notes thereto which
appear in the Company's Annual Report to Stockholders for the
year ended December 31, 1996, under the headings of "Consolidated
Statements of Income" and "Consolidated Balance Sheets", included
in this Form 10-K Annual Report as Exhibit 13, are hereby
incorporated herein by reference. Schedules containing certain
supporting information are also included. See Financial
Statement Schedules on page 8 hereof.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information called for by Item 10 of Form 10-K is hereby
incorporated by reference from the Company's definitive Proxy
Statement for its Annual Meeting of Stockholders, to be held on
June 18, 1997, which will be filed with the Commission pursuant
to Regulation 14A of the Securities and Exchange Commission
("Regulation 14A") within 120 days from December 31, 1996.
Based solely upon its review of Forms 3, 4 and 5 furnished to the
Company, the Company believes that all reports required to be
filed during 1996 pursuant to Section 16(b) of the Securities
Exchange Act of 1934 were timely filed.
Item 11. EXECUTIVE COMPENSATION.
The information called for by Item 11 of Form 10-K is hereby
incorporated by reference from the Company's definitive Proxy
Statement for its Annual Meeting of Stockholders to be held on
June 18, 1997, which will be filed with the Commission pursuant
to Regulation 14A within 120 days from December 31, 1996.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information called for by Item 12 of Form 10-K is hereby
incorporated by reference from the Company's definitive Proxy
Statement for its Annual Meeting of Stockholders to be held on
June 18, 1997, which will be filed with the Commission pursuant
to Regulation 14A within 120 days from December 31, 1996.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information called for by Item 13 of Form 10-K is hereby
incorporated by reference from the Company's definitive Proxy
Statement for its Annual Meeting of Stockholders to be held on
June 18, 1997, which will be filed with the Commission pursuant
to Regulation 14A within 120 days from December 31, 1996.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) 1. CONSOLIDATED FINANCIAL STATEMENTS.
The consolidated financial statements listed
below, together with the report thereon of KPMG Peat Marwick LLP,
dated March 19, 1997, which appear in the Company's Annual Report
to Stockholders for the year ended December 31, 1996, included in
this Form 10-K Annual Report as Exhibit 13, are hereby
incorporated herein by reference.
Independent Auditors' Report
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Stockholders'
Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
2. Financial Statement Schedules.
The following schedule supporting the financial
statements of the Company is included herein:
Page
Schedule II Valuation and Qualifying Accounts. 10
All other schedules and financial statements of
the Company are omitted because they are not applicable, not
required or because the required information is included in the
consolidated financial statements or notes thereto.
3. Index to Exhibits.
The list of exhibits filed as part of this report
on Form 10-K or incorporated herein by reference appear as Index
to Exhibits on page 11 hereof.
(b) Reports on Form 8-K filed in the Quarter Ended
December 31, 1996.
None.
(c) Exhibits.
The exhibits required by Item 601 of Regulation S-K are
filed herewith or are incorporated herein by reference and are
listed in the Index to Exhibits on page 11 hereof.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SYNCOR INTERNATIONAL CORPORATION
By /s/ Robert G. Funari
_________________________________
President and Chief Executive Officer
Date: 3/31/97
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the
dates indicated.
/s/ Monty Fu
_______________________________
Monty Fu, Chairman of the Board and Director
Date: 3/31/97
/s/ Robert G. Funari
_______________________________
Robert G. Funari, President, Chief Executive Officer
(Principal Executive Officer) and Director
Date: 3/31/97
/s/ Michael E. Mikity
_______________________________
Michael E. Mikity, Senior Vice President, Chief Financial Officer
and Treasurer (Principal Financial and Accounting Officer)
Date: 3/31/97
/s/ Haig S. Bagerdjian
_______________________________
Haig S. Bagerdjian, Senior Vice President, Secretary and
General Counsel
Date: 3/31/97
/s/ George S. Oki
_______________________________
George S. Oki, Director
Date: 3/31/97
/s/ Arnold E. Spangler
_______________________________
Arnold E. Spangler, Director
Date: 3/31/97
/s/ Steven B. Gerber
_______________________________
Steven B. Gerber, M.D., Director
Date: 3/31/97
/s/ Henry N. Wagner, Jr.
_______________________________
Henry N. Wagner, Jr., M.D., Director
Date: 3/31/97
/s/ Gail R. Wilensky
_______________________________
Dr. Gail R. Wilensky, Director
Date: 3/31/97
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Schedule II. Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
(In thousands)
_________________________________________________________________
Balance Balance
at Costs at End
Beginning and Deduction of
Description of Period Expenses (A) Period
_________________________________________________________________
<S> <C> <C> <C> <C>
Year Ended
December 31, 1996
Allowance for doubtful
accounts $1,097 $ 0 $186 $ 911
Year Ended
December 31, 1995
Allowance for doubtful
accounts $1,154 $609 $666 $1,097
Year Ended
December 31, 1994
Allowance for doubtful
accounts $1,200 $358 $404 $1,154
</TABLE>
[FN]
(A) Uncollectible accounts written-off, net of recoveries and
reduction of reserve.
<PAGE>
INDEX TO EXHIBITS
Exhibit No.
3. Certificate of Incorporation and By-Laws
3.1 Restated Certificate of Incorporation of the Company
filed as Exhibit 3.1 to the Form 10-K for the year ended May 31,
1987, and incorporated herein by reference.
3.2 Restated By-Laws of the Company, filed as Exhibit 3.2
to the Form 10-K for the year ended December 31, 1995, and
incorporated herein by reference.
4. Instruments Defining the Rights of Security Holders
4.1 Stock Certificate for Common Stock of the Company
filed as Exhibit 4.1 to the Form 10-K for the year ended May 31,
1986, and incorporated herein by reference.
4.2 Rights Agreement dated as of November 8, 1989 between
the Company and American Stock Transfer & Trust Company filed as
Exhibit 2.1 to the Registration Statement on Form 8-A dated
November 3, 1989, and incorporated herein by reference.
10. Material Contracts
10.1 Syncor International Corporation 1981 Master Stock
Option Plan, as amended, filed as part of the Company's Proxy
Statement dated November 5, 1985, for its Annual Meeting of
Stockholders held November 26, 1985, and incorporated herein by
reference.*
10.2 Form of Indemnity Agreement substantially as entered
into between the Company and each Director and Officer, filed as
Exhibit 3.2 Appendix A to the Form 10-K for the year ended
December 31, 1995, and incorporated herein by reference.*
10.3 Form of Benefits Agreement substantially as entered
into between the Company and each Director, filed as Exhibit 10.8
to the Form 10-K for the year ended December 31, 1995, and
incorporated herein by reference.*
10.4 Form of Benefits Agreement substantially as entered
into between the Company and certain employees, filed as Exhibit
10.8 to the Form 10-K for the year ended December 31, 1995, and
incorporated herein by reference.*
10.5 Syncor International Corporation 1990 Master Stock
Incentive Plan, as amended and restated, filed as part of the
Company's Proxy Statement dated October 4, 1993 for its Annual
Meeting of Stockholders held November 15, 1993, and incorporated
herein by reference.*
10.6 Syncor International Corporation Deferred
Compensation Plan effective July 1, 1991, as Amended and Restated
effective April 19, 1993, filed as Exhibit 10.11 to the Form 10-K
for the year ended December 31, 1992, and incorporated herein by
reference.*
10.7 Form of Stock Option Agreement substantially as
entered into between the Company and certain employee Directors
and employees filed as Exhibit 10.15 to the Form 10-K for year
ended December 31, 1993, and incorporated herein by reference.*
10.8 Form of Stock Option Agreement substantially as
entered into between the Company and certain non-employee
Directors filed as Exhibit 10.16 to the Form 10-K for the year
ended December 31, 1993, and incorporated herein by reference.*
10.9 Non-employee Director 1995 Stock Incentive Award
Agreement dated January 24, 1995 entered into between the Company
and Arnold E. Spangler, filed as Exhibit 10.17 to the Form 10-K
for the year ended December 31, 1995, and incorporated herein by
reference.*
10.10 Non-employee Director 1995 Stock Incentive Award
Agreement dated January 24, 1995 entered into between the Company
and George S. Oki, filed as Exhibit 10.18 to the Form 10-K for
the year ended December 31, 1995, and incorporated herein by
reference.*
10.11 Non-employee Director 1995 Stock Incentive Award
Agreement dated January 24, 1995 entered into between the Company
and Henry Wagner, Jr, filed as Exhibit 10.19 to the Form 10-K for
the year ended December 31, 1995, and incorporated herein by
reference.*
10.12 Non-employee Director 1995 Stock Incentive Award
Agreement dated April 29, 1996, entered into between the Company
and Gail Wilensky, filed as Exhibit 4.3(b) to the Registration
Statement on Form S-8 filed on December 20, 1996 to register the
shares underlying said Award Agreement, and incorporated herein
by reference.*
10.13 Non-employee Director 1995 Stock Incentive Award
Agreement dated April 29, 1996, entered into between the Company
and Steven Gerber, filed as Exhibit 4.3(a) to the Registration
Statement on Form S-8 filed on December 20, 1996 to register the
shares underlying said Award Agreement, and incorporated herein
by reference.*
10.14 Loan Agreement, dated September 30, 1996, between the
Company and The First National Bank of Chicago, filed as Exhibit
10.1 to the Form 10-Q for the quarter ended September 30, 1996,
and incorporated herein by reference.
10.15 Subscription Agreement, dated July 15, 1996, executed
by Syncor Management Corporation in favor of American Tax Credit
Corporate Fund III, L.P., together with a Promissory Note, dated
July 15, 1996, executed by Syncor Management Corporation in favor
of John Hancock Mutual Life Insurance Company, as assignee of
Corporate Credit, Inc., and the Guarantee of Parent Corporation,
dated July 15, 1996, executed by the Company in favor of John Hancock
Mutual Life Insurance Company, as assignee of Corporate Credit,
Inc.
10.16 The 1995 Management Incentive Plan of the Company,
filed as Exhibit 10.20 to the Form 10-K for the year ended
December 31, 1995, and incorporated herein by reference.*
10.17 The 1996 Management Incentive Plan of the Company,
filed as Exhibit 10.3 to the Form 10-Q for the quarter ended
September 30, 1996, and incorporated herein by reference.*
10.18 The 1997 Management Incentive Plan of the Company.*
10.19 The Office Lease, dated as of September 30, 1996,
between Massachusetts Life Insurance Company and the Company,
relating to the office lease for the Company's corporate
headquarters in Woodland Hills, California.
10.20 Lease, dated May 30, 1996, between the Company and
Technology Park/Atlanta, Inc., relating to the office lease for
the Company's administrative office in Duluth, Georgia.
11. Statement Re: Computation of Per Share Earnings
Computation can be clearly determined from the material
contained in the Company's Annual Report to Stockholders for year
ended December 31, 1996.
13. Annual Report to Security Holders
Syncor International Corporation Annual Report to
Stockholders for the year ended December 31, 1996, except for
specific information in such Annual Report expressly incorporated
herein by reference, is furnished for the information of the
Commission and is not to be deemed "filed" as part hereof.
21. Subsidiaries of the Registrant
State or Country
Name of Subsidiary of Organization
__________________ _______________
Syncor Diagnostics, LLC California
Syncor Management Corporation Delaware
Syncor Midland, Inc. Texas
Beijing Syncor Medicine Corporation, Ltd. People's Republic
of China
Pharmatopes (Proprietary) Limited** Republic of South
Africa
Shanghai Syncor Medicine Corporation, Ltd. People's Republic
of China
Specialised Medical Trading Pty. Ltd.** Commonwealth of
Australia
Syncor de Mexico, S.A. de C.V.** United Mexican States
Syncor de Puerto Rico, Inc.** Commonwealth of
Puerto Rico
Syncor Hong Kong Limited** Hong Kong, B.C.C.
Syncor International (Thailand) Co., Ltd. Kingdom of Thailand
Syncor Korea, Inc.** Republic of Korea
Syncor New Zealand Limited** New Zealand
Syncor Pharmacies Australia Pty. Ltd.** Commonwealth of
Australia
Syncor Overseas Ltd. British Virgin
Islands
Syncor Philippines, Inc.** Republic of the
Philippines
Syncor Taiwan, Inc.** Taiwan Republic of
China
23. Consent of KPMG Peat Marwick LLP.
27. Financial Data Schedule
_____________________________________
* Management contracts or compensatory plan
** Subsidiaries of Syncor Overseas Ltd.
<PAGE>
Exhibit 10.15
AMERICAN TAX CREDIT CORPORATE FUND III, L.P.
SUBSCRIPTION AGREEMENT
_______________________
(Each Investor should complete and
execute this Agreement for each Closing.)
American Tax Credit Corporate Fund III, LP.
112 N. Galway Drive
P.O. Box 430
Granville, OH 43023
Ladies and Gentlemen:
American Tax Credit Corporate Fund III, LP., a Delaware
limited partnership (the "Partnership"), is offering units (the
"Units") of limited partnership interests pursuant to the terms
of a Confidential Private Placement Memorandum dated March 1,
1996 (as supplemented from time to time, the "Memorandum").
Terms defined in the Memorandum and used but not otherwise
defined herein shall have the meanings given them in the
Memorandum.
1. Subscription and Appointment of Attorney-in-Fact. (a)
The undersigned (the "Investor") hereby subscribes for the
number of Units set forth in paragraph (b) below. By executing
this Subscription Agreement, the Investor (i) executes under seal
the Partnership Agreement and adopts and agrees to be bound by
all the provisions thereof and by so doing will become, upon
acceptance by the General Partner, a Limited Partner, and (ii)
irrevocably constitutes and appoints the General Partner, each
general partner of any General Partner which is a partnership or
limited partnership and each person from time to time holding the
offices of president, vice president or treasurer of any General
Partner or its general partner which is a corporation (the
"Attorney"), and each of them acting singly, with full power of
substitution and in the manner set forth in Section 11.01 of the
Partnership Agreement its true and lawful attorney-in-fact, with
full power and authority to act in its name, place and stead to
(A) make, execute, sign, certify, acknowledge, deliver, swear to,
file and record on its behalf at the appropriate public offices
(i) the Partnership Agreement, the Certificate of Limited
Partnership for the Partnership and all amendments to the
Partnership Agreement or said Certificate of Limited Partnership
adopted in accordance with the terms thereof and all instruments
which any such Attorney deems appropriate to reflect a change or
modification of the Partnership in accordance with the terms of
the Partnership Agreement and (ii) any and all documents or
instruments (including, without limitation, Uniform Commercial
Code financing statements) necessary to evidence or perfect the
security interest granted to the Partnership pursuant to the
Investor Security Agreement; (B) make any necessary clarifying or
conforming changes to the Subscription Documents; and (C) execute
on behalf of the Investor (if such Investor is utilizing the
Installment Method) any Investor Note(s) in one or more
counterparts in order to facilitate the assignment and pledge of
portions of such Investor Note(s) by the Partnership as security
for a bridge loan to one or more lenders. (In no event will the
aggregate amount due under such counterpart promissory note
executed by the General Partner on behalf of the investor exceed
the aggregate amount due under the Investor Note(nor will the
terms of payment of such counterpart promissory notes differ from
the terms of pant of such Investor Note(s)).
(b) The undersigned hereby subscribes for the number of Units in
the Partnership set forth below and hereby agree to be bound by
the terms set forth in the Partnership Agreement, as well as all
of the provisions of this Subscription Agreement
CASH METHOD:
X times $1,000,000 per Unit = $2,000,000.00
____ Total Purchase Price
(Total Number of Units for Current Closing) (Amount Paid Herewith)
DEFERRED CASH METHOD:
____ times $1,000,000 per Unit = $ _____________
(Total Number of Units for Total Purchase Price
Current Closing)
Amount Paid Herewith under the
Deferred Cash Method
____ times $350,000 per Unit = $ ______________
(Total Number of Units for (Amount Paid Herewith)
Current Closing)
INSTALLMENT METHOD:
____ times $_________* per Unit = $_______________
(Total Number of Units for Total Purchase Price
Current Closing)
Amount Paid Herewith under the
Installment Method:
____ times $______ per Unit = $___________
(Total Number of Units for (Amount Paid Herewith)
Current Closing)
* Amount to be agreed upon by the Investor and the General
Partner. Amount should be sufficient to permit the Partnership
to receive $1,000,000 per Unit upon hypothecation of the Investor
Note(s).
____ Check if the Investor is subject to backup withholding
pursuant to Section 34O6(a)(1)(c) of the Code.
____ Check if the Investor wishes to purchase the full number of
Units subscribed for even if that number of Units could represent
more than a particular percentage of the total Units purchased by
all Investors, as of the date of any Investor Closing in which
the Investor purchases Units.
____ Check if the Investor wishes to be advised from time to time
of the aggregate number of Units for which subscriptions have
been received by the Partnership and if the Investor wishes to
purchase no more than some specified percentage of the total
Units purchased by all Investors from time to time. Fill in below
the maximum percentage of the total Units purchased by all
Investors from time to time which the Investor wishes to
purchase:
_________________ percent
The Investor hereby certifies under penalties of perjury
that (a) the federal taxpayer identification number of the
undersigned set forth in the 0fferee Questionnaire is correct and
(b) the undersigned is not subject to backup withholding under
Section 3406(a)(1)(c) of the Code, unless otherwise indicated
above in this Subscription Agreement.
(c) The Investor acknowledges and agrees that this
subscription may be rejected for any reason or may be accepted in
whole or in part. If this subscription is accepted in part, the
Investor agrees to execute substitute documentation, including if
applicable, any Investor Note(s), reflecting its smaller
investment.
2. Representations Warranties and Agreements of the
Investor. In order to induce the Partnership and the General
Partner to accept its subscription, the Investor represents,
warrants and agrees as follows:
(a) The Investor has thoroughly read the Partnership
Agreement, this Subscription Agreement and the other Subscription
Documents, of which this Agreement is a part.
(b) The Investor has been furnished and has thoroughly read
the Memorandum. The Investor has conducted its own investigation
of the Partnership and is satisfied that it has received
information with respect to all matters which it considers
material to its decision to make this investment.
(c) The Investor fully understands the nature of the risks
involved in purchasing Units and is qualified by its own
experience to evaluate investments of this type of has relied
upon the advice of someone (other than Affiliates of the General
Partner) so qualified. The Investor has relied upon its knowledge
of financial accounting and federal tax matters relating to its
investment or upon the advice as to such matters of someone
(other than Affiliates of the General Partner) appropriately
qualified.
(d) If the Investor has elected the Installment Method, the
Investor (i) agrees and consents to the sale or pledge of its
Investor Note(s) to any lender of the Partnership to secure
indebtedness of the Partnership and (ii) recognizes its
continuing liability to pay all installments of said Investor
Note(s) and the consequences of its failure to do so including,
but not limited to, the right of the Partnership or any successor
holder of the Investor Note(s) of the undersigned to declare any
unpaid Installments immediately due and payable and exercise its
rights as a secured party under the Investor Security Agreement.
(e) If the Investor has elected the Deferred Cash Method,
the Investor recognizes its continuing liability to pay all
deferred installments of its Capital Contribution and the
(f) The Investor has been advised that (i) the Partnership
has no financial or operating history, (ii) the Units are
speculative investments and involve a high degree of risk of loss
of the Investor's entire investment and (iii) any federal income
tax benefits which may be available to the Investor may be lost
through the adoption of new laws or Treasury Regulations or
changes in the interpretation of existing laws and Treasury
Regulations.
(g) The Investor is aware of its inability readily to
liquidate its investment in case of an emergency and the fact
that the Units being purchased by it may have to be held for an
indefinite period of time. The Investor understands that the
Units being purchased by it have not been registered under the
Securities Act of 1933, as amended (the "Act"), or applicable
state securities laws, and cannot be sold, transferred or
otherwise disposed of unless subsequently registered under the
Act and the applicable securities laws of such states or an
exemption from such registration is available; that such
registration is unlikely at any time in the future; that no
transfers of the units may be made untill the General Partner has
received an opinion of counsel satislactory to the General
Partner (as to both the identity of such counsel and the form and
substance of such opinion) to the effect that the transfer would
be in compliance with all requirements of the Act and applicable
state securities law and tax law. Any such opinions are to be
furnished at the expense of the transfer of the Units; and that
it is not anticipated that there will be any market for resale of
the Units.
(h) The Investor understands that no state or government
authority has made any finding or determination relating to the
fairness for investment of the Units offered by the Partnership.
(i) The Investor is an Accredited Investor (as such term is
defined in the Memorandum) and the undersigned (and any
guarantors) has a net worth (total assets in excess of total
liabilities) of at least five times the purchase price of the
Units being purchased by it. The investor has such knowledge and
experience in financial and business matters in general and In
particular with respect to this type of investment that it is
capable of evaluating the merits and risks of an investment In
the Partnership. The Investor's overall commitment to ihvesments
which are not readily marketable is not disproportionate to its
net worth and its investment in the Units will not cause its
overall commitment to become excessive. The Investor has adequate
means of providing for its current needs and possible
contingencies and has no need for liquidity in its investment
decisions of this type, or it is relying on the advice of someone
(other than the General Partner or its affiliates) appropriately
qualified In making this type of investment. The Investor's
marginal federal income tax bracket, after taking into account
Tax Credits and losses, if any, likely to be generated as a
resuit of its investment in Units, is not less than 35% and it
expects to remain in that bracket or higher, for several years.
The Investor (together with any related corporation with which it
files a consolidated tax return) does not, after taking into
account the Tax Credits expected to be available from its
investment in the Units, utilize tax credits from all sources to
offset more than 75% of its taxable income.
(j) The Investor is making its investment for its own
account and not for the account of others and has no present
intention of reselling any Units acquired by it. The Investor
agrees not to sell, hypothecate or otherwise dispose of all or
any part of its Units unless they have been registered under the
Act and applicable state securities laws or, in the opinion of
counsel for the Partnership, an exemption from the registration
requirements of the Act and such state laws is available.
(k) During the course of the offering of the Units of the
Partnership, the Investor and its advisors have had the
opportunity to ask questions of and receive answers from
representatives of the Partnership or Persons acting on its
behalf concerning the terms and conditions of a proposed
investment in the Partnership and the Investor and its advisors
have also had the opportunity to obtain additional information
necessary to verify the accuracv of information previously
furnished about the Partnership.
(l) The Investor is not subscribing for Units as a result of
or subsequent to any advertisement, article, notice or other
communication published in any newspaper, magazine, or similar
media or broadcast over television or radio, any seminar or
meeting, or any Solicitation of a subscription by a peson not
previously known to the Investor in connection with investments
in securities generally.
(m) The Investor acknowledges and understands the
limitations on utilization of Tax Credits under the Internal
Revenue Code of 1986, as amended (the "Code"), including, without
limitation, that (i) if the Investor constitutes a personal
service corporation (i.e., its principal activity is the
performance of services in the field of health, law, engineering,
architecture, accounting, acturiaI science, performing arts or
consulting) under the Code, and does not have substantial amounts
of "passive" Income it may not derive the full benefits of the
Partnership's losses and tax credits: and (ii) if the investor is
a "closely-held Corporation" (i.e. 50% or more of the stock of
which is held by five or fewer individuals after application of
cerain attribution of 0wnership rules under the Code) it will be
able to utilize the Partnership's losses and tax credits, to the
extent of its adjusted basis in the Units and its amount at risk,
only to offset net active income and passive income, but not
portfolio income.
(n) The Investor represents that it is not (i) a "foreign
person" within the meaning of Section 1445 of the Code or a
person "which is not a United States Person" within the meaning
of Section 1446 of the Code; (ii) a tax-exempt entity; (iii) a
real estate investment trust sublect to taxtion under Subchapter
M of the Code; or (iv) a corporation subject to taxation under
Subchapter S of the Code.
(o) The undersigned represents that it is not relying on any
oral statements and its investment decision is based only on
written information provided by the Partnership.
(p) The value of all securities of "excluded companies"
owned by the Investor (or, if the Investor is a wholly owned
subsidiary, all "excluded companies" owned directly or indirecy
by its parent Corporation) as of the date of its investment (plus
its purchase price for the Units) does not exceed 10% of the
value of the total assets of the Investor (or, if the Investor is
a wholly-owned subsidiary, the consolidated total assets of its
parent corporation). For purposes of this Agreement, an
"excluded company" is an investment company, as that terms is
defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), which (i) is excluded from the definition of an
investment company solely because there are fewer than 100
beneficial owners of its voting securities, or (ii) would be
excluded from such definition solely because there are fewer than
100 beneficial owners of its voting securities if the attribution
of ownership rule contained in Section 3(c)(a)(A) of the 1994 Act
were not applicable.
(If an Investor is uncertain about its ability to make this
representation, it should consult with its own accountants and/or
attorneys prior to signing this Agreement.)
(q) The Investor represents and warrants to the Partnership
as follows:
(i) The Investor was not formed for the specific
purpose of investing in the Partnership.
(ii) The Investor is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated.
(iii) The Investor has the corporate power and
authority to carry on the business in which it is engaged and to
purchase Units and become a limited partner in the Partnership.
(iv) The Partnership Agreement, this Agreement, the
Investor Note(s), the Investor Security Agreement, the Investor's
obligation to make payments pursuant to the Deferred Cash Method
of investment and all other instruments evidencing or securing
the indebtedness represented thereby executed by the Investor,
have been duly authorized by all necessary corporate action, have
been duly executed and delivered by the Investor, and are the
legal, valid and binding obligations of the Investor, enforceable
in accordance with their terms.
(v) The execution and delivery by the Investor of the
Partnership Agreement, this Agreement, the Investor Note(s), the
Investor Security Agreement and all other instruments evidencing
or securing the indebtedness presented thereby, do not, and the
performance thereof will not, contravene any provision of
existing law or regulations, or of the charter or by-laws of the
Investor, conflict with or result in any breach of the terms,
conditions or provisions of, or constitute a default under, or
result in or permit the creation or imposition of any lien,
charge or encumbrance upon any of the properties of the Investor
pursuant to, any indenture, mortgage, or other agreement or
instrument or any judgment, decree, order or decision to which
the Investor is a party or by which it is bound.
(vi) Under existing law, no approval, authorization,
license, permit or other action by or filing with, any federal,
state municipal or other governmental commission, board or agency
is required in connection with the execution and delivery by the
Investor of the Partnership Agreement, this Agreement, the
Investor Note(s), the Investor Security Agreement and all other
instruments evidencing or securing the indebtedness represented
thereby executed by the Investor, or the consummation of the
transactions contemplated thereby.
(r) The Investor agrees that it will furnish to the
Partnership and any Institutional lender that provides financing
to the Partnership or the General Partner such further
information or documents as either of them shall require,
including without limitation, periodic financial information of
the same type it provides to its other lenders and a legal
opinion from counsel acceptable to the Partnership or the
institutional lender, as the case may be, to the effect of the
representations and warranties set forth in paragraph (q) hereof.
(s) Notwithstanding any of the foregoing representations,.
if the undersigned purchases its Units in a transaction subject
to the laws of the following states, it hereby represents with
respect to such state as follows:
(i) Florida. The Investor is aware of the right of
withdrawal 517.061(11)(a)(5) of the Florida Securities Act
described in the cover pages of the Memorandum.
(ii) New York. The Investor hereby represents that it
is an institutional investor or a corporation with assets valued
at a minimum of $5,000,000.
(iii) Pennsylvania. The Investor hereby acknowledges
that the Part is relying upon the exemption from registration of
securities set forth in Section 203(d) of the Pennsylvania
Securities Act of 1972, as amended (the "Pennsylvania Act"), in
connection with the sale of the Unit: to the Investor. In
accordance with the requirements of Section 203(d) of the
Pennsylvania Act, the Investor hereby agrees not to sell its
Units within twelve (12) months form the date of purchase.
Additionally, the Investor is aware of the right of withdrawal
under Section 207(m) of the Pennsylvania Act described in the
cover pages of the Memorandum.
3. Indemnification. The Investor acknowledges that it
understands the meaning and legal consequences of the
representations and warranties contained in this Subscription
Agreement and hereby agrees to indemnify and hold harmless the
Partnership and each Partner thereof (General and Limited) from
and against any and all loss, damage or liability due to or
arising out of (a) a breach of or any inaccuracy in the
declarations, representations, and covenants hereinabove set
forth; (b) the disposition of the Units contrary to the foregoing
declarations, representations, and covenants; or any action, suit
or proceeding based upon (i) the claim that said declarations,
representations, or covenants were inaccurate or misleading or
otherwise cause for obtaining damages or redress from the
Partnership under the Act, or (ii) the disposition of the Units
or any part thereof.
IN WITNESS WHEREOF, the undersigned has subscribed and sworn
to this Subscription Agreement under seal and accepts, adopts and
agrees to be bound by all of the terms of this Subscription
Agreement and the Partnership Agreement on this 15th, day of July
1996.
Syncor Management Corporation
_____________________________
Legal Name of Corporation
By: /s/ Michael E. Mikity
___________________________
Signature of Authorized Officer
Senior Vice President and Treasurer
___________________________________
Name and Title of Authorized Officer
(Corporate Seal)
STATE OF California )
) ss:
COUNTY OF Los Angeles )
On the 15th of July, 1996, before me, a Notary Public in
and for the jurisdiction set forth above, personally appeared
Michael E. Mikity, Sr. Vice President & Treasurer (title) of
Syncor Management Corporation (name of entity), who, being duly
sworn,did depose and say and acknowledge to me that he or she did
execute the foregoing Subscription Agreement and who, being duly
sworn, did acknowledge that he or she knows the seal of said
Corporation; that the seal affixed to said instrument is said
corporate seal; that said corporate seal was so affixed by the
order of the Board of Directors of said corporation; that he or
she signed his or her name thereto; and that the same is the duly
authorized free act and deed of said entity; and swore thereto.
/s/ Paulette Wolfe
____________________
Notary Public
<PAGE>
PROMISSORY NOTE
_______________
$2,637,833.00 Date: July 15, 1996
_____________
FOR VALUE RECEIVED, the Maker ("the Maker") hereby
unconditionally promises to pay to the order of Corporate Credit,
Inc., (together with its successors and assigns, the "Payee"),
the amount of Two Million Six Hundred Thirty-Seven Thousand Eight
Hundred Thirty-Three and 00/100 Dollars ($2,637,833.00) at its
offices at 345 Park Avenue, 23rd Floor, New York, New York 10152,
or at such other place as the Payee may designate in writing to
the Maker.
This amount shall be payable in installments as follows:
(l) $468,321.00 shall be due and payable on January 15, 1997;
(2) $433,115.00 shall be due and payable on January 15, 1998;
(3) $421,842.00 shall be due and payable on January 15, 1999;
(4) $410,096.00 shall be due and payable on January 17, 2000;
(5) $397,349.00 shall be due and payable on January 15, 2001;
(6) $382,689.00 shall be due and payable on January 15, 2002;
(7) $124,421.00 shall be due and payable on January 15, 2003.
This Note is secured by the Collateral described in that
certain Security Agreement, dated the date hereof, given by the
Maker to the Payee. It may be negotiated, endorsed, assigned,
transferred, pledged, or hypothecated by the Payee and shall
constitute a negotiable instrument. In the event that this Note
is negotiated, endorsed, assigned, transferred, hypothecated
and/or pledged, all references to the Payee shall apply to the
holder, pledgee or transferee as if named as original Payee under
this Note.
The Maker hereby waives presentment, demand for payment,
notice of dishonor, notice of protest, and protest, and all other
notices or demands in connection with the delivery, acceptance,
performance, default, endorsement or guaranty of this instrument.
The obligation to make payments to the Payee hereunder is
absolute and unconditional and the rights of said Payee shall not
be subject to any defense, set-off, counterclaim or recoupment
which the Maker may have against any person or entity, including
the Payee. If this Note is held by a bank, insurance company or
a lending or financing institution, such holder, its successors,
assigns and endorsees, shall in all respects be deemed a holder
in due course, and the Maker expressly waives any rights it may
have to assert that such holder or subsequent holder is not a
holder in due course.
Any of the following shall constitute an Event of Default
hereunder ("Event of Default"):
a. The Maker shall fail to make any payment due hereunder
on the due date; or
b. The Maker shall become insolvent or makes an assignment
for the benefit of creditors or any petition is filed or case
commenced by or against the Maker under any provision of any law
or statute alleging that the Maker is insolvent or unable to pay
debts as they mature and in the case of any such petition filed
against the Maker 60 days shall have passed without such petition
having been stayed or dismissed; or
c. A custodian, receiver, trustee, conservator, liquidator
or similar official shall be appointed for the Maker or any
substantial part of its property; or
d. The issuing of any order or judgment of attachment or
garnishment against any property of the Maker, enforcement of
which shall not have been stayed pending appeal within 60 days
from entry of such judgment or order, or such judgment or order
shall not have been discharged by payment, vacated or reversed
within 60 days from entry thereof; or
e. The dissolution or other winding up of the Maker or the
merger or consolidation of the Maker with or into any other
entity, except where the Maker is the surviving corporation or
the surviving corporation shall have assumed the Maker's
obligations hereunder and the Payee shall have consented to such
merger or assumption in its sole and absolute discretion; or
f. The occurrence of any Event of Default under the
Security Agreement given by the Maker to the Payee.
Upon the occurrence of any such Event of Default, the Payee
shall have the option to declare the entire outstanding principal
balance on this Note immediately due and payable without
presentment or protest or notice or demand, all of which are
expressly waived by the Maker. If an Event of Default shall
occur and be continuing, the Maker shall be obligated to pay
interest on the entire amount in default from the date of default
at an annual rate equal to the lesser of 13% per annum or the
highest amount permitted by applicable law. Notwithstanding the
foregoing, nothing herein is intended to result in interest being
charged which would exceed the maximum rate permitted by law.
Should this Note, or any part of the indebtedness evidenced
hereby, be collected by law or through an attorney-at-law, the
Payee shall be entitled to collect all costs of collection,
including, but not limited to, reasonable attorney's fees.
The Note shall be construed and enforced in accordance with
the laws of the State of California, without giving effect to the
principles thereof relating to the conflict of laws. For any
dispute arising under or relating to this Note, the Maker hereby
irrevocably submits to the jurisdiction of the Courts, Federal or
State, at the discretion of the Payee of either the State of New
York or the Courts of any jurisdiction in which the Payee
maintains its principal place of business and Maker waives any
objection to either such forum as the Payee may select.
WITNESS the execution hereof under seal this 15th day of July,
1996.
Syncor Management Corporation
___________________________________
Legal Name of Corporation
(Please print)
By: /s/ Michael E. Mikity
_______________________________
Signature of Authorized Officer
Senior Vice President and Treasurer
____________________________________
Name and Title of Authorized Officer
<PAGE>
GUARANTEE OF PARENT CORPORATION
________________________________
For valuable consideration, receipt of which is hereby
acknowledged, the undersigned (the "Guarantor") hereby
unconditionally guarantees to Corporate Credit, Inc., a New York
Corporation (together with its successors and assigns, the
"Lender"), the payment and performance of all the obligations of
Syncor Management Corporation (name of subsidiary corporation)
(the "Borrower") under the Promissory Note in the amount of
$2,637,833.00, dated July 1996, executed by the Borrower and
payable to the Lender (the "Note").
This is an absolute, unconditional, present and continuing
guarantee of payment and not of collection, and the Guarantor
hereby waives acceptance of this guarantee and, to the extent
permissible under applicable law, all notices which may be
required to be given to the Guarantor and all defenses which may
be available to the Guarantor under the Note or hereunder, as
guarantor or surety as the case may be, wider any statute or rule
of law. The obligation of the Guarantor hereunder is the
liability of a surety and is in no way conditioned or contingent
upon any attempt to collect from Borrower hereunder, or upon any
other condition or contingency and shall arise immediately upon
nonpayment of the Note without taking any prior action or
proceeding of any kind to enforce any such Note or for the
liquidation or foreclosure of any security given for such Note.
This Guarantee shall continue in full force and effect until
all obligations due under the Note and hereunder shall have been
paid in full. It shall be enforceable despite (i) any discharge
of the Borrower in bankruptcy, or (ii) any adjustment of the
debts, liabilities or obligations of the Borrower in insolvency
proceedings or pursuant to some other compromise with creditors.
If any payment made by the Borrower to the Lender is avoided or
reduced on account of any law relating to the insolvency,
liquidation or reorganization of debtors, or for any other
reason, the Lender or any successor or assignee thereof shall be
entitled to recover in full from the Guarantor the amount of any
such repayment so avoided or reduced.
This Guarantee contains our sole and entire understanding
and agreement with respect to its entire subject matter, and all
prior negotiations, discussions, commitments, representations,
agreements and understandings heretofore are merged herein. This
Guarantee cannot be changed or terminated orally.
The obligations of the Guarantor hereunder shall not be
affected, impaired, released or lessened by any defense, set-off
or counterclairn which Borrower or Guarantor may have against
Lender or any other entity, or by the invalidity, irregularity or
unenforceability of all or any part of the Borrower Obligations
or of any of the documents executed by the Borrower or the
Guarantor, or by the delay or failure of the Lender to exercise
any of its rights and remedies against the Borrower or against
any collateral or security for the Borrower Obligations. No
amendment or modification of this Guarantee shall be effective
unless the same shall be in writing, duly signed on behalf of the
entity against whom such waiver, modification or amendment is
asserted.
No amendment of the Promissory Note permitted by the terms
thereof or any renewal, extension or modification thereof shall
affect, impair or release this Guarantee. This Guarantee shall
be freely assignable by the Lender and shall bind the Guarantor
and the personal representatives and successors of the Guarantor
and shall inure to the benefit of the Lender and its successors
and assigns and to the benefit of each beneficiary of this
Agreement and the heirs, personal representatives, successors and
assigns of each beneficiary. If the Guarantor consists of more
than one party, the obligations of such parties hereunder shall
be joint and several.
This Guaranty shall be governed and construed in accordance
with the laws of California without giving effect to any
conflicts of laws principles or cases.
WITNESS the execution of this Guarantee as a sealed instrument.
Date: July 15, 1996
Syncor International Corporation /s/ Edwin Burgos
________________________________ ___________________
Name of Parent Corporation Witness
(Print)
By: /s/ Michael E. Mikity
____________________________
Signature of Authorized
Officer of Parent Corporation
Michael Mikity, Vice President and Chief Financial Officer
___________________________________
Name and Title (Print)
<PAGE>
Exhibit 10.18
1997 MANAGEMENT INCENTIVE PLAN
SUMMARY PLAN DESCRIPTION
Revised 2/97
<PAGE>
1997 MANAGEMENT INCENTIVE PLAN
PURPOSE
The 1997 Management Incentive Plan is designed to support
the achievement of the Company's profit objectives by
incentivizing managers, directors and above who have direct
influence in accomplishing Syncor's business objectives for 1997.
Direct influence is defined as budgetary responsibility, major
program responsibility and sales responsibility.
OVERVIEW
The objectives of the 1997 Management Incentive Plan are as
follows:
To be profit driven
To be based on shared and/or common goals
To be aligned with the achievement of the Company's overall
business objectives
To be clearly communicated to all participants
To have measurable criteria
To support team concepts and philosophies
In addition, the 1997 Plan was developed to ensure:
consistency with overall Company performance (Earnings Per Share
- - - EPS); the providing of equity in total incentive opportunity;
and affordability. The 1997 Management Incentive Plan consists
of three incentive components; based on your position, you may be
eligible for one or more of the following components of the
Management Incentive Plan:
1) Local Achievement Incentive
2) Earnings Per Share (EPS) Incentive*
EPS Level 1
EPS Level 2
3) Long-Term Incentive*
*The EPS Incentive and Long-Term Incentive are subject to
Individual Performance achievement. Please refer to the
Individual Performance section on pages 6 through 8 for more
details.
The following two pages summarize how payment under each of
the Incentive Plan components (1 and 2) is determined and what
positions are eligible to participate in these component(s).
<PAGE>
<TABLE>
<CAPTION>
_________________________________________________________________
Local
Achievement Payment Earnings Per Share Payment
Position Incentive Based On (EPS) Incentive* Based On
_________________________________________________________________
<S> <C> <C> <C> <C>
Pharmacy Paid at 100% Local Paid at achievement Syncor's
Manager targeted Pharmacy of: Combined
profit or Team EPS Level 1=$.60/share CY97
contribution CY97 EPS Level 2=$.70/share Annual
achievement Annual Results
Results
Senior Paid at 100% Local Paid at achievement Syncor's
Pharmacy targeted Pharmacies of: Combined
Manager profit or Team EPS Level 1=$.60/share CY97
contribution CY97 EPS Level 2=$.70/share Annual
achievement Annual Results
Results
Sales N/A N/A Paid at achievement Syncor's
Manager of: Combined
EPS Level 1=$.60/share CY97
EPS Level 2=$.70/share Annual
Results
General N/A N/A Paid at achievement Syncor's
Manager of: Combined
EPS Level 1=$.60/share CY97
EPS Level 2=$.70/share Annual
Results
National N/A N/A Paid at achievement Syncor's
Account of: Combined
Manager EPS Level 1=$.60/share CY97
EPS Level 2=$.70/share Annual
Results
Corporate N/A N/A Paid at achievement Syncor's
Manager of: Combined
(Grade EPS Level 1=$.60/share CY97
314+) EPS Level 2=$.70/share Annual
Results
Program N/A N/A Paid at achievement Syncor's
Director of: Combined
EPS Level 1=$.60/share CY97
EPS Level 2=$.70/share Annual
Results
</TABLE>
[FN]
*Payment of Incentive is subject to Consolidated EPS target and
Individual Performance achievement. Please refer to the
following applicable sections for more details.<PAGE>
<TABLE>
<CAPTION>
_________________________________________________________________
Local
Achievement Payment Earnings Per Share Payment
Position Incentive Based On (EPS) Incentive* Based On
_________________________________________________________________
<S> <C> <C> <C> <C>
Director N/A N/A Paid at achievement Syncor's
of: Combined
EPS Level 1=$.60/share CY97
EPS Level 2=$.70/share Annual
Results
Executive N/A N/A Paid at achievement Syncor's
Director of: Combined
EPS Level 1=$.60/share CY97
EPS Level 2=$.70/share Annual
Results
VP, Sales N/A N/A Paid at achievement Syncor's
and of: Combined
Operations EPS Level 1=$.60/share CY97
EPS Level 2=$.70/share Annual
Results
VP, N/A N/A Paid at achievement Syncor's
Department of: Combined
Function EPS Level 1=$.60/share CY97
EPS Level 2=$.70/share Annual
Results
Officer N/A N/A Paid at achievement Syncor's
of: Combined
EPS Level 1=$.60/share CY97
EPS Level 2=$.70/share Annual
Results
_________________________________________________________________
</TABLE>
[FN]
*Payment of Incentive is subject to Consolidated EPS target and
Individual Performance achievement. Please refer to the following
applicable sections for more details.<PAGE>
PAY COMPONENTS
______________
I. LOCAL ACHIEVEMENT INCENTIVE
___________________________
A Local Achievement Incentive is assigned for each Pharmacy
Manager and Senior Pharmacy Manager. An Incentive is earned when
targeted profit contribution for the pharmacy(ies), metro area or
Business Unit (as applicable) is attained. (Note: No incentive
will be paid out for achievement below 100% of targeted profit
contribution).
Team Incentive:
______________
Pharmacy Managers and Senior Pharmacy Managers may have the
opportunity to participate in the Local Achievement Incentive
based on team performance. The team can either be a metro area
or the entire Business Unit. All Pharmacy Managers, Senior
Pharmacy Managers and General Managers will be provided with
information so an informed decision can be made to either
participate on an individual basis or as part of a team. Teams
must submit a petition explaining what the benefits and obstacles
are of participating as a team and how it will benefit the
Company in order to participate as a team. The decision to
submit the petition must be made by a majority vote of all
Pharmacy Managers and Senior Pharmacy Managers within a metro
area or Business Unit. If it is selected to submit a petition to
participate as a team by majority vote within a metro area or
Business Unit, then the petition should be written by members of
the team. Once all team members have reviewed the petition, they
must vote by a super majority vote to submit the petition. One
the petition has been accepted and approved, all affected
managers will be required to sign a document indicating their
agreement to participate in the Local Achievement Incentive as a
team. If team participation is elected, the Local Achievement
Incentive will be calculated as stated above, using combined
profit contribution results for the participating pharmacies.
(The applicable General Manager's budget will be included in the
calculation.) The decision to participate as a team is binding
for the entire 1997 Plan Year.
The Local Achievement Incentive is paid out on an annual basis.
Note: Days Sales Outstanding (DSO) will impact the profit
contribution achievement. Cost of money remains as a line item
above the gross profit line on the P&L.
II. EPS INCENTIVE
_____________
Company Performance
Overall Company performance must be achieved prior to payment of
EPS Incentives. Company performance consists of two requirements:
<TABLE>
<CAPTION>
_________________________________________________________________
Requirement Earnings per Share (EPS) Target
_________________________________________________________________
<S> <C> <C>
I Consolidated $.68/share
II CORE - Level 1 $.60/share
CORE - Level 2 $.70/share
_________________________________________________________________
</TABLE>
Requirement I - Consolidated EPS must be achieved first. The
Consolidated EPS target is a combination of the following:
CORE $.60/share
PET ($.10/share)
Other Earnings $.18/share
______________ __________
Consolidated $.68/share
Requirement II - CORE EPS Level 1 must be achieved for the EPS
Level 1 payment to occur and EPS Level 2 must be achieved for the
EPS Level 2 payment to occur. Further explanation is provided
below:
The EPS Incentive includes two possible incentive payments:
Level 1) If the Company meets its targeted EPS of $.60/share,
and
Level 2) If the Company exceeds its targeted EPS and attains
$.70/share.
A percent of salary is designated for each eligible employee for
both levels of EPS achievement: $.60/share and $.70/share. To
calculate the EPS Incentive at $.60/share, the designated
percentage is multiplied by the eligible employee's salary. To
calculate the EPS Incentive at $.70/share, the designated
percentage is multiplied by the eligible employee's salary; add
the result to the incentive calculated at $.60/share to calculate
the total EPS Incentive. The salary used to determine the
incentive payment will be the salary in effect at 01/01/97.
However, if an employee receives a salary change during 1997, the
payment will be determined based on an average salary for 1997.
(Please refer to the Eligibility Chart on page 10 for your Local
Achievement Incentive, if applicable, and percentage of salary
payable for EPS achievement.)
III. LONG-TERM INCENTIVE
___________________
A Long-Term Incentive has been designed to reward long-term
results. Program Directors, Directors, General Mangers,
Executive Directors, Vice Presidents and Officers will have an
additional percentage of salary designated for each EPS
achievement level (i.e., $.60/share and $.70/share) set aside in
a long-term plan. This Long Term Incentive is deferred for three
years. Please refer to pages 12-15 for more details if you are
eligible for this incentive.
INDIVIDUAL PERFORMANCE
______________________
There are two eligibility components used to determine Individual
performance results achieved for payment of the EPS Incentive and
the Long-Term Incentive: 1) Financial Objectives and 2)
Management by Objectives (MBO's). Your individual performance on
these two components will be used to derive an Individual
Performance achievement factor which will be multiplied by your
EPS Incentive amount (and Long-Term Incentive amount for eligible
positions) to determine your final pay-out. As you can see
below, financial objectives that are not met at 100% are severely
discounted for the pay-out level. The weighting of each of the
components of the Individual Performance achievement factor are
as follows:
Field Managers:
______________
1) Financial Objectives (70% weighting) - Field managers'
financial objectives are measured by attainment of targeted
profit contribution for core business only (bulk not included).
The Financial Objective (70% weighting) will be based on combined
profit contribution results for the participating pharmacies for
all Pharmacy Managers and Senior Pharmacy Managers participating
in the plan as part of a team. For managers not participating as
a team, individual pharmacy profit contribution results will be
used.
<TABLE>
<CAPTION>
Profit Contribution (PC)
_____________________________________
PC Achievement* Payout Level
______________ ____________
<S> <C>
90% - 94.9% 1/3
95% - 99.9% 2/3
100% or greater 3/3
_____________________________________
</TABLE>
[FN]
*Less than 90% will result in no credit for the Financial
objective.
2) MBO's (30% weighting) - Field managers determine these
objectives in conjunction with their direct supervisor based on
their local market/location needs, threats, opportunities, etc.
After the end of the Plan Year, the supervisor will assess each
manager's performance on established MBO's. (Refer to the
Guidelines for Developing MBO's and the MBO Worksheet for
additional information.)
Corporate Managers (Cost Center Responsibility Only):
____________________________________________________
1) Financial Objectives (40%) - Corporate managers' financial
objectives are measured by budget attainment.
Budget Attainment
<TABLE>
<CAPTION>
_____________________________________
Budget Attainment Payout Level
_________________ ____________
<S> <C>
105% - 110% 1/3
100.1 - 104.9% 2/3
100% or less 3/3
_____________________________________
</TABLE>
[FN]
*Greater than 110% will result in no credit for the Financial
objective.
2) MBO's (60%) - Corporate managers determine these objectives in
conjunction with their direct supervisor based on their
department needs, threats, opportunities, etc. After the end of
the Plan Year, the supervisor will assess each manager's
performance on established MBO's. (Refer to the Guidelines for
Developing MBO's and the MBO Worksheet for additional
information.)
Corporate Managers (Cost Center with Field Responsibility):
__________________________________________________________
1) Financial Objectives (70%) - Corporate managers' (with field
responsibility) financial objectives are measured by budget
attainment for core business only (bulk not included).
Budget Attainment
<TABLE>
<CAPTION>
_____________________________________
Budget Attainment Payout Level
_________________ ____________
<S> <C>
90% - 94.9% 1/3
95% - 99.9% 2/3
100% or greater 3/3
_____________________________________
</TABLE>
[FN]
*Less than 90% will result in no credit for the Financial
objective.
For all General Managers, the Financial Objective (70%) will be
calculated as follows:
1/2 (35%) - based on overall budget attainment results
for the General Manager's Business Unit (all applicable pharmacy
cost centers plus General Manager's individual cost center).
1/2 (35%) - based on overall budget attainment results
for the General Manager's Area (all applicable pharmacy cost
centers plus all applicable General Managers' cost centers plus
the applicable Area's cost center).
2) MBO's (30%) - Corporate managers determine these objectives in
conjunction with their direct supervisor based on their unit/area
needs, threats, opportunities, etc. After the end of the Plan
Year, the supervisor will assess each manager's performance on
established MBO's. (Refer to the Guidelines for Developing MBO's
and the MBO Worksheet for additional information.)
It is the responsibility of the manager and his/her
supervisor to track the performance of the manager throughout the
year. In order to simplify the tracking process, an MBO
Worksheet has been provided (see page 11). Required signatures
are the manager and immediate supervisor. Completed MBO
Worksheets must be turned in to Human Resources no later than
April 30, 1997. After the end of the Plan Year, MBO's will be
evaluated by each manager's immediate supervisor; evaluated MBO
Worksheets must be turned in to Human Resources no later than
January 31, 1998.
ELIGIBILITY AND OTHER RULES GOVERNING THE INCENTIVE PLAN
________________________________________________________
1. Eligible employees must be actively employed at Syncor on
the last day of the year to receive an annual payout.
2. Eligible employees must have a current performance appraisal
rating of Low Successful or above and not be in the progressive
discipline process at time of payout. If an employee has a
current performance rating of less than Low Successful or is in
the progressive discipline process, he/she must develop a
performance improvement plan agreed upon with employee's
supervisor. When improvement plans have been carried out (no
later than 60 days after the original incentive payment date),
the employee's supervisor must reevaluate the employee's
performance. If the employee is rated Low Successful or above at
that time, he/she is eligible to participate in the Incentive
Plan. An incentive payment may or may not be prorated for the
year, based on performance issues, at the discretion of the
supervisor with approval by Human Resources.
3. Eligible part-time employees will be paid a partial amount,
based on the total number of hours worked during 1997. If the
employee works at least 500 hours during the year, but less than
an average of 35 hours a week, the employee will receive
two-thirds payment, subject to the rules of the Plan. Employees
who work on a casual basis, that is, less than 500 hours per
year, are not eligible.
4. Employees must begin employment with Syncor International
Corporation before October 1, 1997, to participate in this
Incentive Plan. Eligible employees whose first date of
employment falls between January 1, 1997, and October 1, 1997,
will participate on a prorated basis. If an employee's hire date
occurs by the 15th of the month, the month will be credited for
proration. If the employee's hire date occurs after the 15th of
the month, the month will not be credited for proration and
proration will start with the month following the employee's hire
date.
5. Eligible employees who change positions or locations during
the year will participate in the Incentive Plan prorated to the
positions or locations held. An employee may only be
incentivized for one position at a time. In the event that an
employee assumes a new position and for a time fulfills the
duties of the previous position until it is filled, the incentive
payment will be calculated based on the new position. (In the
event the new position is not incentivized, the incentive will be
calculated based on the previous position according to the rules
of the plan. At no time will anyone be eligible to participate
in the Management Incentive Plan based on more than one job
classification at a time.) The prorating rule as described above
in number four (4) will apply, depending on the change in status
date.
6. Payment of an incentive to eligible employees who take a
leave of absence for any reason during the year will be
considered on a case by case basis, which may or may not result
in payment of an incentive.
7. In the circumstances of a windfall (e.g. a sales result that
was realized outside the normal influencing role of the sales
representative), management has the right to exclude the windfall
from the normal incentive calculation.
8. Payment of an incentive will occur within two months after
audited Calendar Year 1997 operating results are announced. It
is expected that incentive payments will be distributed during
March of 1998.
THE INCENTIVE PLAN, AS DESCRIBED, SHALL BE THE MECHANISM AND THE
WAY TO IMPLEMENT THE INTENTION OF MANAGEMENT. THIS INCENTIVE
PLAN SHALL NOT OBLIGATE THE COMPANY OR MANAGEMENT TO GRANT THE
BENEFITS CONTEMPLATED HEREUNDER. CURRENTLY, IT IS MANAGEMENT'S
INTENTION AND BETS JUDGMENT THAT THE PLAN SHOULD BE CARRIED OUT
AS DESCRIBED. HOWEVER, UPON HAPPENING OF UNFORESEEN
CIRCUMSTANCES, MANAGEMENT RESERVES THE RIGHT TO CHANGE THE PLAN
AT ANY TIME, RETROACTIVE TO THE BEGINNING OF 1997. NO BENEFITS
ARE VESTED OR COUPLED WITH INTEREST BEFORE PAYMENT IS COMMENCED.
ELIGIBILITY CHART
As outlined on page 4, payment of a Local Achievement Incentive
is based on 100% achievement of targeted profit contribution.
Payment of an EPS Incentive is based on the Company meeting the
Consolidated EPS target of $.68/share and the CORE EPS Level 1 =
$.60/share or EPS Level 2 = $.70/share. (The EPS Incentive is
also dependent upon Individual Performance Achievement of
financial objectives and MBO's). The Local Achievement Incentive
and percentages of salary for EPS achievement are shown below for
the listed eligible position:
<TABLE>
<CAPTION>
________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ __________________________________
<S> <C>
Pharmacy Manager* 1. Local Achievement Incentive
Incentive = $8,125
2. EPS Incentive
Level 1 - Percent of Salary = 7%
Level 2 - Percent of Salary=1.5%
_________________________________________________________________
</TABLE>
[FN]
*Note: This position may also participate in the 1997 Sales
Incentive Plan - YTD Territory Incentive Target - if a sales
territory is assigned.
ELIGIBILITY CHART
As outlined on page 4, payment of a Local Achievement Incentive
is based on 100% achievement of targeted profit contribution.
Payment of an EPS Incentive is based on the Company meeting the
Consolidated EPS target of $.68/share and the CORE EPS Level 1 =
$.60/share or EPS Level 2 = $.70/share. (The EPS Incentive is
also dependent upon Individual Performance Achievement of
financial objectives and MBO's). The Local Achievement Incentive
and percentages of salary for EPS achievement are shown below for
the listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
Senior Pharmacy Manager* 1. Local Achievement Incentive
Incentive = $10,000
2. EPS Incentive
Level 1 - Percent of Salary = 8%
Level 2 - Percent of Salary = 2%
_________________________________________________________________
</TABLE>
[FN]
*Note: This position may also participate in the 1997 Sales
Incentive Plan - YTD Territory Incentive Target - if a sales
territory is assigned.
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. (The EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
Sales Manager* EPS Incentive
Level 1 - Percent of Salary =25%
Level 2 - Percent of Salary = 5%
_________________________________________________________________
</TABLE>
[FN]
*Note: This position also participates in the 1997 Sales
Incentive Plan - YTD Unit Territory Incentive Target and for
Sales Managers with a territory, YTD Territory Incentive Target.
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. (The EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
National Account Manager* EPS Incentive
Level 1 - Percent of Salary =18%
Level 2 - Percent of Salary = 4%
_________________________________________________________________
</TABLE>
[FN]
*Note: This position also participates in the 1997 Sales
Incentive Plan.
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. (The EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
Corporate Manager- EPS Incentive
Grade 314 Level 1 - Percent of Salary = 6%
Level 2 - Percent of Salary = 2%
_________________________________________________________________
</TABLE>
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. (The EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
Corporate Manager EPS Incentive
Grade 315 Level 1 - Percent of Salary = 7%
Level 2 - Percent of Salary=2.5%
_________________________________________________________________
</TABLE>
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. (The EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
Corporate Manager - 1. EPS Incentive
Grade 316 Level 1 - Percent of Salary = 8%
Level 2 - Percent of Salary=2.5%
_________________________________________________________________
</TABLE>
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. (The EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
<S> <C>
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
Corporate Manager - EPS Incentive
Grade 317 Level 1 - Percent of Salary= 10%
Level 2 - Percent of Salary = 3%
_________________________________________________________________
</TABLE>
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. (The EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
Corporate Manager - EPS Incentive
Grade 318 Level 1 - Percent of Salary =11%
Level 2 - Percent of Salary = 3%
_________________________________________________________________
</TABLE>
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. he EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
Corporate Manager - EPS Incentive
Grade 319 Level 1 - Percent of Salary =13%
Level 2 - Percent of Salary=3.5%
_________________________________________________________________
</TABLE>
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. (The EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
Corporate Manager - EPS Incentive
Grade 320 Level 1 - Percent of Salary =14%
Level 2 - Percent of Salary=3.5%
_________________________________________________________________
</TABLE>
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. (The EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
Corporate Manager - EPS Incentive
Grade 321 Level 1 - Percent of Salary =15%
Level 2 - Percent of Salary = 4%
_________________________________________________________________
</TABLE>
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. (The EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
Program Director* EPS Incentive
Level 1 - Percent of Salary =17%
Level 2 - Percent of Salary = 4%
_________________________________________________________________
</TABLE>
[FN]
*Note: This position also participates in the 1997 Long-Term
Incentive Plan
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. (The EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
Director* EPS Incentive
Level 1 - Percent of Salary =27%
Level 2 - Percent of Salary = 7%
_________________________________________________________________
</TABLE>
[FN]
*Note: This position also participates in the 1997 Long-Term
Incentive Plan
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. (The EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
General Manager* EPS Incentive
Level 1 - Percent of Salary =34%
Level 2 - Percent of Salary = 9%
_________________________________________________________________
</TABLE>
[FN]
*Note: This position also participates in the 1997 Long-Term
Incentive Plan
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. (The EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
Executive Director - EPS Incentive
Corporate* Level 1 - Percent of Salary =29%
Level 2 - Percent of Salary = 7%
_________________________________________________________________
</TABLE>
[FN]
*Note: This position also participates in the 1997 Long-Term
Incentive Plan
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. (The EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
Executive Director - EPS Incentive
Field* Level 1 - Percent of Salary =32%
Level 2 - Percent of Salary = 8%
_________________________________________________________________
</TABLE>
[FN]
*Note: This position also participates in the 1997 Long-Term
Incentive Plan
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. (The EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
VP, Sales and Operations* EPS Incentive
Level 1 - Percent of Salary =40%
Level 2 - Percent of Salary =12%
_________________________________________________________________
</TABLE>
[FN]
*Note: This position also participates in the 1997 Long-Term
Incentive Plan
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. (The EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
VP, Department Function EPS Incentive
Level 1 - Percent of Salary =36%
Level 2 - Percent of Salary =10%
_________________________________________________________________
</TABLE>
[FN]
*Note: This position also participates in the 1997 Long-Term
Incentive Plan
ELIGIBILITY CHART
As outlined on pages 4 - 5, payment of an EPS Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and the CORE EPS Level 1 = $.60/share or EPS Level 2 =
$.70/share. (The EPS Incentive is also dependent upon Individual
Performance Achievement of financial objectives and MBO's). The
percentages of salary for EPS achievement are shown below for the
listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Incentive Plan(s) Eligible For
_________________ ___________________________________
<S> <C>
Officer* EPS Incentive
Level 1 - Percent of Salary =45%
Level 2 - Percent of Salary =16%
_________________________________________________________________
</TABLE>
[FN]
*Note: This position also participates in the 1997 Long-Term
Incentive Plan
1997 MANAGEMENT INCENTIVE PLAN
______________________________
MANAGEMENT BY OBJECTIVES (MBO) WORKSHEET
CORP. MANAGERS, PROGRAM DIRECTORS, DIRECTORS, EXEC DIRECTORS
(CORP)
Instructions: Complete this form to document your 2 to 5
agreed-upon MBO's. This data will be used to determine your
individual performance achievement percentage for calculating
pay-outs on the EPS Incentive. As a reminder, MBO's are weighted
as 60% of your individual performance achievement total;
achievement of financial objectives is weighted at 40%. Please
return this completed form will all approval signatures to the
Compensation/Human Resources Department by April 30, 1997.
Employee Name:__________________________ Department: ____________
Assigned Achievement
1997 MBO's Weight(1) Level(2)
1. __________________________________ ____________ __________
__________________________________
__________________________________
__________________________________
2. __________________________________ ____________ __________
__________________________________
__________________________________
__________________________________
3. __________________________________ ____________ ___________
__________________________________
__________________________________
__________________________________
4. __________________________________ ____________ ___________
__________________________________
__________________________________
__________________________________
5. __________________________________ ____________ ___________
__________________________________
__________________________________
__________________________________
TOTAL: 100%
____________
(1) Assign a Weight for each MBO (Must total 100%)
(2) At the conclusion of the Plan year, determine the Achievement
Level for each MBO; total possible for all objectives is 100%.
APPROVAL SIGNATURES:
_________________________ ____________
Employee Date
_________________________ ____________
Supervisor Date<PAGE>
1997 MANAGEMENT INCENTIVE PLAN
______________________________
MANAGEMENT BY OBJECTIVES (MBO) WORKSHEET
FIELD MANAGEMENT & CORP. MANAGERS W/FIELD RESPONSIBILITY
Instructions: Complete this form to document your 2 to 5
agreed-upon MBO's. This data will be used to determine your
individual performance achievement percentage for calculating
pay-outs on the EPS Incentive. As a reminder, MBO's are weighted
as 30% of your individual performance achievement total;
achievement of financial objectives is weighted at 70%. Please
return this completed form will all approval signatures to the
Compensation/Human Resources Department by April 30, 1997.
Employee Name:_______________________ Location/Unit:_____________
Assigned Achievement
1997 MBO's Weight(1) Level(2)
1. __________________________________ ____________ ___________
__________________________________
__________________________________
__________________________________
2. __________________________________ ____________ ___________
__________________________________
__________________________________
__________________________________
3. __________________________________ ____________ ___________
__________________________________
__________________________________
__________________________________
4. __________________________________ ____________ ___________
__________________________________
__________________________________
__________________________________
5. __________________________________ ____________ ___________
__________________________________
__________________________________
__________________________________
TOTAL: 100%
____________
(1) Assign a Weight for each MBO (Must total 100%)
(2) At the conclusion of the Plan year, determine the Achievement
Level for each MBO; total possible for all objectives is 100%.
<PAGE>
LONG TERM INCENTIVE PLAN
________________________
Eligibility - The following employees are eligible to participate
in the Long-Term Incentive Plan:
$ Program Director
$ Director
$ General Manager
$ Executive Director
$ Vice President
$ Officer
Overview - The Long-Term Incentive Plan is subject to the same
overall Company performance as the Short-Term Incentive Plan.
<TABLE>
<CAPTION>
_________________________________________________________________
Requirement Earnings per Share (EPS) Target
___________ ________________________ ______
<S> <C> <C>
I Consolidated $.68/share
II CORE - Level 1 $.60/share
CORE - Level 2 $.70/share
_________________________________________________________________
</TABLE>
Long-Term Calculation Part I:
Once the Consolidated EPS goal is reached, a designated percent
of salary is awarded for CORE - Level 1 and CORE - Level 2
performance as follows:
CORE Level 1 - $.60/share: A percentage of salary is
designated based on your eligible position when the CORE achieves
$.60/share. To determine your Long-Term Incentive amount at
$.60/share, your designated percentage of salary is multiplied by
your salary as of January 1, 1997, (or, if applicable, an average
salary for 1997).
CORE Level 2 - $.70/share: A percentage of salary is
designated based on your eligible position when the CORE achieves
$.70/share. To determine your Long-Term Incentive amount at
$.70/share, your designated percentage of salary is multiplied by
your salary as of January 1, 1997, (or, if applicable, an average
salary for 1997).
The sum of the results of CORE Level 1 and CORE Level 2 are added
together and multiplied by your Individual Performance
achievement factor to determine your total base Long-Term
Incentive amount. This portion of the Long-Term Incentive is
considered earned but deferred for payment until after December
31, 1999, unless you terminate employment prior to 12/31/99.
Long-Term Calculation Part II:
Long-Term Over-achievement Company Match
________________________________________
An Over-achievement Company match component is also included in
the Long-Term Incentive Plan. For each CORE EPS Level achieved,
a company match is assigned.
STEP 1:
CORE EPS Level 1 - Upon achievement of this level a total of 1
times the base long-term incentive amount is designated.
CORE EPS Level 2 - Upon achievement of this level a total of 2
times the base long-term incentive amount is designated.
STEP 2:
The total over-achievement company match dollars designated are
multiplied by 1/3. This amount is then attributed to the current
year's performance and deferred for payment until the three (3)
year plan is completed.
STEP 3:
At the end of the three year plan period, the base long-term
amount is added to the over-achievement company match for each of
the three years for the final long-term incentive payment amount.
<TABLE>
<CAPTION>
_________________________________________________________________
Base Long-Term
Incentive Amount Part I = $X,XXX
________________ _____________________________________________
<S> <C>
Over-achievement (1 or 2 times Base Long-Term Amount x 1/3)
Company Match
Year 1 Part II (Year 1) - $X,XXX
Over-Achievement (1 or 2 times Base Long-Term Amount x 1/3)
Company Match
Year 2 Part II (Year 2) = $X,XXX
Over-Achievement (1 or 2 times Base Long-Term Amount x 1/3)
Company Match
Year 3 Part II (Year 3) = $X,XXX
Total Long-Term
Incentive Amount
paid after three Part I + Part II (Years 1, 2, & 3) = $XX,XXX
years:
_________________________________________________________________
</TABLE>
An eligible employee must be continuously employed with Syncor
through December 31, 1999, to be eligible to receive the
Over-achievement Company match. If an employee leaves Syncor
before December 31, 1999, the over-achievement company match is
forfeited and will not be paid. However, if an employee leaves
Syncor after December 31, 1997, but before December 31, 1999,
he/she is eligible to receive an early pay-out consisting of the
base long-term incentive amount(s). The amount of early pay-out
is determined as follows:
<TABLE>
<CAPTION>
_________________________________________________________________
Termination Date Early Pay-out Amount
________________ ____________________
<S> <C>
> 12/31/97 < 12/31/98 100% of base Long-Term Incentive,
Less 100% over-achievement
Company match
> 12/31/98 < 12/31/99 100% of base Long-Term Incentive,
Less 100% over-achievement
Company match
_________________________________________________________________
</TABLE>
Please refer to page 15 for your designated percentage of salary
payable for EPS achievement under the Long-Term Incentive Plan.
Refer to Appendix II for a Long-Term Incentive and
Over-achievement Company match sample calculation.
Note: The Long-Term Incentive Plan begins again each year that
it is in place. There may be more than one Long-Term, three-year
plan in place at a time with different pay-out time frames. (i.e.,
1995 Plan extends through 1997; 1996 Plan extends through 1998;
1997 Plan extends through 1999, etc.)
LONG-TERM INCENTIVE PLAN
ELIGIBILITY CHART
As outlined on page 12, payment of a Long-Term Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and includes an initial calculation based on CORE EPS Level 1 =
$.60/share or CORE EPS Level 2 = $.70/share. (The Long-Term
Incentive is also dependent upon Individual Performance
Achievement of financial objectives and MBO's). The percentages
of salary for each level of EPS performance are shown below for
the listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Long Term Incentive Plan - % of Salary
_________________ ________________________________________
<S> <C>
Program Director Level 1 - Percent of Salary = 2%
Level 2 - Percent of Salary = 2%
_________________________________________________________________
</TABLE>
LONG-TERM INCENTIVE PLAN
ELIGIBILITY CHART
As outlined on page 12, payment of a Long-Term Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and includes an initial calculation based on CORE EPS Level 1 =
$.60/share or CORE EPS Level 2 = $.70/share. (The Long-Term
Incentive is also dependent upon Individual Performance
Achievement of financial objectives and MBO's). The percentages
of salary for each level of EPS performance are shown below for
the listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Long Term Incentive Plan - % of Salary
_________________ ________________________________________
<S> <C>
Director Level 1 - Percent of Salary = 3%
Level 2 - Percent of Salary = 3%
_________________________________________________________________
</TABLE>
LONG-TERM INCENTIVE PLAN
ELIGIBILITY CHART
As outlined on page 12, payment of a Long-Term Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and includes an initial calculation based on CORE EPS Level 1 =
$.60/share or CORE EPS Level 2 = $.70/share. (The Long-Term
Incentive is also dependent upon Individual Performance
Achievement of financial objectives and MBO's). The percentages
of salary for each level of EPS performance are shown below for
the listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Long Term Incentive Plan - % of Salary
_________________ ________________________________________
<S> <C>
General Manager Level 1 - Percent of Salary = 3.5%
Level 2 - Percent of Salary = 3.5%
_________________________________________________________________
</TABLE>
LONG-TERM INCENTIVE PLAN
ELIGIBILITY CHART
As outlined on page 12, payment of a Long-Term Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and includes an initial calculation based on CORE EPS Level 1 =
$.60/share or CORE EPS Level 2 = $.70/share. (The Long-Term
Incentive is also dependent upon Individual Performance
Achievement of financial objectives and MBO's). The percentages
of salary for each level of EPS performance are shown below for
the listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Long Term Incentive Plan - % of Salary
_________________ ________________________________________
<S> <C>
Executive Director - Level 1 - Percent of Salary = 4.5%
Corporate Level 2 - Percent of Salary = 4.5%
_________________________________________________________________
</TABLE>
LONG-TERM INCENTIVE PLAN
ELIGIBILITY CHART
As outlined on page 12, payment of a Long-Term Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and includes an initial calculation based on CORE EPS Level 1 =
$.60/share or CORE EPS Level 2 = $.70/share. (The Long-Term
Incentive is also dependent upon Individual Performance
Achievement of financial objectives and MBO's). The percentages
of salary for each level of EPS performance are shown below for
the listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Long Term Incentive Plan - % of Salary
_________________ ________________________________________
<S> <C>
Executive Director - Level 1 - Percent of Salary = 5%
Field Level 2 - Percent of Salary = 5%
_________________________________________________________________
</TABLE>
LONG-TERM INCENTIVE PLAN
ELIGIBILITY CHART
As outlined on page 12, payment of a Long-Term Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and includes an initial calculation based on CORE EPS Level 1 =
$.60/share or CORE EPS Level 2 = $.70/share. (The Long-Term
Incentive is also dependent upon Individual Performance
Achievement of financial objectives and MBO's). The percentages
of salary for each level of EPS performance are shown below for
the listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Long Term Incentive Plan - % of Salary
_________________ ________________________________________
<S> <C>
VP, Sales and Level 1 - Percent of Salary = 9%
Operations Level 2 - Percent of Salary = 9%
_________________________________________________________________
</TABLE>
LONG-TERM INCENTIVE PLAN
ELIGIBILITY CHART
As outlined on page 12, payment of a Long-Term Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and includes an initial calculation based on CORE EPS Level 1 =
$.60/share or CORE EPS Level 2 = $.70/share. (The Long-Term
Incentive is also dependent upon Individual Performance
Achievement of financial objectives and MBO's). The percentages
of salary for each level of EPS performance are shown below for
the listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Long Term Incentive Plan - % of Salary
_________________ ________________________________________
<S> <C>
VP, Department Function Level 1 - Percent of Salary = 7%
Level 2 - Percent of Salary = 7%
_________________________________________________________________
</TABLE>
LONG-TERM INCENTIVE PLAN
ELIGIBILITY CHART
As outlined on page 12, payment of a Long-Term Incentive is based
on the Company meeting the Consolidated EPS target of $.68/share
and includes an initial calculation based on CORE EPS Level 1 =
$.60/share or CORE EPS Level 2 = $.70/share. (The Long-Term
Incentive is also dependent upon Individual Performance
Achievement of financial objectives and MBO's). The percentages
of salary for each level of EPS performance are shown below for
the listed eligible position:
<TABLE>
<CAPTION>
_________________________________________________________________
Eligible Position Long Term Incentive Plan - % of Salary
_________________ ________________________________________
<S> <C>
Officer Level 1 - Percent of Salary = 12%
Level 2 - Percent of Salary = 12%
_________________________________________________________________
</TABLE>
<PAGE>
APPENDIX I
DEFINITIONS
___________
Budget Attainment:
Corporate Managers - Cost Center Responsibility Only: A
budget has been established for each Cost Center for CY97.
Budget attainment makes up 40% of a manager's Individual
Performance achievement percentage. Budget attainment assesses
how well an employee manages his/her expenses and measures actual
results verses budget. At the end of CY97, if results equal
budget, budget attainment = 100%. If results exceed budget,
managers will receive partial credit for up to 110% of budget.
Corporate Managers - Cost Center with Field Responsibility:
A budget has been established for each Cost Center for CY97.
Budget attainment makes up 70% of a manger's Individual
Performance achievement percentage. Budget attainment determines
whether or not a manager's individual budget is met and budgeted
profit contribution levels for the assigned unit or area are met
and measures actual results versus budget. At the end of CY97,
if results equal budget, budget attainment = 100%. If results
fall short of budget, managers will receive partial credit for
meeting 90% to 99.9% of budget.
Deferred: Applies to the Long-Term Incentive Plan and indicates
that payment is delayed until a specified later date.
Earnings Per Share (EPS): The net income of the Company divided
by the number of shares of common stock outstanding as shown on
the Company's Annual Report to shareholders. Syncor's
Consolidated targeted EPS for 1997 is $.68/share. Syncor's Core
targeted EPS for 1997 is $.60/share
Individual Performance Achievement: A factor based on budget
achievement and MBO results that is multiplied by the EPS
Incentive and Long-Term Incentive.
Majority Vote: More than 50% of the team members vote yes.
Management by Objectives: Also referred to as MBO's, it is a
goal-oriented method used to evaluate the performance of managers
against established objectives. MBO's include three steps: 1)
establishing goals; 2) setting performance standards for each
goal; and 3) comparing actual goal attainment against the
established goals.
<PAGE>
Profit Contribution: Gross profit minus operating expenses, both
controllable and non-controllable. An example of a controllable
operating expense is indirect labor. An example of a
non-controllable operating expense is depreciation.
Super Majority Vote: More than 80% of the team members vote yes.
<PAGE>
APPENDIX II
SAMPLE INCENTIVE CALCULATIONS
<PAGE>
Exhibit 10.19
OFFICE LEASE
TABLE OF CONTENTS
_________________
Page
ARTICLE 1 BASIC PROVISIONS . . . . . . . . . . . . . . . 1
ARTICLE 2 PREMISES, TERM AND COMMENCEMENT DATE . . . . . 3
ARTICLE 3 RENT . . . . . . . . . . . . . . . . . . . . . 4
3.1 Monthly Rent . . . . . . . . . . . . . . . . . 4
3.2 Additional Rent. . . . . . . . . . . . . . . . 4
3.3 Rent . . . . . . . . . . . . . . . . . . . . . 4
3.4 Place of Payment, Late Charge, Default Interest 4
ARTICLE 4 TAXES AND OPERATING EXPENSES . . . . . . . . . 4
4.1 Payment of Taxes and Operating Expenses . . . 4
4.2 Property Management. . . . . . . . . . . . . . 7
ARTICLE 5 LANDLORD'S WORK, TENANT'S WORK, ALTERATIONS AND
ADDITIONS . . . . . . . . . . . . . . . . . . 8
5.1 Landlord's Work . . . . . . . . . . . . . . . 8
5.2 Tenant's Work . . . . . . . . . . . . . . . . 8
5.3 Alterations . . . . . . . . . . . . . . . . . 9
5.4 Liens . . . . . . . . . . . . . . . . . . . . 10
5.5 Compliance with ADA . . . . . . . . . . . . . 10
ARTICLE 6 USE . . . . . . . . . . . . . . . . . . . . . 11
6.1 Use . . . . . . . . . . . . . . . . . . . . . 11
6.2 Restrictions. . . . . . . . . . . . . . . . . 11
6.3 Compliance with Laws. . . . . . . . . . . . . 11
ARTICLE 7 SERVICES. . . . . . . . . . . . . . . . . . . 12
7.1 Climate Control . . . . . . . . . . . . . . . 12
7.2 Elevator Service. . . . . . . . . . . . . . . 12
7.3 Janitorial Services . . . . . . . . . . . . . 12
7.4 Water and Electricity . . . . . . . . . . . . 13
7.5 Separate Meters . . . . . . . . . . . . . . . 13
7.6 Interruptions . . . . . . . . . . . . . . . . 14
7.7 Utilities Provided by Tenant. . . . . . . . . 14
ARTICLE 8 INSURANCE . . . . . . . . . . . . . . . . . . 15
8.1 Required Insurance. . . . . . . . . . . . . . 15
8.2 Waiver of Subrogation . . . . . . . . . . . . 16
8.3 Waiver of Claims. . . . . . . . . . . . . . . 16
ARTICLE 9 INDEMNIFICATION . . . . . . . . . . . . . . . 16
9.1 Tenant Indemnity of Landlord. . . . . . . . . 16
9.2 Landlord Indemnity of Tenant. . . . . . . . . 17
9.3 Indemnity Limitations . . . . . . . . . . . . 17
9.4 Indemnitees; Acceptable Attorneys . . . . . . 17
9.5 Limitation on Liability . . . . . . . . . . . 17
ARTICLE 10 CASUALTY DAMAGE . . . . . . . . . . . . . . . 18
ARTICLE 11 CONDEMNATION. . . . . . . . . . . . . . . . . 19
ARTICLE 12 REPAIR AND MAINTENANCE. . . . . . . . . . . . 20
12.1 Tenant's Obligations. . . . . . . . . . . . . 20
12.2 Landlord's Obligations. . . . . . . . . . . . 20
12.3 Signs and Obstructions. . . . . . . . . . . . 21
12.4 Outside Services. . . . . . . . . . . . . . . 21
ARTICLE 13 INSPECTION OF PREMISES. . . . . . . . . . . . 22
ARTICLE 14 SURRENDER OF PREMISES . . . . . . . . . . . . 22
ARTICLE 15 HOLDING OVER. . . . . . . . . . . . . . . . . 22
ARTICLE 16 SUBLETTING AND ASSIGNMENT . . . . . . . . . . 23
16.1 Landlord's Consent. . . . . . . . . . . . . . 23
16.2 Transfers Not Requiring Consent . . . . . . . 24
16.3 First Offer to Landlord . . . . . . . . . . . 24
16.5 Continuing Liability; Voidable Transfers. . . 26
16.6 Other Provisions Applicable to Transfers. . . 26
16.7 Assignment of Sublease Revenues . . . . . . . 27
16.8 Transfers By Subtenants . . . . . . . . . . . 27
16.9 Assignment of Options . . . . . . . . . . . . 27
16.10 Encumbrance . . . . . . . . . . . . . . . . . 28
ARTICLE 17 SUBORDINATION, ATTORNMENT AND MORTGAGEE
PROTECTION. . . . . . . . . . . . . . . . . . 28
ARTICLE 18 ESTOPPEL CERTIFICATE. . . . . . . . . . . . . 29
ARTICLE 19 DEFAULTS. . . . . . . . . . . . . . . . . . . 29
ARTICLE 20 REMEDIES. . . . . . . . . . . . . . . . . . . 30
ARTICLE 21 QUIET ENJOYMENT . . . . . . . . . . . . . . . 32
ARTICLE 22 ACCORD AND SATISFACTION . . . . . . . . . . . 32
ARTICLE 23 SECURITY DEPOSIT. . . . . . . . . . . . . . . 33
ARTICLE 24 BROKERAGE COMMISSION. . . . . . . . . . . . . 34
ARTICLE 25 FORCE MAJEURE . . . . . . . . . . . . . . . . 34
ARTICLE 26 PARKING . . . . . . . . . . . . . . . . . . . 35
ARTICLE 27 HAZARDOUS MATERIALS . . . . . . . . . . . . . 36
27.1 Compliance with Hazardous Materials Laws. . . 36
27.2 Tenant's Use of Hazardous Materials . . . . . 36
27.3 Notices To Landlord . . . . . . . . . . . . . 37
27.4 Indemnifications. . . . . . . . . . . . . . . 38
ARTICLE 28 ADDITIONAL RIGHTS RESERVED BY LANDLORD. . . . 39
ARTICLE 29 DEFINED TERMS . . . . . . . . . . . . . . . . 40
ARTICLE 30 MISCELLANEOUS PROVISIONS. . . . . . . . . . . 45
30.1 Rules and Regulations . . . . . . . . . . . . 45
30.2 Execution of Lease. . . . . . . . . . . . . . 45
30.3 Notices . . . . . . . . . . . . . . . . . . . 45
30.4 Transfers . . . . . . . . . . . . . . . . . . 45
30.5 Relocation. . . . . . . . . . . . . . . . . . 46
30.6 Tenant Financial Statements . . . . . . . . . 46
30.7 Relationship of the Parties . . . . . . . . . 46
30.8 Entire Agreement: Merger. . . . . . . . . . . 46
30.9 No Representation by Landlord . . . . . . . . 46
30.10 Limitation of Liability . . . . . . . . . . . 46
30.11 Memorandum of Lease . . . . . . . . . . . . . 47
30.12 No Waivers: Amendments. . . . . . . . . . . . 47
30.13 Successors and Assigns. . . . . . . . . . . . 47
30.14 Waiver of Jury Trial, Governing Law . . . . . 47
30.15 Exhibits. . . . . . . . . . . . . . . . . . . 47
30.16 Captions. . . . . . . . . . . . . . . . . . . 47
30.17 Counterparts. . . . . . . . . . . . . . . . . 48
EXHIBITS
Exhibit A Plan Showing Property and Premises
Exhibit B Landlord's Work Letter
Exhibit C Tenant's Work
Exhibit D Building's Rules and Regulations; Janitorial
Specifications
Exhibit E Commencement Date Confirmation
Exhibit F Right of First Opportunity to Purchase
Exhibit G Renewal Option<PAGE>
MM Equity
No.9501
OFFICE LEASE
THIS LEASE is made as of September 30, 1996, by and
between MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, a
Massachusetts corporation ("Landlord") through its agent
CORNERSTONE REAL ESTATE ADVISERS, INC., having an address at 1901
Avenue of the Stars, Suite 555, Los Angeles, CA 90067, and SYNCOR
INTERNATIONAL CORPORATION, a Delaware corporation ("Tenant")
having its principal office at 20001 Prairie Street, Chatsworth,
CA 91311.
ARTICLE 1
BASIC PROVISIONS
________________
A. Tenant's Tradename: Syncor International Corporation
B. Tenant's Address: prior to Commencement Date:
20001 Prairie Street
Chatsworth, CA 91311
attention: General Counsel/legal dept.
after Commencement Date:
6464 Canoga Boulevard
Woodland Hills, CA 91367
attention: General Counsel/legal dept.
C. Office Building Name: Warner Business Center
Address: 6464 Canoga Boulevard
Woodland Hills, CA 91367
D. Premises: The entire property described in Article 1,
Paragraph C, including all improvements and all of the 106
parking spaces thereon and the non-exclusive right to use up to
88 unreserved parking spaces in the parking garage located at
21300 Victory Boulevard, Woodland Hills, California (the
"Off-Site Parking Garage").
Square Feet (Rentable): 60,967
Square Feet (Usable): 55,243
Landlord and Tenant acknowledge and agree that the foregoing
measurements shall be deemed to be conclusive and neither party
shall be entitled to an adjustment of any of the terms of this
Lease (including, without limitation, the amount of the Monthly
Rent) in the event such measurements prove to be inaccurate.
E. Landlord: Massachusetts Mutual Life Insurance Company
F. Landlord's Address: c/o Cornerstone Real Estate Advisers,
Inc.
1901 Avenue of the Stars
Suite 555
Los Angeles, CA 90067
Attn: Asset Manager
G. Building Manager/Address: PM Realty Group
444 South Flower Street
Suite 1700
Los Angeles, CA 90071
H. Commencement Date: March 1, 1997; provided, however, that
Landlord shall permit Tenant to take possession of and commence
the operation of its business in the Premises prior to the
Commencement Date without the payment of Monthly Rent for the
period prior to the Commencement Date, so long as during such
period prior to the Commencement Date (i) Tenant shall be
obligated to perform and comply with all other terms, covenants,
conditions and obligations of Tenant hereunder (including,
without limitation, the maintenance of all insurance policies),
and (ii) Tenant shall pay all Operating Expenses associated with
its occupancy of the Premises for the period up to the
Commencement Date.
I. Expiration Date: 120 months after the Commencement Date,
provided, however, that if Landlord receives a notice (a
"Termination Notice") on or before the date which is 51 months
following the Commencement Date, and such notice is accompanied
by a payment equal to one-half of the total amount paid by
Landlord for the Landlord's Work and one-half of the amount paid
by Landlord to Broker in connection with this Lease, then the
Expiration Date shall be 60 months after the Commencement Date.
J. Security Deposit: $85,000.00
K. Monthly Rent:
Period Monthly Amount
______ ______________
Commencement Date through month 60 $ 85,353.80
Month 61 through month 120 $ 97,547.20
L. Operating Expenses Base: The period of time commencing on
the Commencement Date and ending on the first anniversary date
thereof.
M. Tax Base: The period of time commencing on the Commencement
Date and ending on the first anniversary date thereof.
N. Tenant's Pro Rata Share: 100%
O. Normal Business Hours of Building:
Monday through Friday: 8:00 a.m. to 6:00 p.m.
Saturday: 8:00 a.m. to 1:00 p.m.
P. Brokers: Cushman & Wakefield
Q. Parking Fee: None for up to 194 parking spaces during the
initial Lease Term, and prevailing market rates for any parking
spaces in excess of 194. Parking spaces shall be made available
to Tenant during the Renewal Term at then prevailing market
rates. Tenant shall have the exclusive right to use all 106
parking spaces located on the Property and a non-exclusive right
to use up to 88 additional parking spaces (the "Off-Site Parking
Spaces") located in the Off-Site Parking Garage. Off-Site
Parking Spaces in excess of 88 may be made available by Landlord
(to the extent such additional spaces are within Landlord's
control) to Tenant at prevailing market rates.
The foregoing provisions shall be interpreted and applied in
accordance with the other provisions of this Lease set forth
below. The capitalized terms, and the terms defined in Article
29, hall have the meanings set forth herein or therein (unless
otherwise modified in the Lease) when used as capitalized terms
in other provisions of the Lease.
ARTICLE 2
PREMISES, TERM AND COMMENCEMENT DATE
____________________________________
Landlord hereby leases and demises to the Tenant and
Tenant hereby takes and leases from Landlord that certain space
identified in Article 1 and shown on a plan attached hereto as
Exhibit A ("Premises") for a term ("Term") commencing on the
Commencement Date and ending on the Expiration Date set forth in
Article 1, unless sooner terminated as provided herein, subject
to the provisions herein contained. Such date shall be confirmed
by execution of the Commencement Date Confirmation in the form as
set forth in Exhibit E. If Landlord delays delivering possession
of the Premises or substantial completion of any Landlord's Work
under Exhibit B, this Lease shall not be void or voidable, except
as provided in Article 5, and Landlord shall have no liability
for loss or damage resulting therefrom.
ARTICLE 3
RENT
____
3.1 Monthly Rent. Tenant shall pay Monthly Rent in
advance on or before the first day of each month of the Term. If
the Term shall commence and end on a day other than the first day
of a month, the Monthly Rent for the first and last partial month
shall be prorated on a per diem basis. Upon the execution of this
Lease, Tenant shall pay one installment of Monthly Rent for the
first full month of the Term and a prorated Monthly Rent for any
partial month which may precede it.
3.2 Additional Rent. All costs and expenses which
Tenant assumes or agrees to pay and any other sum payable by
Tenant pursuant to this Lease, including, without limitation, its
share of Taxes and Operating Expenses, shall be deemed Additional
Rent.
3.3 Rent. Monthly Rent, Additional Rent, Taxes and
Operating Expenses and any other amounts which Tenant is or
becomes obligated to pay Landlord under this Lease are herein
referred to collectively as "Rent", and all remedies applicable
to the nonpayment of Rent shall be applicable thereto. Landlord
may apply payments received from Tenant to any obligations of
Tenant then accrued, without regard to such obligations as may be
designated by Tenant.
3.4 Place of Payment, Late Charge, Default Interest.
Rent and other charges required to be paid under this Lease, no
matter how described, shall be paid by Tenant to Landlord at the
Building Manager's address listed in Article 1, or to such other
person and/or address as Landlord may designate in writing,
without any prior notice or demand therefor and without deduction
or set-off or counterclaim and without relief from any valuation
or appraisement laws. In the event Tenant fails to pay Rent due
under this Lease, Landlord shall notify Tenant in writing of such
nonpayment and if Tenant does not pay said Rent within five (5)
days after receipt of written notice of such nonpayment, Tenant
shall pay to Landlord a late charge of five percent (5%) on the
amount overdue.
ARTICLE 4
TAXES AND OPERATING EXPENSES
_____________________________
4.1 Payment of Taxes and Operating Expenses. It is
agreed that during each Lease Year beginning with the first
anniversary of the Commencement Date and each month thereafter
during the original Lease Term, or any extension thereof, Tenant
shall pay to Landlord as Additional Rent, at the same time as the
Monthly Rent is paid, an amount equal to one-twelfth (1/12) of
Landlord's estimate (as determined by Landlord in its reasonable
discretion) of Tenant's Pro Rata Share of any projected increase
in the Taxes or Operating Expenses for the particular Lease Year
in excess of the Tax Base or Operating Expenses Base, as the case
may be (the "Estimated Escalation Increase"). A final adjustment
(the "Escalation Reconciliation") to be made between the parties
as soon as practicable following the end of each Lease Year, but
in no event later than ninety (90) days after the end of each
Lease Year. In computing the Estimated Escalation Increase for
any particular Lease Year, Landlord shall take into account any
prior increases in Tenant's Pro Rata Share of Taxes and Operating
Expenses. If during any Lease Year the Estimated Escalation
Increase is less than the Estimated Escalation Increase for the
previous Lease Year on which Tenant's share of Taxes and
Operating Expenses were based for said year, such Additional Rent
payments, attributable to the Estimated Escalation Increase, to
be paid by Tenant for the new Lease Year shall be decreased
accordingly; provided, however, in no event will the Rent paid by
Tenant hereunder ever be less than the Monthly Rent plus all
other amounts of Additional Rent.
As soon as practicable following the end of each Lease
Year, Landlord shall submit to Tenant a statement setting forth
the Estimated Escalation Increase, if any. Beginning with said
statement for the second Lease Year, it shall also set forth the
Escalation Reconciliation for the Lease Year just completed. To
the extent that the Operating Expense Escalation is different
from the Estimated Escalation Increase upon which Tenant paid
Rent during the Lease Year just completed, Tenant shall pay
Landlord the difference in cash within thirty (30) days following
receipt by Tenant of such statement from Landlord, or receive a
credit on future Rent owing hereunder (or cash, if there is no
future Rent owing hereunder, within thirty (30) days following
receipt by Tenant of such statement) as the case may be. Until
Tenant receives such statement, Tenant's Rent for the new Lease
Year shall continue to be paid at the rate being paid for the
particular Lease Year just completed, but Tenant shall commence
payment to Landlord of the monthly installment of Additional Rent
on the basis of said statement beginning on the first day of the
month following the month in which Tenant receives such
statement. In addition to the above, if, during any particular
Lease Year, there is a material change in the information on
which Landlord based the estimate upon which Tenant is then
making its estimated payment of Taxes and Operating Expenses so
that such Estimated Escalation Increase furnished to Tenant is no
longer accurate, Landlord shall revise such Estimated Escalation
Increase by notifying Tenant, and there shall be such adjustments
made in the Additional Rent on the first day of the month
following the serving of such statement on Tenant as shall be
necessary by either increasing or decreasing, as the case may be,
the amount of Additional Rent then being paid by Tenant for the
balance of the Lease Year (but in no event shall any such
decrease result in a reduction of the rent below the Monthly Rent
plus all other amounts of Additional Rent). Landlord's and
Tenant's responsibilities with respect to the Tax and Operating
Expense adjustments described herein shall survive the expiration
or early termination of this Lease.
Notwithstanding the foregoing:
A. Tenant shall not be obligated to pay increases in
any individual components of Operating Expenses to the extent (i)
that such components are controllable by the Landlord (excluding,
e.g., utilities, insurance, compliance with governmental
regulations, etc.) and (ii) the increase exceeds 6% per annum on
a cumulative basis; and
B. In the event that the Property is sold or
Landlord's ownership interest in the Property is in any way
transferred, Tenant shall only be obligated to pay, during the
remainder of the initial Lease Term, a percentage of the increase
in Taxes (if any) resulting from such sale or transfer, which
percentage shall be determined based upon the Lease Year in which
the sale or transfer occurs, as follows:
Time of Sale or Transfer Tenant Responsible to Pay
________________________ _________________________
First Lease Year 0%
Second Lease Year 20% of increase
Third Lease Year 40% of increase
Fourth Lease Year 60% of increase
Fifth Lease Year 80% of increase
Thereafter 100% of increase
C. Disputes Over Taxes or Operating Expenses. If
Tenant disputes the amount of an adjustment or the proposed
estimated increase or decrease in Taxes or Operating Expenses,
Tenant shall give Landlord written notice of such dispute within
thirty (30) days after Landlord advises Tenant of such adjustment
or proposed increase or decrease. Tenant's failure to give such
notice shall waive its right to dispute the amounts so
determined. If Tenant timely objects, Tenant shall have the
right to engage its own (internal or external) accountants
("Tenant's Accountants") for the purpose of verifying the
accuracy of the statement in dispute, or the reasonableness of
the adjustment or estimated increase or decrease. If Tenant's
Accountants determine that an error has been made, Landlord and
Tenant's Accountants shall endeavor to agree upon the matter,
failing which Landlord and Tenant's Accountants shall jointly
select an independent certified public accounting firm (the
"Independent Accountant") which firm shall conclusively determine
whether the adjustment or estimated increase or decrease is
reasonable, and if not, what amount is reasonable. Both parties
shall be bound by such determination. If Tenant's Accountants do
not participate in choosing the Independent Accountant within 20
days notice by Landlord, then Landlord's determination of the
adjustment or estimated increase or decrease shall be
conclusively determined to be reasonable and Tenant shall be
bound thereby. All costs incurred by Tenant in obtaining
Tenant's Accountants and the cost of the Independent Accountant
shall be paid by Tenant unless Tenant's Accountants disclose an
error, acknowledged by Landlord (or found to have conclusively
occurred by the Independent Accountant), of more than ten percent
(10%) in the computation of the total amount of Taxes or
Operating Expenses as set forth in the statement submitted by
Landlord with respect to the matter in dispute; in which event
Landlord shall pay the reasonable costs incurred by Tenant in
obtaining such audits. Tenant shall continue to timely pay
Landlord the amount of the prior year's adjustment and adjusted
Additional Rent determined to be incorrect as aforesaid until the
parties have concurred as to the appropriate adjustment or have
deemed to be bound by the determination of the Independent
Accountant in accordance with the preceding terms. Landlord's
delay in submitting any statement contemplated herein for any
Lease Year shall not affect the provisions of this Paragraph, nor
constitute a waiver of Landlord's rights as set forth herein for
said Lease Year or any subsequent Lease Years during the Lease
Term or any extensions thereof.
4.2 Property Management. At all times during the
Lease Term, Landlord shall cause the Building to be managed and
operated by a professional property manager in a manner
consistent with that of other comparable first class office
buildings in the immediate vicinity of the Building. In the
event that the property manager fails at any time to manage or
operate the Building in such a manner, Tenant may require, in
Tenant's reasonable discretion, that Landlord terminate the
respective management agreement and replace the then current
property manager with another professional property manager of
Landlord's choice, within sixty (60) days after Landlord's
receipt of written notice from Tenant. The foregoing right may
not be exercised by Tenant (i) at any time during the Base Year,
(ii) more frequently than once per Lease Year, (iii) more than
three (3) times during the initial Lease Term, and (iv) more than
twice during the Renewal Term (as defined in Exhibit G attached
hereto), if any.
ARTICLE 5
LANDLORD'S WORK, TENANT'S WORK,
_______________________________
ALTERATIONS AND ADDITIONS
_________________________
5.1 Landlord's Work. Landlord shall construct the
Premises in accordance with Landlord's obligations as set forth
in the work letter attached hereto as Exhibit B, and hereinafter
referred to as "Landlord's Work." Landlord will deliver the
Premises to Tenant with all of Landlord's Work completed (except
for minor and non-material punch list items which in Landlord's
reasonable judgment will not delay completion of Tenant's Work,
as defined in subparagraph B of this Article) on or before the
date specified in Exhibit B and Tenant agrees thereupon to
commence and complete Tenant's Work on or before the Commencement
Date. If Landlord is delayed in completing Landlord's Work by
strike, shortages of labor or materials, delivery delays or other
matters beyond the reasonable control of Landlord, then Landlord
shall give notice thereof to Tenant and the date on which
Landlord is to turn the Premises over to Tenant for Tenant's Work
and the Commencement Date shall be postponed for an equal number
of days as the delay as set forth in the notice. Providing,
however, if such delays exceed one hundred and twenty (120) days,
then either Landlord or Tenant upon notice to the other within
ten (10) days after said 120th day of delays, shall have the
right to terminate this Lease without liability to either party.
If the Commencement Date is postponed as aforesaid, Tenant agrees
upon request of Landlord to execute a writing confirming the
Commencement Date on such form as set forth in Exhibit E attached
hereto.
5.2 Tenant's Work. On and after the date specified in
the immediately preceding subparagraph A for delivery of the
Premises to Tenant for Tenant's Work, Tenant, at its sole cost
and expense (except for moving allowance expenses, as provided in
the work letter), shall perform and complete all other
improvements to the Premises (herein called "Tenant's Work")
including, but not limited to, all improvements, work and
requirements required of Tenant under the foregoing work letter.
Tenant shall complete all of Tenant's Work in good and
workmanlike manner, fully paid for and free from liens, in
accordance with the plans and specifications approved by Landlord
and Tenant as provided in Exhibit C, on or prior to the scheduled
Commencement Date. Tenant shall also have the right during this
period to come onto the Premises to install its fixtures and
prepare the Premises for the operation of Tenant's business.
Notwithstanding the fact that foregoing activities by Tenant will
occur prior to the scheduled Commencement Date, Tenant agrees
that all of Tenant's obligations provided for in this Lease shall
apply during such period with the exception of any obligation to
pay Rent.
5.3 Alterations. (a) Tenant may, at any time and from
time to time during the Term of this Lease, at its sole cost and
expense, make alterations, additions, installations,
substitutions, improvements and decorations (hereinafter
collectively called "Changes") in and to the Premises, excluding
structural Changes, on the following conditions, and provided
such Changes will not result in a violation of or require a
change in the Certificate of Occupancy or any laws applicable to
the Premises:
5.3.1 The outside appearance, character or use of
the Building shall not be affected, and no Changes shall weaken
or impair the structural strength or, in the opinion of Landlord,
lessen the value of the Building or create the potential for
unusual expenses to be incurred upon the removal of said Changes
and the restoration of the Premises upon the termination of this
Lease.
5.3.2 The proper functioning of any of the
mechanical, electrical, sanitary and other service systems or
installations of the Building ("Service Facilities") shall not be
adversely affected and there shall be no construction which might
unreasonably interfere with Landlord's reasonable access to the
Service Facilities or unreasonably interfere with the moving of
Landlord's equipment to or from the enclosures containing the
Service Facilities.
5.3.3 The aggregate cost of any such Changes
shall not exceed $10,000, per occurrence, and Tenant shall not
complete Changes costing in excess of $25,000 in any Lease Year.
5.3.4 All Changes and the performance thereof
shall at all times comply with all laws, rules, orders,
ordinances, directions, regulations and requirements of all
governmental authorities, agencies, offices, departments, bureaus
and boards having jurisdiction thereof, and Tenant shall cause
such Changes to be performed in compliance therewith and in a
good and first class workmanlike manner. Throughout the
performance of any Changes, Tenant, at its expense, shall carry,
or cause to be carried, workmen's compensation insurance in
statutory limits, and general liability insurance for any
occurrence in or about the Building, of which Landlord and its
managing agent shall be named as parties insured, in such limits
as Landlord may reasonably prescribe, with insurers reasonably
satisfactory to Landlord. Tenant shall furnish Landlord with
reasonably satisfactory evidence that such insurance is in effect
at or before the commencement of any Changes and, on request, at
reasonable intervals thereafter during the continuance of any
Changes.
5.3.5 All work shall be done in such manner as
Landlord from time to time may designate, and shall meet or
exceed the standards for materials and construction procedures
set forth by Landlord.
5.4.6 Tenant shall not be permitted to install
and make part of the Premises any materials, fixtures or articles
which are subject to liens, conditional sales contracts or
chattel mortgages.
5.3.7 At the date upon which the Term of this
Lease shall end, or upon the date of any earlier termination of
this Lease, Tenant shall upon written notice from Landlord
restore the Premises to their condition prior to the making of
any Changes permitted by this Paragraph, reasonable wear and tear
excepted.
Except as provided above, Tenant shall not make any
Changes to the Premises or the Building without the prior written
consent of Landlord, which consent Landlord may grant or withhold
in its reasonable discretion. Landlord's consent, if required,
shall specify whether or not Tenant shall be required to restore
the Premises to their condition prior to making the Change at the
termination of this Lease.
5.4 Liens. Tenant shall give Landlord at least ten
(10) days prior written notice (or such additional time as may be
necessary under applicable laws) of the commencement of any
Tenant's Work or Changes, to afford Landlord the opportunity of
posting and recording notices of non-responsibility. Tenant will
not cause or permit any mechanic's, materialman's or similar
liens or encumbrances to be filed or exist against the Premises
or the Building or Tenant's interest in this Lease in connection
with work done under this Article or in connection with any other
work. Tenant shall remove any such lien or encumbrance by bond or
otherwise within twenty (20) days from the date of their
existence. If Tenant fails to do so, Landlord may pay the amount
or take such other action as Landlord deems necessary to remove
any such lien or encumbrance, without being responsible to
investigate the validity thereof. The amounts so paid and costs
incurred by Landlord shall be deemed Additional Rent under this
Lease and payable in full upon demand.
5.5 Compliance with ADA. Notwithstanding anything to
the contrary contained in this Lease, Landlord and Tenant agree
that responsibility for compliance with the Americans With
Disabilities Act of 1990 (the "ADA") shall be allocated as
follows: (i) Landlord shall be responsible for compliance with
the provisions of Title III of the ADA prior to the Commencement
Date, including exterior and interior areas of the Building not
included within the Premises; (ii) Tenant shall be responsible
for compliance with the provisions of Title III of the ADA after
the Commencement Date. Notwithstanding the foregoing, to the
extent that Tenant is required to make expenditures on capital
improvements in order to comply with Title III of the ADA after
the Commencement Date, the cost of such improvements shall be
paid by Landlord and amortized on a straight line basis by
Landlord over the useful life of the capital improvement (as
reasonably determined by Landlord), bearing interest on the
unamortized balance at the rate of ten percent (10%) per annum,
and Tenant shall reimburse Landlord, as Additional Rent, payable
monthly in advance with the Monthly Rent, such amortized amount.
ARTICLE 6
USE
___
6.1 Use. Tenant shall use the Premises for general
office purposes and for the operation of a radio pharmacy lab,
and for no other purpose whatsoever, subject to and in compliance
with all other provisions of this Lease, including without
limitation the Building's Rules and Regulations attached as
Exhibit D hereto.
6.2 Restrictions. Tenant shall not at any time use or
occupy, or suffer or permit anyone to use or occupy, the Premises
or do or permit anything to be done in the Premises which: (a)
causes or is liable to cause injury to persons, to the Building
or its equipment, facilities or systems; (b) impairs or tends to
impair the character, reputation or appearance of the Building as
a first class office building; or (c) impairs or tends to impair
the proper and economic maintenance, operation and repair of the
Building or its equipment, facilities or systems.
6.3 Compliance with Laws. Tenant shall keep and
maintain the Premises, its use thereof and its business in
compliance with all governmental laws, ordinances, rules and
regulations. Tenant shall comply with all Laws relating to the
Premises and Tenant's use thereof, including without limitation
all Laws in connection with the health, safety and building
codes, and any permit or license requirements. Landlord shall be
responsible to remedy any condition which causes the Building not
to comply with any Laws as of the Commencement Date. Landlord
makes no representation that the Premises are suitable for
Tenant's purposes.
ARTICLE 7
SERVICES
________
7.1 Climate Control. Landlord shall furnish heat or
air conditioning to the Premises during Normal Business Hours of
the Building as set forth in Article 1 (and 24 hours per day with
respect to the computer room and training laboratory which form a
part of the Premises) as required in Landlord's reasonable
judgment for the comfortable use and occupation of the Premises.
If Tenant requires heat or air conditioning at any other time,
Landlord shall use reasonable efforts to furnish such service
upon reasonable notice from Tenant, and Tenant shall pay all of
Landlord's charges therefor on demand at Landlord's actual cost.
The performance by Landlord of its obligations under
this Article is subject to Tenant's compliance with the terms of
this Lease including any connected electrical load established by
Landlord. Tenant shall not use the Premises or any part thereof
in a manner exceeding the heating, ventilating or
air-conditioning ("HVAC") design conditions (including any
occupancy or connected electrical load conditions), including the
rearrangement of partitioning which may interfere with the normal
operation of the HVAC equipment, or the use of computer or data
processing machines or other machines or equipment in excess of
that normally required for a standard office use of the Premises.
If any such use requires changes in the HVAC or plumbing systems
or controls servicing the Premises or portions thereof in order
to provide comfortable occupancy, such changes may be made by
Landlord at Tenant's expense and Tenant agrees to promptly pay
any such amount to Landlord as Additional Rent.
Landlord and Tenant acknowledge and agree that a new
HVAC system will be installed in the Building as part of
Landlord's Work. The type and quality of such system was
selected based upon Tenant's estimated needs.
7.2 Elevator Service. Landlord shall furnish elevator
service to Tenant during Normal Business Hours of the Building.
At least one elevator shall remain in service twenty-four hours a
day, 365 days a year. Landlord may designate a specific elevator
for use as a service elevator.
7.3 Janitorial Services. Landlord shall provide
janitorial and cleaning services to the Premises, substantially
as described in Exhibit D attached hereto. Tenant shall pay to
Landlord on demand the reasonable costs incurred by Landlord for
(i) any cleaning of the Premises in excess of the specifications
in Exhibit D for any reason including, without limitation,
cleaning required because of (A) misuse or neglect on the part of
Tenant or Tenant's agents, contractors, invitees, employees and
customers, (B) the use of portions of the Premises for special
purposes requiring greater or more difficult cleaning work than
office areas, and (C) interior glass partitions or unusual
quantities of interior glass surfaces; and (ii) removal from the
Premises of any refuse and rubbish of Tenant in excess of that
ordinarily accumulated in general office occupancy or at times
other than Landlord's standard cleaning times.
7.4 Water and Electricity. Landlord shall make
available domestic water in reasonable quantities to the Building
(and to the Premises if so designated in Exhibit B) and cause
electric service sufficient for lighting the Premises and for the
operation of Ordinary Office Equipment. "Ordinary Office
Equipment" shall mean office equipment wired for 120 volt
electric service and rated and using less than 6 amperes or 750
watts of electric current or other office equipment approved by
Landlord in writing. Landlord shall have the exclusive right to
make any replacement of lamps, fluorescent tubes and lamp
ballasts in the Premises. Landlord may adopt a system of
relamping and ballast replacement periodically on a group basis
in accordance with good management practice. Tenant's use of
electric energy in the Premises shall not at any time exceed the
capacity of any of the risers, piping, electrical conductors and
other equipment in or serving the Premises. In order to insure
that such capacity is not exceeded and to avert any possible
adverse effect upon the Building's electric system, Tenant shall
not, without Landlord's prior written consent in each instance,
connect appliances or heavy duty equipment, other than ordinary
office equipment, to the Building's electric system or make any
alteration or addition to the Building's electric system. Should
Landlord grant its consent in writing, all additional risers,
piping and electrical conductors or other equipment therefor
shall be provided by Landlord and the cost thereof shall be paid
by Tenant within 10 days of Landlord's demand therefor. As a
condition to granting such consent, Landlord may require Tenant
to agree to an increase in Monthly Rent to offset the expected
cost to Landlord of such additional service, that is, the cost of
the additional electric energy to be made available to Tenant
based upon the estimated additional capacity of such additional
risers, piping and electrical conductors or other equipment. If
Landlord and Tenant cannot agree thereon, such cost shall be
determined by an independent electrical engineer, to be selected
by Landlord and paid equally by both parties.
7.5 Separate Meters. The portion of the Premises
designated as the computer room and training laboratory shall be
separately metered with respect to their electric utility service
(which service shall include, without limitation, the use of heat
and air conditioning). Tenant shall be responsible for the
direct payment to the utility company of all charges associated
with such separate meters.
7.6 Interruptions. Landlord does not warrant that any
of the services referred to above, or any other services which
Landlord may supply, will be free from interruption and Tenant
acknowledges that any one or more of such services may be
suspended by reason of accident, repairs, inspections,
alterations or improvements necessary to be made, or by strikes
or lockouts, or by reason of operation of law, or causes beyond
the reasonable control of Landlord. Any interruption or
discontinuance of service shall not be deemed an eviction or
disturbance of Tenant's use and possession of the Premises, or
any part thereof, nor render Landlord liable to Tenant for
damages by abatement of the Rent or otherwise, nor relieve Tenant
from performance of Tenant's obligations under this Lease.
Landlord shall however, exercise reasonable diligence to restore
any service so interrupted. Notwithstanding the foregoing, in
the event that Landlord fails to furnish any of the foregoing as
a result of Landlord's action or inaction, and as a result
thereof, Tenant's use of the Premises is impaired for (i) a
period of four (4) consecutive Business Days, or (ii) eight (8)
non-consecutive Business Days during any thirty (30) consecutive
day period, after Landlord's receipt of written notice of such
failure from Tenant, then Monthly Rent (on a per diem basis)
shall be abated on a pro rata basis (based upon a ratio equal to
the portion of the Premises actually impaired to the total
rentable square footage of the Premises) in an amount equal to
the number of days after such period until service is restored.
7.7 Utilities Provided by Tenant. Tenant shall make
application in Tenant's own name for all utilities not provided
by Landlord and shall: (i) comply with all utility company
regulations for such utilities, including requirements for the
installation of meters, and (ii) obtain such utilities directly
from, and pay for the same when due directly to, the applicable
utility company. The term "utilities" for purposes hereof shall
include but not be limited to electricity, gas, water, sewer,
steam, fire protection, telephone and other communication and
alarm services, as well as HVAC, and all taxes or other charges
thereon. Tenant shall install and connect all equipment and lines
required to supply such utilities to the extent not already
available at or serving the Premises, or at Landlord's option
shall repair, alter or replace any such existing items. Tenant
shall maintain, repair and replace all such items, operate the
same, and keep the same in good working order and condition.
Tenant shall not install any equipment or fixtures, or use the
same, so as to exceed the safe and lawful capacity of any utility
equipment or lines serving the same. The installation,
alteration, replacement or connection of any utility equipment
and lines shall be subject to the requirements for alterations of
the Premises set forth in Article 5. Tenant shall ensure that all
Tenant's HVAC equipment, is installed and operated at all times
in a manner to prevent roof leaks, damage, or noise due to
vibrations or improper installation, maintenance or operation.
ARTICLE 8
INSURANCE
_________
8.1 Required Insurance. Tenant shall maintain
insurance policies, with responsible companies licensed to do
business in the state where the Building is located and
satisfactory to Landlord, at its own cost and expense, including
(i) "all risk" property insurance which shall be primary on the
lease improvements referenced in Article 5 and Tenant's personal
property, including its goods, equipment and inventory, in an
amount adequate to cover their replacement cost, naming Landlord,
Landlord's Building Manager, Cornerstone Real Estate Advisers,
Inc., and any Mortgagee of Landlord, as their respective
interests may appear, as loss payees with respect to all proceeds
thereunder (other than those relating solely to the value of
Tenant's personal property, including its goods, equipment and
inventory); and (ii) comprehensive general liability insurance on
an occurrence basis with limits of liability in an amount not
less than $1,000,000 (One Million Dollars) combined single limit
for each occurrence, naming Landlord, Landlord's Building
Manager, Cornerstone Real Estate Advisers, Inc., Tenant and any
Mortgagee of Landlord, as their respective interests may appear,
as additional insureds. The comprehensive general liability
policy shall include contractual liability which includes the
provisions of Article 9 herein.
On or before the Commencement Date of the Lease, Tenant
shall furnish to Landlord and its Building Manager, certificates
of insurance evidencing the aforesaid insurance coverage,
including naming Landlord, Cornerstone Real Estate Advisers, Inc.
and Landlord's Building Manager as additional insureds. Renewal
certificates must be furnished to Landlord at least thirty (30)
days prior to the expiration date of such insurance policies
showing the above coverage to be in full force and effect.
All such insurance shall provide that it cannot be
canceled except upon thirty (30) days prior written notice to
Landlord. Tenant shall comply with all reasonable rules and
directives of any insurance board, company or agency determining
rates of hazard coverage for the Premises, including but not
limited to the installation of any equipment and/or the
correction of any condition within Tenant's control necessary to
prevent any increase in such rates. Notwithstanding the
foregoing, to the extent that any such required expenditures are
capital in nature, such expenditures shall be amortized on a
straight line basis by Landlord over the useful life of the
capital improvement (as reasonably determined by Landlord),
bearing interest on the unamortized balance at the rate of ten
percent (10%) per annum, and Tenant shall pay to Landlord, as
Additional Rent, payable monthly in advance with the Monthly
Rent, such amortized amount (but only to the extent of the cost
reductions and/or cost savings caused thereby).
8.2 Waiver of Subrogation. Landlord and Tenant each
agree that neither Landlord nor Tenant will have any claim
against the other for any loss, damage or injury which is covered
by insurance carried by either party and for which recovery from
such insurer is made, notwithstanding the negligence of either
party in causing the loss. This release shall be valid only if
the insurance policy in question permits waiver of subrogation or
if the insurer agrees in writing that such waiver of subrogation
will not affect coverage under said policy. Each party agrees to
use its best efforts to obtain such an agreement from its insurer
if the policy does not expressly permit a waiver of subrogation.
8.3 Waiver of Claims. Except for claims arising from
Landlord's gross negligence or willful misconduct that are not
covered by Tenant's insurance required hereunder, Tenant waives
all claims against Landlord for injury or death to persons,
damage to property or to any other interest of Tenant sustained
by Tenant or any party claiming, through Tenant resulting from:
(i) any occurrence in or upon the Premises, (ii) leaking of
roofs, bursting, stoppage or leaking of water, gas, sewer or
steam pipes or equipment, including sprinklers, (iii) wind, rain,
snow, ice, flooding, freezing, fire, explosion, earthquake,
excessive heat or cold, or other casualty, (iv) the Building,
Premises, or the operating and mechanical systems or equipment of
the Building, being defective, or failing, and (v) vandalism,
malicious mischief, theft or other acts or omissions of any other
parties including without limitation, contractors and invitees at
the Building. Tenant agrees that Tenant's property loss risks
shall be borne by its insurance, and Tenant agrees to look solely
to and seek recovery only from its insurance carriers in the
event of such losses. For purposes hereof, any deductible amount
shall be treated as though it were recoverable under such
policies.
ARTICLE 9
INDEMNIFICATION
_______________
9.1 Tenant Indemnity of Landlord. Tenant shall
defend, indemnify and hold Landlord and its agents, successors
and assigns, including its Building Manager, harmless from and
against all claims, causes of action, liabilities, losses, costs
and expenses arising from or in connection with any injury or
other damage to any person or property occurring during the Lease
Term or in connection with Tenant's occupancy of the Premises (a)
which occurs in any portion of the Building (except to the extent
caused by the gross negligence or willful misconduct of Landlord
or any employee or other agent of Landlord), (b) which occurs on
any portion of the Property outside of the Building and is caused
by the gross negligence or willful misconduct of Tenant or any
employee or other agent of Tenant, or (c) arising as a result of
any breach by Tenant in the observance or performance of any of
the terms, covenants and conditions of this Lease on Tenant's
part to be observed or performed. This indemnification shall
survive the expiration or termination of the Lease Term.
9.2 Landlord Indemnity of Tenant. Landlord shall
defend, indemnify and hold Tenant harmless from and against all
claims, causes of action, liabilities, losses, costs and expenses
arising from or in connection with any injury or other damage to
any person or property (a) which occurs on any portion of the
Property outside of the Building (except to the extent caused by
the gross negligence or willful misconduct of Tenant or any
employee or other agent of Tenant), (b) resulting from the gross
negligence or willful misconduct of Landlord, or (c) arising as a
result of any breach by Landlord in the observance or performance
of any of the terms, covenants and conditions of this Lease on
Landlord's part to be observed or performed.
9.3 Indemnity Limitations. The indemnity obligations
set forth in sections A and B above shall not apply (a) to any
costs or expenses not reasonably incurred by the indemnitee or
(b) to any claims, causes of action, liabilities, losses, costs
and expenses resulting from a default by the indemnitee
hereunder.
9.4 Indemnitees; Acceptable Attorneys. Whenever, in
this Article and throughout this Lease, Landlord or Tenant is
required to defend, indemnify and hold the other harmless, such
obligations shall extend to the successors, assigns, officers,
partners, directors, employees and other agents of the
indemnitee. In any instance where this Lease requires either
party to defend the other, such defense shall involve an attorney
or attorneys reasonably acceptable to the indemnitee.
9.5 Limitation on Liability. Landlord shall not be
liable to Tenant for any damage by or from any act or negligence
of any co-tenant or other occupant of the Building, or by any
owner or occupants of adjoining or contiguous property. Landlord
shall not be liable for any injury or damage to persons or
property resulting in whole or in part from the criminal
activities or wilful misconduct of others.
To the extent not covered by all risk property
insurance, Tenant agrees to pay for all damage to the Building,
as well as all damage to persons or property of other occupants
thereof, caused by the negligence, fraud or willful misconduct of
Tenant or any of its agents, contractors, employees, customers
and invitees. Nothing contained herein shall be construed to
relieve Landlord from liability for any personal injury resulting
from its gross negligence, fraud or willful misconduct.
ARTICLE 10
CASUALTY DAMAGE
_______________
Tenant shall promptly notify Landlord or the Building
Manager of any fire or other casualty to the Premises or to the
extent it knows of damage, to the Building. In the event the
Premises or any substantial part of the Building is wholly or
partially damaged or destroyed by fire or other casualty which is
covered by Landlord's insurance, the Landlord will proceed to
restore the same to substantially the same condition existing
immediately prior to such damage or destruction unless such
damage or destruction (i) is incapable of repair or restoration
within one hundred eighty (180) days, or (ii) occurs during the
final 18 months of the Lease Term, in which event Landlord may,
at Landlord's option and by written notice given to Tenant within
forty-five (45) days of such damage or destruction, declare this
Lease terminated as of the happening of such damage or
destruction; provided, however, that with respect to a
termination by Landlord as a result of a casualty during the
final 18 months of the Lease Term, Tenant shall be given an
opportunity to exercise its option to renew the Lease Term, and
if so exercised, the Lease shall not terminate. If in Landlord's
sole opinion the net insurance proceeds recovered by reason of
the damage or destruction will not be adequate to complete the
restoration of the Building, Landlord shall have the right to
terminate this Lease and all unaccrued obligations of the parties
hereto by sending a notice of such termination to Tenant. To the
extent after fire or other casualty that Tenant shall be deprived
of the use and occupancy of the Premises or any portion thereof
as a result of any such damage, destruction or the repair
thereof, providing the fire or other casualty was not
intentionally caused by Tenant or any of its agents or employees,
Tenant shall be relieved of the same ratable portion of the
Monthly Rent hereunder as the amount of damaged or useless space
in the Premises bears to the rentable square footage of the
Premises until such time as the Premises may be restored.
Landlord shall reasonably determine the amount of damaged or
useless space and the square footage of the Premises referenced
in the prior sentence.
If Landlord attempts to restore or repair the Premises
and fails to do so within 180 days after the occurrence of said
casualty (which 180 day period shall be extended, day-for-day,
for (i) each day of Tenant caused delays, and (ii) up to sixty
(60) days for each day of force majeure caused delays (as defined
in Article 25)), or such longer period as Landlord reasonably
estimates in its notice delivered to Tenant within 45 days after
the occurrence of the casualty, then Tenant may terminate this
Lease by giving written notice thereof to Landlord within ten
(10) Business Days after Tenant's receipt of a written notice
from Landlord stating that Landlord has failed to complete the
restoration or repair within said 180 day period (as may be
extended, as provided above), and setting forth Landlord's
reasonable estimate of a date on which the restoration or repair
will be completed.
In addition, in the event of a casualty that
substantially impairs Tenant's use and enjoyment of the Premises
which (i) cannot be restored or repaired within 180 days after
the occurrence of such casualty (as reasonably determined by
Landlord by written notice which shall be delivered to Tenant
within forty-five (45) days after the occurrence of such
casualty, which notice shall also set forth Landlord's reasonable
estimate of when restoration or repairs could be completed), or
(ii) occurs during the final eighteen (18) months of the Lease
Term (provided that Tenant has not exercised an option to renew
said Term), Tenant may elect to terminate this Lease (so long as
such casualty was not intentionally caused by Tenant or any of
its agents or employees) by delivering written notice to Landlord
within forty-five (45) days after the date on which Landlord
notifies Tenant of its inability to repair or restore the
Premises within said 180 period, or within thirty (30) days after
the occurrence of such casualty in the event of an occurrence
during the final 18 months of the Lease Term. In the event that
neither Landlord nor Tenant has elected to terminate this Lease,
as provided above, then Landlord shall use commercially
reasonable efforts to cause the Premises to be repaired or
restored promptly after the occurrence of said casualty.
ARTICLE 11
CONDEMNATION
____________
In the event of a condemnation or taking of the entire
Premises by a public or quasi-public authority, this Lease shall
terminate as of the date title vests in the public or
quasi-public authority. In the event of a taking or condemnation
that substantially impairs Tenant's use and enjoyment of the
Premises, and without regard to whether the Premises are part of
such taking or condemnation, Landlord or Tenant may elect to
terminate this Lease by giving notice to the other within sixty
(60) days of receiving notice of such condemnation. All
compensation awarded for any condemnation shall be the property
of Landlord, whether such damages shall be awarded as a
compensation for diminution in the value of the leasehold or to
the fee of the Premises, and Tenant hereby assigns to Landlord
all of Tenant's right, title and interest in and to any and all
such compensation. Providing, however that in the event this
Lease is terminated, Tenant shall be entitled to make a separate
claim for the taking of Tenant's personal property (including
fixtures paid for by Tenant), any portion of the costs of the
Tenant Improvements actually paid by Tenant, and for costs of
moving. Any additional portion of such award shall belong to
Landlord. In the event of a taking or condemnation that does not
result in a termination of this Lease and Tenant is deprived of
the use and occupancy of the Premises or any portion thereof,
Tenant shall be relieved of the same ratable portion of the
Monthly Rent payable hereunder as the amount of space taken or
condemned bears to the rentable square footage of the Premises
until such time as the Premises may be restored.
ARTICLE 12
REPAIR AND MAINTENANCE
_______________________
12.1 Tenant's Obligations. Tenant shall keep the
Premises in good working order, repair (and in compliance with
all Laws now or hereafter adopted) and condition (which condition
shall be neat, clean and sanitary, and free of pests and rodents)
and shall make all necessary non-structural repairs thereto,
excluding, however, any repairs to Building mechanical, HVAC,
electrical and plumbing systems or components in or serving the
Premises. Tenant's obligations hereunder shall include but not be
limited to Tenant's trade fixtures and equipment, security
systems, signs, interior decorations, floor-coverings,
wall-coverings, entry and interior doors, interior glass, light
fixtures and bulbs, keys and locks, and alterations to the
Premises whether installed by Tenant or Landlord.
12.2 Landlord's Obligations. Landlord shall make all
necessary structural repairs to the Building and any necessary
repairs to the Building standard mechanical, HVAC, electrical,
and plumbing systems in or servicing the Premises (the cost of
which shall be included in Operating Expenses under Article 4),
excluding repairs required to be made by Tenant pursuant to this
Article. Landlord shall have no responsibility to make any
repairs unless and until Landlord receives written notice of the
need for such repair. Landlord shall not be liable for any
failure to make repairs or to perform any maintenance unless such
failure shall persist for an unreasonable time after written
notice of the need for such repairs or maintenance is received by
landlord from Tenant. Landlord shall make every reasonable
effort to perform all such repairs or maintenance in such a
manner (in its judgment) so as to cause minimum interference with
Tenant and the Premises but Landlord shall not be liable to
Tenant for any interruption or loss of business pertaining to
such activities. Landlord shall have the right to require that
any damage caused by the willful misconduct of Tenant or any of
Tenant's agents, contractors, employees, invitees or customers,
be paid for and performed by the Tenant (without limiting
Landlord's other remedies herein).
12.3 Signs and Obstructions. Tenant, at its sole cost
and expense, shall be permitted, subject to the terms hereof, to
place the name of Tenant on certain signage on the Building and a
monument outside the Building (the "Signs"). Tenant shall
provide Landlord plans and specifications with respect to
location, installation, letter size, letter type, and color of
the Signs (hereinafter collectively called the "Plans"). Upon
receipt of said information, Landlord, in its reasonable
judgement, shall approve or disapprove said Plans. Should the
Plans be approved, Tenant shall notify Landlord of any
subcontractors involved with the Signs' installation and said
subcontractors shall work in conjunction with the Landlord's
building personnel to properly install the Signs. Any electrical
service required for the Signs will be provided by Landlord and
all service charges for electrical service and repairs shall be
paid by Tenant upon written notice by Landlord. All costs and
expenses associated with the Signs shall be paid by Tenant.
Tenant shall hold Landlord harmless from any and all liability
regarding any Signs. Should Landlord disapprove the Plans,
Tenant shall work with Landlord to provide acceptable signage
alternatives. Disapproval of the Plans by Landlord shall in no
way serve to terminate this Lease or place any liability on
Landlord, or to rescind the right of Tenant to place a Sign on
the Building or a monument outside the Building as contemplated
by this provision. Tenant shall, at Tenant's sole cost and
expense, remove any Signs on or prior to the expiration of the
Lease Term and shall return the respective portion of the
Building or Premises to their original condition and repair,
ordinary wear and tear excepted.
12.4 Outside Services. Tenant shall not permit, except
by Landlord or a person or company reasonably satisfactory to and
approved by Landlord: (i) the extermination of vermin in, on or
about the Premises; (ii) the servicing of heating, ventilating
and air conditioning equipment; (iii) the collection of rubbish
and trash other than in compliance with local government health
requirements and in accordance with the rules and regulations
established by Landlord, which shall minimally provide that
Tenant's rubbish and trash shall be kept in containers located so
as not to be visible to members of the public and in a sanitary
and neat condition; or (iv) window cleaning, janitorial services
or similar work in the Premises.
ARTICLE 13
INSPECTION OF PREMISES
______________________
Tenant shall permit the Landlord, the Building Manager
and its authorized representatives to enter the Premises to show
the Premises during Normal Business Hours of Building and at
other reasonable times to inspect the Premises and to make such
repairs, improvements, alterations or additions in the Premises
or in the Building of which they are a part as Landlord may deem
necessary or appropriate.
ARTICLE 14
SURRENDER OF PREMISES
_____________________
Upon the expiration of the Term, or sooner termination
of the Lease, Tenant shall quit and surrender to Landlord the
Premises, broom clean, in good order and condition, normal wear
and tear and damage by fire and other casualty excepted. All
leasehold improvements and other fixtures, such as light fixtures
and HVAC equipment, wall coverings, carpeting and drapes (but
excluding Tenant's trade fixtures and other removable personal
property), in or serving the Premises, whether installed by
Tenant or Landlord, shall be Landlord's property and shall
remain, all without compensation, allowance or credit to Tenant.
Any property not removed shall be deemed to have been abandoned
by Tenant and may be retained or disposed of by Landlord at
Tenant's expense free of any and all claims of Tenant, as
Landlord shall desire. All property not removed from the Premises
by Tenant may be handled or stored by Landlord at Tenant's
expense and Landlord shall not be liable for the value,
preservation or safekeeping thereof. At Landlord's option all or
part of such property may be conclusively deemed to have been
conveyed by Tenant to Landlord as if by bill of sale without
payment by Landlord. The Tenant hereby waives to the maximum
extent allowable the benefit of all laws now or hereafter in
force in this state or elsewhere exempting property from
liability for rent or for debt.
ARTICLE 15
HOLDING OVER
____________
Tenant shall pay Landlord 125% of the amount of Rent
then applicable prorated on a per diem basis for each day Tenant
shall retain possession of the Premises or any part thereof after
expiration or earlier termination of this Lease, together with
all damages sustained by Landlord on account thereof. The
foregoing provisions shall not serve as permission for Tenant to
hold-over, nor serve to extend the Term (although Tenant shall
remain bound to comply with all provisions of this Lease until
Tenant vacates the Premises) and Landlord shall have the right at
any time thereafter to enter and possess the Premises and remove
all property and persons therefrom.
ARTICLE 16
SUBLETTING AND ASSIGNMENT
_________________________
16.1 Landlord's Consent. Tenant shall not assign its
interests hereunder, sublease all or any portion of the Premises,
or allow any other person to use or occupy any portion of the
Premises, without the prior written consent of Landlord, which
shall not be unreasonably withheld, except that Landlord shall
not, under any circumstances, be obligated to consent to any
assignment or subletting by Tenant (a) by operation of law, or
(b) to any person who fails to meet any of the other reasonable
criteria of Landlord that Tenant was required to meet prior to
the execution of this Lease, including, without limitation, the
following:
(i) The financial strength of the proposed
assignee or subtenant, both in terms of net worth and in terms of
reasonably anticipated cash flow over the Lease Term, is
reasonably acceptable to Landlord.
(ii) The proposed assignee or subtenant intends to
make substantial alterations to the Premises which would, in
Landlord's reasonable judgment, result in a material net decrease
in the value of the Premises as improved.
(iii) Any other basis on which Landlord can
reasonably refuse to withhold its consent to the proposed
assignment or sublease, including any failure of the proposed
assignee or subtenant to meet any of the reasonable criteria of
Landlord that Tenant was required to meet prior to the execution
of this Lease.
With respect to any proposed assignment or subleasing requiring
Landlord's consent, Tenant shall submit to Landlord in writing,
at least 60 days prior to the effective date of the assignment or
sublease, (i) a notice of application to assign or sublease,
setting forth the proposed effective date, which shall be not
less than 60 or more than 90 days after the delivery of such
notice; (ii) the name of the proposed transferee; (iii) the
nature of the proposed transferee's business to be carried on in
the Premises; (iv) the terms of the proposed sublease or
assignment; and (v) a current financial statement of the proposed
transferee. Tenant shall not submit any such application to
Landlord until Tenant has received a bona fide offer from the
proposed transferee, and Tenant shall furnish Landlord, in
addition to the foregoing, with all other information reasonably
required by Landlord with respect to such transfer and
transferee. Any transfer (or sequence of transfers resulting, in
the aggregate, in the transfer) of 50% or more of the beneficial
ownership of Tenant shall constitute an assignment for purposes
of this Article.
16.2 Transfers Not Requiring Consent. Notwithstanding
the foregoing, Landlord's consent shall not be required with
respect to (1) any assignment resulting from a consolidation,
merger or purchase of substantially all of Tenant's assets; or
(2) any assignment or sublease to a person (a) who wholly owns
Tenant or who wholly owns the person who wholly owns Tenant (in
either case, a "Parent"), or who is wholly owned by Tenant or a
Parent, or is wholly owned by a person who is wholly owned by
Tenant or a Parent, and (b) whose financial strength, both in
terms of net worth and in terms of reasonably anticipated cash
flow over the Lease term, is not materially less than Tenant's
financial strength at the time this Lease was executed or at the
time of such assignment or sublease, whichever is greater. With
respect to any assignment or subletting to which Landlord's
consent is not required, the following provisions shall apply:
(i) give Landlord written notice of the
assignment or subletting no less than 45 days prior to the
effective date thereof, which notice shall set forth the identity
of the proposed transferee, the reason(s) why Landlord's consent
is not required, and the nature of the proposed transferee's
business to be carried on in the Premises.
(ii) Tenant shall furnish Landlord (i) no less
than 30 days prior to the effective date of the assignment or
subletting, with a current financial statement of the proposed
transferee reasonably acceptable to Landlord, and (ii) within 3
days following Landlord's demand, with all other information
reasonably requested by Landlord with respect to such transferee.
Any assignment or subletting to which Landlord's consent is not
required and with respect to which the provisions of this
paragraph are not complied with shall, at Landlord's option, be
void.
16.3 First Offer to Landlord. Tenant shall not assign
this Lease or sublet all or any portion of the Premises (except
as described in Section 16.2, above) unless Tenant has first
offered in writing to enter into such an assignment or sublease
with Landlord (no more than 6 months earlier) on terms not
materially less favorable than those offered to the applicable
third party. Landlord shall be deemed to have rejected any such
offer unless Landlord accepts the same in writing on or before
the 10th business day thereafter. In the event that Landlord
accepts any such offer, the provisions of Section 16.4, below,
shall apply to the same extent as if Tenant had entered into such
assignment or sublease with a third party.
16.4 Net Revenues.
(a) Sublease Revenues. In the event that Tenant
subleases all or any portion of the Premises and the total of all
amounts payable to Tenant for any month under any such sublease
exceeds the total of all amounts payable to Landlord hereunder
for such month for the same space, the following shall apply to
such excess (the "Net Sublease Revenues"):
(i) Sublease Revenues shall first be paid to
Tenant to the extent of the applicable monthly portion
(calculated by amortizing each cost on a straight-line basis over
the term of the applicable sublease) of: (1) the amount by which
all Monthly Rent and Additional Rent paid by Tenant (not
including any Net Sublease Revenues) for such space, for the
period since Tenant vacated the same (and provided Landlord with
written notice of such vacation) until the date on which the
subtenant is required to commence paying rent, exceeds all
amounts payable to Tenant under any previous subleases of such
space for such period; (2) all brokerage commissions reasonably
incurred by Tenant in connection with such sublease(s); and (3)
all improvement allowances and other economic concessions (space
planning allowances, moving allowances, etc.) paid to such
subtenant(s); and
(ii) any additional Net Sublease Revenues
received by Tenant for any month shall be paid to Landlord within
5 Business Days thereafter.
(b) Assignment Revenues. In the event that
Tenant assigns this Lease with respect to all or any portion of
the Premises (the "assigned premises"), Tenant shall pay to
Landlord the amount, if any, by which all amounts paid to Tenant
in consideration of such assignment exceed the sum of (i) all
Monthly Rent and Additional Rent paid by Tenant for the assigned
premises for the period from the date Tenant vacated the same
(and provided Landlord with written notice of such vacation)
until the effective date of the assignment, (ii) all brokerage
commissions reasonably incurred by the assigning tenant in
connection with such assignment, and (iii) all improvement
allowances and other economic concessions (space planning
allowances, moving allowances, etc.) paid to such assignee(s).
16.5 Continuing Liability; Voidable Transfers. No
assignment of this Lease (other than an assignment to Landlord
resulting from Landlord's first offer right), and no subletting
of all or any portion of the Premises, shall release Tenant or
any guarantor with respect to any post-transfer obligations,
unless Landlord agrees otherwise in writing in its absolute
discretion and any such assignment or sublease shall, at
Landlord's option, be void in the event that Tenant and each such
guarantor, if any, does not expressly acknowledge and affirm its
continuing liability in form and substance reasonably
satisfactory to Landlord. The continuing liability of the
assigning Tenant shall be primary, and Landlord shall be entitled
to exercise its rights and remedies against any such assignor
with respect to any Tenant Default without exhausting its rights
and remedies against any successor of such assignor. In the
event that it is ever held, notwithstanding the contrary
intention of the parties hereto, that any such assignor's
continuing liability is that of a guarantor (rather than
primary), Tenant hereby waives any and all suretyship rights and
defenses to which it would otherwise be entitled in connection
with such continuing liability. Notwithstanding the foregoing,
in the event that, following any assignment (other than an
assignment described in Section B, above), Landlord and such
assignee modify this Lease in such a way as to increase Tenant's
total obligations hereunder, neither the assigning Tenant nor any
guarantor whose guaranty pre-dated such assignment shall be
liable for the incremental portion of Tenant's obligations
corresponding to such increase. The acceptance of any assignment
by an assignee shall automatically constitute the assumption by
such assignee of all obligations of Tenant with respect to the
assigned premises that accrue following the assignment; provided,
however, that any assignment of this Lease shall, at Landlord's
option, be void in the event that the assignee does not expressly
acknowledge and affirm the effectiveness of the foregoing
assumption in form and substance reasonably satisfactory to
Landlord. Any assignment or subletting by Tenant to which
Landlord's consent is required but not obtained shall, at
Landlord's option, be void. Following Landlord's consent, or
refusal to consent, to any assignment or sublease, Tenant shall
pay Landlord, upon demand, a reasonable charge (not to exceed
$1,000.00) to cover Landlord's administrative and out-of-pocket
costs in connection therewith.
16.6 Other Provisions Applicable to Transfers. No
assignment or subletting shall be deemed to modify any provision
of this Lease, with respect to permitted or restricted uses of
the Premises or otherwise, unless Landlord then agrees otherwise
in writing in its absolute discretion. Tenant shall promptly
furnish Landlord with a copy of each executed assignment or
sublease, and with copies of any supplements or modifications
thereto which may be executed from time to time.
16.7 Assignment of Sublease Revenues. Tenant hereby
absolutely assigns to Landlord all of Tenant's right, title and
interest in and to all revenues from each sublease of all or any
portion of the Premises; provided, however, that Landlord hereby
grants Tenant a license, which shall remain in effect so long as
no Tenant default remains uncured, to collect all such revenues
(subject to Tenant's obligation to deliver certain of such
revenues to Landlord under this Article). Upon the occurrence of
any Tenant default, Landlord may revoke such license by written
notice to Tenant and may, by written notice to any subtenant of
Tenant, demand that such subtenant pay all such revenues directly
to Landlord. In such event Tenant hereby irrevocably authorizes
and directs any such subtenant to pay such revenues to Landlord,
and further agrees (a) that any such subtenant shall be obligated
and entitled to pay such revenues to Landlord notwithstanding any
contrary contentions or instructions later received from Tenant
and (b) that no such subtenant shall have any liability to Tenant
for any such revenues paid to Landlord in accordance with the
foregoing. Landlord shall not be entitled to use or enjoy any
such revenues except for the purpose of applying such revenues
against unfulfilled obligations of Tenant hereunder with respect
to which the applicable cure periods have expired, or to
reimburse Landlord for costs reasonably incurred as a result of
any Tenant default, or to compensate Landlord for other losses
suffered by Landlord as a result of any Tenant default. Any such
revenues remaining in Landlord's possession following the cure of
all Tenant defaults and the reimbursement of all such costs and
losses shall be delivered to Tenant upon demand. No such notice
to any subtenant or receipt of revenues from any subtenant shall
be deemed to constitute either (i) Landlord's consent to such
sublease or (ii) the assumption by Landlord of any obligation of
Tenant under such sublease, nor shall any such notice or receipt
create privity of contract between Landlord and the applicable
subtenant or be construed as a nondisturbance or similar
agreement between Landlord and such subtenant.
16.8 Transfers By Subtenants. The provisions of this
Article shall also apply to assignments and subleases by
subtenants, sub-subtenants and so on.
16.9 Assignment of Options. Without limiting the
generality of any provision of this Lease which states that any
option or other right of Tenant is personal to the original
Tenant hereunder or may only be assigned under certain
conditions, no option or similar right of Tenant hereunder,
including without limitation any option to extend or renew,
option to expand, first offer or first refusal right, or first
right to lease, may be assigned, and any attempt to assign such
right shall be null and void.
16.10 Encumbrance. Tenant shall not assign its
interests hereunder as security for any obligation without
Landlord's prior written consent, which may be withheld in
Landlord's absolute discretion, and any such assignment without
such consent shall, at Landlord's option, be void.
ARTICLE 17
SUBORDINATION, ATTORNMENT AND MORTGAGEE PROTECTION
__________________________________________________
This Lease is subject and subordinate to all Mortgages
now or hereafter (subject to Landlord's efforts to use reasonable
efforts to obtain a nondisturbance agreement in favor of Tenant
and in a commercially reasonable form) placed upon the Building,
and all other encumbrances and matters of public record
applicable to the Building, including without limitation, any
reciprocal easement or operating agreements, covenants,
conditions and restrictions and Tenant shall not act or permit
the Premises to be operated in violation thereof. If any
foreclosure or power of sale proceedings are initiated by any
Lender or a deed in lieu is granted (or if any ground lease is
terminated), Tenant agrees, upon written request of any such
Lender or any purchaser at such foreclosure sale, to attorn and
pay Rent to such party and to execute and deliver any instruments
necessary or appropriate to evidence or effectuate such
attornment. In the event of attornment, no Lender shall be: (i)
liable for any act or omission of Landlord, or subject to any
offsets or defenses which Tenant might have against Landlord
(prior to such Lender becoming Landlord under such attornment),
(ii) liable for any security deposit or bound by any prepaid Rent
not actually received by such Lender, or (iii) bound by any
future modification of this Lease not consented to by such
Lender. Any Lender may elect to make this Lease prior to the lien
of its Mortgage, and if the Lender under any prior Mortgage shall
require, this Lease shall be prior to any subordinate Mortgage;
such elections shall be effective upon written notice to Tenant.
Tenant agrees to give any Lender by certified mail, return
receipt requested, a copy of any notice of default served by
Tenant upon Landlord, provided that prior to such notice Tenant
has been notified in writing (by way of service on Tenant of a
copy of an assignment of leases, or otherwise) of the name and
address of such Lender. Tenant further agrees that if Landlord
shall have failed to cure such default within the time permitted
Landlord for cure under this Lease, any such Lender whose address
has been so provided to Tenant shall have an additional period of
thirty (30) days in which to cure (or such additional time as may
be required due to causes beyond such Lender's control, including
time to obtain possession of the Building by power of sale or
judicial action or deed in lieu of foreclosure). The provisions
of this Article shall be self-operative; however, Tenant shall
execute such documentation as Landlord or any Lender may request
from time to time in order to confirm the matters set forth in
this Article in recordable form. To the extent not expressly
prohibited by Law, Tenant waives the provisions of any Law now or
hereafter adopted which may give or purport to give Tenant any
right or election to terminate or otherwise adversely affect this
Lease or Tenant's obligations hereunder if such foreclosure or
power of sale proceedings are initiated, prosecuted or completed.
Landlord represents and warrants that, as of the time of this
Lease, there are no mortgages encumbering the Building.
ARTICLE 18
ESTOPPEL CERTIFICATE
____________________
Tenant shall from time to time, upon written request by
Landlord or Lender, deliver to Landlord or Lender, within ten
(10) days after from receipt of such request, a statement in
writing certifying: (i) that this Lease is unmodified and in full
force and effect (or if there have been modifications,
identifying such modifications and certifying that the Lease, as
modified, is in full force and effect); (ii) the dates to which
the Rent has been paid; (iii) to Tenant's knowledge, that
Landlord is not in default under any provision of this Lease (or
if Landlord is in default, specifying each such default); and,
(iv) the address to which notices to Tenant shall be sent; it
being understood that any such statement so delivered may be
relied upon in connection with any lease, mortgage or transfer.
Tenant's failure to deliver such statement within such
time shall be conclusive upon Tenant that: (i) this Lease is in
full force and effect and not modified except as Landlord may
represent; (ii) not more than one month's Rent has been paid in
advance; (iii) there are no defaults by Landlord; and, (iv)
notices to Tenant shall be sent to Tenant's Address as set forth
in Article 1 of this Lease. Notwithstanding the presumptions of
this Article, Tenant shall not be relieved of its obligation to
deliver said statement.
ARTICLE 19
DEFAULTS
________
If Tenant: (i) fails to pay when due any installment or
other payment of Rent, or to keep in effect any insurance
required to be maintained; or (ii) becomes insolvent, makes an
assignment for the benefit of creditors, files a voluntary
bankruptcy or an involuntary petition in bankruptcy is filed
against Tenant which petition is not dismissed within ninety (90)
days of its filing, or (iii) fails to perform or observe any of
the other covenants, conditions or agreements contained herein on
Tenant's part to be kept or performed and such failure shall
continue for thirty (30) days after notice thereof given by or on
behalf of Landlord, or (iv) if the interest of Tenant shall be
offered for sale or sold under execution or other legal process
if Tenant makes any transfer, assignment, conveyance, sale,
pledge, disposition of all or a substantial portion of Tenant's
property, then any such event or conduct shall constitute a
"default" hereunder.
If Tenant shall file a voluntary petition pursuant to
the United States Bankruptcy Reform Act of 1978, as the same may
be from time to time be amended (the "Bankruptcy Code"), or take
the benefit of any insolvency act or be dissolved, or if an
involuntary petition be filed against Tenant pursuant to the
Bankruptcy Code and said petition is not dismissed within thirty
(30) days after such filing, or if a receiver shall be appointed
for its business or its assets and the appointment of such
receiver is not vacated within thirty (30) days after such
appointment, or if it shall make an assignment for the benefit of
its creditors, then Landlord shall have all of the rights
provided for in the event of nonpayment of the Rent.
If any alleged default on the part of the Landlord
hereunder occurs, Tenant shall give written notice to Landlord in
the manner herein set forth and shall afford Landlord a
reasonable opportunity to cure any such default. In addition,
Tenant shall send notice of such default by certified or
registered mail, postage prepaid, to the holder of any Mortgage
whose address Tenant has been notified of in writing, and shall
afford such Mortgage holder a reasonable opportunity to cure any
alleged default on Landlord's behalf. In no event will Landlord
be responsible for any damages incurred by Tenant, including but
not limited to, lost profits or interruption of business as a
result of any alleged default by Landlord hereunder.
ARTICLE 20
REMEDIES
________
Upon the occurrence of any default by Tenant, and in
addition to any and all other rights provided a Landlord under
law or equity for breach of a lease or tenancy by a Tenant,
Landlord shall have the right to pursue one or more of the
following remedies:
(a) Landlord may terminate this Lease by written
notice to Tenant and, following termination, may enter and take
possession of the Premises and remove Tenant and any other person
occupying the Premises by arrangement with Tenant and may recover
from Tenant the following:
(i) The worth at the time of the award of any
unpaid rent that has been earned at the time of termination;
(ii) The worth at the time of the award of the
amount by which the unpaid rent which would have been earned
following termination and until the time of the award exceeds the
amount of such rental loss that Tenant proves could reasonably
have been avoided;
(iii)The worth at the time of the award of the
amount by which the unpaid rent for the balance of the term after
the time of the award exceeds the amount of such rental loss that
Tenant proves could reasonably have been avoided;
(iv) Any other amounts necessary to compensate
Landlord for all detriment proximately caused by Tenant's
defaults under this Lease or which in the ordinary course of
things would be likely to result therefrom, including brokerage
commissions, advertising expenses, remodeling expenses, and
concessions to a new tenant;
(v) At Landlord's election, any other amounts in
addition to or in lieu of the foregoing that may be permitted by
law from time to time.
As used in this Section A, "rent" means all amounts of every
nature required to be paid by Tenant hereunder, whether to
Landlord or to third parties. Any such amounts which must be
based on increased costs or other historical information shall be
calculated based on estimates and projections reasonably made by
Landlord. As used in subparagraphs (a) and (b) of this
paragraph, the "worth at the time of the award" shall be
calculated based on an interest rate equal to the highest rate
permitted by applicable law or, if no maximum applies, 15% per
annum. As used in subparagraph (c) of this paragraph, the "worth
at the time of the award" shall be calculated based on a discount
rate equal to the "Reference Rate" set by Bank of America
National Trust and Savings Association at the time of the award.
In the event that Bank of America National Trust and Savings
Association no longer exists at the time of the award, the
discount rate shall equal the highest "prime" or "reference" rate
announced at the time of the award by any of the three largest
banks based in California at such time.
(b) Landlord may continue this Lease in effect and
pursue any other rights and remedies it may have hereunder and/or
as otherwise permitted by law from time to time.
(c) Landlord may continue this Lease in effect after
Tenant's breach and abandonment and recover rent as it becomes
due, if Tenant has the right to sublet or assign, subject only to
reasonable limitations (and with the understanding that Landlord
is under no obligation to relet the Premises under any conditions
so long as there is comparable space available in the Building
for lease). If the Building is located in California, Landlord
may exercise its remedies under California Civil Code Section
1951.4 (as modified or recodified from time to time).
(c) Whether or not Landlord terminates this Lease,
Landlord shall have the right, as Landlord chooses in its
absolute discretion, (a) to terminate any or all subleases,
licenses, concessions and other agreements entered into by Tenant
without Landlord's prior written consent in connection with its
occupancy of the Premises and/or (b) to maintain any or all such
agreements in effect and succeed to Tenant's interests in
connection therewith (in which event Tenant shall cease to have
any interest in any such agreement).
Upon the occurrence of any default by Landlord, Tenant
shall, except as otherwise expressly provided herein, have all
rights and remedies provided hereunder and by law from time to
time; provided, however, that Tenant shall in no event have the
right to terminate this Lease except as expressly provided
herein.
ARTICLE 21
QUIET ENJOYMENT
_______________
Landlord covenants and agrees with Tenant that so long
as Tenant pays the Rent and observes and performs all the terms,
covenants, and conditions of this Lease on Tenant's part to be
observed and performed, Tenant may peaceably and quietly enjoy
the Premises subject, nevertheless, to the terms and conditions
of this Lease, and Tenant's possession will not be disturbed by
anyone claiming by, through, or under Landlord.
ARTICLE 22
ACCORD AND SATISFACTION
_______________________
No payment by Tenant or receipt by Landlord of an
amount less than full payment of Rent then due and payable shall
be deemed to be other than on account of the Rent then due and
payable, nor shall any endorsement or statement on any check or
any letter accompanying any check or payment as Rent be deemed an
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 for in
this Lease or available at law or in equity.
ARTICLE 23
SECURITY DEPOSIT
________________
To secure the faithful performance by Tenant of all of
the covenants, conditions and agreements set forth in this Lease
to be performed by it, including, without limitation, foregoing
such covenants, conditions and agreements in this Lease which
become applicable upon its termination by re-entry or otherwise,
Tenant has deposited with Landlord the sum shown in Article 1 as
a "Security Deposit" on the understanding:
(a) that the Security Deposit or any portion thereof
may be applied to the curing of any default that may exist,
without prejudice to any other remedy or remedies which the
Landlord may have on account thereof, and upon such application
Tenant shall pay Landlord on demand the amount so applied which
shall be added to the Security Deposit so the same will be
restored to its original amount;
(b) that should the Premises be conveyed by Landlord,
the Security Deposit or any balance thereof may be turned over to
the Landlord's grantee, and if the same be turned over as
aforesaid, Tenant hereby releases Landlord from any and all
liability with respect to the Security Deposit and its
application or return, and Tenant agrees to look solely to such
grantee for such application or return; and,
(c) that Landlord may commingle the Security Deposit
with other funds and not be obligated to pay Tenant any interest;
(d) that the Security Deposit shall not be considered
as advance payment of Rent or a measure of damages for any
default by Tenant, nor shall it be a bar or defense to any
actions by Landlord against Tenant;
(e) that if Tenant shall faithfully perform all of the
covenants and agreements contained in this Lease on the part of
the Tenant to be performed, the Security Deposit or any then
remaining balance thereof, shall be returned to Tenant, without
interest, within thirty (30) days after the expiration of the
Term. Tenant further covenants that it will not assign or
encumber the money deposited herein as a Security Deposit and
that neither Landlord nor its successors or assigns shall be
bound by any such assignment, encumbrance, attempted assignment
or attempted encumbrance.
ARTICLE 24
BROKERAGE COMMISSION
____________________
Landlord and Tenant represent and warrant to each other
that neither has dealt with any broker, finder or agent except
for the Broker(s) identified in Article 1. Tenant represents and
warrants to Landlord that (except with respect to the Broker
identified in Article 1 and with whom Landlord has entered into a
separate brokerage agreement) no broker, agent, commission
salesperson, or other person has represented Tenant in the
negotiations for and procurement of this Lease and of the
Premises and that no commissions, fees, or compensation of any
kind are due and payable in connection herewith to any broker,
agent commission salesperson, or other person. Tenant agrees to
indemnify Landlord and hold Landlord harmless from any and all
claims, suits, or judgments (including, without limitation,
reasonable attorneys' fees and court costs incurred in connection
with any such claims, suits, or judgments, or in connection with
the enforcement of this indemnity) for any fees, commissions, or
compensation of any kind which arise out of or are in any way
connected with any claimed agency relationship not referenced in
Article.
ARTICLE 25
FORCE MAJEURE
_____________
Landlord shall be excused for the period of any delay
in the performance of any obligation hereunder when prevented
from so doing by a cause or causes beyond its control, including
all labor disputes, civil commotion, war, war-like operations,
invasion, rebellion, hostilities, military or usurped power,
sabotage, governmental regulations or controls, fire or other
casualty, inability to obtain any materials or services, or
through acts of God; provided, that Landlord shall not be
entitled to rely upon this Section unless it shall first have
given Tenant notice of the existence of any force majeure
preventing the performance of an obligation of Landlord within
five (5) days after the commencement of the force majeure. Tenant
shall similarly be excused for delay in the performance of any
obligation hereunder; provided:
(a) nothing contained in this Section or elsewhere in
this Lease shall be deemed to excuse or permit any delay in the
payment of the Rent, or any delay in the cure of any default
which may be cured by the payment of money (except with respect
to abatements of Rent as expressly provided herein);
(b) no reliance by Tenant upon this Section shall
limit or restrict in any way Landlord's right of self-help as
provided in this Lease; and
(c) Tenant shall not be entitled to rely upon this
Section unless it shall first have given Landlord notice of the
existence of any force majeure preventing the performance of an
obligation of Tenant within five (5) days after the commencement
of the force majeure.
ARTICLE 26
PARKING
_______
26.1 Landlord hereby grants to Tenant the exclusive
right to use all of the parking facilities located on the
Property. In addition, Landlord hereby grants to Tenant the
non-exclusive right to use the number of Off-Site Parking Spaces
described in Article 1 Q, in common with the rights of others
designated by the owner of the Off-Site Parking Garage. Tenant
acknowledges and agrees that (i) Landlord's interest in the
Off-Site Parking Spaces is governed by that certain Declaration
of Establishment of Easements dated as of September 22, 1988, and
recorded on September 26, 1996 in the Official Records of Los
Angeles County, California, as Instrument No. 88-1537849, as
amended by that certain Amendment to Declaration of Establishment
of Easements dated as of July 6, 1990, and recorded on July 10,
1990 as Instrument No. 90-1207844 (as amended, the
"Declaration"), and (ii) Tenant's right to use the Off-Site
Parking Spaces is subject to the terms of the Declaration and the
rights, rules and regulations promulgated from time to time by
the owner of the Off-Site Parking Garage and Tenant hereby agrees
to comply therewith.
26.2 Commencing on the Commencement Date, Tenant shall
pay Landlord the Parking Fee, if any, shown in Article 1, as
Additional Rent, payable monthly in advance with the Monthly
Rent. If there is a Parking Fee shown in Schedule 1, then
thereafter, and throughout the Term, the parking rate for each
type of parking space provided to Tenant hereunder shall be the
prevailing parking rate, as Landlord may designate from time to
time, at Landlord's sole election, for each such type of parking
space. In addition to the right reserved hereunder by Landlord to
designate the parking rate from time to time, Landlord shall have
the right to change the parking rate at any time to include
therein any amounts levied, assessed, imposed or required to be
paid to any governmental authority on account of the parking of
motor vehicles, including all sums required to be paid pursuant
to transportation controls imposed by the Environmental
Protection Agency under the Clean Air Act of 1970, as amended, or
otherwise required to be paid by any governmental authority with
respect to the parking, use, or transportation of motor vehicles,
or the reduction or control of motor vehicle traffic, or motor
vehicle pollution.
26.3 If requested by Landlord, Tenant shall notify
Landlord of the license plate number, year, make and model of the
automobiles entitled to use the parking facilities and if
requested by Landlord, such automobiles shall be identified by
automobile window stickers provided by Landlord, and only such
designated automobiles shall be permitted to use the parking
facilities. If Landlord institutes such an identification
procedure, Landlord may provide additional parking spaces for use
by customers and invitees of Tenant on a daily basis at
prevailing parking rates, if any. At Landlord's sole election,
Landlord may make validation stickers available to Tenant for any
such additional parking spaces.
26.4 The parking facilities provided for herein are
provided solely for the accommodation of Tenant and Landlord
assumes no responsibility or liability of any kind whatsoever
from whatever cause with respect to the automobile parking areas,
including adjoining streets, sidewalks, driveways, property and
passageways, or the use thereof by Tenant or tenant's employees,
customers, agents, contractors or invitees.
ARTICLE 27
HAZARDOUS MATERIALS
___________________
27.1 Compliance with Hazardous Materials Laws. Tenant
shall at all times and in all respects comply with all federal,
state and local laws, ordinances and regulations ("Hazardous
Materials Laws") relating to industrial hygiene, environmental
protection or the use, analysis, generation, manufacture,
storage, presence, disposal or transportation of any oil,
petroleum product, flammable explosives, asbestos, urea
formaldehyde, radioactive materials or waste, or other hazardous,
toxic, contaminated or polluting materials, substances or wastes,
including, without limitation, any "hazardous substances,"
"hazardous wastes," "hazardous materials" or "toxic substances"
under any such laws, ordinances or regulations (collectively,
"Hazardous Materials").
27.2 Tenant's Use of Hazardous Materials. Tenant
shall, at its own expense procure, maintain in effect and comply
with all conditions of any and all permits, licenses and other
governmental and regulatory approvals required for Tenant's use
of Hazardous Materials on the Premises, including, without
limitation, discharge of (appropriately treated) materials or
wastes into or through any sanitary sewer in strict accordance
and conformity with all applicable Hazardous Materials Laws.
Tenant shall cause any and all discharged Hazardous Materials
removed from the Premises to be removed and transported solely by
duly licensed haulers to duly licensed facilities for final
disposal of such materials and wastes. Tenant shall, in all
respects, handle, treat, deal with and manage any and all
Hazardous Materials in, on, under or about the Premises in total
conformity with all applicable Hazardous Materials Laws and
prudent industry practices regarding management of such Hazardous
Materials. All reporting obligations imposed by Hazardous
Materials Laws are strictly the responsibility of Tenant. Upon
expiration or earlier termination of the Term of the Lease,
Tenant shall cause all Hazardous Materials to be removed from the
Premises and transported for use, storage or disposal in
accordance and compliance with all applicable Hazardous Materials
Laws. Landlord understands that Tenant's use of the Premises
shall include the use of Hazardous Materials. Landlord and
Tenant recognize that Tenant operates a radiopharmacy and may
operate an oncological or other pharmacy and as an integral part
of its operations, Tenant handles toxic and low level radioactive
materials under a license from the Nuclear Regulatory Commission.
Tenant must comply with all prescribed rules, regulations and
statutes of all national, state and local standards for use and
storage of radioactive material and toxic materials used on the
Premises. Any clean up, remediation and removal work shall be
subject to Landlord's prior written approval (except in
emergencies), and shall include, without limitation, any testing,
investigation, and the preparation and implementation of any
remedial action plan required by any governmental body having
jurisdiction or reasonably required by Landlord. If Landlord or
any Lender or governmental body arranges for any tests or studies
showing that this Article has been violated by Tenant, Tenant
shall pay for the costs of such tests.
27.3 Notices To Landlord. Tenant shall immediately
notify Landlord in writing of (i) any enforcement, cleanup,
removal or other governmental or regulatory action instituted,
completed or threatened pursuant to any Hazardous Materials Laws,
(ii) any claim made or threatened by any person against Tenant,
the Premises or the Building relating to damage, contribution,
cost recovery compensation, loss or injury resulting from or
claimed to result from any Hazardous Materials purportedly
handled, stored, treated or released at the Premises or the
Building; (iii) any reports made to any environmental agency
arising out of or in connection with any use of Hazardous
Materials in, on, or removed from the Premises or Building,
including any complaints, notices, warnings, reports or asserted
violations in connection therewith, and (iv) any matters where
Tenant is required by any Hazardous Materials Law to give a
notice to any governmental or regulatory authority respecting any
Hazardous Materials on the Premises or the Building. Tenant
shall also supply to Landlord as promptly as possible, and in any
event within five (5) Business Days after Tenant first receives
or sends the same, with copies of all material claims, reports,
complaints, notices, warnings or asserted violations relating in
any way to Hazardous Materials handled on the Premises, the
Building or Tenant's use thereof. Landlord shall have the right
(but not the obligation) to join and participate, as a party, in
any legal proceedings or actions affecting the Premises or the
Building initiated in connection with any Hazardous Materials
Law. At such times as Landlord may reasonably request, Tenant
shall provide Landlord with a written list, certified to be true
and complete, identifying any Hazardous Materials then used,
stored, or maintained upon the Premises, the use and approximate
quantity of each such materials, a copy of any materials safety
data sheet issued by the manufacturer therefor, and such other
information as Landlord may reasonably require or as may be
required by any Hazardous Materials Law.
27.4 Indemnifications. Tenant will indemnify, defend
(by counsel reasonably acceptable to Landlord), protect, and hold
Landlord and each of Landlord's partners, employees, agents,
attorneys, successors and assigns, free and harmless from and
against any and all claims, liabilities, penalties, forfeitures,
losses or expenses (including attorneys' fees) or death of or
injury to any person or damage to any property whatsoever,
arising from or caused in whole or in part, directly or
indirectly, by:
(a) the presence in, on, under or about the
Premises or discharge in or from the Premises of any Hazardous
Materials placed in, under or about, the Premises by Tenant or at
Tenant's direction, excluding any tenant improvement work done by
Landlord; or
(b) Tenant's use, analysis, storage,
transportation, disposal, release, threatened release, discharge
or generation of Hazardous Materials to, in, on, under, about or
from the Premises; or
(c) Tenant's failure to comply with any Hazardous
Materials Law applicable hereunder to Tenant.
Landlord will indemnify, defend (by counsel reasonably acceptable
to Tenant), protect, and hold Tenant and each of Tenant's
employees, agents, attorneys, successors and assigns, free and
harmless from and against any and all claims, liabilities
penalties, forfeitures, losses or expenses (including attorneys'
fees) or death of or injury to any person or damage to any
property whatsoever, arising from or caused in whole or in part,
directly or indirectly, by
(x) the presence in, on, under or about the
Premises or the Building or discharge in or from the Premises or
the Building of any Hazardous Materials placed, in, on, under or
about the Premises or the Building prior to the date hereof, or
hereafter by Landlord or at Landlord's direction; or
(y) Landlord's use, analysis, storage,
transportation, disposal, release, threatened release, discharge
or generation of Hazardous Materials to, in, on, under, about or
from the Premises or the Building; or
(z) Landlord's failure to comply with any
Hazardous Materials Law.
The obligations of each party ("Indemnifying Party") pursuant to
this Section includes, without limitation, and whether
foreseeable or unforeseeable, all costs of any required or
necessary repair, cleanup or detoxification or decontamination of
the Premises or the Building, and the preparation and
implementation of any closure, remedial action or other required
plans in connection therewith, and survives the expiration or
earlier termination of the term of the Lease.
ARTICLE 28
ADDITIONAL RIGHTS RESERVED BY LANDLORD
______________________________________
In addition to any other rights provided for herein,
Landlord reserves the following rights, exercisable without
liability to Tenant for damage or injury to property, person or
business and without effecting an eviction, constructive or
actual, or disturbance of Tenant's use or possession or giving
rise to any claim:
(a) To have pass keys to the Premises and all doors
therein, excluding Tenant's vaults and safes;
(b) On reasonable prior notice to Tenant, to exhibit
the Premises to any prospective purchaser, Lender, mortgagee, or
assignee of any mortgage on the Building or Land and to others
having an interest therein at any time during the Term, and to
prospective tenants during the last six months of the Term; and
(c) To take any and all measures, including entering
the Premises (other than laboratory areas in which Tenant is
legally required to restrict access to authorized individuals)
for the purpose of making inspections, repairs, alterations,
additions and improvements to the Premises or to the Building
(including for the purpose of checking, calibrating, adjusting
and balancing controls and other parts of the Building Systems),
as may be necessary or desirable for the operation, improvement,
safety, protection or preservation of the Premises or the
Building, or in order to comply with all Laws, orders and
requirements of governmental or other authority, or as may
otherwise be permitted or required by this Lease; provided,
however, that during the progress of any work on the Premises or
at the Building, Landlord will attempt not to inconvenience
Tenant, but shall not be liable for inconvenience, annoyance,
disturbance, loss of business, or other damage to Tenant by
reason of performing any work or by bringing or storing
materials, supplies, tools or equipment in the Building or
Premises during the performance of any work, and the obligations
of Tenant under this Lease shall not thereby be affected in any
manner whatsoever; provided, further, that all such work shall be
done during the Normal Business Hours of the Building, or, in the
case of an emergency, with Tenant's supervision if reasonably
possible.
ARTICLE 29
DEFINED TERMS
_____________
29.1 "Building" shall refer to the Building named in
Article 1. A plan showing the Building is attached hereto as
Exhibit A and made a part hereof and the Premises is defined in
Article 2 and shown on said Exhibit A by cross-hatched lines.
29.2 "Business Day" shall mean any day other than a
Saturday or Sunday or holiday on which banks in the State of
California are authorized by law to close.
29.3 "Default Rate" shall mean fifteen percent (15%)
per annum, or the highest rate permitted by applicable law,
whichever shall be less. If the application of the Default Rate
causes any provision of this Lease to be usurious or
unenforceable, the Default Rate shall automatically be reduced so
as to prevent such result.
29.4 "Hazardous Materials" shall have the meaning set
forth in Article 27.
29.5 "Landlord" and "Tenant" shall be applicable to one
or more parties as the case may be, and the singular shall
include the plural, and the neuter shall include the masculine
and feminine; and if there be more than one, the obligations
thereof shall be joint and several. For purposes of any
provisions indemnifying or limiting the liability of Landlord,
the term "Landlord" shall include Landlord's present and future
partners, beneficiaries, trustees, officers, directors,
employees, shareholders, principals, agents, affiliates,
successors and assigns.
29.6 "Law" or "Laws" shall mean all federal, state,
county and local governmental and municipal laws, statutes,
ordinances, rules, regulations, codes, decrees, orders and other
such requirements, applicable equitable remedies and decisions by
courts in cases where such decisions are binding precedents in
the state in which the Building is located, and decisions of
federal courts applying the Laws of such state.
29.7 "Lease" shall mean this lease executed between
Tenant and Landlord, including any extensions, amendments or
modifications and any Exhibits attached hereto.
29.8 "Lease Year" shall mean each calendar year or
portion thereof during the Term.
29.9 "Lender" shall mean the holder of a Mortgage at
the time in question, and where such Mortgage is a ground lease,
such term shall refer to the ground lessee.
29.10 "Mortgage" shall mean all mortgages, deeds of
trust, ground leases and other such encumbrances now or hereafter
placed upon the Building or any part thereof with the written
consent of Landlord, and all renewals, modifications,
consolidations, replacements or extensions thereof, and all
indebtedness now or hereafter secured thereby and all interest
thereon.
29.11 "Operating Expenses" shall mean all operating
expenses of any kind or nature which are necessary, ordinary or
customarily incurred in connection with the operation,
maintenance or repair of the Building as determined by Landlord.
Operating Expenses shall include, but not be limited to:
(a) costs of supplies, including, but not limited
to, the cost of relamping all Building standard lighting as the
same may be required from time to time;
(b) costs incurred in connection with obtaining
and providing energy for the Building, including, but not limited
to, costs of propane, butane, natural gas, steam, electricity,
solar energy and fuel oils, coal or any other energy sources;
(c) costs of water and sanitary and storm
drainage services;
(d) costs of janitorial and security services;
(e) costs of general maintenance and repairs,
including costs under HVAC and other mechanical maintenance
contracts and maintenance, repairs and replacement of equipment
and tools used in connection with operating the Building;
(f) costs of maintenance and replacement of
landscaping;
(g) insurance premiums, including fire and
all-risk coverage, together with loss of rent endorsements, the
part of any claim required to be paid under the deductible
portion of any insurance policies carried by Landlord in
connection with the Building (where Landlord is unable to obtain
insurance without such deductible from a major insurance carrier
at reasonable rates), public liability insurance and any other
insurance carried by Landlord on the Building, or any component
parts thereof (all such insurance shall be in such amounts as may
be required by any holder of a Mortgage or as Landlord may
reasonably determine);
(h) labor costs, including wages and other
payments, costs to Landlord of worker's compensation and
disability insurance, payroll taxes, welfare fringe benefits, and
all legal fees and other costs or expenses incurred in resolving
any labor dispute;
(i) professional building management fees
required for management of the Building;
(j) legal, accounting, inspection, and other
consultation fees (including, without limitation, fees charged by
consultants retained by Landlord for services that are designed
to produce a reduction, but only to the extent of the reduction
over the Term of the Lease, in Operating Expenses or to
reasonably improve the operation, maintenance or state of repair
of the Building) incurred in the ordinary course of operating the
Building or in connection with making the computations required
hereunder or in any audit of operations of the Building;
(k) the costs of capital improvements or
structural repairs or replacements made in or to the Building in
order to conform to changes, subsequent to the date of this
Lease, in any applicable laws, ordinances, rules, regulations or
orders of any governmental or quasi-governmental authority having
jurisdiction over the Building (herein "Required Capital
Improvements") or the costs incurred by Landlord to install a new
or replacement capital item for the purpose of reducing Operating
Expenses, but only to the extent of the reduction over the Term
of the Lease (herein "Cost Savings Improvements"), and a
reasonable reserve for all other capital improvements and
structural repairs and replacements reasonably necessary to
permit Landlord to maintain the Building in its current class.
The expenditures for Required Capital Improvements and Cost
Savings Improvements shall be amortized on a straight line basis
over the useful life of such capital improvement or structural
repair or replacement (as reasonably determined by Landlord).
All costs so amortized shall bear interest on the unamortized
balance at the rate of ten percent (10%) per annum.
Notwithstanding the foregoing, Operating Expenses shall
not include (a) costs relating to Landlord's business operations
incurred at locations other than the Building, and (b) except as
otherwise set forth above in this Article 29, costs associated
with capital improvements.
In making any computations contemplated hereby, Landlord shall
make such adjustments and modifications to the provisions of this
paragraph and Article 4 as shall be reasonable and necessary to
achieve the intention of the parties hereto.
(1) shall have the meaning specified therefor in
Article 3.
29.12 "Tax" or "Taxes" shall mean:
(a) all real property taxes and assessments
levied against the Building by any governmental or
quasi-governmental authority. The foregoing shall include all
federal, state, county, or local governmental, special district,
improvement district, municipal or other political subdivision
taxes, fees, levies, assessments, charges or other impositions of
every kind and nature, whether general, special, ordinary or
extraordinary, respecting the Building, including without
limitation, real estate taxes, general and special assessments,
interest on any special assessments paid in installments, transit
taxes, water and sewer rents, taxes based upon the receipt of
rent, personal property taxes imposed upon the fixtures,
machinery, equipment, apparatus, appurtenances, furniture and
other personal property used in connection with the Building
which Landlord shall pay during any calendar year, any portion of
which occurs during the Term (without regard to any different
fiscal year used by such government or municipal authority except
as provided below). Provided, however, any taxes which shall be
levied on the rentals of the Building shall be determined as if
the Building were Landlord's only property, and provided further
that in no event shall the term "taxes or assessment," as used
herein, include any federal or state income taxes levied or
assessed on Landlord, unless such taxes are a specific substitute
for real property taxes. Such term shall, however, include gross
taxes on rentals. Expenses incurred by Landlord for tax
consultants and in contesting the amount or validity of any such
taxes or assessments shall be included in such computations, but
only to the extent of any reduction in taxes and assessments over
the Term of the Lease. At Tenant's reasonable request, Landlord
shall contest the amount or validity of any such taxes or
assessments and, at Tenant's sole cost and expense, shall hire
such experts and consultants as Landlord reasonably deems
necessary to pursue such claim.
(b) all "assessments", including so-called
special assessments, license tax, business license fee, business
license tax, levy, charge, penalty or tax imposed by any
authority having the direct power to tax, including any city,
county, state or federal government, or any school, agricultural,
lighting, water, drainage, or other improvement or special
district thereof, against the Premises of the Building or any
legal or equitable interest of Landlord therein. For the
purposes of this lease, any special assessments shall be deemed
payable in such number of installments as is permitted by law,
whether or not actually so paid. If as of the Commencement Date
the Building has not been fully assessed as a completed project,
for the purpose of computing the Operating Expenses for any
adjustment required herein or under Article 4, the Tax shall be
adjusted by Landlord, as of the date on which the adjustment is
to be made, to reflect full completion of the Building including
all standard Tenant finish work if the method of taxation of real
estate prevailing to the time of execution hereof shall be, or
has been altered, so as to cause the whole or any part of the
taxes now, hereafter or theretofore levied, assessed or imposed
on real estate to be levied, assessed or imposed on Landlord,
wholly or partially, as a capital levy or otherwise, or on or
measured by the rents received therefrom, then such new or
altered taxes attributable to the Building shall be included
within the term real estate taxes, except that the same shall not
include any enhancement of said tax attributable to other income
of Landlord. All of the preceding clauses K (1.1 and 1.2) are
collectively referred to as the "Tax" or "Taxes".
All other capitalized terms shall have the definition set forth
in the Lease.
ARTICLE 30
MISCELLANEOUS PROVISIONS
________________________
30.1 Rules and Regulations. Tenant shall comply with
all of the rules and regulations reasonably promulgated by
Landlord from time to time for the Building; provided, however,
that Landlord shall not institute any new rules or regulations
which materially increase Tenant's obligations under this Lease
or which further restrict Tenant's reasonable use and enjoyment
of the Premises. A copy of the current rules and regulations are
attached hereto as Exhibit D.
30.2 Execution of Lease. If Tenant executes this Lease
as a corporation, then Tenant and the persons executing this
Lease on behalf of Tenant represent and warrant that the
individuals executing this Lease on Tenant's behalf are duly
authorized to execute and deliver this Lease on its behalf in
accordance with a duly adopted resolution of the board of
directors of Tenant, a copy of which is to be delivered to
Landlord on execution hereof, and in accordance with the Bylaws
of Tenant and that this Lease is binding upon Tenant in
accordance with its terms.
30.3 Notices. All notices under this Lease shall be in
writing and will be deemed sufficiently given for all purposes
if, to Tenant, by delivery to Tenant at the Premises during the
hours the Building is open for business or by certified mail,
return receipt requested or by overnight delivery service (with
one acknowledged receipt), to Tenant at the address set forth
below, and if to Landlord, by certified mail, return receipt
requested or by overnight delivery service (with one acknowledged
receipt), at the addresses set forth below.
Landlord: at the address shown in Article 1, item F,
with a copy to the Building Manager at the address shown in
Article 1, item G.
Tenant: at the address shown in Article 1, item B, with
a copy to Troy & Gould, 1801 Century Park East, 16th Floor, Los
Angeles, California 90067, attention: Patrick R. Obel.
30.4 Transfers. The term "Landlord" appearing herein
shall mean only the owner of the Building from time to time and,
upon a sale or transfer of its interest in the Building, the then
Landlord and transferring party shall have no further obligations
or liabilities for matters accruing after the date of transfer of
that interest and Tenant, upon such sale or transfer, shall look
solely to the successor owner and transferee of the Building for
performance of Landlord's obligations hereunder.
30.5 Relocation. Not applicable.
30.6 Tenant Financial Statements. Upon the written
request of Landlord, Tenant shall submit copies of its audited
financial statements which are released to the public for its
most recent financial reporting period and for its prior fiscal
year. Landlord shall make such request no more than twice during
any Lease Year. All such financial statements shall be certified
as true and correct by the responsible officer of Tenant and
shall be certified by an independent certified public accountant.
30.7 Relationship of the Parties. Nothing contained in
this Lease shall be construed by the parties hereto, or by any
third party, as constituting the parties as principal and agent,
partners or joint venturers, nor shall anything herein render
either party (other than a guarantor) liable for the debts and
obligations of any other party, it being understood and agreed
that the only relationship between Landlord and Tenant is that of
Landlord and Tenant.
30.8 Entire Agreement: Merger. This Lease embodies the
entire agreement and understanding between the parties respecting
the Lease and the Premises and supersedes all prior negotiations,
agreements and understandings between the parties, all of which
are merged herein. No provision of this Lease may be modified,
waived or discharged except by an instrument in writing signed by
the party against which enforcement of such modification, waiver
or discharge is sought.
30.9 No Representation by Landlord. Neither Landlord
nor any agent of Landlord has made any representations,
warranties, or promises with respect to the Premises or the
Building except as expressly set forth herein.
30.10 Limitation of Liability. Notwithstanding any
provision in this Lease to the contrary, under no circumstances
shall Landlord's liability or that of its directors, officers,
employees and agents for failure to perform any obligations
arising out of or in connection with the Lease or for any breach
of the terms or conditions of this Lease (whether written or
implied) exceed forty percent (40%) of the fair market value of
the Building. No personal judgment shall lie against Landlord
upon extinguishment of its rights in the Building and any
judgments so rendered shall not give rise to any right of
execution or levy against Landlord's assets. The provisions
hereof shall inure to Landlord's successors and assigns including
any Lender. The foregoing provisions are not intended to relieve
Landlord from the performance of any of Landlord's obligations
under this Lease, but only to limit the personal liability of
Landlord in case of recovery of a judgment against Landlord; nor
shall the foregoing be deemed to limit Tenant's rights to obtain
injunctive relief or specific performance or other remedy which
may be accorded Tenant by law or under this Lease. If Tenant
claims or asserts that Landlord has violated or failed to perform
a covenant under the Lease, Tenant's sole remedy shall be an
action for specific performance, declaratory judgment or
injunction and in no event shall Tenant be entitled to any money
damages in any action or by way of set off, defense or
counterclaim and Tenant hereby specifically waives the right to
any money damages or other remedies for any such violation or
failure.
30.11 Memorandum of Lease. Neither party, without the
written consent of the other, will execute or record any this
Lease or any summary or memorandum of this Lease in any public
recorders office.
30.12 No Waivers: Amendments. Failure of Landlord to
insist upon strict compliance by Tenant of any condition or
provision of this Lease shall not be deemed a waiver by Landlord
of that condition. No waiver shall be effective against Landlord
unless in writing and signed by Landlord. Similarly, this Lease
cannot be amended except by a writing signed by Landlord and
Tenant.
30.13 Successors and Assigns. The conditions,
covenants and agreements contained herein shall be binding upon
and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and
assigns.
30.14 Waiver of Jury Trial, Governing Law. Landlord
and Tenant hereby waive all right to trial by jury in any claim,
action proceeding or counterclaim by either Landlord or Tenant
against each other or any matter arising out of or in any way
connected with this Lease, the relationship of Landlord and
Tenant, and/or Tenant's use or occupancy or the Premises. This
Lease shall be governed by the law of the State where the
Building is located.
30.15 Exhibits. All exhibits attached to this Lease
are a part hereof and are incorporated herein by reference and
all provisions of such exhibits shall constitute agreements,
promises and covenants of this Lease.
30.16 Captions. The captions and headings used in this
Lease are for convenience only and in no way define or limit the
scope, interpretation or content of this Lease.
30.17 Counterparts. This Lease may be executed in one
(1) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, and intending to be legally bound
hereby, the parties have duly executed this Lease with the
Exhibits attached hereto, as of the date first written above.
LANDLORD:
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: CORNERSTONE REAL ESTATE ADVISERS, INC., its agent
By: /s/ Steve Provencio
____________________
Name: Steve Provencio
Title: Vice President
TENANT:
SYNCOR INTERNATIONAL CORPORATION,
a Delaware corporation
By: /s/ Robert Glenn Funari
____________________________
Name: Robert Glenn Funari
Title: President and CEO
By: /s/ Michael E. Mikity
____________________________
Name: Michael E. Mikity
Title: Senior Vice President and CFO
<PAGE>
Certificate of Tenant
(If a Corporation)
I, Haig Bagerdjian, Secretary of Syncor International
Corp., Tenant, hereby certify that the officers executing the
foregoing Lease on behalf of Tenant is/are duly authorized to act
on behalf of and bind the Tenant.
/s/ Haig S. Bagerdjian
(Corporate Seal) ____________________________
Secretary
Date:
<PAGE>
EXHIBIT A
Plan Showing Property and Premises
<PAGE>
EXHIBIT B
Landlord's Work
1. This Agreement ("Work Letter Agreement") is
intended to set forth the obligations of Landlord and Tenant with
respect to the preparation of the Premises for Tenant's
occupancy. All improvements described in this Work Letter
Agreement to be constructed in and upon the Premises are
hereinafter referred to as the "Tenant Improvements." It is
agreed that construction of the Tenant Improvements will be
completed in accordance with the procedures set forth in this
Work Letter Agreement.
2. Tenant shall devote such time in consultation with
Landlord or Landlord's agent as may be required to provide all
necessary information to Landlord or Landlord's agent as Landlord
deems necessary in order to enable Landlord to complete, and
obtain Tenant's written approval of, the final layout, drawings,
and plans for the Premises. If Tenant fails to furnish any such
information, or fails to approve layout, drawings, or plans prior
to November 1, 1996, Landlord may, at its election, be discharged
of its obligations under this Work Letter Agreement, but the same
shall not affect or diminish Tenant's duties and obligations set
forth in the Lease, and Tenant agrees to pay on demand all costs
and expenses and increased unit prices incurred by Landlord on
account of Tenant's failure to furnish such information and
approved drawings within such prescribed times. All of Tenant's
plans and specifications shall be subject to Landlord's consent,
the granting or denial of which shall be in Landlord's reasonable
discretion.
3. Space planning and construction drawings, and when
deemed necessary by Landlord, engineering drawings, shall be
prepared by Landlord's architect. Tenant shall pay for space
planning services for Landlord's standard construction and
engineering drawings covering Landlord's standard materials, and
for any nonstandard construction and engineering drawings, or any
additional costs for drawings occasioned by special installation
other than Landlord's standard materials. Tenant may pay for
such services out of the Allowance, if any, provided in Exhibit
"B-1". Tenant shall furthermore be responsible for the design,
function and maintenance of all special improvements, whether
installed by Landlord at Tenant's request or installed by Tenant
with Landlord's prior written approval. Tenant shall use
Landlord's standard materials unless other materials are
expressly approved in writing by Landlord.
4. Landlord shall solicit bids from not less than
three (3) general contractors to construct the Tenant
Improvements, which contractors shall be chosen by Landlord.
Tenant shall select a general contractor to construct the Tenant
Improvements from such competitive bids within three (3) days
after receipt of same from Landlord. Prior to Landlord's
execution of a construction contract with such general
contractor, Tenant shall be given three (3) Business Days to
provide comments upon and propose revisions to such contract,
including proposing bonuses for early completion (provided,
however, that no such bonuses shall be paid out of the
Allowance), and penalties for late completion of the Tenant
Improvement work. Prior to commencing any construction of Tenant
Improvements, Landlord shall submit to Tenant a written estimate
setting forth the anticipated cost of the Tenant Improvements
(excluding any costs which may be specified herein or in Exhibit
"B-1" as being borne by Landlord), including but not limited to
labor and materials, contractor's fees and Landlord's
construction management fees (not to exceed three percent (3%) in
the aggregate), permit fees, and space planning, construction,
and engineering drawing costs. Within five (5) Business Days of
its receipt, Tenant shall either notify Landlord in writing of
its approval of the cost estimate, or specify its objections
thereto and desired changes to the proposed Tenant Improvements.
In the event Tenant notifies Landlord of such objections and
desired changes, Tenant shall work with Landlord to reach
acceptable plans and cost estimate; provided, however, if Tenant
fails to give written approval of a cost estimate within ten (10)
Business Days following delivery to Tenant of the original cost
estimate, Tenant shall be chargeable with one day of Delay for
each day thereafter until Tenant provides to Landlord in writing
its approval of a cost estimate.
5. In the event Landlord's estimate and/or the actual
cost of construction shall exceed the Allowance, (as defined in
Exhibit "B-1" attached hereto), if any (such amounts exceeding
the Allowance being herein referred to as the "Excess Costs"),
Tenant shall pay to Landlord such Excess Costs as follows:
(a) Tenant shall deliver to Landlord, with its
approval of the Landlord's estimate, and in any event prior to
commencement of construction, an amount equal to fifty percent
(50%) of the Excess Costs as then estimated by Landlord.
(b) After substantial completion of the Tenant
Improvements, but prior to occupancy of the Premises by Tenant,
Tenant shall pay to Landlord on demand an amount which when added
to the initial payment described in subparagraph (a) above equals
ninety percent (90%) of the Excess Costs as then estimated by
Landlord.
(c) As soon as the final accounting can be
prepared and submitted to Tenant, Tenant shall pay on demand to
Landlord the entire balance of the Excess Costs based upon the
actual cost of construction.
The statements of costs submitted to Landlord by Landlord's
contractors shall be conclusive for purposes of determining the
actual cost of the items described therein. The amounts payable
hereunder constitute other rent payable pursuant to the Lease,
and the failure to timely pay same constitutes an event of
default under the Lease.
6. If Tenant shall request any change, addition or
alteration in the working drawings, after approval by Landlord
and Tenant, Landlord shall have such working drawings prepared,
and Tenant shall promptly reimburse Landlord for the cost
thereof. Promptly upon completion of the revisions, Landlord
shall notify Tenant in writing of the cost which will be
chargeable first to any remaining Allowance and then to Tenant by
reason of such change, addition or deletion. Tenant shall,
within five (5) Business Days, notify Landlord in writing whether
it desires to proceed with such change, addition or deletion. In
the absence of such written authorization, Landlord shall have
the option to continue work on the Premises disregarding the
requested change, addition or alteration, or Landlord may elect
to discontinue work on the Premises. In the event such revisions
result in a higher estimate of the cost of construction, Tenant
shall pay to Landlord an amount sufficient to provide Landlord
with the above described fifty percent (50%) (or if applicable
ninety percent (90%)) payment toward Excess Costs.
7. Following approval of the plans and the payment by
Tenant of the required portion of the Excess Costs, if any,
Landlord shall cause the Tenant Improvements to be constructed in
accordance with the approved plans. Unless otherwise
specifically provided in the approved plans, all material used in
the construction of the Tenant's Improvements shall be of such
quality as determined by the Landlord's architect. Landlord
shall notify Tenant of substantial completion of the Tenant
Improvements.
8. Landlord shall use reasonable diligence to cause
the Tenant Improvement work to be "substantially completed" in a
timely manner, subject to delays described in Section 25 of the
Lease and delays described in Paragraph 9 of this Work Letter
Agreement. Without limitation on the foregoing, in the event of
a material breach of the construction contract by the general
contractor, Tenant may require Landlord to take commercially
reasonable efforts to enforce said contract at Tenant's sole cost
and expense. The Tenant Improvements shall be considered
"substantially completed" for all purposes under this Work Letter
Agreement and the Lease if and when Landlord's architect issues a
written certificate to Landlord and Tenant, certifying that the
Tenant Improvement work has been completed (except for minor
finish-out and "punchlist" items) in substantial compliance with
the approved plans and, if applicable, the working drawings, or
when Tenant first takes occupancy of the Premises, whichever
occurs first.
9. There shall be no extension of the Commencement
Date (as permissibly extended under Article 5 of the Lease) if
the Tenant Improvements have not been substantially completed on
said date by reason of any delay attributable to Tenant,
including without limitation:
(i) the failure of Tenant to furnish all plans,
drawings, specifications, finish details or the other information
required under Paragraph 2 above on or before the date stated in
Paragraph 2;
(ii) the failure of Tenant to comply with the
requirements of Paragraphs 5, 6 or 7, above;
(iii)Tenant's requirements for special work or
materials, finishes, or installations other than Landlord's
standards;
(iv) the performance of any other work in the
Premises by any person, firm or corporation employed by or on
behalf of Tenant, or any failure to complete or delay in
completion of such work; or
(v) any other act or omission of Tenant.
10. Landlord, in Landlord's discretion and upon
request by Tenant, will grant to Tenant and Tenant's agents a
license to enter the Premises prior to the date designated in the
Lease for the commencement of the Term in order to allow Tenant
to do other work required by Tenant to make the Premises ready
for Tenant's use and occupancy. It shall be a condition to the
grant by Landlord and continued effectiveness of such license
that:
(a) Tenant shall give to Landlord not less than
five (5) days' prior written notice of its request to have such
access to the Premises, which notice shall contain and/or shall
be accompanied by: (i) a description of and schedule for the work
to be performed by those persons and entities for whom and which
such access is being requested; (ii) the names and addresses of
all contractors, subcontractors and material suppliers for whom
and which such early access is being requested and the
approximate number of individuals, itemized by trade, who will be
present in the Premises; (iii) copies of all contracts pertaining
to the performance of the work for which such early access is
being requested; (iv) copies of all plans and specifications
pertaining to the work for which such access is being requested;
(v) copies of all licenses and permits required in connection
with the performance of the work for which such access is being
requested; (vi) certificates of insurance (in amounts and with
insured parties satisfactory to Landlord) and instruments of
indemnification against all claims, costs, expenses, damages and
liabilities which may arise in connection with such work; and
(vii) assurances of the availability of funds sufficient to pay
for all such work. All of the foregoing shall be subject to
Landlord's approval, which shall not be unreasonably withheld.
(b) Such early access shall be subject to
scheduling by Landlord.
(c) Tenant's agents, contractors, workmen,
mechanics, suppliers and invitees shall work in harmony and not
interfere with Landlord and Landlord's agents in performing the
Tenant Improvement work in the Premises or the general operation
of the Building. If at any time such entry shall cause or
threaten to cause such disharmony, Landlord may withdraw such
license upon twenty-four (24) hours' prior written notice to
Tenant.
Any such entry into and occupation of the Premises by Tenant
shall be deemed to be under all of the terms, covenants,
conditions and provisions of the Lease, excluding only the
covenant to pay Rent and specifically including the provisions of
Article 9 thereof. Landlord shall not be liable for any injury,
loss or damage which may occur to any of Tenant's work or
installations made in the Premises or to property placed therein
prior to the commencement of the Term, the same being at Tenant's
sole risk and liability. Tenant shall be liable to Landlord for
any damage to the Premises or to any portion of the Tenant
Improvements caused by Tenant or any of Tenant's employees,
agents, contractors, workmen or suppliers. In the event the
performance of the work by Tenant, its agents, employees or
contractors causes extra costs to Landlord, Tenant shall
reimburse Landlord for the entire extra cost and the cost
incurred by Landlord for the engineers or operators under
applicable union regulations or contracts.
(11) Landlord shall allow Tenant's construction
representative to be present at the Premises at all times during
the construction of the Tenant Improvements to oversee the
construction of the Tenant Improvements, monitor compliance with
the construction contract (including adherence to construction
schedules) and to propose changes to the working drawings (as
provided above). Tenant's construction representative shall
coordinate all comments and concerns through Landlord's
construction representative or project superintendent. Tenant's
construction representative shall not in any way interfere with
Landlord, its contractors, or any of their employees.
(12) The terms and provisions of the Lease, insofar as
they are applicable to this Work Letter Agreement, are hereby
incorporated herein by reference.
(13) All amounts payable by Tenant to Landlord
hereunder shall be deemed to be Rent under the Lease and upon any
default in the payment of same, Landlord shall have all of the
rights and remedies provided for in the Lease.
<PAGE>
EXHIBIT "B-1"
Landlord agrees to provide Tenant an allowance (the
"Allowance") of $1,187,724.50 toward the cost of the Tenant
Improvements (including but not limited to expenses associated
with space planning, preparation of plans and drawings, fees and
permits, etc.) and for reimbursement to Tenant of out-of-pocket
moving costs actually incurred by Tenant, from and after the date
of the Lease, in connection with moving and installing its
furniture and other equipment to the Premises. Tenant shall not
be entitled to any credit for any amount not applied to the cost
of the Tenant Improvements or its moving costs described above.
In the event the Allowance shall not be sufficient to complete
the improvements contemplated by the approved plans, Tenant shall
pay the Excess Costs as prescribed in Exhibit "B". Upon request,
Landlord shall loan Tenant up to $276,215.00 for Tenant
Improvements, amortized over 10 years at an annual compounded
rate of ten percent (10%) per annum and payable in equal monthly
installments, and payable in full upon demand upon the occurrence
of and default under the Lease or upon the early termination of
the Lease for any reason.
<PAGE>
EXHIBIT C
Tenant's Work
Subject to Tenant's right of reimbursement for certain
moving expenses, Tenant will install the following items at
Tenant's sole cost and expense:
Telephone/Data Cabling and Equipment
Trade Fixtures
All Kitchen Appliances
<PAGE>
EXHIBIT D
Building's Rules and Regulations
and Janitorial Specifications
1. The water and wash closets and other plumbing
fixtures shall not be used for any purposes other than those for
which they were constructed, and no sweepings, rubbish, rags, or
other substances shall be thrown therein.
2. No space in the Building shall be used for
manufacturing, for the storage of merchandise, or for the sale of
merchandise, goods, or property of any kind at auction, without
the prior consent of Landlord.
3. No additional locks or bolts of any kind shall be
placed upon any of the doors or windows, nor shall any changes be
made in locks or the mechanism thereof. Tenant must, upon the
termination of its tenancy, restore to Landlord all keys of
stores, offices and toilet rooms, either furnished to, or
otherwise procured by Tenant.
4. No portion of the Premises shall be used, or
permitted to be used for lodging or sleeping, or for any immoral
or illegal purposes.
5. If the Premises becomes infested with vermin,
Tenant, at its sole cost and expense, shall cause the Premises to
be exterminated, from time to time, to the satisfaction of
Landlord, and shall employ such exterminators therefor as shall
be approved by Landlord.
6. Tenant shall not clean any window in the Building
from the outside.
7. With respect to work being performed by Tenant in
the Premises which is subject to the prior approval of Landlord,
Tenant shall refer all contractors, contractors' representatives
and installation technicians to Landlord for its supervision,
approval and control prior to the performance of any work or
services. This provision shall apply to all work performed in
the Building (subject to Article 5 of the Lease) including
installation of telephones, telegraph equipment, electrical
devices and attachments, and installations of every nature
affecting floors, walls, woodwork, trim, ceilings, equipment and
any other physical portion of the Building.
8. Without Landlord's prior approval, Tenant shall
not install any radio or television antenna, loudspeaker, music
system or other device on the roof or exterior walls of the
Building.
9. Tenant shall store all trash and garbage in such
areas specifically designated by Landlord. No materials shall be
placed in the trash boxes or receptacles in the Building unless
such materials may be disposed of in the ordinary and customary
manner of removing and disposing of trash and garbage and will
not result in a violation of any law or ordinance governing such
disposal. All garbage and refuse disposal shall be only through
entryways and elevators provided for such purposes.
10. Tenant shall not employ any persons other than the
janitor or Landlord for the purpose of cleaning its premises
without the prior consent of Landlord. Tenant shall not cause
any unnecessary labor by reason of its carelessness or
indifference in the preservation of good order and cleanliness.
Janitor service shall include ordinary dusting and cleaning by
the janitor assigned to such work and shall not include beating
of carpets or rugs or moving of furniture or other special
services. Janitor service shall be furnished Mondays through
Fridays, legal holidays excepted, between the hours of 5:00 P.M.
and 7:00 A.M.; janitor service will not be furnished to areas
which are occupied after 9:30 P.M. Window cleaning shall be done
only by Landlord, and only between 6:00 A.M and 5:00 P.M.
(Attach Janitorial Specifications and Elevator Maintenance
Contract for the Property)<PAGE>
EXHIBIT E
Commencement Date Confirmation
DECLARATION BY LANDLORD AND TENANT AS TO DATE OF DELIVERY
AND ACCEPTANCE OF POSSESSION OF PREMISES
Attached to and made a part of the Lease dated the
______ day of ________________, 199__, entered into and by
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY as LANDLORD, and
_____________________________________________ as TENANT.
LANDLORD AND TENANT do hereby declare that possession of the
Premises was accepted by TENANT on the _____ day of ___________,
199__. The Premises required to be constructed and finished by
LANDLORD in accordance with the provisions of the Lease have been
satisfactorily completed by LANDLORD and accepted by TENANT, the
Lease is now in full force and effect, and as of the date hereof,
LANDLORD has fulfilled all of its obligations under the Lease.
The Lease Commencement Date is hereby established as
______________________, 199___. The Term of this Lease shall
terminate on _______________, 199__.
LANDLORD:
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: CORNERSTONE REAL ESTATE
ADVISERS, INC., its agent
By: ____________________________
Name Typed:
Title:
Date:
TENANT:
By: ____________________________
Name Typed:
Title:
Date:
<PAGE>
EXHIBIT "F"
RIGHT OF FIRST OPPORTUNITY TO NEGOTIATE
Prior to marketing the Building for sale, Landlord will
send a written notice (the "Sale Notice") to Tenant requesting
Tenant to make an offer to purchase the Building. If Landlord
receives an offer (the "Offer") from Tenant within 15 days of
Tenant's receipt of the Sale Notice, Landlord shall either accept
or reject the Offer, as determined by Landlord in Landlord's sole
discretion, within 10 days of Landlord's receipt thereof. In the
event that Landlord rejects the Offer, Landlord and Tenant hereby
agree to negotiate in good faith for a period of up to, but not
more than thirty (30) days after Landlord's rejection, to reach
an agreement as to the basic terms on which Tenant would purchase
and Landlord would sell the Building (each, a "Counter-Offer").
If Landlord notifies Tenant in writing of the acceptance of the
Offer within such 10-day period, or at any time during said
30-day negotiation period of a Counter-Offer, Landlord and Tenant
shall enter into a written agreement of purchase and sale
("Purchase Agreement") containing appropriate and mutually
acceptable terms and conditions relating to the purchase and sale
of the Building. In the event that Tenant does not notify
Landlord in writing of any Offer within the 15 day period
specified above, or Landlord rejects Tenant's final Counter-Offer
(and said 30-day negotiation period has expired), or Landlord and
Tenant fail to execute a Purchase Agreement within 30 days
following the acceptance of the Offer or Counter-Offer (as the
case may be) by Landlord, then Tenant's rights under this
paragraph shall automatically terminate and Landlord shall be
free to market the Building to any third parties on any terms and
at any price determined by Landlord, including on terms
(including, without limitation, price) more favorable than those
contained in any Offer or Counter-Offer. Any termination of the
Lease shall terminate all rights of Tenant with respect to the
matters contained in this Paragraph. The rights of Tenant with
respect to the matters contained in this Paragraph shall not be
severable from the Lease, nor may such rights be assigned or
otherwise conveyed in connection with any permitted assignment of
the Lease. Landlord's consent to any assignment of the Lease
shall not be construed as allowing an assignment or a conveyance
of such rights to any assignee. Nothing herein contained should
be construed so as to limit or abridge Landlord's ability to sell
the Building to any other party, Landlord's sole obligation being
to offer Tenant a right of first negotiation as set forth above,
and if such offer is accepted, to negotiate the Purchase
Agreement with Tenant in accordance with this provision.
Landlord shall not be responsible to pay any commissions to any
broker in connection with any sale to Tenant.
Notwithstanding the foregoing, Tenant acknowledges and
agrees that the rights described in this Exhibit "F" are subject
and subordinate to the rights of Nomura Warner Center Associates,
L.P., a California limited partnership ("Nomura") under that
certain Right of First Negotiation Agreement dated as of July 6,
1990, by and between Nomura and Landlord's
predecessor-in-interest with respect to the Property, 6464 TW
Associates, L.P., a California limited partnership, and recorded
in the Official Records of Los Angeles County, California, on
July 10, 1990, as Instrument No. 90-1207845.
<PAGE>
EXHIBIT "G"
RENEWAL OPTION
Provided that no material event of default by Tenant
has occurred under any term or provision contained in this Lease
during the 30 month period preceding Tenant's delivery of a
notice of exercise of its Renewal Option (as defined below) and
no condition exists which with the passage of time or the giving
of notice or both would constitute an event of default pursuant
to this Lease, Tenant (but not any assignee or subtenant) shall
have the right and option (the "Renewal Option") to renew this
Lease, by irrevocable and unconditional written notice delivered
to Landlord no later than 9 months prior to the expiration of the
initial Lease Term, for an additional term (the "Renewal Term")
of sixty (60) months under the same terms, conditions and
covenants contained in the Lease, except that (a) the Rent shall
be equal to the then current market rental rate for comparable
office space as of the end of the initial Lease Term, (b) Tenant
shall have no option to renew this Lease beyond the expiration of
the Renewal Term, and (c) all leasehold improvements within the
Premises shall be provided in their then existing condition (on
an "as is" basis) at the time the Renewal Term commences
(provided that this provision shall not be construed to relieve
Landlord of its obligations under the Lease to repair and/or
maintain the Premises). Failure by Tenant to notify Landlord in
writing of Tenant's election to exercise the Renewal Option
herein granted within the time limits set forth for such exercise
shall constitute a waiver of such Renewal Option.
In the event Tenant elects to exercise the Renewal
Option as set forth above, Landlord shall, within 45 days
thereafter, notify Tenant in writing of the proposed rental for
the Renewal Term (the "Proposed Renewal Rental") which shall be
derived by Landlord using the then prevailing market rate (the
"Prevailing Rate") for space reasonably comparable to the
Premises (taking into account concessions then being granted by
landlords for reasonably comparable tenants) in the general
vicinity of the Building. Tenant shall within thirty (30) days
following delivery of the Proposed Renewal Rental by Landlord
notify Landlord in writing of the acceptance or rejection of the
Proposed Renewal Rental. If Tenant accepts Landlord's proposal,
then the Proposed Renewal Rental shall be the rental rate in
effect during the Renewal Term. Should Tenant reject Landlord's
Proposed Renewal Rental during such thirty (30) day period, then
Landlord and Tenant shall negotiate in good faith during the
thirty (30) day period commencing upon Tenant's rejection of
Landlord's Proposed Renewal Rental to determine the Prevailing
Rate. In the event Landlord and Tenant are unable to agree on
the Prevailing Rate during said thirty (30) day period, then each
party shall place in a separate sealed envelope their final
proposal as to the Prevailing Rate, which final proposals shall
be delivered to an arbitrator, and which Prevailing Rate shall be
determined by said arbitrator, as follows:
(a) Landlord and Tenant shall agree upon and jointly
appoint a single arbitrator within ten (10) Business Days after
the expiration of the thirty (30) day negotiation period, which
arbitrator shall by profession be a real estate broker who shall
have been active over the five (5) year period ending on the date
of such appointment in the leasing of commercial office
properties in Los Angeles County, California. Neither Landlord
nor Tenant shall consult with such broker as to his or her
opinion as to Prevailing Rate prior to the appointment. The
determination of the arbitrator shall be limited solely to the
issue of whether Landlord's or Tenant's submitted Prevailing Rate
for the Premises is the closest to the actual Prevailing Rate for
the Premises as determined by the arbitrator, taking into account
the requirements of this provision regarding same. Such
arbitrator may hold such hearings and require such briefs as the
arbitrator, in his or her sole discretion, determines is
necessary.
(b) The arbitrator shall, within thirty (30) days of
his or her appointment, reach a decision as to whether the
parties shall use Landlord's or Tenant's submitted Prevailing
Rate, and shall notify Landlord and Tenant of such determination.
(c) The decision of the arbitrator shall be binding
upon Landlord and Tenant.
(d) If Landlord and Tenant fail to agree upon and
appoint an arbitrator, then the appointment of the arbitrator
shall be made by the Presiding Judge of the Los Angeles Superior
Court, or, if he or she refuses to act, by any judge having
jurisdiction over the parties.
(e) The cost of arbitration shall be paid by Landlord
and Tenant equally.
Upon the agreement (by arbitration or otherwise) of
Landlord and Tenant on the Prevailing Rate, and subject to the
conditions set forth hereinabove, Landlord and Tenant shall enter
into a written agreement modifying and supplementing the Lease in
accordance with the provisions hereof. Any termination of the
Lease during the initial Lease Term shall terminate all renewal
rights hereunder. The renewal rights of Tenant hereunder shall
not be severable from the Lease, nor may such rights be assigned
or otherwise conveyed in connection with any permitted assignment
of the Lease. Landlord's consent to any assignment of the Lease
shall not be construed as allowing an assignment of such rights
to any assignee.<PAGE>
Exhibit 10.20
STATE OF GEORGIA
COUNTY OF FULTON
LEASE
THIS LEASE made this 30th day of May 1996, between
TECHNOLOGY PARK/ATLANTA, INC., a Georgia corporation
(hereinafter called "Lessor"), and SYNCOR INTERNATIONAL
CORPORATION, a Delaware corporation (hereinafter called
"Lessee"):
WITNESSETH: THAT,
WHEREAS, Lessor is the owner of that certain building
situated at 6455 East Johns Crossing, Duluth, Fulton County,
Georgia (hereinafter called the "Building") and located on the
property (hereinafter called the "Land"; the Land and the
Building are herein collectively called the "Property") described
on Exhibit "A", attached hereto and by this reference
incorporated herein; and
WHEREAS, Lessee wishes to lease from Lessor approximately
25,608 rentable square feet (22,297 usable square feet) of the
Building, which area is outlined in red on the diagram marked
Exhibit "B", attached hereto and by this reference incorporated
herein and made a part hereof (hereinafter called the
"Premises");
NOW, THEREFORE, in consideration of the payment of the rent
and the keeping and performance of the covenants and agreements
by Lessee as hereinafter set forth, Lessor does hereby lease to
Lessee, and Lessee does hereby lease from Lessor, the Premises.
Lessor has not made any representation or warranty as to the
suitability of the Premises for the conduct of Lessee's business.
No easement for light or air is included in the Premises.
FOR AND IN CONSIDERATION of the leasing of the Premises as
aforesaid, the parties hereby covenant and agree as follows:
1. TERM. Subject to Section 22 hereof, the term
(hereinafter called the "Lease Term") of this Lease shall
commence on the earlier of (a) seven (7) days after the issuance
of a temporary certificate of occupancy, or (b) the date of
occupancy of the Premises by Lessee (hereinafter called the
"Commencement Date") and, unless sooner terminated pursuant to
the provisions hereof, shall expire at 11:59 p.m. on October 17,
2006.
2. RENT.
2.1 The annual base rental (hereinafter called "Annual
Base Rental") for the Premises shall be FOUR HUNDRED FORTY EIGHT
THOUSAND ONE HUNDRED FORTY AND NO/100 DOLLARS ($448,140.00). The
Annual Base Rental shall be payable in equal monthly installments
of THIRTY SEVEN THOUSAND THREE HUNDRED FORTY FIVE AND NO/100
DOLLARS ($37,345.00) (hereinafter called "Base Rent") in advance
on the first day of each and every calendar month during the
Lease Term. Base Rent shall be prorated at the rate of 1/30th of
the Base Rent per day for any partial month. Beginning on
September 1, 1997 and each September 1 thereafter during the
lease term, the Annual Base Rental and Base Rent shall
automatically increase by an amount equal to two percent (2%)over
the preceding year's Annual Base Rental and Base Rent.
2.2 Lessee shall pay the rent and all other sums,
amounts, liabilities, and obligations which Lessee herein assumes
or agrees to pay (whether designated Base Rent, additional rent,
costs, expenses, damages, losses, or otherwise) (all of which are
hereinafter called "Amount Due") as herein provided promptly at
the times and in the manner herein, specified without deduction,
set off, abatement, counterclaim, or defense. If any Amount Due
is not received by Lessor within ten days of the date on which it
is due, Lessee shall pay Lessor a late charge equal to five
percent (5%) of the amount of such past due payment,
notwithstanding the date on which such payment is actually paid
to Lessor. If such Amount Due is not paid within thirty (30)
days of the date on which it was originally due, then, in
addition to such late charge, Lessee shall pay Lessor interest on
such Amount Due from the date on which it was originally due
until the date it is actually paid at a rate per annum equal to
the lesser of (i) the prime rate of interest announced by
Wachovia Bank of Georgia, N.A., or its successors, from time to
time for 90-day unsecured loans to its best commercial customers
plus three percent (3%) or (ii) the maximum rate permitted by
applicable law. Any such late charge and interest shall be due
and payable at the time of actual payment of the Amount Due. Any
Amount Due payable to Lessor by Lessee shall be paid in cash or
by check at the office of Lessor, c/o Technology Park/Atlanta,
Inc., Suite 150, 11555 Medlock Bridge Road, Duluth, Georgia
30155, or at such other place or places as Lessor may from time
to time designate in writing.
3. OPERATING EXPENSES.
3.1 Beginning on January 1, l998 and on the first day
of each January thereafter during the Lease Term, Lessee shall
pay to Lessor as additional rent Lessee's Proportionate Share of
Common Operating Expenses (as hereinafter defined) for the
ensuing calendar year in excess of the actual Common Operating
Expenses during the calendar year 1997 (hereinafter called the
"Base Year"), as adjusted to reflect a one hundred percent (100%)
occupancy as set forth below. Lessee shall also pay as additional
rent all other charges, costs and expenses which are not included
within Common Operating Expenses and which are incurred by Lessor
at the request of Lessee as a result of any use of the Premises
by Lessee. Lessee's Proportionate Share of Common Operating
Expenses shall be prorated, on a daily basis using a 365-day
calendar year, as necessary for any year during which this Lease
is in effect for less than the full twelve month calendar year.
Common Operating Expenses shall be calculated on an accrual
basis. For the purpose of determining the Common Operating
Expenses during the Base Year, and for estimating the Common
Operating Expenses during each subsequent year after the Base
Year, Lessor shall reasonably estimate such expenses assuming one
hundred percent (100%) occupancy of the Building based on the
actual Common Operating expenses for the preceding year, any
then-known cost changes or additional expenses which can be
reasonably anticipated to occur within the year for which such
expenses are estimated, Lessor's experience with similar office
buildings, the costs of contracts already entered, quotes
obtained, representations of providers of the services and
equipment, consultation with specialists such as insurers, and
other factors a prudent lessor would use to make a fair and
accurate estimate of operating costs. Notwithstanding the
foregoing if the actual Common Operating Expenses for the Base
Year, as adjusted aforesaid (to reflect a one hundred percent
(100%) occupancy), as adjusted aforesaid, are more than $5.50 per
rentable square foot of the Building, then the Annual Base Rental
payable by Lessee per rentable square foot of the Premises during
calendar year 1997 shall be increased by an aggregate amount (to
be prorated over a twelve-month period) equal to the difference
of such actual Common Operating Expenses for the Base Year per
rentable square foot of the Building minus $5.50. In the event
the actual Common Operating Expenses for the calendar year 1997
exceed $6.00 per rentable square foot, then the difference
between the actual Base Year Operating Expenses and $6.00 shall
be added to $5.50 the total of which shall become the new figure
to be compared with Base Year and subsequent year Common
Operating Expenses. It is hereby agreed that Common Operating
Expense increases shall be limited to eight percent (8%) per year
and this increase limitation shall be cumulative year to year so,
for example, increases in the second year shall be less than or
equal to 16%.
3.2 "Lessee's Proportionate Share of Common Operating
Expenses" shall mean, for each calendar year (or portion
thereof), 26.15% (which represents that percentage of the
Building occupied by the Tenant pursuant to this Lease) of the
Operating Expense Amount (defined below). As used herein the
"Operating Expense Amount" shall mean, for each calendar year (or
portion thereof), the amount by which the Common Operating
Expenses (defined below) exceeds the Base Year's Common Operating
Expenses.
3.3 For purposes of this Lease, the term "Common
Operating Expenses" shall consist of all "operating costs" (as
hereinafter defined) for the Building, the parking area adjacent
to the Building, and the Land (the Building, such parking area
and the Land being hereinafter referred to collectively as the
"Project"; the Project is further described on Exhibit "A"). For
purposes of this Lease, the term "operating costs" shall mean all
reasonable expenses, costs and disbursements (subject to the
exclusions set forth in subparagraph 3.3.13 hereof, computed on
the accrual basis, relating to or incurred or paid in connection
with the operation, maintenance and repair of the Project all in
accordance with generally accepted accounting principles
appropriate for prudent real estate practice, consistently
applied, including, but not limited to the following:
3.3.1 The wages and salaries of all ernployees
(not excluded in paragraph 3.3.13) engaged in the operation and
maintenance of the Project, including employers' Social Security
taxes, unemployment and any other taxes which may be levied on or
with respect to such wages and salaries, allocated based upon the
time such employees are engaged directly in providing such
services, excluding wage and salaries of property managers.
3.3.2. The cost of all supplies, tools, equipment
and materials used in the operation and maintenance of the
Project to the extent so utilized.
3.3.3. The cost of water, sewer, heating,
lighting, ventilation, electricity, air conditioning, and any
other utilities supplied or paid for by Lessor for the Project
and the costs of maintaining the systems supplying the same,
including, but not limited to, any utility and service costs
incurred by Lessor pursuant to paragraph 5 hereof.
3.3.4. The cost of all agreements for maintenance
and service of the Project and the equipment therein, including,
but not limited to, agreements relating to security service,
window cleaning, elevator maintenance, janitorial service, pest
control and landscaping maintenance.
3.3.5 The cost of maintaining sprinkler systems,
fire extinguishers and fire hoses and the cost of all security
services and protective services or devices rendered to or in
connection with the Project or any part thereof.
3.3.6. Insurance premiums for insurance for the
Project required to be maintained by Lessor hereunder or which a
prudent owner would carry, including, but not limited to,
premiums for insurance maintained by Lessor pursuant to Section 9
hereof, business interruption or rental abatement insurance and
liability insurance (but exclusive of additional premiums caused
and paid for by Lessee or any other tenant of the Building).
3.3.7. The cost of repairs and general
maintenance of the Project (excluding repairs, alterations and
general maintenance paid by proceeds of insurance or attributable
solely to tenants of the Project other than Lessee or to other
projects), including, but not limited to: maintenance and
cleaning of general common areas and facilities; lawn mowing,
gardening, landscaping, and irrigation of landscaped areas; line
painting, pavement maintenance (but not replacement), sweeping,
and sanitary control; removal of snow, trash. rubbish, garbage,
and other refuse; the cost of personnel to implement such
services, to direct parking, and to police the general common
areas; the cost of exterior and interior painting of common
areas; all maintenance and repair costs (but excluding all
replacement costs on capital items) incurred pursuant to
subsections 6.1 and 10.4 hereof; and the cost of maintenance of
sewers and utility lines.
3.3.8. The amortization (together with reasonable
financing charges) of the cost of installation of capital
investment items which are installed for the purpose of reducing
operating expenses or complying with governmental requirements
but only to the extent of the savings created by such equipment
during each year such charges are included in Common Operating
Expenses.
3.3.9. All taxes, assessments, and governmental
or other charges, general or special ordinary or extraordinary,
foreseen or unforeseen, which are levied, assessed, or otherwise
imposed against the Project street lights, personal property or
rents, or on the right or privilege of leasing the Project,
collecting rents therefrom or parking vehicles thereon, by any
federal, state, county, or municipal government or by any special
sanitation district or by any other governmental or
quasi-governmental entity that has taxing or assessment
authority, and any other taxes and assessments attributable to
the Project or its operation (herein collectively called the
"Impositions"), but exclusive of federal, state and local income
taxes of Lessor, inheritance taxes, estate taxes, gift taxes,
transfer taxes, excess profit taxes and any taxes imposed in lieu
of such taxes. If at any time during the Lease Term, the present
method of taxation or assessment shall be so changed that the
whole or any part of the Impositions now levied, assessed or
imposed on real estate and the improvements thereon shall be
discontinued and as a substitute therefor), or in lieu of and in
addition thereof, taxes, assessments, levies, impositions or
charges shall be levied, assessed and/or imposed wholly or
partially as a capital levy or otherwise on the rents received
from the Project or the rents reserved herein or any part
thereof, then such substitute or additional taxes, assessments,
levies, impositions or charges, to the extent so levied, assessed
or imposed, shall be deemed to be included within the Impositions
and the operating costs. Lessee will be responsible for ad
valorem taxes on its personal property and on the value of the
leasehold improvements in the Premises to the extent the same
exceed building standard allowances (and if the taxing
authorities do not separately assess Lessee's leasehold
improvements. Lessor may make a reasonable allocation of the ad
valorem taxes allocated to the Project to give effect to this
sentence). Lessor shall take reasonable steps to protest any
increase in real estate or ad valorem taxes and assessments on
the Building or the land on which the Building is situated,
including without limitation Lessor's timely response to any
notice of increase of assessed value of the land on which the
Building is located. Lessee shall not be charged for any
assessment imposed as a result of Lessor's request to the
applicable governmental entity for capital improvements to
Lessor's project in which the Premises are located, which
improvements benefit said project without providing any
substantial increase in benefits to Lessee over those for which
Lessee bargained in this Lease.
3.3.10 A management fee equal to four percent
(4%) of all rental amounts collected with respect to the
Building.
3.3.11 All assessments (if any) assessed against
the Project during the Lease Term pursuant to any protective
covenants now or hereafter of record against the Project or the
Building, including, without limitation, any assessments imposed
for the maintenance and repair of the common areas of the park
(development) but only to the extent that such assessments do not
pay for any capital improvements to Lessor's project.
3.3.12 Any real estate tax incentives, reductions
or abatements received by Lessor shall reduce operating costs;
however, the costs and expenses incurred by Lessor, including,
without limitation, the fees and expenses of Lessor's real estate
tax service, appraisers and attorneys, in obtaining any such
incentives, reductions or abatements shall be included within the
operating costs. Lessor shall pay taxes timely to avoid
penalties, interest, and surcharges.
3.3.13 Anything in this Lease to the contrary
notwithstanding, there shall be excluded from operating costs the
following items:
(a) Repairs or other work occasioned by
fire, windstorm or other casualty of an insurable nature, or by
the exercise of eminent domain; however, there shall be included
in operating costs the amount of any deductible under Lessor's
policy or policies of casualty insurance (which deductible shall
not exceed $5,000.00 per occurrence).
(b) Leasing commissions, attorneys' fees,
costs and disbursements and other expenses incurred in connection
with negotiations or disputes with tenants, other occupants, or
prospective tenants.
(c) The costs of renovating or otherwise
improving or decorating, painting or redecorating space for
tenants or other occupants; however, any such costs incurred with
respect to the common areas of the Project shall be included
within operating costs.
(d) Lessor's costs for electricity and other
services that are sold to tenants and for which Lessor is
entitled to a reimbursement by tenants as an additional charge,
whether or not Lessor receives such reimbursement.
(e) Costs incurred by Lessor for alterations
which are considered capital improvements and replacements under
generally accepted accounting principles, except those permitted
by subparagraph 3.3.8 hereof.
(f) Depreciation and amortization, except
for the amortization that permitted by subparagraph 3.3.8 hereof.
(g) Costs of a capital nature including but
not limited to capital improvements, capital repairs, capital
equipment and capital tools; however, those costs of a capital
nature permitted by subparagraph 3.3.8 hereof shall be included
within operating costs.
(h) Expenses in connection with services or
other benefits of a type provided to another tenant which are not
provided to Lessee.
(i) Wages, salaries or other compensation or
benefits for any officers or employees of Lessor above the grade
of Building Manager.
(j) The Common Operating Expense payable by
Lessee shall be deemed to exclude any and all executive salaries
above that of property manager, interest, payment due under any
note, deed to secure debt, or mortgage encumbering the Building
in which the Premises is located or under any underlying superior
lease or ground lease and all expenses of a capital nature not
specifically permitted in this Lease.
3.4 Nothing contained in this Section 3, including,
but not limited to, the definition of "operating costs" contained
in subsection 3.3 hereof, shall imply any duty on the part of
Lessor to pay any expense or provide any service not otherwise
imposed by the express terms of this Lease.
3.5 Prior to December 31, 1996 and prior to December
31 of each subsequent calendar year during the Lease Term, Lessor
shall estimate the amount of Common Operating Expenses and
Lessee's Proportionate Share of Common Operating Expenses for the
ensuing calendar year or (if applicable) broken portion thereof
and notify Lessee in writing of such estimate. Such estimate
shall be made by Lessor in the exercise of its reasonable
discretion, and Lessee shall continue paying Lessee's
Proportionate Share of Common Operating Expenses in accordance
with this Section 3, if Lessee challenges whether such estimate
by Lessor is reasonable until such dispute is conclusively
resolved between the parties. The amount of additional rent
specified in such notification shall be paid by Lessee to Lessor
in equal monthly installments in advance on the first day of each
month of such ensuing calendar year, at the same time and in the
same manner as Base Rent. Common Operating Expense both estimated
and actual will be itemized by major expense categories.
3.6 Within ninety (90) days alter December 31 of any
calendar year during the Lease Term for which additional rent is
due under this Section 3, Lessor shall advise Lessee in writing,
of the amount of actual Common Operating Expenses for such
calendar year. If the Common Operating Expenses for such calendar
year prove to be greater than the amount previously estimated,
Lessor shall invoice Lessee for the deficiency as soon as
practicable after the amount of underpayment has been determined,
and Lessee shall pay such deficiency to Lessor within thirty (30)
days following its receipt of such invoice. If, however, Common
Operating Expenses for such calendar year are lower than the
amount previously estimated, Lessee shall receive a credit (or in
the event the term of this Lease has then expired, Lessee shall
receive a prompt cash refund) toward the next ensuing monthly
payment or payments of the estimated amount of Lessee's
Proportionate Share of Common Operating Expenses in the amount of
such overpayment until depleted, but in no event shall Lessee's
Proportionate Share of Common Operating Expenses be deemed to be
less than zero.
3.7 Lessee may, upon ten (10) days prior written
notice to Lessor, at Lessee's expense and at any reasonable time.
audit the books and supporting documentation of Lessor pertaining
to the determination of Common Operating Expenses for the Base
Year, and for any other calendar year not more than three (3)
years prior to the year in which such audit is to take place. If
Lessee disputes the amount of additional rent due pursuant to
paragraph 3.6 hereof and Lessor and Lessee are unable to resolve
the dispute by good faith efforts, Lessee may institute
arbitration proceedings and such dispute shall be settled by
arbitration in the City of Atlanta. Georgia, by a panel of three
members in accordance with the rules then in effect of the
American Arbitration Association; provided, however, that Lessee
shall immediately pay any disputed amount to Lessor, and if the
arbitrators find that Lessee has paid more than the Lessee's
Proportionate Share of Common Operating Expenses for the
previous calendar year, Lessor shall immediately refund such
overpayment to Lessee. The decision of the arbitrators acting
hereunder shall be binding and conclusive upon the parties.
Lessor and Lessee shall each pay one-half of the cost of such
arbitration provided, however, that if the arbitrators determine
that the arbitration proceedings were not instituted in good
faith by Lessee, Lessee shall pay the full cost thereof or in the
event the arbitrators determine that the Common Operating
Expenses were not determined in good faith by Lessor, Lessor
shall pay the full cost thereof. *
* Notwithstanding any disputes which are taken to
arbitration in accordance with the provisions of this
paragraph, Lessee shall continue paying to Lessor any
increase in the Common Operating Expenses not the subject of
said dispute.
4. INTENTIONALLY DELETED.
5. USE.
5.1 Lessee (and its permitted assignees and
subtenants) shall use the Premises only for general business.
administration, sales, and service, not in violation of the
restrictive covenants hereinafter referred to, and for no other
purpose without the prior written consent of Lessor. Lessee shall
operate its business in the Premises during the entire Lease Term
and in a reputable manner in compliance with all applicable laws,
ordinances, regulations, covenants, restrictions, and other
matters shown on the public records, now in force or hereinafter
enacted. Lessee will not permit, create, or maintain any
disorderly conduct, trespass, noise, or nuisance whatsoever about
the Premises which has a tendency to annoy or disturb any
persons occupying adjacent premises either within or without the
Building.
5.2 Lessee shall not place or maintain machines,
equipment, or other apparatus which causes vibrations or noise
that may be transmitted to the Building structure or to any space
to such a degree as to be objectionable to Lessor or to any
tenant, occupant. or other person in the Building. Neither Lessee
nor any of Lessee's employees, agents or invitees shall place or
maintain within the Premises any stoves, ovens or space heaters,
except that Lessee may maintain one (1) microwave oven within the
Premises so long as such microwave oven uses standard 110V
electrical service. Lessee shall not make or permit any odor that
is objectionable to the public or to other occupants of the
Building, to emanate from the Premises, and shall not create,
permit or maintain a nuisance thereon, and shall not do any act
tending to injure the reputation of the Building.
5.3 Lessee shall cause all loading and unloading of
any goods or materials delivered to or sent from the Premises to
be done only in the loading dock area of the Premises or, if no
loading dock area is located at the Premises, then at the loading
dock area of the Building or such other dock area as Lessor may
designate. Under no circumstances shall Lessee allow any goods or
materials delivered to or sent from the Premises to be stored on,
accumulate on or obstruct the loading dock area, dumpster pad,
sidewalks, driveways, parking areas, entrances or other public
areas or spaces of the Building or the Property. Lessee
acknowledges that violations of this Paragraph 5.3 shall
constitute a material breach of this Lease.
5.4 Lessee shall not perform or permit any work,
including, but not limited to, assembly, construction, mechanical
work, painting, drying, layout, cleaning, or repair of goods or
materials, to be done on the loading dock, sidewalks, driveways,
parking areas, landscaped areas of the Building or the Property.
5.5 Lessee shall not use, handle, store, deal in,
discharge, or fabricate any environmentally hazardous wastes,
substances or materials as the same are now or hereafter may be
defined or classified by any local, state, or federal
environmental protection legislation or regulation issued
pursuant thereto.
5.6 Lessee shall not abandon or vacate the Premises at
any time during the Lease Term.
6. UTILITIES AND SERVICE.
6.1 Except to the extent directly contracted for by
Lessee, Lessor shall furnish or cause to be furnished to the
Premises between 7:00 a.m. and 6:00 p.m. Monday through Friday
and between 8:00 a.m. and 1:00 p.m. on Saturdays, exclusive of
all holidays, subject to any rules and regulations of the
Building, water and sewer services suitable for Lessees intended
use of the Premises, electricity as set forth in Paragraph 6.2
hereof, and heat and air conditioning required in Lessor's
reasonable judgment for the comfortable use and occupation of the
Premises. As used in this Paragraph 6.1, the term "holiday"
shall mean New Years Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. Lessor shall provide
lighting facilities for the common entries, hallways, stairways,
and restroom facilities in the Building. Lessee will install and
pay for its own telephone service.
6.2 Lessor, at Lessor's sole cost and expense, shall
cause to be furnished to the Premises sufficient power for
building standard fluorescent lighting, personal computers,
normal office copying machines, typewriters, voice writers,
calculating machines, and other normal office machines of similar
low electrical consumption; but not including electricity
required for electronic data processing equipment, special
lighting, or any other item of electrical equipment which singly
consumes more than 0.25 kilowatts at rated capacity or requires a
voltage other than 120 volts single phase. Lessee shall not
install or use any other equipment using electric power without
the prior written consent of Lessor, and, if Lessor gives written
consent then Lessee shall pay the cost of the power to operate
the equipment, as determined by Lessor, and if the installation
of such electrical equipment requires additional air conditioning
capacity above that provided by the building standard system then
the additional air conditioning installation and operating costs
will be the obligation of Lessee.
6.3 Lessor shall not be held liable for any damage or
injury suffered by Lessee or by any of Lessee's licensees,
agents, invitees, servants, employees, contractors, or
subcontractors or any other person or entity engaged, invited, or
allowed to come onto the Premises by Lessee (hereinafter
collectively referred to as "Lessee Parties"), resulting
directly, indirectly, proximately, or remotely from the
installation, use, or interruption of any utility service to the
Premises or Building, including, but not limited to, temporary
failure to supply any heating, air conditioning, electrical,
water, or sewer services, or any of them. No temporary failure
to provide services shall relieve Lessee from fulfillment of any
covenant of this Lease, including, without limitation, the
covenant to pay any Amount Due in the manner and amounts, and
promptly at the times set forth herein.
6.4 Lessor shall furnish Lessee janitorial service
five (5) days per week, exclusive of holidays, in a manner that
Lessor reasonably deems to be consistent with the first-class
standard of the Building.
7. MAINTENANCE.
7.1 Except for damage arising from the negligence of
Lessee or the Lessee Parties, Lessor shall keep the roof,
foundation, exterior walls, common areas, and all sewer and
utility lines of the Building, including all sewer connections,
plumbing, heating appliances, wiring, and glass, in good order
and repair, shall furnish Lessee all Building standard florescent
bulb replacement in all areas and all incandescent bulb
replacement in the common areas and service areas within the
Building. Notwithstanding anything to the contrary contained
herein and except as otherwise provided in the preceding
sentence, Lessor shall have no obligation to maintain, or repair
any other improvements located within the Premises, the
maintenance of which is and shall be the responsibility of
Lessee.
7.2 Lessor shall have no obligation to make any
repairs unless and until Lessee notifies Lessor in writing of the
necessity thereof, in which event Lessor shall have reasonable
time (excepting in event of an emergency) in which to make such
repairs, however, Lessee may notify Lessor verbally of any minor,
routine or day-to-day repairs which need to be made.
7.3 Subject to Lessor's obligation to provide
janitorial services, Lessee shall keep the Premises free from all
litter, dirt, debris and obstructions and in a clean and sanitary
condition. Except as otherwise provided in the first sentence of
paragraph 7.1 hereof, Lessee shall maintain, and repair all
improvements located within the Premises, including, but not
limited to, finishes, wall coverings, carpets, floor coverings,
utility lines, (off site) sewer connections (off site), plumbing,
wiring and glass which are or were installed for Lessee. At the
expiration or other termination of this Lease, Lessee shall
surrender the Premises (and keys thereto) in as good condition as
when received, loss by fire or other casualty not the result of
any act or omission by Lessee, or ordinary wear and tear only
excepted.
8. FORCE MAJEURE. In the event that either party hereto
shall be delayed or hindered in or prevented from the performance
of any act required hereunder by reason of strikes, lockouts,
labor troubles, inability to procure materials, failure of power,
restrictive government laws or regulations, riots, insurrection,
war, or other reason of a like nature other than finance not the
fault of the party delayed in performing work or doing acts
required under the terms of this Lease, then performance of such
act shall he excused for the period of the delay and the period
for the performance of any such act shall be extended for a
period equivalent to the period of the delay. The provisions of
this Section 8 shall not cancel, postpone, or delay the due date
of any payment to be made by Lessee hereunder, nor operate to
excuse Lessee from prompt payment of any Amount Due required by
the terms of this Lease.
9. PROPERTY AND LIABILITY INSURANCE.
9.1 Throughout the Lease Term, Lessor will insure the
Building (excluding foundations and excavations), the Building
standard leasehold improvements, and the machinery, boilers, and
equipment contained therein owned by Lessor (excluding any
property Lessee is obliged to insure pursuant to Paragraph 9.3
below) against damage by fire and the perils insured in the
standard extended coverage endorsement. Lessor shall so,
throughout the Lease Term, carry public liability insurance with
respect to the ownership and operation of the Building.
9.2 Lessee shall comply with all insurance regulations
so the lowest fire, extended coverage, and liability insurance
rates available for use of the Building as normal office space
may be obtained by Lessor and will not use or keep any substance
or material in or about the Premises which may vitiate or
endanger the validity of insurance on the Building, increase the
hazard or the risk beyond that for a normal office building or
result in an increase in premium on the insurance on the
Building. If any insurance policy upon the Premises or the
Building or any part thereof shall be canceled or shall be
threatened by the insurer to be canceled, the coverage thereunder
reduced or threatened to be reduced, or the premium therefor
increased or threatened to be increased in any way by the insurer
by reason of the use and occupation of the Premises by Lessee or
by any assignee or subtenant of Lessee and if Lessee fails to
remedy the condition giving rise to the cancellation, reduction,
or premium increase or threat thereof within twenty-four (24)
hours after notice thereof by Lessor. Lessor may, at its option,
do any one of the following:
9.2.1 Declare a default by Lessee, and thereupon
the provisions of Section 12 shall apply; or
9.2.2 Enter upon the Premises and remedy the
condition giving rise to the cancellation, reduction, or premium
increase or threat thereof, and in such event, Lessee shall
forthwith pay the cost thereof to Lessor as additional rent; and
if Lessee fails to pay such cost, Lessor may declare a default by
Lessee and thereupon the provisions of Section 12 shall apply
(Lessor shall not be liable for any damage or injury caused to
any property of Lessee or of others located on the Premises as a
result of the re-entry); or
9.2.3 If the sole action taken by the insurer is
to raise the premium or other monetary cost of the insurance,
demand payment from Lessee of the premium or other cost as
additional rent hereunder, and if Lessee fails to pay the
increase to Lessor within ten (10) days of demand by Lessor,
Lessor may declare a default by Lessee and thereupon the
provisions of Section 12 shall apply. Lessee acknowledges that it
has no right to receive any proceeds from any insurance policies
carried by Lessor and that such insurance will be for the sole
benefit of Lessor with no coverage for Lessee for any risk
insured against.
9.3 Lessee shall, during its occupancy of the
Premises and during the entire Lease Term, at its sole cost and
expense, obtain, maintain, and keep in full force and effect, and
with Lessee, Lessor, and Lessor's mortgagees named as additional
insureds therein as their respective interests may appear, the
following types and kinds of insurance:
9.3.l Upon property of every description and kind
owned by Lessee and located in the Building or for which Lessee
is legally liable or which was installed by or on behalf of
Lessee, including, without limitation, furniture, fittings,
installations, alterations, additions, partitions, and fixtures
(excluding, however, those improvements, if any, installed by
Lessor in accordance with paragraph 10.1 hereof), against all
risk of loss.
9.3.2 Public liability insurance in an amount not
less than $1,000,000.00 for any one occurrence or such higher
limits as Lessor may reasonably require from time to time; the
insurance shall include coverage against liability for bodily
injuries or property damage arising out of the use by or on
behalf of Lessee of owned, non-owned, or hired automobiles and
other vehicles for a limit not less than that specified above;
and shall also include coverage for "Fire Legal" liability with
respect to the Premises in an amount not less than $100,000 or
such higher limits as Lessor may reasonably require from time to
time.
9.3.3 Workers' compensation insurance in the
amount required by law to protect Lessee's employees; and
9.3.4 Any other form or forms of insurance that
Lessor may reasonably require from time to time, in form, in
amounts, and for insurance risks against which a prudent tenant
would protect itself.
9.4 All insurance policies shall be taken out with
companies acceptable to Lessor licensed and registered to operate
in the State of Georgia and in form reasonably satisfactory to
Lessor. The insurance may be by blanket insurance policy or
policies. Lessee shall deliver certificates evidencing the
insurance policies and any endorsement, rider, or renewal
thereof, to Lessor. Certificates evidencing renewals shall be
delivered to Lessor no later than fifteen (15) days after each
renewal, as often as renewal occurs, and in no event less than
fifteen (15) days prior to the date on which the policy would
otherwise expire. All insurance policies shall require the
insurer to notify Lessor and Lessor's mortgagees in writing
thirty (30) days prior to any material change, cancellation, or
termination thereof.
9.5 Lessor and Lessee hereby release the other from
any and all liability or responsibility to the other or to anyone
claiming through or under them by way of subrogation or otherwise
for any loss or damage to property caused by fire or any other
perils insured or insurable whether or not such insurance is
obtained) in policies of fire and extended coverage insurance
covering such property even if such loss or damage shall have
been caused by the fault or negligence of the other party, or any
one for whom such party may be responsible (other than acts, such
as intentional wrongdoing or criminal conduct, that are not
waived in the standard waiver of subrogation provision in
commercial property insurance at the time of the loss or damage).
10. ALTERATIONS AND IMPROVEMENTS.
10.1 Lessor shall improve the Premises in accordance
with working drawings to be approved by Lessee and Lessor prior
to commencement of construction. Lessor shall have such work
performed promptly, diligently and in a good and workmanlike
manner. Lessor shall provide Lessee with an allowance (the
"Allowance") of FOUR HUNDRED FORTY FIVE THOUSAND NINE HUNDRED
FORTY AND NO/1OO DOLLARS ($445,940.00) for the design,
supervision and construction of the improvements to the Premises
in accordance with such drawings, including, without limitation,
all costs of design, all costs of materials and labor to install
such improvements, (Lessor will not charge an overhead and
supervisory fee for initial design and construction), and Lessor
will pay all such costs as and when incurred by Lessor on a
timely basis to the extent of the Allowance. Base Building
improvements shall not be included as part of the Allowance, or
as improvements to the Premises and shall include the Building
exterior walls, the roof, core restrooms, two elevators, common
area facilities, the exterior windows, one half of the demising
wall between lessees, the electrical transformer (excluding
Lessee's electrical distribution panel), sprinkler system
installation (excluding head relocation), main trunk lines for
water and sewer, building standard roof top HVAC units, Perimeter
duct work with PIU boxes and slot diffuser (excluding
relocating), Interior VVU dampers excluding duct and diffusers,
Trane DDC control system (excluding mounting of sensors), 24" x
24" ceiling grid, not including Building standard ceiling tile
and light fixtures, and concrete floor slab. If such costs should
exceed the Allowance, then at Lessee's option Lessee shall pay
for all such costs in excess of the Allowance on the Commencement
Date, or may amortize the additional costs over the Lease Term
(on a monthly basis) at an annual interest rate of eleven percent
(11%). Additional costs to be amortized over the Lease Term
shall not exceed $5.00 per usable square foot. It is hereby
agreed between Lessor and Lessee that construction drawings and
construction costs must be approved and permits obtained for
start of construction on or before July 1, 1996.
10.2 Lessee shall not make any alterations, additions,
or improvements in or to the Premises, nor install or attach
fixtures in or to the Premises, without the prior written
consent of Lessor, which consent Lessor shall not unreasonably
withhold, delay or condition. All alterations, additions, or
improvements made, installed in, or attached to the Premises by
Lessee, upon the consent specified above, shall be made at
Lessee's expense in a good and workmanlike manner, strictly in
accordance with the plans and specifications approved by Lessor,
all applicable laws, ordinances, regulations, and other
requirements of any appropriate governmental authority, and any
applicable covenants or other restrictions. Prior to the
commencement of any such work, Lessee shall deliver to Lessor
certificates issued by insurance companies licensed and
registered to operate in the State of Georgia evidencing that
workers' compensation insurance and public liability insurance,
all in amounts satisfactory to Lessor, are in force and effect
and maintained by all contractors and subcontractors engaged by
Lessee to perform the work.
10.3 Lessee shall keep the Premises free from all
liens, preliminary notices of liens, right to liens, or claims of
liens of contractors, subcontractors, mechanics, or materialmen
for work done or materials furnished to the Property at the
request of Lessee. Whenever and so often as any such lien shall
attach or claims or notices thereof shall be filed against the
Property or any part thereof as a result of work done or
materials furnished to the Property at the request of Lessee,
Lessee shall within twenty (20) days after Lessee has notice of
the claim or notice of lien, cause it to be discharged of record,
which discharge may be accomplished by deposit or bonding
proceedings. If Lessee shall fail to cause the lien, or such
claim or notice thereof, to be discharged within the ten-day
period, then, in addition to any other right or remedy, Lessor
may, but shall not be obligated to, discharge it either by paying
the amount claimed to be due or by procuring the discharge of the
lien, or claim or notice thereof, by deposit or bonding
proceedings. Any amount so paid by Lessor and all costs and
expenses, including, without limitation, attorneys fees, incurred
by Lessor in connection therewith shall constitute additional
rent payable by Lessee under this Lease and shall be paid by
Lessee in full on demand of Lessor together with interest thereon
at the rate set forth in paragraph 2.2 hereof from the date it
was paid by Lessor. Lessee shall not have the authority to
subject the interest or estate of Lessor to any liens, rights to
liens, or claims of liens for services, materials, supplies, or
equipment furnished to Lessee, and all persons contracting with
Lessee are hereby charged with notice that they must look to
Lessee and to Lessee's interest only to secure payment.
10.4 All alterations, additions, or improvements,
including, but not limited to, fixtures, partitions, counters,
and window and floor coverings, which may be made or installed by
either of the parties hereto upon the Premises, irrespective of
the manner of annexation, and irrespective of which party may
have paid the cost thereof, excepting only movable office
furniture and shop equipment put in at the expenses of Lessee,
shall be the property of Lessor, and shall remain upon and be
surrendered with the Premises as a part thereof at the expiration
or other termination of this Lease, without disturbance,
molestation, or injury. As a condition to Lessor's approval of
alterations, Lessor may reasonably elect that any or all
installations made or installed by or on behalf of Lessee be
removed at the end of the Lease Term, and, if Lessor so elects,
it shall be Lessee's obligation to restore the Premises to the
condition they were prior to the alterations, additions, or
improvements on or before the expiration or other termination of
this Lease. Such removal and restoration shall be at the sole
expense of Lessee. Further, notwithstanding anything contained
herein to the contrary except as otherwise provided in paragraph
9.3.1 hereof, Lessor shall be under no obligation to insure the
alterations, additions, or improvements or anything in the nature
of a leasehold improvement made or installed by or on behalf of
Lessee, the Lessee Parties, or any other person, and such
improvements shall be on the Premises at the risk of Lessee only.
10.5 In the event Lessor makes any capital investment,
major structural repairs or improvements in or to the Premises or
Building which are required due to any act or omission of Lessee
or any of the Lessee Parties, any and all cost and expenses
incurred by Lessor in making the capital investment, major
structural repairs, or improvements shall constitute additional
rent payable by Lessee under this Lease and shall be paid by
Lessee in full on demand of Lessor, together with interest
thereon from the date of the demand at the rate set forth in
paragraph 2.2 hereof.
11. ASSIGNMENT OR SUBLETTING.
11.1 Lessee shall not assign this Lease, or any
interest herein, or sublet or allow any other person, firm, or
corporation to use or occupy the Premises, or any part thereof,
without the prior written consent of Lessor, which consent will
not be unreasonably withheld or delayed. Lessor shall have the
right to make such investigations as it deems reasonable and
necessary in determining the acceptability of the proposed
assignee or subtenant. Such investigations may include inquiries
into the financial background, business history, capability of
the proposed assignee or subtenant in its line of business, and
the quality of its operations. Under no circumstances shall
Lessor be obligated to consent to the assignment of this Lease or
the subletting of the Premises to any entity whose operations
violate the restrictive covenants described in Section 26 hereof.
Lessee shall provide to Lessor such information as Lessor may
reasonably require to enable it to determine the acceptability of
the proposed assignee or subtenant including information
concerning all of the foregoing matters, and Lessor shall have no
obligation to consent to any assignment or subletting unless it
has received from Lessee (at no cost or expense to Lessor) the
most recent financial statements (the financial statements shall
be audited if available) of the proposed assignee or subtenant
and such other information as Lessor reasonably requires. For
purposes of this Section 11, an assignment of stock or other
ownership interest in Lessee shall be deemed an assignment within
the meaning of and be governed by this Paragraph. No assignment
or subletting (with or without the consent of Lessor) shall
release Lessee from its obligations under this Lease nor shall
Lessee permit this Lease or any interest herein or in the tenancy
hereby created to become vested in or owned by any other person,
firm, or corporation by operation of law or otherwise. The power
of Lessor to give or withhold its consent to any assignment or
subletting shall not be exhausted by the exercise thereof on one
or more occasions, but shall be a continuing right and power with
respect to any type of transfer, assignment or subletting.
11.2. Lessee shall assign this Lease or sublet the
Premises in any way not authorized by the terms hereof, the
acceptance by Lessor of any Amount Due from any person claiming
as assignee, sublessee, or otherwise shall not be construed as a
recognition of or consent to the assignment or subletting or as a
waiver of the right of Lessor thereafter to collect any rent from
Lessee, it being agreed that Lessor may at any time accept any
Amount Due under this Lease from any person offering to pay it
without thereby acknowledging the person so paying as a lessee in
place of Lessee herein named, and without releasing Lessee from
the obligations of this Lease, and without recognizing the claims
under which such person offers to pay any Amount Due, but it
shall be taken to be a payment on account by Lessee.
12. DEFAULTS.
12.1 In the event that (i) Lessee shall fail to pay
the Base Rent or any other Amount Due for more than ten (10) days
after its due date, or (ii) Lessee shall fail to comply with any
of the terms, covenants, conditions, or agreements herein
contained or any of the rules and regulations now or hereafter
established for the government of the Building and such failure
to comply continues for ten (10) days after Lessor's written
notice to Lessee thereof, (provided, however, that if any such
failure to comply on the part of Lessee would reasonably require
more than ten (10) days to cure, then, unless Lessee commences
curing within the ten (10) day notice period and thereafter
promptly, effectively, and with continuity proceeds with the
curing of the failure to comply on the part of Lessee and in all
such events cures such failure to comply on the part of Lessee no
later than thirty (30) days after such notice), or (iii) Lessee
shall fail for more than thirty (30) days after written notice
thereof from Lessor to Lessee to comply with any term, provision,
condition or covenant of any other agreement between Lessor and
Lessee; then Lessor shall have the option, but not the
obligation, to do any one or more of the following in addition
to, and not in limitation of, any other remedy permitted by law,
in equity or by this Lease:
12.1.1 Terminate this Lease, in which event Lessee
shall surrender the Premises to Lessor immediately upon
expiration of twenty (20) days from the date of the service upon
Lessee of written notice to that effect, without any further
notice or demand. In the event Lessor shall become entitled to
the possession of the Premises by any termination of this Lease
herein provided, and Lessee shall refuse to surrender or deliver
up possession of the Premises after the service of such notice,
then Lessor may, without further notice or demand, enter into and
upon the Premises, or any part thereof, and take possession of
and repossess the Premises as Lessor's former estate, and expel,
remove, and put out of possession Lessee and its effects, using
such help, assistance and force in so doing as may be needful and
proper, without being liable for prosecution or damages therefor,
and without prejudice to any remedy allowed by law available in
such cases. Lessee shall indemnify Lessor for all loss, cost,
expense, and damage which Lessor may suffer by reason of the
termination, whether through inability to relet the Premises, or
through decrease in rent or otherwise. In the event of such
termination, Lessor may, at its option, recover forthwith as
damages a sum of money equal to the total of (a) the cost of
recovering the Premises (including, without limitation,
attorneys' fees and cost of suit), (b) the unpaid rent earned at
the time of termination, plus late charges and interest thereon
at the rate specified in paragraph 2.2 hereof, (c) the present
value (discounted at the rate of 8% per annum) of the balance of
the rent for the remainder of the Lease Term less the present
value (discounted at the same rate) of the fair market rental
value of the Premises for said period, and any other sum of money
and damages owed by Lessee to Lessor.
12.1.2 Without terminating this Lease, retake
possession of the Premises and rent the Premises, or any part
thereof, for such term or terms and for such rent and upon such
conditions as Lessor may, in its sole discretion, think best,
making such changes, improvements, alterations, and repairs to
the Premises as may be required. All rent received by Lessor from
any reletting shall be applied first to the payment of any
indebtedness other than rent due hereunder from Lessee; second,
to the payment of any costs and expenses of the reletting,
including, but not limited to brokerage fees, attorneys' fees and
costs of such changes, improvements, alterations, and repairs;
third to the payment of rent due and unpaid hereunder; and the
residue, if any, shall be held by Lessor and applied in payment
of future rent or damage as they may become due and payable
hereunder. If the rent received from the reletting during the
Lease Term is at any time insufficient to cover the costs,
expenses, and payments enumerated above, Lessee shall pay any
deficiency to Lessor, as often as it shall arise on demand.
12.1.3 Correct or cure the default and recover
any amount expended in so doing, together with interest thereon
until paid.
12.1.4 Recover any and all costs incurred by
Lessor resulting directly, or proximately, from the default,
including but not limited to reasonable attorneys' fees.
12.2 In addition to any other rights which Lessor may
have, Lessor, in person or by agent, may enter upon the Premises
and take possession of all or any part of Lessee's property in
the Premises, and may sell all or any part of such property at a
public or private sale, in one or successive sales, with or
without notice, to the highest bidder for cash, and, on behalf of
Lessee, sell and convey all or part of the property to the
highest bidder, delivering to the highest bidder all of Lessee's
title and interest in the property sold to him. The proceeds of
the sale of the property shall be applied by Lessor toward the
reasonable costs and expenses of the sale, including, without
limitation, reasonable attorneys' fees, and then forward the
payment of all sums then due by Lessee to Lessor under the terms
of this Lease. Any excess remaining shall be paid to Lessee or
any other person entitled thereto by law. Such sale shall bar
Lessee's right of redemption.
12.3 In the event of a default or threatened default
under this Lease by Lessee, Lessor shall be entitled to all
equitable remedies, including, without limitation, injunction and
specific performance.
12.4 Pursuit of any of the remedies herein provided
shall not preclude the pursuit of any other remedies herein
provided or any other remedies provided at law or in equity.
Failure by Lessor to enforce one or more of the remedies herein
provided shall not be deemed or construed to constitute a waiver
of any default, or any violation or breach of any of the terms,
provisions, or covenants herein contained.
13. BANKRUPTCY. The filing or preparation for filing by or
against Lessee of any petition in bankruptcy, insolvency, or for
reorganization under the Federal Bankruptcy Code, any other
federal or state law now or hereafter relating to insolvency,
bankruptcy, or debtor relief, or an adjudication that Lessee is
insolvent, bankrupt, or an issuance of an order for relief with
respect to Lessee under the Federal Bankruptcy Code, any other
federal or state law now or hereafter relating to insolvency,
bankruptcy, or debtor relief, or the execution by Lessee of a
voluntary assignment for the benefit of, or a transfer in fraud
of, its general creditors, or the failure of Lessee to pay its
debts as they mature, or the levying on under execution of the
interest of Lessee under this Lease, or the filing or preparation
for filing by Lessee of any petition for a reorganization under
the Federal Bankruptcy Code, or for the appointment of a receiver
or trustee for a substantial part of Lessee's assets or to take
charge of Lessee's business, or of any other petition or
application seeking relief under any other federal or state laws
now or hereafter relating to insolvency, bankruptcy, or debtor
relief, or the appointment of a receiver or trustee for a
substantial part of Lessee's assets or to take charge of Lessee's
business, shall automatically constitute a default in this Lease
by Lessee for which Lessor may, at any time or times thereafter;
at its option, exercise any of the remedies and options provided
to Lessor in Section 12 hereof; provided, however, that if such
petition be filed by a third against Lessee, and Lessee desires
in good faith to defend against the petition and is not in any
way in default of any obligation hereunder at the time of filing
the petition, and Lessee within ninety (90) days thereafter
procures a final adjudication that it is solvent and a judgment
dismissing the petition, then this Lease shall be fully
reinstated as though the petition had never been filed. In the
event Lessor elects to terminate this Lease as provided for in
this Section, Lessee shall pay forthwith to Lessor as liquidated
damages, the difference between the unpaid rent reserved in this
Lease at the time of such termination and the then reasonable
rental value of the Premises for the balance of the Lease Term,
and Lessee acknowledges that said sum is reasonable and shall not
be construed as a penalty.
14. DAMAGE AND CONDEMNATION.
14.1 In the event during the Lease Term the Premises
are damaged by fire or other casualty, but not to such an extent
that repairs and rebuilding cannot reasonably be completed within
one hundred twenty (120) days of the date of the event causing
the damage, Lessor may, at Lessor's option, repair and rebuild
the Premises. If Lessor elects to repair and rebuild the
Premises, this Lease shall remain in full force and effect, but
Lessor may require Lessee temporarily to vacate the Premises
while they are being repaired and, subject to the provisions of
this Paragraph 14.l, rent shall abate during this period to the
extent that the Premises are untenantable; provided, however,
that Lessor shall not be liable to Lessee for any damage or
expense which temporarily vacating the Premises may cause Lessee.
If the Premises are not repaired, rebuilt, or otherwise made
suitable for occupancy by Lessee within the aforesaid one hundred
twenty (120) day period, Lessee shall have the right, by written
notice to Lessor, to terminate this Lease, in which event rent
shall be abated for the unexpired Lease Term, effective as of the
date of the written notification, but the other terms and
conditions of this Lease shall continue and remain in full force
and effect until Lessee shall have vacated the Premises, removed
all Lessee's personal property therefrom and delivered peaceable
possession thereof to Lessor. If Lessor elects not to repair and
rebuild the Premises or if the Building or any part thereof be so
damaged that repairs and rebuilding cannot reasonably be
completed within one hundred twenty (120) days of the date of the
event causing the damage, Lessor may by written notice to Lessee
terminate this Lease in which event rent shall be abated for the
unexpired Lease Term, effective as of the date of the written
notification, but the other terms and conditions of this Lease
shall continue and remain in full force and effect until Lessee
shall have vacated the Premises, removed all Lessee's personal
property therefrom and delivered peaceable possession thereof to
Lessor. Failure by Lessee to comply with any provision of this
Paragraph 14.1 shall subject Lessee to such costs, expenses,
damages, and losses as Lessor may incur by reason of Lessee's
breach hereof. Notwithstanding any provision of this Lease to the
contrary, if the Premises, the Building, or any part thereof are
damaged by fire or other casualty caused by or materially
contributed to by the negligence or misconduct of Lessee or any
of the Lessee Parties, Lessee shall be fully responsible, to the
extent not covered by insurance, for repairing, restoring, or
paying for the damage as Lessor shall direct and this Lease shall
remain in full force and effect without reduction or abatement of
rent.
14.2 In the event the Building shall be taken, in
whole or in part, by condemnation or the exercise of the right of
eminent domain, or if in lieu of any formal condemnation
proceedings or actions, if any, Lessor shall sell and convey the
Premises, or any portion thereof, to the governmental or other
public authority, agency, body, or public utility, seeking to
take the Premises, the Property or any portion thereof, then
Lessor, at its option, may terminate this Lease upon thirty (30)
days' prior written notice to Lessee and prepaid rent, if any,
shall be proportionately refunded from the date of possession by
the condemning authority. All damages awarded for the taking, or
paid as the purchase price for the sale and conveyance in lieu of
formal condemnation proceedings, whether for the fee or the
leasehold interest, shall belong to and be the property of
Lessor; provided, however, Lessee shall have the sole right to
reclaim and recover from the condemning authority, but not from
Lessor, such compensation as may be separately awarded or
recoverable by Lessee in Lessee's own right on account of any and
all costs or loss (including loss of business) to which Lessee
might be put in removing Lessees furniture, fixtures, leasehold
improvements, and equipment to a new location. Lessee shall
execute and deliver any instruments, at the expense of Lessor,
that Lessor may deem necessary to expedite any condemnation
proceedings, to effectuate a proper transfer of title to such
governmental or other public authority, agency, body or public
utility seeing to take or acquire the lands and Premises, or any
portion thereof, Lessee shall vacate the Premises, remove all
Lessee's personal property therefrom and deliver up peaceable
possession thereof to Lessor or to such other party designated by
Lessor in the aforementioned notice. Failure by Lessee to comply
with any provisions of this Paragraph l4.2 shall subject Lessee
to such costs, expenses, damages, and losses as Lessor may incur
by reason of Lessee's breach hereof. If Lessor chooses not to
terminate this Lease, then to the extent and availability of
condemnation proceeds received by Lessor and subject to the
rights of any mortgagee thereto, Lessor shall, at the sole cost
and expense of Lessor and with due diligence and in a good and
workmanlike manner, restore and reconstruct the Premises within
one hundred twenty (120) days after the date of the physical
taking, and such restoration and reconstruction shall make the
Premises reasonably tenantable and suitable for the general use
being made by Lessee prior to the taking; provided, however, that
Lessor shall have no obligation to restore and reconstruct
Lessee's leasehold improvements unless and to the extent that
Lessor receives an award of condemnation proceeds specifically
designated as compensation for such improvements.
Notwithstanding the foregoing, if Lessor has not completed the
restoration and reconstruction within one hundred twenty (120)
days after the date of physical taking, Lessee, in addition to
any other rights and remedies Lessee may have, shall have the
right to cancel this Lease. If this Lease continues in effect
after the physical taking, the rent payable hereunder shall be
equitably adjusted both during the period of restoration and
reconstruction and during the unexpired portion of the Lease
Term.
14.3 In the event Lessor, during the Lease Term, shall
be required by any governmental authority or the order or decree
of any court, to repair, alter, remove, reconstruct, or improve
(hereinafter collectively called "Repairs") any part of the
Premises, then the Repairs may be made by and at the expense of
Lessor and shall not in any way affect the obligations or
covenants of Lessee herein contained, and Lessee hereby waives
all claims for damages or abatement of rent because of the
Repairs. If the Repairs shall render the Premises untenantable
and if the Repairs are not completed within one hundred twenty
(120) days after the date of the notice, requirement, order, or
decree, either party hereto upon written notice to the other
party given not later than one hundred thirty (130) days after
the date of the notice, requirement, order, or decree, may
terminate this Lease, in which case rent shall be apportioned and
paid to the date the Premises were rendered untenantable;
provided however that where the requirement by a governmental
authority having jurisdiction to repair, alter, remove,
reconstruct, or improve any part of the Premises arises out of
any act or omission by Lessee, then the Repairs shall be effected
promptly at the sole cost and expense of Lessee and there shall
not, in any event, be any abatement of rent nor any right in
Lessee to terminate this Lease whether or not the completion of
the Repairs takes more than one hundred twenty (120) days.
15. TAXES. Lessor shall pay all taxes, assessments, and
other governmental charges, general or special, ordinary or
extraordinary, foreseen or unforeseen, including any installments
thereof, levied, assessed, or otherwise imposed by any lawful
authority or payable with respect to the Property or the
Building.
16. LIABILITY OF LESSOR.
16.1 Subject to paragraph 9.5 hereof, and excepting
Lessor's gross negligence or willful misconduct, Lessee shall
indemnify, defend, and hold harmless Lessor, at Lessee's expense,
against (a) any default by Lessee or permitted assignee or
subtenant hereunder, (b) any act or negligence of Lessee or any
of the Lessee Parties; and (c) all claims for damages to persons
or property by reason of the use or occupancy of the Premises not
caused by Lessor. Lessee shall not be liable to Lessor, or
Lessor's agents, servants, employees, contractors, customers or
invitees for any damage to person or property caused by any act,
omission or neglect of Lessor, its agents, servants or employees.
Moreover, Lessor shall not be liable for any damage, injury,
destruction, or theft to or of the Premises, the personal
property of Lessee or any of the Lessee Parties, Lessee, or any
of the Lessee Parties arising from any use of the Premises, or
any sidewalks, entrance ways, or parking areas serving the
Premises, or the act or neglect of co-tenants or any other
person, or the malfunction of any equipment or apparatus serving
the Premises, or any loss thereof by mysterious disappearance or
otherwise, unless caused by the gross negligence or willful
misconduct of Lessor.
16.2 Lessee expressly agrees to look solely to
Lessor's interest in the Property for the recovery of any
judgment against Lessor, it being agreed that Lessor (and its
partners and shareholders) shall never be personally liable for
any such judgment. The provision contained in the foregoing
sentence is not intended to, and shall not, limit any right that
Lessee might otherwise have to obtain injunctive relief against
Lessor or Lessor's successors-in-interest.
17. RIGHT OF ENTRY.
17.1 Except in the events of an emergency, with
twenty-four hours notice to Lessee; Lessor reserves the right, or
itself, its mortgagees, or their respective agents and duly
authorized representatives, to enter and be upon the Premises at
any time and from time to time to inspect the Premises and to
repair, maintain, alter, improve, and remodel, but Lessor shall
not materially interfere with Lessee's normal operation except in
case of an emergency. Lessee shall not be entitled to any
compensation, damages, or abatement or reduction in rent on
account of any such repairs, maintenance, alterations,
improvements or remodeling. Except as otherwise provided in this
Lease, nothing contained in this Paragraph 17.1 shall in imply
any duty on the part of Lessor to repair, maintain, alter,
improve, or remodel.
17.2 After notice to Lessee, Lessee shall permit
Lessor or Lessor's agents at any reasonable hour of the day to
enter into or upon and go through and view the Premises and to
exit the Premises to prospective purchasers or tenants.
18. BUILDING RULES AND REGULATIONS. Lessor reserves the
right to establish reasonable rules and regulations pertaining to
the use and occupancy of the Building, which rules and
regulations may be changed by Lessor from time to time. Lessee
shall comply with any rules and regulations established by Lessor
pursuant to this Section 18.
19. PROPERTY LEFT ON THE PREMISES. Upon the expiration of
this Lease, or if the Premises should he abandoned by Lessee, or
if this Lease should terminate for any cause, or if Lessee should
be dispossessed after default, if at the time of any such
expiration, abandonment, termination or dispossession, Lessee or
its assignees, subtenants, agents, servants, employees,
contractors, or any other person controlled by Lessee or claiming
under Lessee should leave any property of any kind or character
in or upon the Premises, such property shall be the property of
Lessor and the fact of such leaving of property in or upon the
Premises shall be conclusive evidence of the intent by Lessee or
such person to abandon such property so left in or upon the
Premises, and such leaving shall constitute abandonment of the
property. It is understood and acknowledged by the parties
hereto that none of Lessor's servants, agents or employees, have
or shall have the actual or apparent authority to waive any
portion of this Section 19, and neither Lessee nor any other
person designated above shall have any right to leave any such
property upon the Premises beyond the time set forth herein
without the written consent of Lessor. Lessor, its agents or
attorneys, shall have the right and authority without notice to
Lessee or anyone else, to remove and destroy, store, sell or
otherwise dispose of, such property, or any part thereof, without
being in any way liable to Lessee or anyone else therefor. Lessee
shall be liable to Lessor for all reasonable and necessary
expenses incurred in such removal and destruction, storage, sale
or other disposition of such property. The said property removed
or the proceeds from the sale or other disposition thereof shall
belong to the Lessor as compensation for the removal and
disposition of said property. Lessor will use its reasonable best
efforts to notify Lessee to remove its property prior to the
disposal of said property as provided for herein.
20. OTHER INTERESTS.
20.1 This Lease and Lessee's interest hereunder shall
at all times be subject and subordinate to the lien and security
title of any deeds to secure debt, deeds of trust, mortgages, or
other interests heretofore or hereafter granted by Lessor or
which otherwise encumber or affect the Premises and to any and
all advances to be made thereunder and to all renewals,
modifications, consolidations, replacements, substitutions, and
extensions thereof (all of which are hereinafter called the
"Mortgage"); provided, however, that this subordination shall be
effective if, and only if, the holder of any such Mortgage shall
execute a subordination, non-disturbance and attornment agreement
in a form reasonably satisfactory to Lessee agreeing that
Lessee's rights to occupy the Premises in accordance with the
terms of this Lease shall not be disturbed following foreclosure
or delivery of a deed in lieu of foreclosure unless Lessee is in
default of its obligations hereunder beyond applicable notice and
cure periods. Lessor does hereby warrant and represent that, as
of the date hereof, no Mortgage presently encumbers the Building.
In confirmation of such subordination, however, Lessee shall, at
Lessor's request, promptly execute, acknowledge, and deliver any
instrument which may be required to evidence subordination to any
Mortgage and, to the holder thereof, and, in the event of a
failure so to do, Lessor may, in addition to any other remedies
for breach of covenant hereunder, execute, acknowledge, and
deliver the instrument as the agent or attorney-in-fact of
Lessee, and Lessee hereby irrevocably constitutes Lessor its
attorney-in-fact for such purpose, Lessee acknowledging that the
appointment is coupled with an interest and is irrevocable.
Lessee hereby waives and releases any claim it might have against
Lessor or any other party for any actions lawfully taken by the
holder of any Mortgage.
20.2 In the event of a sale or conveyance by Lessor of
Lessor's interest in the Premises other than a transfer for
security purposes only, Lessor shall be relieved, from and after
the date of transfer, of all obligations and liabilities accruing
thereafter on the part of Lessor, provided that any funds in the
hands of Lessor at the time of transfer in which Lessee has an
interest shall be delivered to the successor of Lessor. This
Lease shall not be affected by any such sale and Lessee shall
attorn to the purchaser or assignee.
21. INTENTIONALLY DELETED.
22. DELAYED POSSESSION. If Lessor shall fail to deliver to
Lessee actual possession of the Premises by October 31, 1996,
rent shall abate until possession is given, but Lessor shall not
be liable to Lessee for such failure, and the Commencement Date
shall become the date on which possession is given.
Notwithstanding the foregoing, however, if the Premises are not
available for occupancy by Lessee on January 1, 1997, this Lease
shall be voidable by either party, and if voided, all payments
made to Lessor by Lessee hereunder, if any, shall be immediately
refunded to Lessee by Lessor, provided, however, that such date
shall be extended to the extent that construction is delayed by
any of the reasons set forth in Section 8 or other conditions
beyond Lessor's control or by amendments to the working drawings
for the improvements to the Premises requested by Lessee. The
Premises shall be "available for occupancy" when they are so
completed that Lessee may conduct normal operations. or when a
temporary Certificate of Occupancy has been issued for the
Premises, whichever is earlier.
23. HOLDING OVER. There shall be no renewal, extension, or
reinstatement of this Lease by operation of law. In the event of
holding over by Lessee after the expiration or sooner termination
of this Lease, with Lessor's acquiescence and without any express
agreement of the parties, Lessee shall be a tenant at sufferance
and all of the terms, covenants, and conditions of this Lease
shall be applicable during that period, except that Lessee shall
pay Lessor as Base Rent for the period of the hold over an amount
equal to one and one-quarter times the Base Rent which would have
been payable by Lessee under Paragraph 2.1 hereof, as adjusted in
accordance with paragraph 3.1 hereof, had the hold-over period
been part of the original Lease Term, together with all
additional rent due hereunder and together with any other Amount
Due under this Lease. The rent payable by Lessee during the
hold-over period shall be payable to Lessor on demand. If Lessee
holds over as a tenant at sufferance, Lessee shall vacate and
deliver the Premises to Lessor upon demand. In the event Lessee
fails to surrender the Premises to Lessor upon expiration or
other termination of this Lease or of such tenancy at sufferance,
then Lessee shall indemnify Lessor against any and all loss or
liability resulting from any delay of Lessee in surrendering the
Premises, including, but not limited to any amounts required to
be paid to third parties who were to have occupied the Premises
and any attorneys' fees related thereto.
24. NO WAIVER. Lessee understands and acknowledges that no
assent, express or implied, by Lessor to any breach of any one or
more of the terms, covenants or conditions hereof shall be deemed
or taken to be a waiver of any succeeding or other breach,
whether of the same or any other term, covenant or condition
hereof.
25. BINDING EFFECT. All terms and provisions of this Lease
shall be binding upon and apply to the successors, permitted
assigns, and legal representatives of Lessor and Lessee or any
person claiming by, through, or under either of them or their
agents or attorneys, subject always, as to Lessee, to the
restrictions contained in Section 11 hereof.
26. COMPLIANCE WITH PROTECTIVE COVENANTS. In addition to
and without in any way limiting any of the other provisions of
this Lease, Lessee shall comply with any protective covenants now
or hereafter of record against the Building or the Property and
with any changes to the covenants duly adopted. It is expressly
acknowledged that all uses of the Building and Premises are
subject to the covenants, conditions and restrictions of Johns
Creek filed at Deed Book 9863, Pages 106-130, Fulton County,
Georgia, records, as amended and extended.
27. SIGNS. Lessee shall not install, paint, display,
inscribe, place, or affix any sign, picture, advertisement,
notice, lettering, or direction (hereinafter collectively called
"Signs") on the exterior of the Premises, the common areas of the
Building, the interior surface of glass and any other location
which could be visible from outside of the Premises without first
securing written consent from Lessor therefor. Any Sign permitted
by Lessor shall at all times conform with all municipal
ordinances or other laws, regulations, deed restrictions, and
protective covenants applicable thereto. Lessee shall remove all
Signs at the expiration or other termination of this Lease, at
Lessee's sole risk and expense, and shall in a good and
workmanlike manner properly repair any damage caused by the
installation, existence, or removal of Lessee's Signs. Subject to
approval of the Johns Creek architectural design and review
committee, Lessee shall be permitted to place its name on the
Building's monument sign, the face of which shall be shared with
other major tenants located in the Building.
28. DIRECTORY BOARD. Lessee shall be entitled to have its
name shown upon the Directory Board of the Building. Lessor shall
designate the style of the Directory Board as well as the amount
of space to be allocated to Lessee, which Board shall be located
in an area designated by Lessor in the main lobby of the
Building.
29. ESTOPPEL CERTIFICATE. Lessee shall, at any time and
from time to time, upon not less than twenty (20) days' prior
written notice from Lessor, execute, acknowledge, and deliver to
Lessor a statement in writing certifying that this Lease is
unmodified and in full force and effect (or if modified, stating
the nature of the modification and certifying that this Lease, as
so modified, is in full force and effect) and the dates to which
the rent and other charges are paid, and acknowledging that
Lessee is paying rent on a current basis with no offsets or
claims, and that there are not, to Lessee's knowledge, any
uncured defaults on the part of Lessor hereunder (or specifying
the offsets, claims, or defaults, if any are claimed), and such
other information (including, but not limited to the most recent,
financial statements) reasonably required by Lessor. It is
expressly understood and acknowledged that any such statement may
be relied upon by any prospective purchaser or encumbrancer of
all or any portion of the Property or by any other person to whom
it is delivered.
30. SEVERABILITY. The terms, conditions, covenants,
and provisions of this Lease shall be deemed to be severable. If
any clause or provision herein contained shall be adjudged to be
invalid or unenforceable by a court of competent jurisdiction or
by operation of any applicable law, it shall not affect the
validity of any other clause or provision herein, but the other
clauses or provisions shall remain in full force and effect.
31. ENTIRE AGREEMENT. Lessee acknowledges that there are
no covenants, representations, warranties, or conditions, express
or implied, collateral or otherwise, forming part of or in any
way affecting or relating to this Lease save as expressly set out
in this Lease and that this Lease together with the Exhibits
attached hereto constitutes the entire agreement between the
parties hereto and may not be modified except as herein
explicitly provided or except by subsequent agreement in writing
of equal formality hereto executed by Lessor and Lessee.
32. CUMULATIVE REMEDIES. In the event of any default,
breach or threatened breach by Lessee of any of the covenants or
provisions hereto, Lessor shall, in addition to all other
remedies as provided by this Lease, have the right of injunction
and/or damages and the right to invoke any remedy allowed at law
or in equity, and may have any one or more of the remedies
contemporaneously. The various rights, remedies, powers, options,
and elections of Lessor reserved, expressed, or contained in this
Lease are cumulative and no one of them shall be deemed to be
exclusive of the others, or of such other rights, remedies,
powers, options, or elections as are now, or may hereafter, be
conferred upon Lessor by law.
33. PARKING AREAS AND COMMON AREA CONTROL.
33.1 Lessee acknowledges and agrees that the common
areas of the Building including, without limiting the generality
of the foregoing, lawns, gardens, parking areas, sidewalks,
driveways, foyers, hallways, washrooms, and stairwells not within
the Premises shall at all times be subject to the exclusive
control and management of Lessor. Lessor shall have the right to
change the area, level, location, and arrangement of common areas
so long as in so doing Lessor does not materially and adversely
affect ingress to and egress from the Building or the Premises.
There are 3.8 parking spaces per 1000) rentable square feet
contained in the Building, as shown on Exhibit "A".
33.2 Lessee and the Lessee Parties shall not use more
than Lessee's proportionate share of the parking spaces in the
parking areas made available to the Building by Lessor. Lessee
covenants and agrees to fully cooperate with Lessor in the
enforcement of any program of rules and regulations designed for
the orderly control and operation of parking areas.
34. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been
given when delivered in person or when deposited in the United
States mail, return receipt requested, addressed to the parties
at the respective addresses set out below:
If to Lessee: Syncor International Corporation
20001 Prairie Street
Chatsworth. California 91311
Attn: Program Director, Real Estate and
Facilities
With copy to:
Prior to Commencement Date:
Syncor International Corporation
330 Research Court
Norcross, Georgia 30092
Attn: Roy Martarella
After the Commencement Date:
Syncor international Corporation
6455 East Johns Crossing
Suite 400
Duluth, Georgia 30155
Attn: Roy Martarella
If to Lessor: Technology Park/Atlanta, Inc.
Suite 150
11555 Medlock Bridge Road
Duluth, Georgia 30155
Attn: Executive Vice President
or to such other addresses as the parties may direct from time to
time by thirty (30) days written notice. However, the time period
in which a response to any notice, demand, or request must be
given, if any, shall commence to run from the date of receipt of
the notice, demand, or request by the addressee thereof.
Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was given shall be
deemed to be receipt of the notice, demand, or request sent.
Lessee hereby appoints as its agent to receive service of all
dispossessory or distraint proceedings and notices in connection
therewith, CSC NETWORKS, The Prentice-Hall Corporation System,
Inc., 66 Luckie Street, Atlanta, GA 30303, and if such person is
not available for service, then the person in charge of or
occupying the Premises at the time; and if no person is in charge
of or occupying the Premises, then the service or notice may be
made by attaching it on the main entrance to the Premises and on
the same day enclosing, directing, stamping, and marking by first
class mail a copy of the service or notice to Lessee at the last
known address of Lessee.
35. RECORDING. Neither this Lease nor any portion hereof
shall be recorded unless both parties hereto agree to the
recording.
36. ATTORNEYS' FEES. Lessee and Lessor agree to pay
prevailing party's reasonable attorneys' fees, collection costs,
and other costs and expenses which are incurred in enforcing any
of the obligations of Lessee or Lessor under this Lease.
37. HOMESTEAD. Lessee waives all homestead rights and
exemptions which it may have under any law as against any
obligations owing under this Lease. Lessee hereby assigns to
Lessor its homestead right and exemption.
38. TIME OF ESSENCE. Time is of the essence of this Lease.
39. NO ESTATE IN LAND. This Lease shall create the
relationship of landlord and tenant between Lessor and Lessee,
and nothing contained herein shall be deemed or construed by the
parties hereto, or by any third party, as creating the
relationship of principal and agent, or of partnership, or of
joint venture, or of any relationship other than landlord and
tenant, between the parties hereto. No estate shall pass out of
Lessor and Lessee has only a usufruct not subject to levy and
sale.
40. ACCORD AND SATISFACTION. No payment by Lessee or
receipt by Lessor of a lesser amount than the Base Rent,
additional rent, or any other Amount Due herein stipulated shall
be deemed to be other than on account of the earliest of such
amount then due, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as rent be
deemed an accord and satisfaction, and Lessor may accept the
check or payment without prejudice to Lessor's right to attempt
to recover the balance of the rent or pursue any other remedy
provided in this Lease.
41. BROKERS' FEES. With the exception of Technology
Park/Atlanta, Inc., as broker representing Lessor, Lessor and
Lessee warrant and represent, each to the other, that it has had
no dealings with any broker or agent in connection with this
Lease, and Lessor and Lessee hereby indemnify each other against,
and agree to hold each other harmless from, any liability or
claim (and all expenses, including attorneys' fees, incurred in
defending any such claim or in enforcing this indemnity) for a
real estate brokerage commission or similar fee or compensation
arising out of or in any way connected with any claimed dealings
with the indemnitor and relating to this Lease or the negotiation
thereof.
42. MISCELLANEOUS.
42.1 Words of any gender used in this Lease shall be
held and construed to include any other gender, and words in the
singular number shall be held to include the plural unless the
context otherwise requires.
42.2 The captions are inserted in this Lease for
convenience only, and in no way define, limit, or describe the
scope or intent of this Lease, or of any provision hereof, nor in
any way affect the interpretation of this Lease.
42.3 This Lease is made and delivered in the State of
Georgia and shall be governed by and construed in accordance with
the laws of the State of Georgia.
For additional terms and stipulations of this Lease, if
any, see Exhibit "C", attached hereto and by this reference
incorporated herein.
IN WITNESS WHEREOF, the parties hereto have hereunto
set their hands and seals the day and year first above written.
LESSOR:
TECHNOLOGY PARK/ATLANTA, INC.
a Georgia corporation
By: /s/ Richard R. O'Brien
__________________________
Name: Richard R. O'Brien
Title: Executive Vice President
[Corporate Seal]
LESSEE:
SYNCOR INTERNATIONAL CORPORATION
a Delaware corporation
By: /s/ Gene R. McGrevin
___________________________
Name: Gene R. McGrevin
Title: Vice Chairman & Chief Executive
Officer
Attest: /s/ Linda S. Leipheimer
____________________________
Name: Linda S. Leipheimer
Title: Assistant Secretary
[Corporate Seal]
<PAGE>
SCHEDULE OF EXHIBITS
Exhibit "A" Legal Description
Exhibit "B" Outline of Premises
Exhibit "C" Special Stipulations
<PAGE>
EXHIBIT "C"
SPECIAL STIPULATIONS
____________________
A. Lessee shall have the option to terminate this Lease at
_______________________________________________________
midnight on October 17, 2001 by giving notice to Lessor prior
_____________________________________________________________
January 18, 2001, which notice shall be accompanied with payment
_______________________________________________________________
of a termination fee equal to two months of Base Rent.
_____________________________________________________
<PAGE>
Exhibit 23
INDEPENDENT AUDITORS' REPORT ON SCHEDULE AND CONSENT
The Board of Directors and Stockholders
Syncor International Corporation
The audits referred to in our report dated March 19, 1997
included the related financial statement schedule for each of the
years in the three-year period ended December 31, 1996, included
in the registration statement of Syncor International
Corporation. This financial statement schedule is the
responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule
based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
We consent to incorporation by reference in the registration
statement (No. 33-44345) on Form S-3 and the registration
statements (Nos. 33-7325, 33-39251, 33-43692, 33-57762, 33-52607,
333-18373, 333-18375, 333-18377) on Form S-8 of Syncor
International Corporation of our report dated March 19, 1997,
relating to the consolidated balance sheets of Syncor
International Corporation and subsidiaries as of December 31,
1996 and 1995 and the related consolidated statements of income,
stockholders' equity and cash flows and related schedule for each
of the years in the three-year period ended December 31, 1996,
which report appears in the December 31, 1996 annual report on
Form 10-K of Syncor International Corporation.
KPMG Peat Marwick LLP
Los Angeles, California
March 31, 1997
Exhibit 27
FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted
from the financial statement prepared by KPMG Peat Marwick LLP,
dated March 19,1997, and is qualified in its entirety by
reference to such financial statement.
<TABLE>
<S> <C>
Period type 12 mos
Fiscal year end December 31, 1996
Period start January 1, 1996
Period end December 31, 1996
Cash 25,214
Securities 1,258
Receivables 52,875
Allowances (911)
Inventory 7,827
Current assets 145,563
Current liabilities 57,465
Bonds 0
Preferred mandatory 0
Preferred 0
Common 567
Other SE 77,965
Total Liability and Equity 145,563
Sales 366,447
Total Revenue 366,447
CGS 286,254
Total costs 286,254
Other expenses 71,536
Loss provision 0
Interest expense (845)
Income pre tax 11,311
Income tax 4,411
Income continuing 6,900
Discontinued (2,264)
Extraordinary 0
Changes 0
Net income 4,636
EPS primary .65
EPS diluted .64
</TABLE>
