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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR
--- 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-10442
FIRST FINANCIAL MANAGEMENT
CORPORATION
(Exact name of Registrant as specified in its charter)
GEORGIA 58-1107864
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 CORPORATE SQUARE, SUITE 700, ATLANTA, GEORGIA 30329
(Address of principal executive offices)
(404) 321-0120
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class Name of each exchange on which registered
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COMMON STOCK, $.10 PAR VALUE NEW YORK STOCK EXCHANGE
5% SENIOR CONVERTIBLE DEBENTURES DUE 1999 NEW YORK STOCK EXCHANGE
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Securities registered pursuant to Section 12(g) of the Act: None
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
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K 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 Common Stock of the Registrant held by
nonaffiliates as of January 31, 1995: $3,749,087,586
Number of shares of Common Stock outstanding as of January 31, 1995:
61,709,709 shares
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DOCUMENTS INCORPORATED BY REFERENCE PART
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Proxy Statement for the Annual Meeting of Shareholders
to be held on April 26, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III
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PART I
ITEM 1. BUSINESS.
First Financial Management Corporation ("FFMC" or the "Company") provides
a variety of information services to a diverse customer base. FFMC was
incorporated as a Georgia corporation in 1971, and became a public company in
1983.
The Company periodically conducts a strategic reevaluation of its
businesses, reviewing overall trends and developments in relation to its
business investments and industry concentrations. These strategic reviews have
resulted in numerous business acquisitions that have complemented internal
growth in expanding the Company's customer base, range of services,
technological capabilities and management depth. Such reviews also resulted in
FFMC's dispositions in 1992 of business units no longer involved in the
Company's strategic direction (see "Dispositions").
INFORMATION SERVICES
FFMC operates in a single business segment, providing a vertically
integrated set of data processing, storage and management services for the
capture, manipulation and distribution of information. These services are
provided to over 327,000 commercial establishments and government agencies,
primarily in the United States. In addition, the Company, through its November
1994 acquisition of Western Union Financial Services, Inc. and related assets
("Western Union"), provides information services to a worldwide network of
agents resulting in money transfers involving an estimated 55 million consumers
in 1994. Currently, a substantial majority of these money transfers originate
within the United States.
The Company markets its array of service offerings to attract new
customers and cross sells its various services throughout its existing customer
base. FFMC's business units utilize the Company's internally developed
telecommunications infrastructure to transfer data and route service calls in
providing information services to their customers. The credit and debit card
processing and check acceptance business areas are increasingly using data
capture terminals developed by MicroBilt (FFMC's in-house research and
development unit) to connect customer point-of-sale systems to FFMC's data
transfer network. The Company continues to pursue further integration of its
services to gain competitive advantage. FFMC's information services fall into
three main categories: merchant services, health care services and imaging
services.
Merchant Services
Merchant services involves information processing and transfer related to
financial transactions. These services include the authorization, processing
and settlement of credit and debit card transactions, verification or guarantee
of check transactions, debt collection and accounts receivable management, and
worldwide nonbank money transfers and bill payments. Also included is a
business unit that designs, installs and manages in-store financial services
outlets in supermarkets. Services are provided to over 310,000 customers in
all 50 states, the Caribbean, Canada, Mexico, Australia, and New Zealand. In
addition, Western Union provides information services throughout its worldwide
network of over 24,000 agents that results in money transfers for consumers.
Merchant services' operations consists of over 80 processing centers employing
approximately 5,700 employees. The percentages of FFMC's revenues
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contributed by merchant services were 71%, 66% and 60%, respectively, during
the years ended December 31, 1994, 1993 and 1992.
National Bancard Corporation ("NaBANCO") was acquired by FFMC in 1987,
and has since become the largest provider of merchant credit and debit card
authorization, processing and settlement services in the United States. These
services are provided for merchants with respect to transactions in which
payment is made through bank cards (primarily VISA and MasterCard) and certain
other credit cards. Fees for credit card authorization and settlement services
are generally based on the dollar volume of transactions processed.
Approximately $74 billion in merchant credit and debit card transactions were
handled in 1994, compared with $54 billion in 1993 and $43 billion in 1992.
NaBANCO's processing centers in Sunrise, Florida and Melville, New York
support merchant electronic cash registers and dial up point-of-sale
authorization and draft capture terminals. Approximately 97% of the credit
card authorizations by NaBANCO are performed electronically, with responses to
customers usually within two to five seconds. Also, voice authorization
services are provided via the Florida center to merchants without electronic
authorization capabilities and in the event that electronic authorization
capabilities are interrupted. Essentially all of the electronic authorization
volume can be handled through either of the two processing centers, enabling
transactions to be load-shared between centers and ensuring availability of
processing facilities.
Starting in June 1993, NaBANCO began providing most of its services under
an agreement as agent for and in conjunction with First Financial Bank ("FFB"),
FFMC's credit card bank formed for the primary purpose of supporting the
Company's credit card processing and settlement operations. FFB replaced
Georgia Federal Bank, FSB (see "Dispositions") as NaBANCO's primary sponsoring
member bank in the VISA and MasterCard systems as required by their rules.
NaBANCO also provides services as agent for and in conjunction with other
sponsoring member banks and maintains ongoing relationships with these and
other banks to assist in marketing and delivering NaBANCO's services to these
banks' merchant customers.
The TeleCheck system was founded in 1964 to provide services to merchants
who desire to pass the risk of bad checks to a third party, and is now one of
the largest check acceptance services in the world. These services are
provided utilizing large consumer data bases and proprietary risk management
systems operated under the "TeleCheck" trademark. Checks totalling over $30
billion were authorized in 1993, compared with $24 billion in 1993 and $15
billion in 1992.
TeleCheck provides check guarantee services (buying the approved check at
face value from the merchant if it is subsequently dishonored) up to a
pre-established warranty maximum. TeleCheck's check verification service helps
merchants reduce bad check write-offs and control the costs of check acceptance
by providing access to payment data bases and activity monitoring systems.
These services allow merchants to maintain a liberal check acceptance program
to increase sales and profits. Fees charged to customers for check
verification and guarantee services are generally based on the dollar volume of
transactions processed.
TeleCheck became a part of merchant services through FFMC's acquisition
in July 1992 of TeleCheck Services, Inc. ("TSI") and its principal franchisee,
Payment Services Company - U.S. ("PSC"). TSI was the owner and franchisor of
the TeleCheck system, and provided these services along with eleven independent
franchisees (including PSC) operating in geographically-defined territories.
PSC started in 1976 as the owner of the Houston TeleCheck franchise, and grew
its volume and service
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offerings through internal growth and the acquisition of additional franchises
and other related businesses.
In 1993, TSI and PSC completed the combination of their operations,
consolidating TSI's data processing operations and administrative offices into
PSC's headquarters and principal operating facility in Houston, Texas. The
Company also acquired five entities during 1993 that operated TeleCheck
franchises, four in the United States and the franchise in the Commonwealth of
Puerto Rico. In 1994, the Company acquired the entity operating the TeleCheck
franchise covering Australia and New Zealand. TeleCheck now operates virtually
the entire TeleCheck system, with independent franchisees remaining in only
three states and Canada.
Nationwide Credit, Inc. ("Nationwide"), acquired by FFMC in 1990, is a
leading provider of debt collection and accounts receivable management services
nationally to a wide variety of customers including retailers, health care
providers, financial institutions and the federal government and its agencies
through eleven collection offices located throughout the United States. Fees
charged to customers are generally based on the dollar amount of the funds
collected. Nationwide's services are performed with enhanced technological
advancements, including on-line skiptracing capabilities and paperless
collection systems, as customers' transactions are managed through a
collector's computer terminal linked to a central mainframe computer.
In March 1994, Nationwide acquired The Master Collectors, Inc. ("Master
Collectors"), an Atlanta-based collection agency. During 1994, the Master
Collectors' administrative and principal operating office was consolidated into
Nationwide's headquarters facility in Marietta, Georgia.
International Banking Technologies, Inc. ("IBT"), acquired via merger
with FFMC in 1993 and headquartered in Norcross, Georgia, is a leader in
developing in-store branch banking programs in supermarkets. IBT provides a
comprehensive array of services for its financial institution customers, with
the objective of developing a profitable retail financial services outlet while
achieving a value added arrangement to the food retailer. IBT derives its
revenues from fees earned during the design and installation phases, and also
from the on-going management of the in-store program between the financial
institution and the supermarket.
FFMC's acquisition of Western Union gives the Company a worldwide
leadership position in nonbank money transfer and bill payment services. The
primary market for Western Union's services is comprised of people who
periodically need to send or receive cash quickly to meet emergency situations,
to send funds to family in other locations or to use nonbank financial services
to pay bills and meet other obligations.
Western Union's automated money transfer system is connected to its
network of over 18,000 agents in the United States and over 6,000 agents in
over 100 foreign countries. In addition, money transfer services are available
on a next day basis to 15 African countries and third party service is
available in over 20 additional countries. Proprietary software links Western
Union's network directly to personal computers at agent locations for over half
of Western Union's domestic agent locations and over 1,000 of its foreign agent
locations. Western Union's administrative offices are located in Paramus, New
Jersey, and its principal operating facilities are customer service centers in
Bridgeton, Missouri and Dallas, Texas, the latter being a multilingual center.
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Data is entered into the money transfer system from a person initiating a
transfer (the sender with funds) and the information is available throughout
Western Union's agent network (for a money transfer to a recipient specified by
the initiator) or to a specified commercial establishment (for a bill payment).
The information processing and transfer is completed by Western Union's system
such that money is available to the intended recipient, generally within
minutes. Western Union's revenues are derived from the transfer fee, which is
paid by the sender based on a graduated schedule and varies with the principal
amount of the money transfer.
Money transfers are typically handled by Western Union agents, of which
over 6,000 are located in supermarkets and convenience stores in the United
States. Customers can also call toll-free to a Western Union service center
and charge the transfer and related fee to their credit card account.
Commercial customers can also contact Western Union directly to complete money
transfers to traveling employees or clients.
Western Union offers bill payment services to utility companies,
collection agencies, finance companies and other financial institutions. The
debtor pays a transaction fee to settle their account via a money transfer
initiated at a participating Western Union agent location, with Western Union's
commercial customer benefiting from a convenient collection tool that results
in immediately available funds.
Also in recent years, Western Union has introduced ancillary products to
expand its services throughout its customer base. These products include money
orders and a prepaid disposable phone card, both of which are sold primarily
through Western Union's money transfer agents.
Merchant service revenues and earnings are favorably affected by
increased credit card and check volume during the holiday shopping period in
the fourth quarter and, to a lesser extent, during the back-to-school buying
period in the third quarter. In future years, the Company believes that its
revenues and earnings will also be affected by higher Western Union money
transfer volume during the summer months.
Health Care Services
Health care services includes data processing and information management
services related to health care and workers' compensation claims and the
resulting payments. Services are provided to approximately 2,000 customers by
over 5,300 employees operating in 180 locations throughout the United States.
The percentages of FFMC's revenues provided by health care services were 18%,
21% and 20%, respectively, for the years ended December 31, 1994, 1993 and
1992.
During 1994, FFMC began the process of consolidating previously separate
business units under one operating entity, FIRST HEALTH. The Company believes
a streamlined organizational structure will promote the marketing of its
various health care services to new customers, and the cross-selling of such
services to existing customers.
FIRST HEALTH Strategies, based in Salt Lake City, Utah, is one of the
nation's largest processors of private sector health care claims. Its services
include claims administration, utilization management, provider networks,
insurance brokerage and data analysis and reporting. These services are
designed to help control employer health care costs and to monitor the quality
of health care provided. FIRST
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HEALTH Strategies markets its services principally to employers with
self-funded group health benefit plans and to employers with insured plans
which are seeking health care management alternatives. In 1994, FIRST HEALTH
Strategies began providing claims administration services to health maintenance
organizations.
FIRST HEALTH Services, based in Glen Allen, Virginia, is one of the
largest providers of transaction processing and management services to
governmental agencies and private and public third party payors. These
services include processing for Medicaid and other state programs,
pharmaceutical claims processing, drug utilization review services, and
management services for mental health, substance abuse, and preventative care
programs.
In addition, FIRST HEALTH is a leading supplier of Medicare claims
processing systems to health care insurers and a provider of hospital
information processing systems focused on revenue generation and cost
containment.
In July 1994, FFMC expanded FIRST HEALTH's service offerings by the
acquisition of GENEX Services, Inc. ("GENEX"). GENEX, headquartered in Wayne,
Pennsylvania, provides workers' compensation cost containment services to the
insurance industry and to self-insured corporations throughout the United
States, Canada and the Commonwealth of Puerto Rico. Services provided include
medical case management, medical bill review, vocational rehabilitation,
utilization management, independent medical exams, disability case management,
access to PPO networks, and telephonic injury management. GENEX has over 1,000
employees and over 120 offices throughout its markets to extend its service
coverage given the differences in disability laws and regulations among the
states.
During 1994, health care reform measures introduced in 1993 by the
executive and legislative branches of the federal government have been
supplanted by private sector initiatives to streamline the delivery of health
care services in the United States. FFMC believes this trend will continue.
Accordingly, the Company in 1994 intentionally slowed its rate of capital
investments in its health care services businesses as the nature of the reform
process materialized. FFMC continues to believe that its health care services,
given their focus on the efficiency of information processing, are favorably
positioned to benefit from an emphasis on reducing the level of administrative
costs related to the delivery of health care products and services.
In 1994, FIRST HEALTH Strategies continued its development of an
electronic claims processing system (ACT3). The Company lengthened its
implementation schedule to allow continued system design to incorporate the
effects of industry reforms on the processing of health care transactions. The
ACT3 system is being tested, and FFMC believes customer implementation will
commence in late 1995.
Data Imaging Services
Data imaging services is comprised of a full array of information
management services, including data capture, data imaging, micrographics,
electronic database management, and output printing and distribution. Services
are provided through First Image Management Company ("First Image") through
approximately 80 locations across the United States. First Image,
headquartered in Atlanta, Georgia, is the largest full service provider of
imaging services in the United States, employing nearly 3,400 people to provide
services to over 13,000 customers. The percentages of FFMC's revenues from
data imaging services were 11% in 1994, 13% in 1993 and 15% in 1992.
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First Image markets its array of services under a "total solutions"
approach with the objective of improving the utility of a user's data base
through ease of access and efficient information output. In addition, First
Image's services reduce the need for its clients to devote substantial capital
investments to create, maintain and access large databases. Fees for First
Image's services are based on the volume and complexity of the information
management services as well as other factors such as required turnaround time,
volume and duration of contract. The majority of First Image's revenues are
derived from contracts two to three years in length.
First Image strengthened its market leadership position during 1994 by
acquiring the assets of AT&T's Global Information Solutions Information
Imaging Systems ("AT&T IIS"). At the date of acquisition, AT&T IIS provided a
full line of information management services to approximately 850 customers
through 13 locations across the United States. First Image continues to
provide services to AT&T's Data Services Division under a long-term contract.
In 1994, First Image began implementation of a business strategy to
deemphasize its sales and related maintenance of imaging equipment, focusing
its organization instead on the growth of its recurring business services.
Third party equipment suppliers are now utilized, as needed, to furnish First
Image customers with imaging equipment and associated maintenance services.
Also during 1994, First Image reorganized its businesses around three product
sets - Data Acquisition, Data Output and Corporate Publishing.
First Image's Data Acquisition division creates and manages large scale
electronic data bases through the collection and conversion of paper source
documents via key entry or high speed scanning techniques. Customers can be
linked to these data bases off-line, by dedicated transmission lines or
satellite link, or on-line by a direct link to First Image's key entry
terminals. In 1994, the Data Acquisition division signed several large
contracts with insurance companies for processing related to health care
claims.
The Data Output division includes First Image's production of computer
output microfilm ("COM") and the customization, printing and mailing of reports
and statements from large databases. COM services result in cost savings for
customers by the elimination of paper and reduced information distribution
costs with compact storage and efficient information retrieval. In 1994, First
Image introduced a CD-ROM data storage and retrieval product in selected
markets. As a natural extension of its database management services, First
Image prints and distributes large volumes of computer generated documents such
as promotional mailings, invoices and account statements for its clients each
month.
The Corporate Publishing division maintains databases for training
manuals, software manuals, product catalogs, directories and other lengthy,
detailed documents. Updates for these documents are transmitted electronically
to First Image from its customers. First Image then updates the database,
prints the required pages, and ships the hard copy output to predetermined
client locations.
MARKETING
FFMC markets its services through a variety of channels including direct
solicitation and general advertising. The Company's employees are utilized in
the direct solicitation of new customers and the cross-selling of additional
FFMC services to existing customers. Direct sales organizations at the
Company's merchant credit card and check acceptance businesses have been
effective in signing new merchant accounts in the past several years.
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General advertising of FFMC's services is accomplished through industry
and trade publications, direct mail, telemarketing, and contact at trade
conventions and Company-sponsored seminars as well as direct sales. Western
Union, acquired by FFMC in November 1994, maintains a broad based advertising
and marketing program supporting the Western Union brand and the public's
awareness of Western Union's services.
In addition, the Company believes that its ongoing business acquisition
program is an important complement to direct marketing efforts to enhance
existing products by expanding markets and services offered.
COMPETITION
The most significant competitive factors in the sale of the Company's
services are price, quality, technological advancement and reliability of
service. Competition is encountered from several different sources, which vary
depending on the particular service involved and the size of the customer
served. These sources include national and local service providers, and
in-house solutions sold by computer equipment and software vendors.
The Company's merchant credit card services compete against several other
national service providers and against banks that continue to provide these
services to their merchant customers. FFMC's check acceptance business is in
competition principally with two other national companies.
Western Union originated nonbank money transfer services in 1871, and is
the dominant provider of these services in the United States. Western Union
competes with bank wire transfer services (available primarily to commercial
users) and money orders as alternative methods of funds transfer. First Data
Corporation is currently the major competitor in the nonbank money transfer
business, and Western Union faces several established competitors in providing
commercial money transfer and electronic bill payment services. Western
Union's major competitive strengths include its long service history, its
worldwide brand awareness, and the market presence of its large and established
worldwide agent network.
FFMC's acquisition strategy includes the objective of entering large,
fragmented markets in which the Company can become the dominant service
provider. The markets related to health care information services and debt
collection services continue to be fragmented, with no one company or group of
companies considered dominant. First Image is the largest provider in the data
imaging market, a market composed primarily of local area providers.
DISPOSITIONS
In 1992, FFMC sold or entered into agreements to sell Georgia Federal
Bank, FSB and its subsidiaries ("Georgia Federal"), including its consumer
finance subsidiary, First Family Financial Services ("First Family"). Georgia
Federal was acquired by FFMC on May 31, 1989 specifically to ensure that the
Company's merchant credit card processing business had access to the payment
system through Georgia Federal's sponsorship in the VISA and MasterCard
networks. In 1992, the Company implemented alternative measures to provide
continued access to the payment system (including a plan to form a credit card
bank), which provided FFMC the flexibility to sell Georgia Federal. The sale
of First Family was consummated on November 10, 1992, and a definitive
agreement to sell Georgia Federal was entered into on December 21, 1992. FFMC
operated Georgia Federal until the sale was
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consummated on June 12, 1993 although the agreement provided that all 1993
results accrued to the purchaser.
During the period of FFMC's ownership of Georgia Federal and First
Family, these combined businesses comprised the Company's financial services
segment for purposes of FFMC's financial reporting. Georgia Federal was the
largest thrift institution in the State of Georgia with assets of over $4
billion, and First Family was a regional consumer finance company with $600
million in assets and offices in eight southeastern states. These businesses
have been presented as discontinued operations in FFMC's consolidated financial
statements.
On December 31, 1992, FFMC entered into a definitive agreement to sell
Basis Information Technologies, Inc. ("Basis"), the Company's original core
business unit that provided data processing services to financial institutions.
FFMC operated this business until the sale was consummated on February 10,
1993, although the agreement provided that all 1993 results accrued to the
purchaser. During the fourth quarter of 1992, the Company discontinued
software development for a major Basis product line in connection with the
settlement of litigation with a vendor. As a part of its overall strategic
reevaluation, FFMC's management determined that additional investments in its
financial institutions processing business did not fit the Company's overall
strategic direction and decided to pursue the sale of Basis. Basis was
included in FFMC's Information Services segment for financial reporting
purposes.
REGULATION AND EXAMINATION
The 1992 business dispositions removed certain service offerings that
previously subjected FFMC to considerable regulation and examination. However,
remaining services that the Company provides directly to governmental agencies
and to banks and other regulated financial institutions may be reviewed by
various federal and state regulatory agencies.
First Financial Bank ("FFB") was formed effective May 7, 1993 under
Georgia law as a special purpose bank that will conduct only those activities
permitted for "credit card banks" under the Federal Bank Holding Company Act,
as amended (the "BHC Act"). Under the BHC Act, FFMC may own a credit card bank
without itself becoming subject to federal regulation as a bank holding company
(or subject to related restrictions on the types of activities FFMC and its
other subsidiaries may engage in) as long as the credit card bank: (a) engages
only in credit card operations, (b) accepts no deposits other than time
deposits of $100,000 or more, (c) maintains only one office that accepts
deposits, and (d) does not engage in the business of making commercial loans.
FFB operates under these limitations.
First Financial Bank is subject to examination and regulation by the
Georgia Department of Banking and Finance and applicable federal regulatory
agencies, including the Federal Deposit Insurance Corporation ("FDIC"), which
in 1993 approved FFB's application for FDIC deposit insurance. Certain
activities of NaBANCO are subject to examination and regulation. In addition,
certain minimum capital ratios must be maintained by FFB, and arrangements
between FFB and its affiliates must be on terms at least as favorable as those
available from independent third parties. In addition, FFB and NaBANCO
continue to be subject to the VISA and MasterCard rules, including a
requirement that FFB maintain adequate capital (currently $70 million) based on
the merchant credit card processing volume settled through FFB.
FFMC's service operations related to debt collection, health care claims
administration, and money transfer are regulated at the state level by banking
or insurance commissions or similar authorities, which
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require the Company to obtain and maintain licenses to conduct such operations.
Such licenses generally require the Company or the licensed subsidiary to
demonstrate and maintain minimum levels of net worth and/or liquidity.
INDUSTRY TRENDS
The technological capabilities required for the rapid and efficient
creation, processing, handling, storage and retrieval of information are
becoming increasingly complex. These capabilities require large capital
expenditures and have resulted in an industry consolidation that is beneficial
to FFMC. The Company's customers are handling an expanding variety of
transactions with rapidly growing volumes. This processing increasingly
requires the use of sophisticated software, hardware and communication
technologies.
Third-party credit card processing and check verification services are
being performed increasingly through electronic means, which provide faster and
more reliable confirmations and quicker and more convenient transaction
processing and settlement. Sophisticated technological and communication
capabilities are also essential to permit the imaging, creation and effective
management of large data bases. Likewise, within the health care and
pharmaceutical claims industry, there is an increasing need for data to be
available more rapidly in order to manage and pay for health care services.
Significant capital commitments are becoming increasingly important in
order to develop, maintain and update the systems (including software, hardware
and communication equipment and methods) necessary to provide these
technologically advanced services at a competitive price. Economies of scale
are needed to justify these capital investments. In addition, as more on-line
and other electronic delivery systems are used, it is becoming easier to serve
a wider geographic area from centralized data processing centers. As a result
of these developments, many institutions are contracting with outside
specialists for these services, and many small information processing and
handling organizations are consolidating with large providers of these
services.
FFMC believes that it can benefit from these trends by leveraging the
collective capabilities developed through its various service offerings which
lend themselves to cross-selling and to synergistic combinations. The Company
also believes that its growing array of information services enhances its
ability to provide a total solutions approach to many of its customers' needs.
EMPLOYEES
At December 31, 1994, FFMC and its subsidiaries employed approximately
15,000 employees. Western Union has a three-year labor contract (expiring
August 6, 1997) with the Communications Workers of America, AFL-CIO,
representing approximately 900 full time and 200 part time employees. The
Company's employees are not otherwise represented by any labor organization.
PRODUCT DEVELOPMENT
FFMC develops systems software and data capture equipment to facilitate
the delivery of the Company's information services to its customers. These
products enable customers to more easily connect with FFMC's information
transfer network and to make the completion of transactions more convenient and
efficient.
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During 1994, FFMC repositioned one of its business units, MicroBilt, by
deemphasizing sales to unaffiliated parties to focus on its primary role as the
Company's internal research and development arm. MicroBilt develops
technological solutions to enhance the Company's service offerings and to
facilitate the linkage of customer transaction terminals with FFMC's
information processing network. MicroBilt develops and supports data capture,
communications and information distribution systems to multi-location
customers, including financial institutions, retailers, restaurants, and health
care and pharmaceutical providers. In 1992, MicroBilt developed a
point-of-sale terminal (SurePay(TM)) which captures and stores electronically
the cardholder's signature, allowing NaBANCO to provide its merchant customers
with added protection against procedural chargebacks. In January 1995,
TeleCheck introduced MicroBilt-developed Accelera(TM), a combination check
reader and credit card processing devise that connects with a merchant's
point-of-sale terminal.
Outlays for FFMC's software development activities totalled $35 million
in 1994, $31 million in 1993 and $27 million in 1992. The 1992 amount excludes
development costs incurred by Basis which were subsequently written off in
1992 in connection with the settlement of litigation with a vendor. The costs
of software maintenance, research and conceptualization are expensed when
incurred.
ITEM 2. PROPERTIES
FFMC leases virtually all of its operating facilities of its business
units, covering approximately 400 locations across the United States and 10
locations outside the United States. Approximately 230 of these locations
represent the Company's principal data processing and service centers, many of
which also contain sales and administrative offices. These facilities are
under leases that have expiration dates ranging from 1995 to 2009.
During 1994, FFMC sold the FIRST HEALTH operations facility in Salt Lake
City, Utah and leased it back under a fifteen year agreement. The Company's
remaining owned property is a First Image operations facility in London,
Kentucky.
All of FFMC's properties are in good repair and in suitable condition for
the purposes for which they are used.
FFMC will move its corporate headquarters office during 1995 to another
leased office location in Atlanta, Georgia. The new facility has a ten year
lease through 2005, with renewal options.
ITEM 3. LEGAL PROCEEDINGS.
There were no material legal proceedings involving FFMC or its property
required to be disclosed herein.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of FFMC's shareholders during the
fourth quarter of 1994.
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EXECUTIVE OFFICERS
Set forth below is information about FFMC's executive officers:
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OFFICER OF
NAME AGE POSITIONS WITH FFMC FFMC SINCE
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Patrick H. Thomas 52 Chairman of the Board, President 1972
and Chief Executive Officer
Robert J. Amman 56 Vice Chairman and Chief Operations 1995
Officer
Richard D. Jackson 58 Vice Chairman and Chief Operations 1989
Officer
Stephen D. Kane 51 Vice Chairman, Chief Administrative 1988
Officer and Secretary
M. Tarlton Pittard 55 Vice Chairman, Chief Financial 1986
Officer and Treasurer
Randolph L. M. Hutto 46 Senior Executive Vice President, 1992
General Counsel
Richard Macchia 43 Executive Vice President, Finance and 1989
Principal Accounting Officer
</TABLE>
Messrs. Thomas, Kane and Pittard have been principally employed as
executive officers of FFMC for more than five years. Messrs. Amman, Jackson,
Kane and Pittard each were named Vice Chairman in January 1995.
Prior to his appointment as Vice Chairman of FFMC, Mr. Amman was
President and Chief Executive Officer of Western Union Financial Services, Inc.
since 1988.
Prior to his appointment as Vice Chairman of FFMC, Mr. Jackson was Senior
Executive Vice President of the Company since January 1993. He was Vice
Chairman and Chief Executive Officer of Georgia Federal Bank, FSB ("Georgia
Federal"), since July 1986 and became Senior Executive Vice President of FFMC
in June 1989.
Mr. Hutto was named Senior Executive Vice President of FFMC in January
1995. Mr. Hutto joined FFMC in January 1992 as Executive Vice President,
Secretary and General Counsel. Previously he had been a partner with the law
firm of Sutherland, Asbill and Brennan, FFMC's principal outside counsel, since
1985.
Mr. Macchia assumed his present position with FFMC in September 1991.
From December 1989 until such time, he served as Senior Vice President and
Chief Financial Officer, Commercial Services, then a division of FFMC.
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<PAGE> 13
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
FFMC's $.10 par value common stock is traded on the New York Stock
Exchange under the symbol "FFM." The high and low prices for the Company's
common stock for each quarter during the last two years were as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
Quarter Ended High Low High Low
- ------------- ------ ----- ------ -----
<S> <C> <C> <C> <C>
March 31 $60 1/8 $51 1/8 $44 1/4 $38 1/4
June 30 59 1/8 52 3/8 42 3/8 36
September 30 62 52 55 1/8 42 3/8
December 31 63 1/2 53 3/4 58 1/2 50 1/2
</TABLE>
The closing sale price for the Company's common stock on March 10, 1995
was $69 1/4 per share, with 1,918 holders of record as of that date.
In 1989 the Company established a policy of making semi-annual dividend
payments to shareholders and the Company's Board of Directors has since
declared semi-annual cash dividends of $.05 per share. The Company expects to
pay future cash dividends semi-annually depending upon the Company's pattern
of growth, profitability, financial condition, and other factors which the
Board of Directors may deem appropriate.
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<PAGE> 14
ITEM 6. SELECTED FINANCIAL DATA.
FIRST FINANCIAL MANAGEMENT CORPORATION
The following data should be read in conjunction with the consolidated
financial statements and related notes thereto included elsewhere in this
Annual Report and "Management's Discussion and Analysis of Financial Condition
and Results of Operations." The Company's merger with GENEX Services, Inc.
("GENEX") in July 1994 has been accounted for as a pooling of interests and,
accordingly, the following information (including share information) has been
restated to include both FFMC and GENEX. During each of the periods presented
below, FFMC has made various acquisitions, accounted for as purchases, which
affect the comparability of information presented. For additional information
concerning the Company's acquisitions, see Note B to the consolidated financial
statements. In addition, in 1992 the Company disposed of one of its two
business segments and recorded a loss in another business unit that was sold.
These dispositions are outlined in Note C to the consolidated financial
statements.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Year ended December 31, 1994 1993 1992 1991 1990
- -------------------------------------------------------------------------------------------------------------
(In millions, except per share amounts)
<S> <C> <C> <C> <C> <C>
Income statement data:
- ---------------------
Revenues $2,207.5 $1,759.6 $1,508.4 $1,057.5 $816.3
Expenses 1,939.2 1,539.4 1,440.5* 952.9 737.1
--------------------------------------------------------
Income from continuing
operations before income taxes 268.3 220.2 67.9 104.6 79.2
Income taxes 108.1 88.4 46.5 41.9 31.5
--------------------------------------------------------
Income from continuing operations $ 160.2 $ 131.8 $ 21.4 $ 62.7 $ 47.7
========================================================
Depreciation and amortization $ 97.7 $ 77.8 $ 84.5 $ 58.7 $ 45.2
Per share data:
- --------------
Income per share - continuing operations
Primary $ 2.56 $ 2.12 $ 0.35* $ 1.32 $ 1.17
Fully diluted 2.56 2.12 0.35* 1.23 1.10
Cash dividends per share 0.10 0.10 0.10 0.07 0.07
Weighted average common shares outstanding:
- ------------------------------------------
Primary 62.9 62.0 60.1 47.4 40.8
Fully diluted 62.9 62.1 60.3 53.0 48.1
Balance sheet data (at year end):
- --------------------------------
Total assets $3,135.7 $1,645.9 $1,571.7 $1,297.0 $1,105.2
Long-term debt, including current portion 62.3 17.3 158.7 152.1 207.8
Convertible debentures 447.1 -- -- -- 166.8
Total shareholders' equity 1,429.8 1,253.5 1,124.9 997.6 600.7
</TABLE>
* Includes loss in business unit sold of $79.6 million ($1.07 after-tax loss
per share).
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<PAGE> 15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
First Financial Management Corporation (the "Company" or "FFMC") is in
the business of providing information services to commercial establishments,
government agencies and consumers. The Company markets its array of service
offerings to attract new customers and cross-sells its various services
throughout its existing customer base. The largest category of services
involves information processing and transfer related to financial transactions.
These services include the authorization, processing and settlement of credit
and debit card transactions, verification or guarantee of check transactions,
debt collection and accounts receivable management, and worldwide nonbank money
transfers and bill payments. A second category includes data processing and
information management services related to health care and workers'
compensation claims and the resulting payments. The final service category is
comprised of a full array of information management services, including data
capture, data imaging, micrographics, electronic database management, and
output printing and distribution.
The Company's information services business is presented as FFMC's
continuing operations in the accompanying consolidated financial statements and
in the following discussions. Discontinued operations consist of FFMC's
previous financial services businesses (which the Company sold or signed
agreements to sell in 1992), the results of operations for which are not
included in the Company's results in 1994 or 1993.
In July 1994, FFMC completed its merger with GENEX Services, Inc.
("GENEX"). This business combination has been accounted for as a pooling of
interests and, accordingly, for all periods in the accompanying consolidated
financial statements and in the following discussions the results of GENEX are
included in the Company's results. In November 1994, FFMC completed its
acquisition of Western Union Financial Services, Inc. and related assets
("Western Union"). This business combination was accounted for as a purchase,
and the results of Western Union have been included in the Company's results
from the effective date of the acquisition.
RESULTS OF OPERATIONS
1994 Compared With 1993
FFMC's revenues increased 25% to $2.2 billion in 1994 from $1.8
billion in 1993, including a 31% increase in service revenues. Net income for
the year ended December 31, 1994 was $160.2 million, 22% greater than 1993's
net income of $131.8 million. Per share earnings increased to $2.56 compared
with per share earnings of $2.12 in 1993, an increase of 21%.
Record new business (contracted in the latter half of 1993 and during
1994) together with the assimilation of acquisitions contributed to the
Company's revenue growth. Internal growth of 16% for the year was the
principal component of the overall increase in revenues in 1994 as compared
with the prior year. Over 67,000 new customers (net of attrition) were added
in 1994, with the majority occurring in FFMC's financial transaction processing
area. In addition, this area benefited during 1994 from new business from
several national accounts signed in 1993's fourth quarter.
The Company continues to emphasize growth in its service revenues, as
reflected by the 31% increase in 1994 compared with the prior year. FFMC also
continues to place emphasis on expense controls, as 1994's 29% increase in
operating expenses over 1993 is below the increase in service
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<PAGE> 16
revenues. This favorable comparison occurred despite the fact that the
strongest growth in service revenues occurred in the Company's credit card
processing services, an area that has a lower margin than the Company's overall
margin.
Product sales declined in 1994 compared with the prior year, primarily
due to FFMC's decision to decrease the significance of one-time product sales
and focus its product development effort on data capture platforms that link
customers to the Company's information services. Changes in the composition of
product sales led to a gross profit percentage on product sales of 36.3% in
1994 compared with 39.6% in 1993.
Depreciation and amortization expense increased 26% in 1994 compared
with the prior year, but represented 4.4% of revenues in both 1994 and 1993.
General and administrative expenses decreased slightly as a percentage of
revenues in 1994 compared with 1993. After excluding 1994 pension costs of
approximately $2.3 million incurred in the fourth quarter related to the
assumption of Western Union pension obligations, general and administrative
expenses increased 10% in 1994 compared with 1993.
The combination of these revenue and expense changes resulted in a
pre-tax margin of 12.2% in 1994 compared with a pre-tax margin of 12.5% in
1993. FFMC's effective tax rate for 1994 was 40.3%, comparable to the 40.1% in
1993.
On a pro forma basis (assuming that FFMC owned Western Union for all
of 1993 and 1994, and the related acquisition financing was completed on
January 1, 1993), the inclusion of the historical results of operations of
Western Union would have diluted the Company's consolidated results in 1993
and, to a much lesser degree, in 1994. However, Western Union is currently
experiencing profitability growth significantly above its historical rate,
which was an important factor in FFMC's determination to purchase Western
Union. The Company expects to further supplement this growth through the
cross-selling of its other information processing services throughout Western
Union's worldwide distribution network of over 24,000 agents in over 100
countries.
1993 Compared with 1992
FFMC consummated several significant business transactions during 1993
that resulted from the Company's strategic reevaluation of its businesses
completed in 1992. During the fourth quarter of 1992, the Company entered into
agreements to sell its financial services businesses, comprised of Georgia
Federal Bank, FSB ("Georgia Federal"), formerly the largest thrift institution
in Georgia, together with First Family Financial Services ("First Family"),
which previously was Georgia Federal's regional consumer finance subsidiary.
The sales of First Family and Georgia Federal were consummated in November 1992
and June 1993, respectively.
During the fourth quarter of 1992 the Company also agreed to sell
Basis Information Technologies, Inc. ("Basis"), the unit within FFMC's
information services business that provided data processing services to
financial institutions. The sale of Basis was consummated in February 1993.
Prior to entering into the agreement for the sale of Basis, the Company
discontinued software development and wrote off related costs for a major
product line in connection with the settlement of litigation with a vendor, the
combination of which resulted in income of $13.8 million included in other
revenues. Concurrently, the Company decided to explore the sale of Basis. In
reviewing the potential market value of Basis, FFMC's management determined
that a write-down of the carrying value of Basis' net assets was necessary.
Accordingly, the Company recognized a pre-tax loss of $79.6 million in 1992 (an
after tax loss of $1.07 per share). Revenues attributable to Basis were
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<PAGE> 17
$113.8 million in 1992 and its contribution to income before income taxes,
aside from the items mentioned above, was approximately $4.5 million.
The terms of both the Georgia Federal and Basis sale agreements
provided that the results of operations of these businesses after December 31,
1992 accrued to the respective purchasers, such that FFMC's 1993 financial
results do not include results for these businesses. The following discussion
pertains to FFMC's continuing operations.
FFMC's revenues increased 17% to $1.8 billion in 1993 from $1.5
billion in the prior year. Excluding Basis' 1992 revenues, the revenue growth
rate for the year was 26%. Income from continuing operations increased to
$131.8 million in 1993 from $21.4 million in 1992. Excluding the Basis asset
write-down from the prior year's results, income from continuing operations
increased 53% in 1993 compared with the prior year. Per share earnings from
continuing operations increased to $2.12 in 1993, compared with $.35 in 1992.
Excluding the Basis write-down, per share earnings increased 49% over 1992.
The 17% increase in revenues in 1993 is all attributable to internal
growth, as the effect of excluding Basis' revenues in 1993 is largely offset by
incremental 1993 revenues from acquisitions completed in 1992. The internal
revenue growth was due primarily to significant volume increases within FFMC's
existing businesses, particularly in the Company's credit card services and
check acceptance services areas. Despite pricing pressures in several of
FFMC's product areas, the Company demonstrated the leveragability of its
businesses by translating the revenue increases into higher percentage
increases in pre-tax income, thereby producing higher pre-tax margins. FFMC's
pre-tax margin of 12.5% in 1993 compared with a 9.8% pre-tax margin in 1992
(excluding the Basis write-down). The impact of the revenue increases and the
expansion of margins in 1993 was enhanced by net interest income of $.3 million
in 1993 compared with net interest expense of $9.4 million in 1992, as FFMC
reduced its debt obligations during 1993 from the cash received from the sale
of businesses.
The Company's effective tax rate decreased 1.4% to 40.1% in 1993. The
comparable 1992 rate of 41.5% excludes the impact of the Basis write-down. The
decrease occurred despite a 1% increase in the federal corporate tax rate from
the Omnibus Budget Reconciliation Act of 1993, which was signed into law during
the year and which contained several other provisions which affected FFMC's
1993 income tax expense. The Company's lower effective tax rate in 1993 was
attributable primarily to lower levels of nondeductible goodwill and to lower
effective state tax rates resulting from FFMC's tax strategies.
ECONOMIC FLUCTUATIONS
The Company's business is somewhat insulated from economic
fluctuations due to recurring service revenues from long-term customer
relationships, and the fact that FFMC's services often result in cost savings
for its customers. In addition, the Company believes that its credit and debit
card processing services are benefiting from higher overall card use and, in
particular, to growing card use for recurring transactions at outlets such as
supermarkets and grocery stores.
Strong economic growth during 1994 benefited FFMC's results, as the
Company experienced higher year-to-year processing volumes, particularly in its
credit card processing and check acceptance service areas. The Company
believes that recent increases in short-term interest rates will not
significantly impact processing volumes in these business areas.
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<PAGE> 18
Portions of FFMC's business are seasonal. The Company's revenues and
earnings are favorably affected by increased credit card and check volume
during the holiday shopping period in the fourth quarter and, to a lesser
extent, during the back-to-school buying period in the third quarter. In
future years, the Company believes that it's revenues and earnings will also be
affected by higher Western Union money transfer volume during the summer
months.
Although FFMC cannot precisely determine the impact of inflation on
its operations, the Company feels that it is not significantly affected by
inflation. To some extent the Company is able to contractually increase the
price of its services to offset increased costs of employee compensation and
other operating expenses. In addition, FFMC's revenues from its information
services for credit card, check and money transfer transactions are generally a
percentage of the dollar volume processed. The Company's operating margins on
these services are therefore relatively insulated from the effects of inflation
on merchant prices for goods and services and on the dollar value of money
transfers.
CAPITAL RESOURCES AND LIQUIDITY
FFMC's information services business generates strong cash flows from
operating activities, and the growth in these cash flows in recent years
mirrors the growth in the scale and breadth of the Company's service offerings.
Cash generated from operating activities in 1994 increased 38% to $298.3
million, up from $215.7 million in 1993 and compared with $153.0 million in
1992. The increased cash flows from operating activities are due primarily to
the Company's increased earnings in these periods (before non-cash expenses
for depreciation and amortization and other non-cash expenses).
The Company transferred the responsibility for merchant credit card
settlement to its credit card bank, First Financial Bank ("FFB"), in June 1993
(included in FFMC's continuing operations) from Georgia Federal (part of FFMC's
discontinued operations). FFB was activated during the second quarter of 1993
with a required initial capitalization of $70 million. The capitalization of
FFB is based upon the requirements of bank card associations given the size of
the Company's credit card processing operations. The primary purpose of FFB is
to support the Company's credit card services activities, and FFB does not
conduct any significant banking activities, accept deposits from unaffiliated
parties or engage in lending activities. FFB's capitalization and activities
comply with regulatory requirements and restrictions.
The significant cash flows generated from operating activities are
reinvested by the Company in existing businesses, are used to fund tactical
acquisitions, and are also used to reduce borrowings and to contribute to the
financing of larger, strategic acquisitions.
FFMC reinvests cash in its businesses principally for property and
equipment additions, software development and customer conversions. Cash
outlays in 1994 for these reinvestments totalled $91.0 million, which was
partially offset by the Company's receipt of $12.5 million in cash proceeds
from a property sale in December 1994. Comparative prior year outlays totalled
$81.0 million in 1993 and $79.7 million in 1992. The Company estimates that
business reinvestment amounts will increase moderately in 1995, primarily from
outlays anticipated for software development activities.
Cash from operating activities exceeded non-acquisition investing
activities by $219.8 million in 1994, $134.7 in 1993, and $73.3 million in
1992. This excess cash was utilized primarily to
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<PAGE> 19
finance the Company's business acquisitions. Cash consideration paid (net of
cash acquired), including amounts paid related to acquisitions completed in
prior years, totalled $560.7 million in 1994, $92.2 million in 1993 and $267.5
million in 1992.
FFMC utilizes the capital markets and its revolving credit facility
for proceeds to supplement excess cash generated from operations to fund its
acquisition program and for other general corporate purposes. The Company
filed a shelf registration statement with the Securities and Exchange
Commission in November 1994 to enable the Company to issue up to $1.0 billion
in debt and convertible debt securities. In addition, FFMC amended its
unsecured revolving credit facility in November 1994, increasing it from $450
million to $1.0 billion and providing for a new three year term.
FFMC agreed to pay a total of $893.2 million in cash for its November
1994 acquisition of Western Union. Under the terms of the acquisition
agreement, $593.2 million was paid in November 1994 and $300 million was paid
in January 1995. The Company utilized its amended revolving credit facility
and available cash on hand to finance the Western Union cash purchase price
portion paid in November 1994. Subsequently, net cash proceeds of $441.6
million from FFMC's December 1994 issuance of senior convertible debentures
(under its shelf registration) were used to repay all but $45 million of these
borrowings. In January 1995, FFMC utilized $220 million in facility borrowings
and $80 million of available cash on hand to finance the final cash payment.
The Company also has an option to acquire an additional business unit from
Western Union's prior owner (who also has an option to put the additional
business unit to FFMC) for $20 million in cash in 1996.
The Company also assumed underfunded pension plan obligations
(estimated at $266.0 million) as part of the purchase consideration for the
Western Union acquisition. FFMC is evaluating its funding options related to
these obligations. Future cash contributions needed to meet minimum funding
requirements should not materially affect the Company's cash flows. The
Company may decide to fund a substantial portion of such obligations in advance
of required contributions.
FFMC expects to receive approximately $35 million in cash during
1995's second quarter from the exercise of remaining publicly held stock
warrants. FFMC received $8.1 million in cash proceeds in 1994 from the
exercise of these stock warrants, which were issued in 1989 in connection with
an offering of the Company's common stock.
The Company continued its practice established in 1989 of paying
semi-annual $.05 per share cash dividends to shareholders (distributed in
January and July), the latest of which was paid on January 3, 1995 to
shareholders of record on December 1, 1994.
Cash equivalents of $97.1 million and $70.0 million, respectively, at
December 31, 1994 and 1993 relate to required investments of cash in connection
with the Company's merchant credit card and money transfer settlements. FFMC's
remaining cash and cash equivalents are available for acquisitions and general
corporate purposes. If suitable opportunities arise for additional
acquisitions, the Company may use cash, draw on its available credit facility,
or use common stock or other securities as payment of all or part of the
consideration for such acquisitions. Alternatively, FFMC may seek additional
funds in the equity or debt markets, under its existing shelf registration or
otherwise, to finance such acquisitions or to repay outstanding borrowings
under its credit facility. The Company believes that its current level of cash
and future cash flows from operations are sufficient to meet the needs of its
existing businesses.
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<PAGE> 20
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and supplementary data filed as a part of
this Form 10-K are listed in the Index to Consolidated Financial Information.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information concerning the nominees for Directors of FFMC is contained
under "Election of Directors" in FFMC's Proxy Statement for the April 26, 1995
Annual Meeting of Shareholders and is incorporated herein by reference in
response to the information required by this item.
Information concerning the Executive Officers of FFMC is contained in
a separate section captioned "Executive Officers" in Part I of this Report and
is incorporated herein by reference in response to the information required by
this item.
ITEM 11. EXECUTIVE COMPENSATION.
The information set forth under "Compensation Related Matters" in
FFMC's Proxy Statement for the April 26, 1995 Annual Meeting of Shareholders is
incorporated herein by reference in response to the information required by
this item.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information set forth under "Voting Securities" and "Election of
Directors" (regarding ownership of FFMC stock) in FFMC's Proxy Statement for
the April 26, 1995 Annual Meeting of Shareholders is incorporated herein by
reference in response to the information required by this item.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information set forth under "Certain Transactions" in FFMC's Proxy
Statement for the April 26, 1995 Annual Meeting of Shareholders is incorporated
herein by reference in response to the information required by this item.
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<PAGE> 21
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) FINANCIAL STATEMENTS
The financial statements filed as a part of this Form 10-K are
listed in the Index to Consolidated Financial Information.
(a)(2) FINANCIAL STATEMENT SCHEDULES
The schedules required under Article 5 of Regulation S-X are listed
in the attached Index to Consolidated Financial Information. All
other schedules are omitted because they are either not applicable
or the information is presented in the financial statements or notes
thereto.
(a)(3) EXHIBITS
3.1 Restated Articles of Incorporation of First Financial Management
Corporation (filed May 13, 1994 as an exhibit to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1994
and incorporated herein by reference).
3.2 Bylaws, as amended through March 15, 1995.
4.1 See Articles V, VI and VIII of the Registrant's Restated Articles of
Incorporation (filed May 13, 1994 as an exhibit to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1994
and incorporated herein by reference) and Articles 1, 2, 5 and 9 of
the Registrant's Bylaws, as amended through March 15, 1995, filed as
Exhibit 3.2 hereto.
4.2* FFMC Savings Plus Plan, as amended and restated, effective January
1, 1991 (filed on November 5, 1990 as an exhibit to the Registrant's
Registration Statement on Form S-8 (File No. 33-37532) and
incorporated herein by reference).
4.3* Amendments 1 and 2 to the FFMC Savings Plus Plan, dated November 2,
1992 and April 1, 1993, respectively (filed on August 12, 1994 as an
exhibit to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994 and incorporated herein by reference).
4.4* Amendment 3 to the FFMC Savings Plus Plan, dated November 7, 1994.
4.5 Amended and Restated Credit Agreement dated as of June 25, 1992,
amended and restated as of November 8, 1994 between First Financial
Management Corporation, First Financial Bank, and The Chase
Manhattan Bank (National Association), as agent for the banks that
are signatories to the Agreement. The Exhibits and Schedules to the
Amended and Restated Credit Agreement are identified on a list of
Exhibit and Schedules contained in the Table of Contents to the
Amended and Restated Credit Agreement, which list is incorporated
herein by reference. Such Exhibits and Schedules have been omitted
for purposes of this filing, but will be furnished supplementally to
the Commission upon request (filed on November 15, 1994 as an
exhibit to the Registrant's Current Report on Form 8-K and
incorporated herein by reference).
4.6 Warrant Agreement, dated June 15, 1989, between the Registrant and
Wachovia Bank and
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<PAGE> 22
Trust Company, N.A. (filed on June 19, 1989 as an exhibit to
Registrant's Registration Statement on Form S-3 (File No. 33-29267)
and incorporated herein by reference).
4.7 Amendment dated September 5, 1989, to the Warrant Agreement, dated
June 15, 1989, by and between the Registrant and Wachovia Bank and
Trust Company, N.A. (filed on September 6, 1989 as an exhibit to
Amendment No. 1 to Registrant's Registration Statement on Form S-3
(File No. 33-29267) and incorporated herein by reference).
4.8 Indenture, dated as of December 5, 1994, between the Registrant and
NationsBank of Georgia, National Association, as Trustee (filed on
December 5, 1994 as an exhibit to the Registrant's Amendment No. 2
to its Registration Statement on Form S-3 (File No. 33-56327)
covering an unlimited amount of senior debt securities and
incorporated herein by reference).
4.9 First Supplemental Indenture, dated as of December 5, 1994, between
the Company and NationsBank of Georgia, National Association, as
Trustee (filed on December 6, 1994 as an exhibit to the Registrant's
Post Effective Amendment No. 1 to Form S-3 covering $440,000,000 of
Senior Convertible Debentures due 1999 and incorporated herein by
reference).
10.1 Agreement and Plan of Merger, dated July 6, 1992, by and among the
Registrant, PSC Acquisition Corporation and Payment Services Company
- U.S. The schedules to the Agreement and Plan of Merger were
omitted, but were identified in a list included therein and will be
furnished supplementally to the Commission upon request (filed on
November 16, 1992 as an exhibit to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1992 and
incorporated herein by reference).
10.2 Underwriting Agreement covering the Registrant's Senior Convertible
Debentures due 1999 (filed on December 6, 1994 as an exhibit to the
Registrant's Post Effective Amendment No. 1 to its Registration
Statement on Form S-3 (File No. 33-56327) and incorporated herein by
reference).
10.3 Lease between Mack Paramus Affiliates, as lessor, and Western Union
Financial Services, Inc., as lessee, dated June 30, 1993, together
with the First Amendment to Lease, dated March 3, 1995, covering the
Western Union Financial Services, Inc. headquarters office in
Paramus, New Jersey. The Exhibits to the Lease are listed in the
Table of Contents to the Lease, which list is incorporated herein by
reference. Such Exhibits (and Exhibits to the First Amendment to
Lease) have been omitted for purposes of filing, but will be
furnished to the Commission upon request.
10.4 Lease between the Northwestern Mutual Life Insurance Company, as
lessor, and Endata, Inc., as lessee, dated December 23, 1985 for
Endata, Inc.'s headquarters at 501 Great Circle Road, Nashville,
Tennessee (filed on March 31, 1986 as an exhibit to Endata, Inc.'s
Annual Report on Form 10-K for 1985 (File No. 0-11357) and
incorporated herein by reference).
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<PAGE> 23
10.5 Lease between Parkway, Ltd., as landlord, and National Bancard
Corporation, as tenant, dated December 28, 1987, together with
Addendum to Lease Agreement, dated February 22, 1988, for the
NaBANCO Building in Sunrise, Florida (filed on March 14, 1988 as an
exhibit to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1987 and incorporated herein by reference).
10.6 Lease, together with related Rider, dated February 6, 1989, between
Rowe Properties-Data Limited Partnership, as Lessor, and The
Computer Company as Lessee, covering First Health Services
Corporation's facilities at Innsbrook Corporate Center in Glen
Allen, Virginia, together with a Guaranty, dated February 2, 1989,
guaranteeing Lessor's obligations under the Lease (filed on March
27, 1990 as an exhibit to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1989 and incorporated herein by
reference).
10.7 Lease, dated February 28, 1990, as amended by the First Amendment
dated June 22, 1990, between Frank J. Hanna, Jr., as Lessor, and
Nationwide Credit, Inc. (Nationwide), as Lessee, covering
Nationwide's headquarters facility at 2258 Northwest Parkway,
Marietta, Georgia. (1)
10.8 Lease Agreement between VPM 1988-1 Ltd., as landlord, and Payment
Services Company, as tenant, dated March 27, 1990, together with
First Amendment to Lease Agreement (dated July 9, 1990), Second
Amendment to Lease Agreement (dated February 21, 1992), Third
Amendment to Lease Agreement (dated October 5, 1992), Fourth
Amendment to Lease Agreement (dated April 5, 1993) and Fifth
Amendment to Lease Agreement (dated December 15, 1993). The
Exhibits to the Lease Agreement and related Amendments are listed at
the end of such documents, and these lists are incorporated herein
by reference. Such Exhibits have been omitted for purposes of
filing, but will be furnished to the Commission upon request.
10.9 Lease Agreement between TriNet Essential Facilities X, Inc., as
landlord, and First Health Strategies, Inc. (a wholly owned
subsidiary of the Registrant), as tenant, dated November 1, 1994,
together with Exhibits B and C to the Lease Agreement, covering a
First Health Strategies, Inc. office facility in Salt Lake City,
Utah. All other Exhibits to the Lease Agreement are listed in the
Table of Contents to the Lease Agreement, which list is incorporated
herein by reference. Such Exhibits have been omitted for purposes of
filing, but will be furnished to the Commission upon request.
-23-
<PAGE> 24
10.10 Office Building Lease between Weprec Powers Pointe Corporation, as
landlord, and First Financial Management Corporation, as tenant,
dated March 8, 1995, together with Exhibit F to the Office Building
Lease, covering the Registrant's new corporate headquarters office
in Atlanta, Georgia. All other Exhibits to the Office Building
Lease are listed in the Table of Contents to the Office Building
Lease, which list is incorporated herein by reference. Such
Exhibits have been omitted for purposes of filing, but will be
furnished supplementally to the Commission upon request.
10.11* The Registrant's 1982 Incentive Stock Plan, as amended through
January 31, 1990. (1)
10.12* The Registrant's 1988 Incentive Stock Plan, as amended through
January 30, 1991. (1)
10.13* Amendment to the Registrant's 1988 Incentive Stock Plan, dated March
22, 1994 (filed on August 12, 1994 as an exhibit to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994
and incorporated herein by reference).
10.14* Amendment to the Registrant's 1988 Incentive Stock Plan, dated
February 24, 1995.
10.15* First Financial Management Corporation Performance Units Incentive
Plan, as amended through May 1, 1991 (filed on November 14, 1991 as
an exhibit to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1991 and incorporated herein by
reference).
10.16* Directors' Restricted Stock Award Plan, together with Form of
Director's Restricted Stock Award Agreement (filed on March 31, 1987
as an exhibit to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1986 and incorporated herein by reference).
10.17* 1990 Directors' Stock Option Plan. (Filed on August 14, 1990 as an
exhibit to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1990 and incorporated herein by reference.)
10.18* Endata, Inc. Amended Stock Option Plan (filed on October 17, 1986 as
an exhibit to Post-Effective Amendment No. 1 to Endata, Inc.'s
Registration Statement on Form S-8 (File No. 2-97925) and
incorporated herein by reference), together with an Amendment to
Endata Inc.'s Amended Stock Option Plan, dated October 30, 1987, and
two forms of letters specifying the manner in which each Endata,
Inc. Stock Option was converted into an option to purchase the
Registrant's stock and forms of the Endata Incentive and
Non-Qualified Stock Option Agreements (filed on March 14, 1988 as an
exhibit to the Registrant's Annual Report on Form 10-K for the year
ended December 31,1987 and incorporated herein by reference).
10.19* FFMC 1990 Employee Stock Purchase Plan adopted December 15, 1989, as
amended on October 24, 1990 (1), and amendment thereto adopted on
July 24, 1991, effective October 1, 1991 (filed on August 14, 1991
as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1991 and incorporated herein by
reference).
-24-
<PAGE> 25
10.20* Employment Agreement, dated January 31, 1989, between the Registrant
and Patrick H. Thomas (filed on March 31, 1989 as an exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1988 and incorporated herein by reference). This Employment
Agreement was superseded effective January 1, 1995 by the Employment
Agreement listed as Exhibit 10.32.
10.21* Employment Agreement, dated January 31, 1989, between the Registrant
and M. Tarlton Pittard (filed on March 31, 1989 as an exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1988 and incorporated herein by reference).
10.22* Employment Agreement, dated February 15, 1991, Termination of prior
Employment Agreement, Termination of Employee Death Benefit
Agreement, and First Amendment to Deferred Compensation Agreement,
all between the Registrant (or Georgia Federal Bank, FSB) and
Richard D. Jackson. (1)
10.23* Form of Restricted Stock Award Agreement between the Registrant and
each of the following officers covering awards under the 1988
Incentive Stock Plan, on January 31 1990, to M. Tarlton Pittard and
Richard D. Jackson. (1)
10.24* Non-Qualified Stock Option, dated February 5, 1988, granted by the
Registrant to Patrick H. Thomas (filed on March 14, 1988 as an
exhibit to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1987 and incorporated herein by reference).
10.25* Form of Non-Qualified Stock Option Agreement as issued to the
Registrant's Executive Officers under the 1988 Incentive Stock Plan
(filed on March 30, 1994 as an exhibit to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993 and
incorporated herein by reference).
10.26* Form of Restricted Stock Award Agreement between the Registrant and
each of the following officers covering awards under the 1988
Incentive Stock Plan on May 1, 1991, to Richard D. Jackson, M.
Tarlton Pittard and Stephen D. Kane (filed on August 14, 1991 as an
exhibit to the Registrant's Quarterly Report on Form 10-K for the
quarter ended June 30, 1991 and incorporated herein by reference).
10.27* Form of Restricted Stock Award Agreement between the Registrant and
each of the following officers covering awards on January 31, 1989
under the 1988 Incentive Stock Plan: Patrick H. Thomas, M. Tarlton
Pittard and Stephen D. Kane (filed on March 31, 1989 as an exhibit
to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1988 and incorporated herein by reference).
10.28* Resolution of the Compensation Committee of the Registrant's Board
of Directors, dated June 24, 1993, accelerating to December 31, 1993
the date on which restrictions lapsed on stock awards previously
issued to Patrick H. Thomas, M. Tarlton Pittard and Stephen D. Kane
(filed on March 30, 1994 as an exhibit to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993 and
incorporated herein by reference).
10.29* Employment Agreement, dated January 29, 1992, between the Registrant
and Stephen D. Kane (filed on March 23, 1992 as an exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1991 and incorporated herein by reference).
-25-
<PAGE> 26
10.30 Agreement, dated May 7, 1993, by and among National Bancard
Corporation, CMSC Corporation and First Financial Bank (filed on May
14, 1993 as an exhibit to the Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1993 and incorporated herein by
reference).
10.31 Agreement, Plan of Reorganization and Plan of Merger, dated as of
July 28, 1993 by and among First Financial Management Corporation,
Tomahawk Acquisition Corporation, Pennant Acquisition Corporation,
International Banking Technologies, Inc., Prime Consulting Group,
Inc. and The Shareholders of International Banking Technologies,
Inc. and Prime Consulting Group, Inc. The Schedules to this
Agreement, Plan of Reorganization and Plan of Merger are identified
on a list of schedules contained at the end of the Table of Contents
to such Agreement, which list is incorporated herein by reference.
All schedules were omitted for purposes of filing but will be
furnished supplementally to the Commission upon request (filed on
August 13, 1993 as an exhibit to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1993 and incorporated
herein by reference).
10.32* Employment Agreement, dated March 22, 1994, between the Registrant
and Patrick H. Thomas (filed on March 30, 1994 as an exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1993 and incorporated herein by reference).
10.33* First Amendment, dated December 21, 1994, to Employment Agreement,
dated March 22, 1994, between the Registrant and Patrick H. Thomas.
10.34* Second Amendment, dated March 13, 1995, to Employment Agreement,
dated March 22, 1994, between the Registrant and Patrick H. Thomas,
together with two Restricted Stock Award Agreements (both dated
March 13, 1995) constituting Exhibits A and B, respectively, to the
Second Amendment.
10.35* Non-Qualified Stock Option, dated March 22, 1994, granted by the
Registrant to Patrick H. Thomas (filed on March 30, 1994 as an
exhibit to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1993 and incorporated herein by reference).
10.36 Agreement, Plan of Reorganization and Plan of Merger, dated June 30,
1994, by and among First Financial Management Corporation, Bluebird
Acquisition Corporation, Gencan Acquisition Corporation, GENEX
Services, Inc., GENEX Services of Canada, Ltd. The Schedules to
this Agreement, Plan of Reorganization and Plan of Merger are
identified on a list of schedules contained at the end of the Table
of Contents to such agreement, which list is incorporated herein by
reference. All schedules were omitted for purposes of filing but
will be furnished supplementally to the Commission upon request
(filed on August 12, 1994 as an exhibit to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994
and incorporated herein by reference).
10.37 Stock Purchase Agreement, dated October 20, 1994 by and between New
Valley Corporation and First Financial Management Corporation. The
Exhibits and Schedules to the Stock Purchase Agreement are
identified on a list of Exhibits and Schedules contained in the
Table of Contents to the Stock Purchase Agreement, which list is
incorporated herein by reference. Such Exhibits and Schedules have
been omitted for purposes of filing, but will be furnished
supplementally to the Commission upon request (filed on November 4,
1994 as an exhibit to the Registrant's Current Report on Form 8-K
and incorporated herein by reference).
-26-
<PAGE> 27
10.38 Amendment No. 1, dated November 14, 1994, to Stock Purchase
Agreement, dated October 20, 1994, by and between New Valley
Corporation and First Financial Management Corporation (filed on
November 15, 1994 as an exhibit to the Registrant's Current Report
on Form 8-K and incorporated herein by reference).
10.39* Employment Agreement, dated April 20, 1990, between Western Union
Corporation and Robert J. Amman (an Executive Officer of the
Registrant), together with Amendment to Employment Agreement, dated
January 30, 1991.
21.1 List of Subsidiaries.
23.1 Consent of Independent Auditors.
27.1 Financial Data Schedule (for SEC use only).
* Indicates management contract or compensatory plan or arrangement.
(1) Filed on April 1, 1991 as an exhibit to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1990 and incorporated
herein by reference.
(b) REPORTS ON FORM 8-K
The Company filed current reports on Form 8-K on November 4, 1994 to report the
pending acquisition of Western Union assets and on November 15, 1994 as a
supplemental report to confirm consummation of the acquisition of the Western
Union assets on November 14, 1994 and to reflect various adjustments made by
Amendment No. 1 to the Stock Purchase Agreement.
-27-
<PAGE> 28
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, on March 17, 1995.
FIRST FINANCIAL MANAGEMENT CORPORATION
By: /s/ Patrick H. Thomas
--------------------------------
Patrick H. Thomas
Chairman of the Board, President
and Chief Executive Officer
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------------- ----------------------------- --------------------
<S> <C> <C>
/s/ Patrick H. Thomas Chairman of the Board, March 17, 1995
- ---------------------------- President and Chief Executive Officer --------------
Patrick H. Thomas
/s/ M. Tarlton Pittard Vice Chairman, Chief Financial March 17, 1995
- ----------------------------- Officer, Treasurer and Director --------------
M. Tarlton Pittard
/s/ Richard Macchia Executive Vice President March 17, 1995
- ---------------------------- and Principal Accounting Officer --------------
Richard Macchia
/s/ George L. Cohen Director March 17, 1995
- --------------------------- --------------
George L. Cohen
/s/ Robert E. Coleman Director March 17, 1995
- -------------------------- --------------
Robert E. Coleman
/s/ Jack R. Kelly, Jr. Director March 17, 1995
- ------------------------------- --------------
Jack R. Kelly, Jr.
/s/ Henry A. Leslie Director March 17, 1995
- ----------------------------- --------------
Henry A. Leslie
/s/ Charles B. Presley Director March 17, 1995
- ----------------------------- --------------
Charles B. Presley
/s/ Virgil R. Williams Director March 17, 1995
- ----------------------------- --------------
Virgil R. Williams
</TABLE>
-28-
<PAGE> 29
FIRST FINANCIAL MANAGEMENT CORPORATION
INDEX TO CONSOLIDATED FINANCIAL INFORMATION
FINANCIAL STATEMENTS:
<TABLE>
<CAPTION>
Page in this
10-K Report
-----------
<S> <C>
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . 30
Consolidated Balance Sheets at December 31, 1994
and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Consolidated Statements of Income for the Years
Ended December 31, 1994, 1993, and 1992 . . . . . . . . . . . . . . 32
Consolidated Statements of Shareholders'
Equity for the Years Ended
December 31, 1994, 1993, and 1992 . . . . . . . . . . . . . . . . . 33
Consolidated Statements of Cash Flows for the
Years Ended December 31, 1994, 1993 and 1992 . . . . . . . . . . . 34
Notes to Consolidated Financial Statements . . . . . . . . . . . . . 35
SCHEDULES:
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . 48
Schedule VIII - Valuation and Qualifying Accounts . . . . . . . . . . . . . . 49
</TABLE>
All other schedules (as required under Article 5 of Regulation S-X) are omitted
because they are either not applicable or the information is presented in the
financial statements or notes thereto.
-29-
<PAGE> 30
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
First Financial Management Corporation
Atlanta, Georgia
We have audited the accompanying consolidated balance sheets of First
Financial Management Corporation and subsidiaries as of December 31, 1994 and
1993, and the related consolidated statements of income, shareholders' equity
and cash flows for each of the three years in the period ended December 31,
1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of First Financial Management
Corporation and subsidiaries as of December 31, 1994 and 1993, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1994 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Atlanta, Georgia
January 27, 1995
-30-
<PAGE> 31
FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-------------------------
1994 1993
--------- ----------
(Dollars in millions)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 326.1 $ 190.0
Accounts receivable, net of allowance for doubtful
accounts of $7.7 (1994) and $5.0 (1993) 473.8 351.9
Prepaid expenses and other current assets 103.3 70.2
-------- --------
Total Current Assets 903.2 612.1
Property and equipment, net 163.6 144.3
Goodwill, less accumulated amortization
of $73.4 (1994) and $52.0 (1993) 1,740.6 647.7
Customer portfolios, less accumulated amortization
of $44.5 (1994) and $31.8 (1993) 160.5 140.1
Other assets 167.8 101.7
-------- --------
$3,135.7 $1,645.9
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 678.9 $ 288.9
Income taxes payable 5.6 10.6
Current portion of long-term debt 9.2 6.6
-------- --------
Total Current Liabilities 693.7 306.1
Long-term debt, less current portion 53.1 10.7
Pension obligations assumed 266.0
Senior convertible debentures 447.1
Other liabilities 246.0 75.6
-------- --------
Total Liabilities 1,705.9 392.4
-------- --------
Commitments and contingencies
Shareholders' Equity:
Common stock, $.10 par value; authorized
150,000,000 shares, issued 61,575,046
shares (1994) and 60,976,996 shares (1993) 6.2 6.1
Additional paid-in capital 858.2 835.2
Retained earnings 565.4 412.2
-------- --------
Total Shareholders' Equity 1,429.8 1,253.5
-------- --------
$3,135.7 $1,645.9
======== ========
</TABLE>
See notes to consolidated financial statements.
-31-
<PAGE> 32
FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1994 1993 1992
---------------------------------------
(In millions, except per share amounts)
<S> <C> <C> <C>
REVENUES
Service revenues $2,131.0 $1,632.9 $1,399.8
Product sales 73.1 116.8 92.0
Other 3.4 9.9 16.6
-------- -------- --------
2,207.5 1,759.6 1,508.4
-------- -------- --------
EXPENSES
Operating 1,767.5 1,367.5 1,185.5
General and administrative 28.5 23.9 23.5
Cost of products sold 46.6 70.5 58.0
Depreciation and amortization 97.7 77.8 84.5
Loss in business unit sold 79.6
Interest, net (1.1) (0.3) 9.4
-------- -------- --------
1,939.2 1,539.4 1,440.5
-------- -------- --------
Income from continuing operations
before income taxes 268.3 220.2 67.9
Income taxes 108.1 88.4 46.5
-------- -------- --------
Income from continuing operations 160.2 131.8 21.4
Income from discontinued operations,
net of taxes 36.9
Loss on sale of discontinued operations,
net of taxes (6.8)
-------- -------- --------
Net income $ 160.2 $ 131.8 $ 51.5
======== ======== ========
EARNINGS PER COMMON SHARE
Continuing operations $ 2.56 $ 2.12 $ 0.35
Discontinued operations 0.50
-------- -------- --------
Net income $ 2.56 $ 2.12 $ 0.85
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
-32-
<PAGE> 33
FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Total
Common Paid-in Retained Shareholders'
Shares Capital Earnings Equity
- ------------------------------------------------------------------------------------------------------------
(Dollars in millions; shares in thousands)
<S> <C> <C> <C> <C>
Balance, January 1, 1992
As previously reported by FFMC 56,753 $740.9 $256.7 $ 997.6
Pooling of interests with GENEX
Services, Inc. 1,095 7.3 (3.5) 3.8
---------------------------------------------------
Balance, January 1, 1992, as restated 57,848 748.2 253.2 1,001.4
Stock issued in acquisitions 2,058 66.5 66.5
Stock warrants exercised 389 10.4 10.4
Shares issued under stock compensation
plans, net of forfeitures 256 7.1 7.1
Shares issued for employee stock
purchase plan 47 1.3 1.3
Cash dividends ($.10 per share) (5.8) (5.8)
Investment in FFMC common stock
by merged entity (0.7) (0.7)
Shareholder distributions by merged entities (6.8) (6.8)
Net income 51.5 51.5
---------------------------------------------------
Balance, December 31, 1992 60,598 832.8 292.1 1,124.9
Stock issued in acquisitions 50 2.4 2.4
Stock warrants exercised 50 1.3 1.3
Shares issued under stock compensation
plans, net of forfeitures 227 2.9 2.9
Shares issued for employee stock
purchase plan 52 1.9 1.9
Cash dividends ($.10 per share) (5.9) (5.9)
Shareholder distributions by merged entities (5.8) (5.8)
Net income 131.8 131.8
---------------------------------------------------
Balance, December 31, 1993 60,977 841.3 412.2 1,253.5
Stock warrants exercised 303 8.1 8.1
Shares issued under stock compensation
plans, net of forfeitures 248 12.5 12.5
Shares issued for employee stock
purchase plan 47 2.5 2.5
Cash dividends ($.10 per share) (6.2) (6.2)
Shareholder distributions by merged entity (0.8) (0.8)
Net income 160.2 160.2
---------------------------------------------------
Balance, December 31, 1994 61,575 $864.4 $565.4 $1,429.8
===================================================
</TABLE>
See notes to consolidated financial statements.
-33-
<PAGE> 34
FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1994 1993 1992
------- ------- -------
(In millions)
<S> <C> <C> <C>
Cash and cash equivalents at January 1 $ 190.0 $ 18.2 $ 75.6
------- ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES
Income from continuing operations 160.2 131.8 21.4
Adjustments to reconcile to net cash provided by
operating activities:
Depreciation and amortization 97.7 77.8 84.5
Loss in business unit sold 79.6
Other non-cash items (1.1) (3.6) (3.3)
Increase (decrease) in cash, excluding the effects of
acquisitions and dispositions, resulting from changes in:
Accounts receivable (110.4) (99.2) (48.7)
Prepaid expenses and other assets 14.9 (1.4) (7.4)
Accounts payable and accrued expenses 116.3 88.4 13.1
Income tax accounts 20.7 21.9 13.8
------- ------- -------
Net cash provided by continuing operating activities 298.3 215.7 153.0
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of senior convertible debentures, net 441.6
Borrowings under revolving credit facility, net 45.0 140.0
Principal payments on long-term debt (6.7) (155.5) (148.4)
Proceeds from issuance of common stock 8.1 1.3 10.4
Cash dividends and other payments (6.8) (12.0) (15.6)
------- ------- -------
Net cash provided by (used in) financing activities 481.2 (166.2) (13.6)
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Current year acquisitions, net of cash received (509.9) (70.2) (232.6)
Payments related to businesses previously acquired (50.8) (22.0) (34.9)
Proceeds and dividends related to dispositions,
net of expenses and taxes paid (4.2) 295.5 150.4
Additions to property and equipment, net (27.3) (36.7) (34.0)
Software development and customer conversions (51.2) (44.3) (45.7)
------- ------- -------
Net cash provided by (used in) investing activities (643.4) 122.3 (196.8)
------- ------- -------
Change in cash and cash equivalents 136.1 171.8 (57.4)
------- ------- -------
Cash and cash equivalents at December 31 $ 326.1 $ 190.0 $ 18.2
======= ======= =======
CASH PAID DURING THE YEAR FOR
Income taxes $ 86.1 $ 62.8 $ 33.4
Interest 4.1 5.5 13.9
</TABLE>
See notes to consolidated financial statements.
-34-
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include the accounts of First
Financial Management Corporation and its wholly-owned subsidiaries (the
"Company" or "FFMC"). All material intercompany profits, transactions, and
balances have been eliminated. Certain prior year amounts have been
reclassified to conform to the current year's presentation.
The Company's continuing operations operate in a single business
segment, providing information services to commercial establishments,
government agencies and consumers. The largest category of services involves
information processing and transfer related to financial transactions. These
services include the authorization, processing and settlement of credit and
debit card transactions, verification or guarantee of check transactions, debt
collection and accounts receivable management, and worldwide nonbank money
transfers and bill payments. A second category includes data processing and
information management services related to health care and workers'
compensation claims and the resulting payments. The final service category is
comprised of a full array of information management services, including data
capture, data imaging, micrographics, electronic database management, and
output printing and distribution.
In 1993, FFMC formed First Financial Bank ("FFB"), its credit card
bank, whose only significant business purpose is to support the Company's
credit and debit card processing and settlement operations. FFB does not
conduct any other significant banking activities, accept deposits from
unaffiliated parties, or engage in lending activities.
CASH AND CASH EQUIVALENTS
Cash balances at December 31, 1994 include funds in transit from money
transfer agents. Cash equivalents consist of short-term investments in United
States government or government agency securities and are stated at cost which
approximates market value. These securities are short-term, highly liquid
investments with original maturities of three months or less which are readily
convertible to cash. Cash equivalents of $97.1 million and $70.0 million,
respectively, at December 31, 1994 and 1993 relate to required investments of
cash in connection with the Company's merchant credit card and money transfer
settlements.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, less accumulated
depreciation or amortization which is provided on a straight-line basis over
the lesser of the useful life of the related assets (generally 5 to 10 years
for equipment, furniture and fixtures) or the lease term.
-35-
<PAGE> 36
GOODWILL AND INTANGIBLE ASSETS
Goodwill represents the excess of the cost of acquired businesses over
the value assigned to tangible and identifiable intangible assets, and is
amortized on a straight-line basis, primarily over 40 years. The Company
periodically assesses the recoverability of goodwill when there are indications
of potential impairment by comparing its carrying value to expected future
operating results of the applicable acquired business. If estimates of future
operating results would be insufficient to recover future charges to goodwill
amortization, then the recorded value of goodwill balances would be reduced by
the estimated deficiencies in operating results.
Intangible assets consist primarily of customer portfolios (costs
assigned to purchased customer relationships) and software development and
related conversion costs (the principal component of other assets). These
costs are amortized on a straight-line basis over periods ranging from 4 to 15
years.
INCOME TAXES
FFMC adopted Statement of Financial Accounting Standards No. 109 ("FAS
109"), "Accounting for Income Taxes," effective January 1, 1993. Under FAS
109, deferred income taxes are determined based on the difference between
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the years in which such differences are expected to
reverse. No cumulative effect on the Company's results of operations from
adopting FAS 109 was recorded because it was insignificant. Prior to January
1, 1993 deferred income taxes were provided in accordance with Accounting
Principles Board Opinion No. 11.
REVENUE RECOGNITION
Service revenues are recognized as services are performed and product
sales (data processing equipment and related software enhancements) are
recognized upon delivery. Interchange fees incurred in the settlement of
merchant credit card transactions are included in operating expenses.
EARNINGS PER COMMON SHARE
Earnings per common share amounts are computed by dividing income
amounts by the weighted average number of common and common equivalent shares
(when dilutive) outstanding during the period. Common stock equivalents
consist of shares issuable under the Company's stock option plans, shares
issuable in connection with outstanding warrants and an assumed conversion into
common stock of FFMC's senior convertible debentures issued in December 1994.
The after-tax interest expense and amortization on these debentures ($0.7
million in 1994) is added back to net income in computing earnings per common
share. Weighted average shares for all periods reflect the shares issued in
1994 to effect FFMC's merger with GENEX Services, Inc., which was accounted for
as a pooling of interests. Weighted average shares used to compute earnings
per common share for the years ended December 31, 1994, 1993 and 1992,
respectively, were 62.9 million, 62.1 million and 60.3 million.
-36-
<PAGE> 37
B. BUSINESS COMBINATIONS AND ASSET ACQUISITIONS
FFMC completed the following business combinations and asset
acquisitions:
<TABLE>
<CAPTION>
Initial Consideration
-----------------------------------------------
FFMC Common Stock
-----------------
Dollar
Businesses and Assets Acquired(a) Month Total(d) Cash Value Shares
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(Dollars in millions; shares in thousands)
1994:
- -----
Western Union Financial November $ 893.2(b) $593.2
Services, Inc. (Western Union)
GENEX Services, Inc. (GENEX) July 60.2(c) $60.2 1,095
The Master Collectors, Inc.
(Master Collectors) March 29.0 25.0
Other 30.2 26.9
-----------------------------------------------
$1,012.6 $645.1 $60.2 1,095
===============================================
1993:
- ----
International Banking Technologies (IBT) August $ 46.0 $46.0 1,000
Credit card processing portfolios 32.9 $ 32.9
TeleCheck franchise entities 20.1 15.4
Other 44.2 27.1
-----------------------------------------------
$ 143.2 $ 75.4 $46.0 1,000
===============================================
1992:
- ----
TeleCheck Services (TeleCheck) July $ 156.1 $142.8 $13.3 470
FIRST HEALTH Strategies, Inc. (Strategies) April 112.5 59.6 52.9 1,998
Credit card processing portfolios 10.4 10.4
Other 28.0 28.0
-----------------------------------------------
$ 307.0 $240.8 $66.2 2,468
===============================================
</TABLE>
_______________________________________
(a)All of the outstanding common stock was acquired for each of the
businesses acquired.
(b)Deferred cash consideration of $300 million related to this
acquisition was paid in January 1995. The Company utilized $220 million in
bank borrowings and $80 million of available cash on hand to fund this payment,
and such amounts were included in Other Liabilities and Accounts Payable,
respectively, in the accompanying consolidated balance sheet at December 31,
1994. FFMC also assumed pension obligations estimated at $266 million as part
of the Western Union acquisition (see Note I). The Company also has an option
to acquire an additional business unit from Western Union's prior owner (who
also has an option to put the additional business unit to FFMC) for $20 million
in cash in 1996.
(c)Does not include the assumption of stock options.
(d)Other consideration, not separately listed in the table or described
above, consists of promissory notes and other amounts payable of $7.3 million
in 1994 and $21.8 million in 1993.
-37-
<PAGE> 38
The mergers with GENEX and IBT were accounted for as poolings of
interests and, accordingly, the Company's financial statements and related
notes include their accounts and operations for all periods presented. Prior
to the combinations, GENEX and IBT were Subchapter S Corporations and included
no income taxes in their financial statements since their income was taxed at
the shareholder level. Results of GENEX included with FFMC's consolidated
results are as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Year Ended December 31, 1994 1993 1992
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(In Millions)
Revenues $90.8 $90.0 $83.1
Income form continuing operations 6.6 4.2 2.6
</TABLE>
All other business combinations and asset acquisitions have been
accounted for as purchases, and their results have been included in the results
of the Company's continuing operations from the effective dates of acquisition.
The following table summarizes pro forma results of operations of the Company
as if the Company's acquisition of Western Union had occurred, all cash
purchase price consideration was paid, and related debt financing was concluded
on January 1, 1993. All other acquisitions have been excluded due to their
immaterial effect. This pro forma information is not necessarily indicative of
what the combined operations would have been if the Company had control of such
combined businesses for the periods presented.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
Year Ended December 31, 1994 1993
-------------------------------------------------------------------------------------------
(In millions, except per share amounts)
<S> <C> <C>
Revenues $2,644.5 $2,089.6
Income from continuing operations 160.0 95.6
Earnings per common share 2.49 1.57
</TABLE>
Western Union is the leading provider of nonbank money transfer and
bill payment services in over 100 countries through its worldwide network of
over 24,000 agents. Western Union is one of the world's most recognized
trademarks, and has been in the money transfer business since 1871. Other
types of information services and products provided by acquired entities are as
follows: GENEX, workers' compensation cost containment and management services;
Master Collectors, debt collection and accounts receivable management services;
IBT, in-store marketing programs and systems for supermarkets; TeleCheck, check
acceptance services; Strategies, health care claims processing and management
services. Other acquisitions expanded the Company's markets and service
offerings in all of FFMC's business categories.
The following table outlines the assets acquired and liabilities
assumed (at the date of acquisition) for FFMC business combinations and asset
acquisitions accounted for as purchases.
-38-
<PAGE> 39
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------
(In millions)
<S> <C> <C> <C>
Fair value of assets acquired $1,462.0 $136.0 $407.3
Less liabilities recorded (509.6) (38.8) (100.3)
Less acquisition notes and accounts payable (307.3) (21.8)
Less value of common stock issued (66.2)
Less cash acquired (135.2) (5.2) (8.2)
----------------------------------------------
Net cash paid for acquisitions $ 509.9 $ 70.2 $232.6
==============================================
</TABLE>
Amounts recorded for 1994 acquisitions are based on preliminary
estimates. The fair value of assets acquired includes initial goodwill amounts
aggregating $1.1 billion in 1994, $57.7 million in 1993, and $301.5 million in
1992. The terms of certain of the Company's acquisition agreements provide for
additional consideration to be paid if the acquired entity's results of
operations exceed certain targeted levels. Targeted levels are generally set
substantially above the historical experience of the acquired entity at the
time of acquisition. Such additional consideration is paid in cash and with
shares of the Company's common stock, and is recorded if and when earned as
additional purchase price. Acquisitions consummated in 1994 included no
contingent consideration. Additional consideration was paid totalling $7.6
million in 1994, $10.7 million in 1993, and $6.5 million in 1992 related to
businesses acquired prior to 1994, which have maximum remaining contingent
consideration totalling approximately $67 million, payable through 1999.
C. DISPOSITIONS
During the fourth quarter of 1992, FFMC sold or signed agreements to sell the
following businesses:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
BUSINESS SOLD MONTH SALE COMPLETED PROCEEDS TO FFMC (BEFORE SALE EXPENSES)
- ---------------------------- -------------------- ---------------------------------------------------
<S> <C> <C>
Georgia Federal Bank, FSB June 1993 $269 million in cash
("Georgia Federal")
First Family Financial November 1992 $248 million in cash to Georgia Federal, which
Services ("First Family," paid FFMC in 1992 a $100 million cash dividend and
formerly a subsidiary of $50.4 million in cash for the eventual 1993
Georgia Federal) settlement of income tax liabilities related to
the First Family sale
Basis Information February 1993 $96.5 million, 50% in cash and 50% in common stock
Technologies, Inc. ("Basis") of the buyer (subsequently sold in June 1993)
</TABLE>
Georgia Federal and First Family formerly comprised FFMC's Financial
Services business segment. Georgia Federal was the largest thrift institution
in Georgia, and First Family was a regional
-39-
<PAGE> 40
consumer finance company. For purposes of the consolidated statement of income
for the year ended December 31, 1992, net amounts for these businesses have
been presented as discontinued operations. Interest expense was allocated to
the Company's discontinued operations for each of the periods presented,
including the 1993 period prior to the completion of the Georgia Federal sale.
This allocation was based on the net assets of discontinued operations relative
to the sum of the consolidated net assets plus long term debt of continuing
operations, none of which was directly attributable to specific operations.
The agreement for the sale of Georgia Federal provided that the results of
operations of Georgia Federal after December 31, 1992 accrued to the buyer.
For the year ended December 31, 1992, revenues attributable to FFMC's
discontinued operations were $184.5 million and income from discontinued
operations was net of income taxes of $20.5 million.
Basis provided data processing services to financial institutions, and
prior to its sale was included in FFMC's continuing operations in the
accompanying consolidated financial statements for the year ended December 31,
1992. The agreement for the sale of Basis provided that Basis' results of
operations after December 31, 1992 accrued to the buyer. Prior to entering
into the stock purchase agreement for the sale of Basis, the Company
discontinued software development and wrote off related costs for a major
product line in connection with the settlement of litigation with a vendor, the
combination of which resulted in income of $13.8 million included in other
revenues in 1992. Concurrently, FFMC decided to explore the sale of Basis. In
reviewing the market value of Basis, the Company's management determined that a
write-down of the carrying value of Basis' net assets was appropriate and
recognized a fourth quarter 1992 pre-tax loss of $79.6 million.
D. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
December 31, 1994 1993
- -----------------------------------------------------------------------------------
(In millions)
<S> <C> <C>
Equipment $261.1 $200.9
Furniture and fixtures 30.4 26.0
Leasehold improvements 18.7 16.0
Land and buildings 3.4 15.2
---------------------------
313.6 258.1
Less accumulated depreciation and amortization (150.0) (113.8)
---------------------------
$163.6 $144.3
===========================
</TABLE>
Amounts charged to expense for the depreciation and amortization of
property and equipment were $38.9 million, $36.7 million and $41.7 million,
respectively, for the years ended December 31, 1994, 1993 and 1992. In
December 1994, the Company sold an office property for net cash proceeds to the
Company of $12.5 million and leased it back under a fifteen year agreement.
-40-
<PAGE> 41
E. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
December 31, 1994 1993
- -------------------------------------------------------------------------------------------------------------
(In millions)
<S> <C> <C>
Accounts payable, including merchant credit
card and money transfer settlements $434.2 $162.5
Accrued costs of businesses acquired 75.5 36.6
Compensation and benefit liabilities 48.1 38.4
Other accrued expenses 121.1 51.4
-------------------------------
$678.9 $288.9
===============================
</TABLE>
Accounts payable balances at December 31, 1994 and 1993 include
merchant credit card and money transfer settlements of $280.5 million and $97.3
million, respectively. Amounts due from credit card associations (related to
merchant settlements) totalling $148.6 and $101.5 million are included in
FFMC's accounts receivable balances at December 31, 1994 and 1993,
respectively.
F. LONG-TERM DEBT
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
December 31, 1994 1993
----------------------------------------------------------------------------------
<S> <C> <C>
(In millions)
Revolving credit facility $45.0
Other obligations 17.3 $17.3
-------------------------
62.3 17.3
Less: current portion (9.2) (6.6)
-------------------------
$53.1 $10.7
=========================
</TABLE>
FFMC amended its unsecured revolving credit facility on November 8,
1994, increasing it from $450 million to $1.0 billion. The amended facility
has a new three year term through November 1997 (with two possible one year
extensions) with borrowings due at the end of the term. Interest rates for
borrowings under the facility fluctuate based on market rates. Therefore, fair
market value approximates the amounts outstanding. The facility contains
covenants which require the Company to meet certain financial tests and
restrict certain activities in the future, none of which are expected to
significantly affect the Company's operations. At December 31, 1994, the
Company was in compliance with all these covenants. Borrowings under the
amended facility were at rates ranging from 5.6% to 6.4% in 1994, with
borrowings outstanding at December 31, 1994 at 6.4%. Other obligations consist
of equipment notes payable and capitalized lease obligations. These
obligations generally have interest rates ranging from 4% to the prime
commercial lending rate, and are due at various dates through May 2003.
-41-
<PAGE> 42
Maturities of long-term debt at December 31, 1994 are as follows (in
millions): $9.2 in 1995, $5.1 in 1996, $46.5 in 1997, and $1.5 for all
periods thereafter.
G. COMMITMENTS AND CONTINGENCIES
The Company leases certain of its facilities and equipment under
operating lease agreements. Lease terms generally range from one to seven
years and substantially all agreements contain renewal options. Total rent
expense for operating leases was $58.2 million, $47.9 million and $61.3 million
for the years ended December 31, 1994, 1993 and 1992, respectively.
Commitments for rental payments under noncancelable operating leases at
December 31, 1994 are as follows (in millions): $48.8 in 1995, $38.0 in 1996,
$30.8 in 1997, $19.1 in 1998, $14.6 in 1999, and $30.0 for all periods
thereafter.
Additionally, one of the Company's businesses leases supermarket space
which it concurrently leases to its bank customers. The lease terms, renewal
options, and rent escalation provisions of the Company's lease to the bank
generally mirror the corresponding provisions of the Company's lease from the
supermarket. Lease rentals received exceed lease payments and the terms of the
leases are generally for noncancelable initial terms of five years. Total
lease payments to supermarkets were $7.2 million, $5.7 million, and $4.7
million for the years ended December 31, 1994, 1993 and 1992, respectively, and
remaining obligations under supermarket leases as of December 31, 1994
aggregate $28.5 million for the remaining lease terms.
In the normal course of business, the Company is subject to claims and
litigation, including indemnification obligations to purchasers of former
subsidiaries. Management of the Company believes that current or threatened
claims and litigation, including matters giving rise to indemnification
obligations, with a reasonably possible chance of loss would not, individually
or in the aggregate, result in a materially adverse effect on the Company's
results of operations, liquidity or financial condition.
H. INCOME TAXES
The provision for income taxes for continuing operations includes:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Year Ended December 31, 1994 1993 1992
- --------------------------------------------------------------------------------------------
(In millions)
<S> <C> <C> <C>
Current tax expense:
Federal $ 72.9 $59.5 $30.8
State 9.5 8.5 8.1
----------------------------------------------------
82.4 68.0 38.9
----------------------------------------------------
Deferred tax expense:
Federal 22.7 18.0 6.7
State 3.0 2.4 .9
----------------------------------------------------
25.7 20.4 7.6
----------------------------------------------------
$108.1 $88.4 $46.5
====================================================
</TABLE>
The Company's effective tax rates for continuing operations differ from
statutory rates as follows:
-42-
<PAGE> 43
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory rate: 35.0% $35.0% 34.0%
State income taxes, net of federal income tax
benefit 4.8 4.6 4.9
Non-deductible amortization of intangible assets 2.4 2.4 3.4
Non-deductible loss in business unit sold 26.9
Subchapter S income (.3) (1.1) (1.3)
Other (1.6) (.8) .5
-------------------------------------
Effective tax rate 40.3% 40.1% 68.4%
=====================================
</TABLE>
The following table outlines the principal components of deferred tax
items, representing the difference between book and tax bases of the Company's
assets and liabilities as aggregated under FAS 109. There is no valuation
allowance.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Year ended December 31, 1994 1993
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
(In millions)
Deferred tax assets related to:
-------------------------------
Pension obligations assumed $96.7
Accrued expenses 48.9 $20.2
Other 7.7 2.4
Deferred tax liabilities related to:
------------------------------------
Software development costs (28.9) (20.9)
Property and equipment (16.1) (16.8)
Customer conversion costs (12.3) (8.0)
Deductible goodwill (9.0) (4.1)
Customer portfolios (8.9) (10.7)
Other (1.2) (3.1)
----------------------
$76.9 ($41.0)
======================
</TABLE>
-43-
<PAGE> 44
Deferred tax assets and liabilities are aggregated under FAS 109 into
net current and net non-current amounts, and are included in the accompanying
consolidated balance sheets as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Year ended December 31, 1994 1993
- -------------------------------------------------------------------------------------------------------------
(In millions)
<S> <C> <C>
Prepaid expenses and other current assets $52.4 $22.3
Other assets 24.5
Other liabilities (63.3)
----------------------
$76.9 ($41.0)
======================
</TABLE>
In years prior to the adoption of FAS 109 in 1993, deferred income
taxes arose from the recognition of certain income and expense items for tax
purposes in years different from those in which they are recognized in the
financial statements. The tax effects of these timing differences (primarily
depreciation and amortization) were deducted from the amount currently payable
in determining the provision for income taxes.
I. PENSION OBLIGATIONS ASSUMED
The purchase consideration for the Company's acquisition of Western
Union in November 1994 included FFMC's assumption of underfunded obligations
(estimated at $266 million) related to a suspended defined benefit pension
plan. Benefit accruals under this plan were suspended in 1988. Pension cost
for the partial 1994 period after acquisition is composed primarily of interest
and totalled approximately $2.3 million.
An actuarial review of the plan is in process which will provide
updated estimates of the accumulated benefit obligation (fully vested), the
projected benefit obligation less fair market value of plan assets and the net
underfunded pension obligation. The fair market value of plan assets at the
date of acquisition was $259 million. Adjustment to the net pension
obligations assumed, if required as a result of the actuarial review, will be
recorded in 1995 with a corresponding adjustment to goodwill.
The assets of the plan are held by a trustee and consist of marketable
securities and corporate and government debt securities and commingled funds.
FFMC is evaluating its funding options related to these obligations, and will
make future contributions to the plan as necessary to meet the minimum funding
requirements of the Employee Retirement Income Security Act of 1974. The
Company may decide to fund a substantial portion of such obligations in advance
of required contributions.
J. SHAREHOLDERS' EQUITY AND SENIOR CONVERTIBLE DEBENTURES
In December 1994, FFMC issued $447.1 million of 5% senior convertible
debentures due 1999. These debentures are convertible into shares of the
Company's common stock on or before December 15, 1999 at $69 per share, subject
to adjustment in certain events. The debentures are redeemable on at least 30
days' notice at the option of the Company (in whole or in part) at 102% during
the twelve month period beginning December 15, 1997, at 101% during the twelve
month period beginning December 15, 1998 and at 100% if redeemed at maturity.
The quoted market price for the debentures on the New York Stock Exchange was
105.75% of par at December 31, 1994.
-44-
<PAGE> 45
On July 21, 1994, FFMC issued 1.1 million unregistered shares of its
common stock related to the Company's merger with GENEX Services, Inc. On
August 18, 1993, FFMC issued 1.0 million unregistered shares of its common
stock related to the Company's merger with International Banking Technologies,
Inc. As the Company accounted for these mergers as poolings of interests,
these shares have been reflected in share amounts for all periods presented in
the consolidated financial statements.
Publicly held stock warrants were exercised during the second quarter
of 1994, resulting in the issuance of 303,000 new shares of FFMC common stock
and cash proceeds to the Company of $8.1 million. After such exercises, 1.3
million shares remained subject to publicly held warrants at December 31, 1994,
with these remaining warrants exercisable at $26.67 per share during the second
quarter of 1995.
The Company's Articles of Incorporation authorizes 5.0 million shares
of preferred stock, none of which are issued.
K. STOCK OPTIONS AND AWARDS
The Company has various plans that provide for the granting of stock
options and restricted stock awards to certain officers, employees and
non-employee members of the Company's Board of Directors. A total of 7.1
million shares of FFMC common stock has been authorized for issuance under
these plans. The Company has reserved the appropriate number of shares of
common stock to accommodate these plans and other outstanding options.
Options to purchase shares of the Company's common stock are generally
granted at not less than the common stock's fair market value at the date of
grant, have ten-year terms, and become exercisable in five equal annual
increments beginning six months after the grant date. In connection with the
Company's acquisitions, outstanding options under certain stock option plans
were assumed. These options were converted to options to purchase shares of
FFMC common stock and are exercisable on specified conditions and at specified
times not later than ten years from the date of grant. Options granted in 1992
include the assumption of 162,903 options at $.01 originally issued by GENEX
Services, Inc. A summary of stock option transactions is as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Year ended December 31, 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shares under option at January 1 1,424,811 1,855,144 1,792,706
Granted 575,500 155,714 275,668
Canceled (57,615) (78,172) (61,959)
Exercised (191,771) (507,875) (151,271)
------------------------------------------------------
Shares under option at December 31 1,750,925 1,424,811 1,855,144
======================================================
Average price of options exercised $ 14.10 $ 14.34 $ 11.00
At December 31:
Price range of outstanding options $.01 to $57.25 $.01 to $48.13 $.01 to $31.88
Options exercisable 1,078,721 1,052,772 1,287,423
</TABLE>
Restrictions under restricted stock awards generally expire after two
to five years of continuous service from the grant date. The value of the
awards is determined using closing prices of the Company's common stock on the
grant date, and is amortized to expense on a straight-line basis over the
restriction period. The unamortized portion of such awards is reported as a
reduction in paid-in capital. A summary of stock award transactions is as
follows:
-45-
<PAGE> 46
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Year ended December 31, 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Restricted shares January 1 169,936 590,483 569,997
Granted 91,596 9,837 128,239
Canceled (12,154) (19,500) (23,208)
Vested (27,557) (410,884) (84,545)
-------------------------------------------------
Restricted shares at December 31 221,821 169,936 590,483
=================================================
Value of restricted shares granted (in millions) $4.7 $.4 $4.0
</TABLE>
The above table does not include two awards (totalling 972,500
restricted shares) that were granted by the Company in the first quarter of
1994 and subsequently cancelled in the fourth quarter of 1994. FFMC had
granted these two awards to Mr. Patrick H. Thomas, its Chairman of the Board,
President and Chief Executive Officer, in connection with an employment
agreement covering a five year period beginning in 1995. Compensation expense
was being recognized over the restriction period. These awards were cancelled
based on a mutual agreement between the Company and Mr. Thomas, resulting in
the reversal of $4.9 million in award expense amortization. By the end of the
first quarter of 1995, the Company and Mr. Thomas will enter into a new
performance-based compensation arrangement for the five year period.
L. EMPLOYEE BENEFIT PLANS
FFMC and certain of its acquired entities (including Western Union)
maintain defined contribution savings plans covering virtually all of the
Company's full-time employees. The plans provide tax deferred amounts for each
participant, consisting of employee elective contributions and additional
discretionary Company contributions. The aggregate amounts charged to expense
in connection with these plans were $4.9 million in 1994, $2.9 million in 1993
and $2.4 million in 1992.
The Company has an employee stock purchase plan for which a total of
2,250,000 unissued shares have been reserved for purchase. Monies accumulated
through payroll deductions elected by eligible employees are used to effect
quarterly purchases of FFMC common stock at a 5% discount from the lower of the
market price at the beginning or end of the quarter.
FFMC does not offer post-retirement health care or other insurance
benefits for retired employees. Western Union plans in effect at the date of
acquisition provide for continued Company administration of these
post-retirement insurance programs. Under these plans all retiring Western
Union employees bear the entire cost of the premiums, except for union
employees for which these benefits are subsidized by the Company until the end
of the current collective bargaining agreement in 1997. In addition, the
Company signed agreements with Western Union's former owner that will pay FFMC
for its administrative services in continuing these coverages.
FFMC adopted Statement of Financial Accounting Standard No. 112,
"Employer's Accounting for Postemployment Benefits," (FAS 112) effective
January 1, 1994 relating primarily to the Company's short-term disability
benefits. The impact of adopting FAS 112 did not have a significant effect on
FFMC's results of operations.
-46-
<PAGE> 47
M. QUARTERLY FINANCIAL RESULTS (UNAUDITED)
Summarized quarterly results for the two years ended December 31, 1994
are as follows (in millions, except per share data):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
1994 By Quarter First Second Third Fourth
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $455.1 $511.4 $536.5 $704.5
Expenses 405.5 452.5 468.7 612.5
---------------------------------------------------------
Income before income taxes 49.6 58.9 67.8 92.0
Income taxes 20.1 24.7 27.2 36.1
---------------------------------------------------------
Net income $ 29.5 $ 34.2 $ 40.6 $ 55.9
=========================================================
Earnings per common share $ 0.47 $ 0.55 $ 0.65 $ 0.89
=========================================================
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
1993 By Quarter First Second Third Fourth
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $371.4 $416.0 $443.3 $528.9
Expenses 333.7 367.1 385.2 453.4
---------------------------------------------------------
Income before income taxes 37.7 48.9 58.1 75.5
Income taxes 15.1 19.8 24.3 29.2
---------------------------------------------------------
Net income $ 22.6 $ 29.1 $ 33.8 $ 46.3
=========================================================
Earnings per common share $ 0.37 $ 0.47 $ 0.54 $ 0.74
=========================================================
</TABLE>
FFMC completed its merger with GENEX Services, Inc. (GENEX) during the
third quarter of 1994. This merger has been accounted for as a pooling of
interests. Accordingly, the previously reported results for all quarterly
periods prior to the merger have been restated to combine the results of FFMC
and GENEX. Per share amounts have been recalculated after adding the shares of
FFMC common stock issued to effect the merger to weighted average share
amounts.
-47-
<PAGE> 48
INDEPENDENT AUDITORS' REPORT
To The Board of Directors and Shareholders of
First Financial Management Corporation
Atlanta, Georgia
We have audited the consolidated financial statements of First Financial
Management Corporation and subsidiaries (the "Company") as of December 31, 1994
and 1993, and for each of the three years in the period ended December 31,
1994, and have issued our report thereon dated January 27, 1995; such report is
included elsewhere in this Form 10-K. Our audits also included the financial
statement schedule of the Company, listed in Item 14. This financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
Atlanta, Georgia
January 27, 1995
-48-
<PAGE> 49
FIRST FINANCIAL MANAGEMENT CORPORATION
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(IN MILLIONS)
<TABLE>
<CAPTION>
Additions, charged to:
----------------------
Balance at Costs Balance
Beginning and Other at End
Description of Period Expenses Accounts (1) Deductions (2) of Period
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RELATED TO AMOUNTS PRESENTED IN
BALANCE SHEET CAPTIONS:
Year Ended December 31, 1994
- ----------------------------
Allowance for doubtful accounts $5.0 $5.4 $2.4 ($5.1) $7.7
=====================================================================
Year Ended December 31, 1993
- ----------------------------
Allowance for doubtful accounts $5.9 $2.1 $.5 ($3.5) $5.0
=====================================================================
Year Ended December 31, 1992
- ----------------------------
Allowance for doubtful accounts $1.5 $4.5 $2.0 ($2.1) $5.9
=====================================================================
</TABLE>
(1) Additional amounts added during the year are from acquired businesses,
representing balances at the date of acquisition.
(2) Amounts represent write-offs.
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3.1 Restated Articles of Incorporation of First Financial Management Corporation
(filed May 13, 1994 as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1994 and incorporated herein by
reference).
3.2 Bylaws, as amended through March 15, 1995.
4.1 See Articles V, VI and VIII of the Registrant's Restated Articles of
Incorporation (filed May 13, 1994 as an exhibit to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1994 and
incorporated herein by reference) and Articles 1, 2, 5 and 9 of the
Registrant's Bylaws, as amended through March 15, 1995, filed as Exhibit 3.2
hereto.
4.2* FFMC Savings Plus Plan, as amended and restated, effective January 1, 1991
(filed on November 5, 1990 as an exhibit to the Registrant's Registration
Statement on Form S-8 (File No. 33-37532) and incorporated herein by
reference).
4.3* Amendments 1 and 2 to the FFMC Savings Plus Plan, dated November 2, 1992 and
April 1, 1993, respectively (filed on August 12, 1994 as an exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30,
1994 and incorporated herein by reference).
4.4* Amendment 3 to the FFMC Savings Plus Plan, dated November 7, 1994.
</TABLE>
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4.5 Amended and Restated Credit Agreement dated as of June 25, 1992, amended and
restated as of November 8, 1994 between First Financial Management
Corporation, First Financial Bank, and The Chase Manhattan Bank (National
Association), as agent for the banks that are signatories to the Agreement.
The Exhibits and Schedules to the Amended and Restated Credit Agreement are
identified on a list of Exhibit and Schedules contained in the Table of
Contents to the Amended and Restated Credit Agreement, which list is
incorporated herein by reference. Such Exhibits and Schedules have been
omitted for purposes of this filing, but will be furnished supplementally to
the Commission upon request (filed on November 15, 1994 as an exhibit to the
Registrant's Current Report on Form 8-K and incorporated herein by
reference).
4.6 Warrant Agreement, dated June 15, 1989, between the Registrant and Wachovia
Bank and Trust Company, N.A. (filed on June 19, 1989 as an exhibit to
Registrant's Registration Statement on Form S-3 (File No. 33-29267) and
incorporated herein by reference).
4.7 Amendment dated September 5, 1989, to the Warrant Agreement, dated June 15,
1989, by and between the Registrant and Wachovia Bank and Trust Company,
N.A. (filed on September 6, 1989 as an exhibit to Amendment No. 1 to
Registrant's Registration Statement on Form S-3 (File No. 33-29267) and
incorporated herein by reference).
4.8 Indenture, dated as of December 5, 1994, between the Registrant and
NationsBank of Georgia, National Association, as Trustee (filed on December
5, 1994 as an exhibit to the Registrant's Amendment No. 2 to its
Registration Statement on Form S-3 (File No. 33-56327) covering an unlimited
amount of senior debt securities and incorporated herein by reference).
4.9 First Supplemental Indenture, dated as of December 5, 1994, between the
Company and NationsBank of Georgia, National Association, as Trustee (filed
on December 6, 1994 as an exhibit to the Registrant's Post Effective
Amendment No. 1 to Form S-3 covering $440,000,000 of Senior Convertible
Debentures due 1999 and incorporated herein by reference).
</TABLE>
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10.1 Agreement and Plan of Merger, dated July 6, 1992, by and among the
Registrant, PSC Acquisition Corporation and Payment Services
Company - U.S. The schedules to the Agreement and Plan of Merger
were omitted, but were identified in a list included therein and will be
furnished supplementally to the Commission upon request (filed on
November 16, 1992 as an exhibit to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1992 and
incorporated herein by reference).
10.2 Underwriting Agreement covering the Registrant's Senior Convertible
Debentures due 1999 (filed on December 6, 1994 as an exhibit to the
Registrant's Post Effective Amendment No. 1 to its Registration Statement on
Form S-3 (File No. 33-56327) and incorporated herein by reference).
10.3 Lease between Mack Paramus Affiliates, as lessor, and Western Union
Financial Services, Inc., as lessee, dated June 30, 1993, together with the
First Amendment to Lease, dated March 3, 1995, covering the Western Union
Financial Services, Inc. headquarters office in Paramus, New Jersey. The
Exhibits to the Lease are listed in the Table of Contents to the Lease,
which list is incorporated herein by reference. Such Exhibits (and Exhibits
to the First Amendment to Lease) have been omitted for purposes of filing,
but will be furnished to the Commission upon request.
10.4 Lease between the Northwestern Mutual Life Insurance Company, as lessor, and
Endata, Inc., as lessee, dated December 23, 1985 for Endata, Inc.'s
headquarters at 501 Great Circle Road, Nashville, Tennessee (filed on March
31, 1986 as an exhibit to Endata, Inc.'s Annual Report on Form 10-K for 1985
(File No. 0-11357) and incorporated herein by reference).
10.5 Lease between Parkway, Ltd., as landlord, and National Bancard Corporation,
as tenant, dated December 28, 1987, together with Addendum to Lease
Agreement, dated February 22, 1988, for the NaBANCO Building in Sunrise,
Florida (filed on March 14, 1988 as an exhibit to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1987 and incorporated
herein by reference).
</TABLE>
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10.6 Lease, together with related Rider, dated February 6, 1989, between Rowe
Properties-Data Limited Partnership, as Lessor, and The Computer Company as
Lessee, covering First Health Services Corporation's facilities at Innsbrook
Corporate Center in Glen Allen, Virginia, together with a Guaranty, dated
February 2, 1989, guaranteeing Lessor's obligations under the Lease (filed
on March 27, 1990 as an exhibit to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1989 and incorporated herein by
reference).
10.7 Lease, dated February 28, 1990, as amended by the First Amendment dated June
22, 1990, between Frank J. Hanna, Jr., as Lessor, and Nationwide Credit,
Inc. (Nationwide), as Lessee, covering Nationwide's headquarters facility at
2258 Northwest Parkway, Marietta, Georgia. (1)
10.8 Lease Agreement between VPM 1988-1 Ltd., as landlord, and Payment Services
Company, as tenant, dated March 27, 1990, together with First Amendment to
Lease Agreement (dated July 9, 1990), Second Amendment to Lease Agreement
(dated February 21, 1992), Third Amendment to Lease Agreement (dated October
5, 1992), Fourth Amendment to Lease Agreement (dated April 5, 1993) and
Fifth Amendment to Lease Agreement (dated December 15, 1993). The Exhibits
to the Lease Agreement and related Amendments are listed at the end of such
documents, and these lists are incorporated herein by reference. Such
Exhibits have been omitted for purposes of filing, but will be furnished to
the Commission upon request.
</TABLE>
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10.9 Lease Agreement between TriNet Essential Facilities X, Inc., as
landlord, and First Health Strategies, Inc. (a wholly owned subsidiary
of the Registrant), as tenant, dated November 1, 1994, together with
Exhibits B and C to the Lease Agreement, covering a First Health Strategies,
Inc. office facility in Salt Lake City, Utah. All other Exhibits to the
Lease Agreement are listed in the Table of Contents to the Lease
Agreement, which list is incorporated herein by reference. Such
Exhibits have been omitted for purposes of filing, but will be furnished
to the Commission upon request.
10.10 Office Building Lease between Weprec Powers Pointe Corporation, as landlord,
and First Financial Management Corporation, as tenant, dated March 8, 1995,
together with Exhibit F to the Office Building Lease, covering the
Registrant's new corporate headquarters office in Atlanta, Georgia. All
other Exhibits to the Office Building Lease are listed in the Table of
Contents to the Office Building Lease, which list is incorporated herein by
reference. Such Exhibits have been omitted for purposes of filing, but will
be furnished supplementally to the Commission upon request.
10.11* The Registrant's 1982 Incentive Stock Plan, as amended through January 31,
1990. (1)
10.12* The Registrant's 1988 Incentive Stock Plan, as amended through January 30,
1991. (1)
10.13* Amendment to the Registrant's 1988 Incentive Stock Plan, dated March 22,
1994 (filed on August 12, 1994 as an exhibit to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1994 and incorporated
herein by reference).
10.14* Amendment to the Registrant's 1988 Incentive Stock Plan, dated February 24,
1995.
10.15* First Financial Management Corporation Performance Units Incentive Plan, as
amended through May 1, 1991 (filed on November 14, 1991 as an exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended September
30, 1991 and incorporated herein by reference).
</TABLE>
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10.16* Directors' Restricted Stock Award Plan, together with Form of
Director's Restricted Stock Award Agreement (filed on March 31, 1987
as an exhibit to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1986 and incorporated herein by reference).
10.17* 1990 Directors' Stock Option Plan. (Filed on August 14, 1990 as an exhibit
to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June
30, 1990 and incorporated herein by reference.)
10.18* Endata, Inc. Amended Stock Option Plan (filed on October 17, 1986 as an
exhibit to Post-Effective Amendment No. 1 to Endata, Inc.'s Registration
Statement on Form S-8 (File No. 2-97925) and incorporated herein by
reference), together with an Amendment to Endata Inc.'s Amended Stock Option
Plan, dated October 30, 1987, and two forms of letters specifying the manner
in which each Endata, Inc. Stock Option was converted into an option to
purchase the Registrant's stock and forms of the Endata Incentive and Non-
Qualified Stock Option Agreements (filed on March 14, 1988 as an exhibit to
the Registrant's Annual Report on Form 10-K for the year ended December
31,1987 and incorporated herein by reference).
10.19* FFMC 1990 Employee Stock Purchase Plan adopted December 15, 1989, as amended
on October 24, 1990 (1), and amendment thereto adopted on July 24, 1991,
effective October 1, 1991 (filed on August 14, 1991 as an exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30,
1991 and incorporated herein by reference).
10.20* Employment Agreement, dated January 31, 1989, between the Registrant and
Patrick H. Thomas (filed on March 31, 1989 as an exhibit to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1988 and
incorporated herein by reference). This Employment Agreement was superseded
effective January 1, 1995 by the Employment Agreement listed as Exhibit
10.32.
10.21* Employment Agreement, dated January 31, 1989, between the Registrant and M.
Tarlton Pittard (filed on March 31, 1989 as an exhibit to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1988 and
incorporated herein by reference).
</TABLE>
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10.22* Employment Agreement, dated February 15, 1991, Termination of prior
Employment Agreement, Termination of Employee Death Benefit
Agreement, and First Amendment to Deferred Compensation Agreement,
all between the Registrant (or Georgia Federal Bank, FSB) and
Richard D. Jackson. (1)
10.23* Form of Restricted Stock Award Agreement between the Registrant and each of
the following officers covering awards under the 1988 Incentive Stock Plan,
on January 31 1990, to M. Tarlton Pittard and Richard D. Jackson. (1)
10.24* Non-Qualified Stock Option, dated February 5, 1988, granted by the
Registrant to Patrick H. Thomas (filed on March 14, 1988 as an exhibit to
the Registrant's Annual Report on Form 10-K for the year ended December 31,
1987 and incorporated herein by reference).
10.25* Form of Non-Qualified Stock Option Agreement as issued to the Registrant's
Executive Officers under the 1988 Incentive Stock Plan (filed on March 30,
1994 as an exhibit to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993 and incorporated herein by reference).
10.26* Form of Restricted Stock Award Agreement between the Registrant and each of
the following officers covering awards under the 1988 Incentive Stock Plan
on May 1, 1991, to Richard D. Jackson, M. Tarlton Pittard and Stephen D.
Kane (filed on August 14, 1991 as an exhibit to the Registrant's Quarterly
Report on Form 10-K for the quarter ended June 30, 1991 and incorporated
herein by reference).
10.27* Form of Restricted Stock Award Agreement between the Registrant and each of
the following officers covering awards on January 31, 1989 under the 1988
Incentive Stock Plan: Patrick H. Thomas, M. Tarlton Pittard and Stephen D.
Kane (filed on March 31, 1989 as an exhibit to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1988 and incorporated
herein by reference).
10.28* Resolution of the Compensation Committee of the Registrant's Board of
Directors, dated June 24, 1993, accelerating to December 31, 1993 the date
on which restrictions lapsed on stock awards previously issued to Patrick H.
Thomas, M. Tarlton Pittard and Stephen D. Kane (filed on March 30, 1994 as
an exhibit to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993 and incorporated herein by reference).
</TABLE>
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10.29* Employment Agreement, dated January 29, 1992, between the
Registrant and Stephen D. Kane (filed on March 23, 1992 as an exhibit
to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1991 and incorporated herein by reference).
10.30 Agreement, dated May 7, 1993, by and among National Bancard Corporation,
CMSC Corporation and First Financial Bank (filed on May 14, 1993 as an
exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993 and incorporated herein by reference).
10.31 Agreement, Plan of Reorganization and Plan of Merger, dated as of July 28,
1993 by and among First Financial Management Corporation, Tomahawk
Acquisition Corporation, Pennant Acquisition Corporation, International
Banking Technologies, Inc., Prime Consulting Group, Inc. and The
Shareholders of International Banking Technologies, Inc. and Prime
Consulting Group, Inc. The Schedules to this Agreement, Plan of
Reorganization and Plan of Merger are identified on a list of schedules
contained at the end of the Table of Contents to such Agreement, which list
is incorporated herein by reference. All schedules were omitted for
purposes of filing but will be furnished supplementally to the Commission
upon request (filed on August 13, 1993 as an exhibit to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 and
incorporated herein by reference).
10.32* Employment Agreement, dated March 22, 1994, between the Registrant and
Patrick H. Thomas (filed on March 30, 1994 as an exhibit to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1993 and
incorporated herein by reference).
10.33* First Amendment, dated December 21, 1994, to Employment Agreement, dated
March 22, 1994, between the Registrant and Patrick H. Thomas.
10.34* Second Amendment, dated March 13, 1995, to Employment Agreement, dated March
22, 1994, between the Registrant and Patrick H. Thomas, together with two
Restricted Stock Award Agreements (both dated March 13, 1995) constituting
Exhibits A and B, respectively, to the Second Amendment.
10.35* Non-Qualified Stock Option, dated March 22, 1994, granted by the Registrant
to Patrick H. Thomas (filed on March 30, 1994 as an exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1993
and incorporated herein by reference).
</TABLE>
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10.36 Agreement, Plan of Reorganization and Plan of Merger, dated June 30,
1994, by and among First Financial Management Corporation, Bluebird
Acquisition Corporation, Gencan Acquisition Corporation, GENEX Services,
Inc., GENEX Services of Canada, Ltd. The Schedules to this Agreement,
Plan of Reorganization and Plan of Merger are identified on a list of
schedules contained at the end of the Table of Contents to such agreement,
which list is incorporated herein by reference. All schedules were
omitted for purposes of filing but will be furnished supplementally to
the Commission upon request (filed on August 12, 1994 as an exhibit
to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1994 and incorporated herein by reference ).
10.37 Stock Purchase Agreement, dated October 20, 1994 by and between New Valley
Corporation and First Financial Management Corporation. The Exhibits and
Schedules to the Stock Purchase Agreement are identified on a list of
Exhibits and Schedules contained in the Table of Contents to the Stock
Purchase Agreement, which list is incorporated herein by reference. Such
Exhibits and Schedules have been omitted for purposes of filing, but will be
furnished supplementally to the Commission upon request (filed on November
4, 1994 as an exhibit to the Registrant's Current Report on Form 8-K and
incorporated herein by reference).
10.38 Amendment No. 1, dated November 14, 1994, to Stock Purchase Agreement, dated
October 20, 1994, by and between New Valley Corporation and First Financial
Management Corporation (filed on November 15, 1994 as an exhibit to the
Registrant's Current Report on Form 8-K and incorporated herein by reference).
10.39* Employment Agreement, dated April 20, 1990, between Western Union
Corporation and Robert J. Amman (an Executive Officer of the Registrant),
together with Amendment to Employment Agreement, dated January 30, 1991.
21.1 List of Subsidiaries.
23.1 Consent of Independent Auditors.
</TABLE>
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27.1 Financial Data Schedule (for SEC use only).
- -----------------------------
</TABLE>
* Indicates management contract or compensatory plan or arrangement.
(1) Filed on April 1, 1991 as an exhibit to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1990 and incorporated
herein by reference.
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<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
FIRST FINANCIAL MANAGEMENT CORPORATION
Adopted February 2, 1983
(As amended through March 15, 1995)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE ONE: SHARE CERTIFICATES 1
1.1. Share Certificates
1.2. Share Records; Transfer of Shares
1.3. Lost, Stolen or Destroyed Certificates
1.4. Regulations, Transfer Agents and Registrars
1.5. Record Date
1.6. List or Record of Shareholders Entitled to Vote
ARTICLE TWO: SHAREHOLDERS' MEETINGS 3
2.1. Annual Meetings of Shareholders
2.2. Special Meetings of Shareholders
2.3. Notice
2.4. Voting; Presiding Officer
2.5. Quorum; Adjournment
2.6. Written Consent of Shareholders
2.7. Advance Notice of Shareholder Proposals or
Nominees for Director
ARTICLE THREE: DIRECTORS 7
3.1. Powers of Board
3.2. Number of Directors; Conduct of Meetings
3.3. Vacancies
3.4. Meetings of Board; Notice
3.5. Written Consent of Directors
3.6. Telephonic Meetings
3.7. Removal of Directors
3.8. Executive and Other Committees
ARTICLE FOUR: OFFICERS 12
4.1. Officers; Election
4.2. President
4.3. Secretary
4.4. Treasurer
4.5. Vice Chairmen and Vice Presidents
4.6. Appointment of Officers and Agents
4.7 Officers of Operational Units
4.8. Removal of Officers and Agents
4.9. Vacancies
</TABLE>
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<TABLE>
<S> <C>
ARTICLE FIVE: SHAREHOLDER INSPECTION RIGHTS 15
5.1. Limitation on Inspection Rights
ARTICLE SIX: SEAL 15
6.1. Seal
ARTICLE SEVEN: INDEMNIFICATION AND INSURANCE 16
7.1. Indemnification of Directors
7.2. Additional Indemnification of Directors
7.3 Indemnification of Officers
7.4 Exclusivity
7.5 Insurance
ARTICLE EIGHT: AMENDMENT 18
8.1. Amendment
ARTICLE NINE: BUSINESS COMBINATIONS 18
9.1 Business Combinations
</TABLE>
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<PAGE> 4
BYLAWS
OF
FIRST FINANCIAL MANAGEMENT CORPORATION
ARTICLE ONE
SHARE CERTIFICATES
1.1. SHARE CERTIFICATES. Share certificates shall be issued in
consecutive order and shall be numbered in the order in which they are issued,
and the numbers and registered holders of and shares represented by such
certificates shall be entered in the stock records of the corporation. They
shall be signed by the President and the Secretary or an Assistant Secretary
and the seal of the corporation or a facsimile thereof shall be affixed
thereto; provided, however, that the signatures of such officers upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation or an employee
of the corporation. In case any officer or officers who shall have signed or
whose facsimile signature or signatures shall have been used on any such
certificate or certificates shall cease to be such officer or officers of the
corporation, whether because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the corporation, such
certificate or certificates may nevertheless be delivered as though the person
or persons who signed such certificate or certificates or whose facsimile
signatures shall have been used thereon had not ceased to be such officer or
officers.
1.2. SHARE RECORDS; TRANSFER OF SHARES. Transfers of shares of
the corporation shall be made in the share records of the corporation only by
the written direction of the person
<PAGE> 5
named in the certificate or by his attorney (authorized by duly executed power
of attorney) or his legal representative (who shall furnish proper evidence of
authority to transfer such shares), and upon surrender of the certificate or
certificates for such shares properly endorsed (or accompanied by a properly
endorsed instrument of transfer) and subject to such other reasonable
conditions and requirements as may be required by the corporation or its
agents; provided, however, that if the Board of Directors shall by resolution
so provide, transfer of stock may be made in any other manner provided by law.
The corporation shall maintain at its principal place of business or registered
office, or the transfer agent or registrar shall maintain at its office, a
record of the names and addresses of the corporation's shareholders and the
number of shares, by classes and series of stock, held by each.
1.3. LOST, STOLEN OR DESTROYED CERTIFICATES. In case of the
loss, theft or destruction of any certificate of stock, a new certificate may
be issued in its place, but only on delivery to the corporation of acceptable
proof of such loss, theft or destruction and of proof of compliance with the
requirements of law relating thereto and upon giving the corporation adequate
security, in such form as may be approved by the Board of Directors, sufficient
to indemnify the corporation against loss.
1.4. REGULATIONS, TRANSFER AGENTS AND REGISTRARS. The Board of
Directors shall have the power and authority to make all such rules and
regulations as it may deem expedient concerning the issuance, transfer,
conversion, registration, and cancellation of certificates for shares of this
corporation's stock not inconsistent with the laws of Georgia, the Articles of
Incorporation or these bylaws. The Board of Directors may appoint one or more
agents or
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<PAGE> 6
registrars, or both, and may require all stock certificates to bear the
signature of a transfer agent or of a registrar or both.
1.5. RECORD DATE. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose, the
Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date to be not more than seventy days and,
in case of a meeting of shareholders, not less than ten days prior to the date
on which a particular action requiring such determination of shareholders is to
be taken.
1.6. LIST OR RECORD OF SHAREHOLDERS ENTITLED TO VOTE. The
Secretary or other officer or agent having charge of the corporation's stock
transfer books shall produce at each meeting of shareholders a list or record
of the shareholders which readily shows, in alphabetical order or by
alphabetical index, and by classes or series of stock, if any, the names of the
shareholders entitled to vote at the meeting, with the address of and the
number of shares held by each.
ARTICLE TWO
SHAREHOLDERS' MEETINGS
2.1. ANNUAL MEETINGS OF SHAREHOLDERS. The annual meeting of
shareholders of the corporation shall be held at such time and place, within or
without the State of Georgia, as may from time to time be fixed by the
President; provided that failure to hold the annual meeting shall not work a
forfeiture or give cause for dissolution of the corporation, except as provided
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<PAGE> 7
in section 14-2-285 of the Georgia Business Corporation Code in case of
deadlock among directors or shareholders, nor shall such failure otherwise
affect valid corporate acts.
2.2. SPECIAL MEETINGS OF SHAREHOLDERS. Special meetings of the
shareholders may be called at any time by the Board of Directors, the Chairman
of the Board, if any, or the President, or by the corporation upon the written
request of any holder or holders of as much as 75 percent of the outstanding
shares of the corporation. Special meetings of the shareholders shall be held
at such time and place, within or without the State of Georgia, as may be
determined by the person or persons calling the meeting.
2.3. NOTICE. The Secretary or an Assistant Secretary shall
deliver a written notice of the place, day and time of all meetings of
shareholders, not less than 10 nor more than 60 days before the date of the
meeting, either personally or by first class mail, to each shareholder of
record entitled to vote at such meeting provided, however, that the corporation
may utilize a class of mail other than first class if the notice of the meeting
is mailed, with adequate postage prepaid, not less than 30 days before the date
of the shareholders' meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail with first class postage
thereon prepaid, addressed to the shareholder at his address as it appears on
the share records of the corporation. The notice of any special meeting of
shareholders shall state the purpose or purposes for which the meeting is
called. Notice of any meeting of shareholders need not be given to any
shareholder who signs a waiver of notice, either before or after the meeting.
Attendance of a shareholder at a meeting, either in person or by proxy, shall
of itself constitute waiver of notice of such meeting and waiver of any and all
objections to the place of the meeting, the time of the meeting, or the manner
in which it has been called or convened, except when a
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<PAGE> 8
shareholder attends a meeting solely for the purpose of stating, at the
beginning of the meeting, any such objection or objections to the transaction
of business.
2.4. VOTING; PRESIDING OFFICER. At all meetings of the
shareholders each holder of shares of the corporation shall be entitled to cast
one vote, either in person or by written proxy, for each share standing in his
name on the books of the corporation. The Chairman of the Board shall preside
at all meetings of the shareholders, unless he delegates such authority.
2.5. QUORUM; ADJOURNMENT. At all meetings of shareholders a
majority of the outstanding shares of the corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum for the
transaction of business. Except with respect to the election of directors and
as otherwise required by law or by sections 3.7 or 8.1 of these bylaws, if a
quorum exists, action on a matter by shareholders is approved if the votes cast
in favor of the action exceed the votes cast opposing the action. Directors
are elected by a plurality of the votes cast by the shareholders entitled to
vote at a meeting at which a quorum is present. The holders of a majority of
the shares represented at a meeting, whether or not a quorum is present, may
adjourn such meeting from time to time.
2.6. WRITTEN CONSENT OF SHAREHOLDERS. Any action required to be
taken at a meeting of the shareholders of the corporation, or any action that
may be taken at a meeting of the shareholders, may be taken without a meeting
if a consent in writing setting forth the action so taken shall be signed by
all of the shareholders entitled to vote with respect to the subject matter
thereof.
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<PAGE> 9
2.7. ADVANCE NOTICE OF SHAREHOLDER PROPOSALS OR NOMINEES FOR
DIRECTOR. No matter of business may be brought before any annual meeting of
shareholders and no person may be nominated for election as a director at any
meeting of shareholders, except a matter of business or nominee that has been:
(1) described or named in the notice of meeting of shareholders
or an accompanying proxy statement;
(2) approved for consideration or nomination by the Board of
Directors; or
(3) described or named in a written notice by a shareholder to
the secretary of the corporation which has been delivered to the secretary at
the principal executive offices of the corporation not less than 5 days prior
to the date of such meeting which sets forth: (a) the name and record address
of the shareholder delivering the notice; (b) the class and number of shares of
the corporation entitled to vote at such meeting which are beneficially owned
by the shareholder; (c) a brief description of such business matter or the name
and age of each nominee for director and such person's residence and business
addresses, the class and number of any shares of the corporation beneficially
owned by such nominee and such nominee's principal occupation; (d) any material
interest of the shareholder in such business matter or any material
relationship of the shareholder to such nominee for director and a description
of all arrangements or understandings between such shareholder and each such
nominee and any other person or persons (naming such person or persons)
pursuant to which such nomination or nominations are being made; and (e) as to
any nominee for director, the written consent of such person to serve as a
director of the corporation if so elected.
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Notwithstanding anything in these bylaws to the contrary, no
person shall be eligible for election as a director unless nominated in
accordance with this Section 2.7 and no matter of business shall be conducted
at an annual meeting of shareholders except in accordance with the procedures
set forth in this Section 2.7; provided, however, that nothing in this Section
2.7 shall be deemed to preclude discussion by any shareholder of any business
properly brought before any annual meeting of shareholders in accordance with
such procedures.
The chairman of the meeting of shareholders shall, if the facts
warrant, determine and declare to such meeting that business was not properly
brought before the meeting, or that nomination was not made in accordance with
the foregoing procedures, and if he should so determine, he shall so declare to
the meeting and any such business not properly brought before the meeting shall
not be transacted or the defective nomination shall be disregarded, as
appropriate.
ARTICLE THREE
DIRECTORS
3.1. POWERS OF BOARD. Subject to these bylaws, the Board of
Directors shall oversee the management of the business and operations of the
corporation which shall be conducted by or under the direction of the
President, and the Board of Directors shall have and may exercise all of the
other powers that may be exercised or performed by the corporation.
3.2. NUMBER OF DIRECTORS; CONDUCT OF MEETING. The Board of
Directors shall consist of not less than three persons nor more than nine
persons. The number of directors may be fixed or changed from time to time,
within the specified range, by the Board of Directors.
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Each director shall be elected at an annual meeting of the shareholders and
serve for a term of one year and until his successor is elected and qualified,
or until his earlier death, resignation or removal. A majority of said
directors shall constitute a quorum for the transaction of business. Except as
otherwise provided in these bylaws, all resolutions adopted and all business
transacted by the Board of Directors shall require the affirmative vote of a
majority of the directors present at the meeting. The Chairman of the Board
or, in his absence, the President, shall preside at all meetings of the Board
of Directors.
3.3. VACANCIES. Any vacancy occurring in the Board of Directors
by reason of death, resignation or incapacity to serve may be filled by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the Board of Directors, or by the sole remaining director, as the
case may be, or, if the vacancy is not so filled, or if no director remains, by
the shareholders. The directors may fill a vacancy created by an increase in
the number of directors pursuant to section 3.2 of these bylaws, but only for a
term of office continuing until the next annual election of directors by the
shareholders and the election and qualification of his successor.
3.4. MEETINGS OF BOARD; NOTICE. The directors shall meet
annually immediately following the annual meeting of the shareholders and
quarterly at times determined by the Chairman of the Board or the Board of
Directors; provided, however, that the failure to hold the annual meeting shall
not work a forfeiture or otherwise affect valid corporate acts. Special
meetings of the directors may be called at any time by the Chairman of the
Board or by any two directors, and shall be preceded by at least two days'
notice of the date, time and place of the meetings. Unless otherwise provided
by law, written notice shall be effective at the earliest of the following:
(1) when received or when delivered, properly addressed, to the director's last
known
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principal place of business or residence, (2) five days after deposit in the
mail, as evidenced by the post-mark, if mailed with first-class postage prepaid
and correctly addressed, or (3) on the date shown on the return receipt if sent
by registered or certified mail, return receipt requested, and the receipt is
signed by or on behalf of the addressee. Oral notice shall be effective when
communicated if communicated in a comprehensible manner. Notice of the time
and place of an adjourned special meeting need not be given to absent directors
if the time and place are fixed at the meeting which has been adjourned. A
director may waive notice of any meeting by executing a written waiver and
delivering it to the corporation for inclusion in the minutes or filing with
the corporate records. Attendance of a director at a meeting shall constitute
a waiver of notice of such meeting and waiver of any and all objections to the
place of the meeting, the time of the meeting, or the manner in which it has
been called or convened, except when a director states, at the beginning of the
meeting, any such objection or objections to the transaction of business. Any
meeting of the Board of Directors may be held within or without the State of
Georgia at such place as may be determined by the person or persons calling the
meeting. A majority of said directors shall constitute a quorum for the
transaction of business. Except as otherwise provided in these bylaws, all
resolutions adopted and all business transacted by the Board of Directors shall
require the affirmative vote of a majority of the directors present at the
meeting. The Chairman of the Board or, in his absence, the President, shall
preside at all meeting of the Board of Directors.
3.5. WRITTEN CONSENT OF DIRECTORS. Any action required to be
taken at a meeting of the directors, or any action that may be taken at a
meeting of the directors, may be taken
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without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all the directors and be filed with the minutes of the
proceedings of the directors.
3.6. TELEPHONIC MEETINGS. Any action required to be taken at a
meeting of the directors, or any action that may be taken at a meeting of the
directors, may be taken at a meeting held by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in such a meeting shall
constitute presence in person at such meeting. In all other respects the
provisions of Article Three of these bylaws with respect to meetings of the
Board of Directors shall apply.
3.7. REMOVAL OF DIRECTORS. At any shareholders' meeting with
respect to which notice of such purpose has been given, any one or more
directors may be removed, with or without cause, by the affirmative vote of the
holders of the majority of the shares of the corporation.
3.8. EXECUTIVE AND OTHER COMMITTEES. The Board of Directors may
designate from among its members an executive committee and one or more other
committees, each consisting of one or more directors, subject to the following:
(a) Each such committee shall have and may exercise,
consistent with and to the extent provided in the resolution of the Board of
Directors designating such committee, all the authority of the Board of
Directors (including, without limitation, the authority to authorize the
affixing of the corporate seal to all documents or other papers which may
require it), but no such committee shall have the authority of the Board of
Directors: (1) to approve or to propose to shareholders action that the Georgia
Business Corporation Code requires to be approved by shareholders; (2) to fill
vacancies on the Board of Directors or on any of its
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<PAGE> 14
committees; (3) to amend the Articles of Incorporation pursuant to section
14-2-1002 of the Georgia Business Corporation Code; (4) to adopt, to amend or
to repeal the Bylaws; or (5) to approve a plan of merger not requiring
shareholder approval.
(b) Each member of any such committee shall hold office
until the next regular annual meeting of the Board of Directors following his
designation and until his successor is designated, elected and qualified. Any
vacancy in any such committee may be filled by a resolution adopted by a
majority of the full Board of Directors. The Board of Directors by resolution
adopted by a majority of the full Board of Directors may designate one or more
directors as alternate members of any such committee, who may act in the place
and stead of any absent member or members at any meeting of such committee.
Any member of any such committee may be removed at any time with or without
cause by resolution adopted by a majority of the full Board of Directors. Any
member of any such committee may resign from such committee at any time by
giving written notice to the President of the corporation, and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
(c) Unless the Board of Directors otherwise provides,
each committee designated by the Board of Directors may make, alter and repeal
rules for the holding of its meetings and the conduct of its business, subject
to the following: a majority of the entire authorized number of members of
such committee shall constitute a quorum for the transaction of business; the
vote of a majority of the members present at a meeting at the time of a vote if
a quorum is then present shall be the act of such committee; and in other
respects each committee shall hold its meetings and conduct its business in the
same manner as does the Board of Directors
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<PAGE> 15
pursuant to Article Three of these bylaws (including, without limitation, the
taking of action without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by all of the members of such committee and be
filed with the minutes of the proceedings of such committee). Each such
committee shall keep minutes or other records of its proceedings and shall
report its actions to the Board of Directors as requested and at regularly
scheduled meetings of the Board of Directors.
(d) The designation of any such committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors or any member thereof, of any responsibility imposed by law.
ARTICLE FOUR
OFFICERS
4.1. OFFICERS; ELECTION. The Board of Directors shall elect a
Chairman of the Board, a President, a Secretary and a Treasurer and may elect
one or more Vice Chairmen, Vice Presidents, or other officers or assistant
officers. Any two or more offices may be held by the same person, except the
office of President and Secretary.
4.2. PRESIDENT. The President shall be the chief executive
officer of the corporation, and shall be responsible for the conduct of the
business of the corporation, including general supervision of the other
officers of the corporation. He shall have the authority to execute notes or
other contracts, agreements or instruments under the seal of the corporation or
otherwise. The President shall have the authority to institute legal
proceedings when the directors are deadlocked.
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<PAGE> 16
4.3. SECRETARY. The Secretary shall keep minutes of all
meetings of the shareholders and directors and have charge of the minute books,
share records and seal of the corporation, shall have the authority to certify
as to the corporate books and records, and shall perform such other duties and
shall have such other powers as may from time to time be delegated to him by
the President or the Board of Directors.
4.4. TREASURER. The Treasurer shall be charged with the
management of the financial affairs of the corporation. He shall in general
perform all of the duties incident to the office of treasurer and shall perform
such other duties and have such other powers as from time to time may be
assigned to him by the President or the Board of Directors.
4.5. VICE CHAIRMEN AND VICE PRESIDENTS. Each Vice Chairman and
Vice President, if any, shall perform such duties and exercise such powers as
the President shall request or delegate and, unless the President otherwise
directs, shall perform such other duties as are generally performed by vice
chairmen and vice presidents, respectively, with equivalent restrictions, if
any, on title, and shall have such other powers as may from time to time be
delegated to him by the Board of Directors.
4.6. APPOINTMENT OF OFFICERS AND AGENTS. The President may
appoint one or more Vice Chairmen and Vice Presidents and such other officers,
assistant officers and agents as the President may determine. Any such
officers, assistant officers or agents so appointed shall perform such duties
and have such powers as from time to time may be delegated by the President,
and, unless the President otherwise directs, such appointed officers and
assistant officers shall perform such duties as are generally performed by
officers or assistant officers with
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<PAGE> 17
equivalent restrictions, if any, on title and shall have such other powers as
may from time to time be delegated by the Board of Directors.
4.7. OFFICERS OF OPERATIONAL UNITS. In addition to any
officers, assistant officers and agents of the corporation as a whole, the
President may appoint any such officers, assistant officers and agents of the
corporation's operational groups, divisions and other units as the President
may determine and unless the President of the corporation otherwise directs,
any person appointed by the President of the corporation as the principal
officer of any operational group, division or other unit of the corporation may
appoint such other officers, assistant officers and agents for the respective
operational group, division or other unit as such principal officer may
determine. Any person appointed as an officer or assistant officer with
respect to a particular operational group, division or other unit of the
corporation shall perform such duties and have such authority as are generally
performed by and possessed by officers or assistant officers with equivalent
restrictions, if any, on title; provided, however, that unless such person is
also elected or appointed as an officer of the corporation as a whole, such
duties and authority shall pertain only to the operations of the respective
operational group, division or other unit. Any such officer, assistant officer
or other agent of an operational group, division or other unit also shall have
such other powers as may from time to time be delegated by the Board of
Directors or the President of the corporation.
4.8. REMOVAL OF OFFICERS AND AGENTS. Any officer, assistant
officer or agent elected by the Board of Directors may be removed by the Board
whenever in its judgment the best interests of the corporation will be served
thereby. Any officer or assistant officer appointed
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by the President may be removed by the President or by the Board of Directors
whenever in his or its judgment the best interests of the corporation will be
served thereby.
4.9. VACANCIES. Any vacancy, however occurring, in any office
may be filled by the Board of Directors.
ARTICLE FIVE
SHAREHOLDER INSPECTION RIGHTS
5.1. LIMITATION ON INSPECTION RIGHTS. Shareholders owning 2% or
less of the shares of outstanding common stock of the corporation shall not be
entitled to inspect or copy the accounting records of the corporation or the
record of the corporation's shareholders.
ARTICLE SIX
SEAL
6.1. SEAL. The seal of the corporation shall be in such form as
the Board of Directors may from time to time determine. In the event it is
inconvenient to use such a seal at any time, the words "Corporate Seal" or the
word "Seal" in parentheses or scroll accompanying the signature of an officer
signing for and on behalf of the corporation shall be the seal of the
corporation. The seal shall be in the custody of the Secretary or Assistant
Secretary and affixed by him on the share certificates, unless a facsimile
thereof is used, and on such other papers as may be directed by law, by these
bylaws or by the Board of Directors.
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ARTICLE SEVEN
INDEMNIFICATION AND INSURANCE
7.1. INDEMNIFICATION OF DIRECTORS. The corporation shall
indemnify and pay for or reimburse expenses, including payments in advance of
final disposition of any proceeding, of each person who is or was a director of
the corporation (including the heirs, executors, administrators or estate of
such person) or is or was serving at the request of the corporation as a
director, officer, partner, trustee or employee of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise to
the full extent permitted under sections 14-2-851 through 855 of the Georgia
Business Corporation Code (the "Code"). (References to any provision of the
Code shall also refer to any successor provisions of the laws of the State of
Georgia.) If any such indemnification is requested pursuant to section
14-2-851 of the Code, the Board of Directors shall cause a determination to be
made (unless a court has ordered the indemnification) in one of the manners
prescribed in section 14-2-855 of the Code as to whether indemnification of the
party requesting indemnification is proper in the circumstances because he has
met the applicable standard of conduct set forth in section 14-2-851(a) of the
Code. Upon any such determination that such indemnification is proper, the
corporation shall make indemnification payments of liability, cost, payment or
expense asserted against, or paid or incurred by, him in his capacity as such
to the maximum extent permitted by the Code.
7.2. ADDITIONAL INDEMNIFICATION OF DIRECTORS. The corporation
shall also indemnify and pay or reimburse liabilities and expenses incurred by
each person who is or was a director of the corporation or is or was serving at
the request of the corporation as a director, officer, partner, trustee or
employee of another foreign or domestic corporation, partnership, joint
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venture, trust, employee benefit plan or other enterprise, including any
liability or expense incurred in or as a result of a proceeding brought by or
in the right of the corporation, to the full extent permitted by section
14-2-856 of the Code, subject to the conditions and limitations contained in
that section; provided, however, that such indemnification (other than advances
or reimbursements of expenses pursuant to section 14-2-856(c) of the Code)
shall be made only if there has been a determination in the manner prescribed
in section 14-2-855(b) of the Code that the director is entitled to such
indemnification under this section 7.2 and section 14-2-856 of the Code.
7.3 INDEMNIFICATION OF OFFICERS. Any officer of the
corporation who is not a director shall be entitled to indemnification to the
same extent as though he were a director.
7.4 EXCLUSIVITY. The indemnification obligations of the
corporation set forth in this Article shall not be deemed exclusive of any
other rights, in respect to indemnification or otherwise, to which any party
may be entitled under any provision of the Articles of Incorporation, these
Bylaws, any general or specific action of the Board of Directors or the
shareholders or any contract, in each case which is permitted by the Code.
7.5 INSURANCE. The corporation may purchase and maintain
insurance at its expense, to protect itself and any director, officer or
employee of the corporation against any liability, cost, payment or expense
asserted against or incurred by him in his capacity or arising from his status
as a director, officer or employee of the corporation, or as a director,
officer, partner, trustee, employee or agent of another domestic or foreign
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise as to which capacity he is serving at the
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request of the corporation, whether or not the corporation would have the power
to indemnify such person against such liability or expense.
ARTICLE EIGHT
AMENDMENT
8.1. AMENDMENT. These bylaws may be amended at any meeting of
the shareholders by the affirmative vote of a majority of the issued and
outstanding shares of the corporation, or at any meeting of the directors of
the corporation by an affirmative vote of a majority of all directors then
holding office.
ARTICLE NINE
BUSINESS COMBINATIONS
9.1 BUSINESS COMBINATIONS. The provisions of sections
14-2-232 through 14-2-235 and the provisions of sections 14-2-236 through
14-2-238 of the Georgia Business Corporation Code or any successor provisions
of the laws of the State of Georgia shall apply to all business combinations as
defined therein, and the provisions of sections 14-2-232 through 14-2-235 and
the provisions of sections 14-2-236 through 14-2-238 of said Code or any
successor provisions of the laws of the State of Georgia are hereby
incorporated into these bylaws by this reference.
* * *
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<PAGE> 1
EXHIBIT 4.4
AMENDMENT NO. 3
TO THE
FFMC SAVINGS PLUS PLAN
THIS IS AN AMENDMENT to the FFMC Savings Plus Plan (the "Plan")
made this 7th day of November, 1994 by First Financial Management Corporation,
a Georgia corporation (the "Company"), and Wachovia Bank of Georgia, N.A., the
trustee (the "Trustee").
BACKGROUND STATEMENT
The Company and the Trustee desire to amend the Plan to comply
with certain changes in the law regarding qualified employee benefit plans
under the Tax Reform Act of 1986 and subsequent legislation and regulations and
to make certain other changes in the design of the Plan, effective January 1,
1995. Therefore, the Plan is amended in the following respects, such amendment
to be effective generally as of January 1, 1987 or as otherwise specified
below:
1.
Section 1.4 is amended effective January 1, 1994 by deleting the
last sentence thereof and by substituting the following:
"For any Plan Year beginning on or after January 1, 1989 and
before January 1, 1994, Base Compensation shall not exceed
$200,000 (adjusted as provided under section 401(a)(17) of the
Code). Effective for any
<PAGE> 2
Plan Year beginning on or after January 1, 1994, Base Compensation
shall not exceed $150,000 (adjusted as provided under section
401(a)(17) of the Code). For purposes of applying the foregoing
limitations on Base Compensation, the family aggregation rules of
section 414(q)(6) of the Code shall apply, except that in applying
such rules, the term "family" shall include only the spouse of the
Employee and any lineal descendants who have not attained age 19
before the close of the year."
2.
Section 1.30 is amended effective January 1, 1994 by deleting the
last sentence thereof and by substituting the following:
"For any Plan Year beginning on or after January 1, 1989 and
before January 1, 1994, Total Compensation shall not exceed
$200,000 (adjusted as provided under section 401(a)(17) of the
Code). Effective for any Plan Year beginning on or after January
1, 1994, Total Compensation shall not exceed $150,000 (adjusted as
provided under section 401(a)(17) of the Code). For purposes of
applying the foregoing limitations on Total Compensation, the
family aggregation rules of section 414(q)(6) of the Code shall
apply, except that in applying such rules, the term "family" shall
include
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<PAGE> 3
only the spouse of the Employee and any lineal descendants who
have not attained age 19 before the close of the year."
3.
Subsection 1.37(a) is amended effective January 1, 1995 by adding
the following at the end of such subsection:
"Effective January 1, 1995, a Year of Service shall mean twelve
months of employment, whether consecutive or not, with any
Employer, determined by the method described in subsection (b)
below."
4.
Section 2.2 is amended effective October 1, 1993 by adding the
following subsection (c):
"(C) SPECIAL PARTICIPATION RULES.
(1) International Banking Technologies, Inc.
Eligible Employees of International Banking Technologies,
Inc. ("IBT") who were employed by IBT for at least three
months as of October 1, 1993 and who had attained age 18
became Covered Participants under the Plan as of October
1, 1993. All other Eligible Employees of IBT shall become
Covered Participants in accordance with the requirements
of subsections (a) and (b) above.
(2) VIPS, INC. Eligible Employees of VIPS,
INC. ("VIPS") who were employed by VIPS for at
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<PAGE> 4
least six months as of April 1, 1994 and who had attained
age 18 became Covered Participants under the Plan as of
April 1, 1994. All other Eligible Employees of VIPS shall
become Covered Participants in accordance with the
requirements of subsections (a) and (b) above.
(3) Master Collectors. Eligible Employees of Master
Ventures, Inc., The Master Collectors of Colorado Inc.,
Master Collectors of Dallas, Inc., The Master Collectors
of Maryland, Inc., and Texas Master Collectors, Inc.
(collectively "Master Collectors") who were employed by
Master Collectors for at least six months as of June 1,
1994 and who had attained age 18 became Covered
Participants under the Plan as of June 1, 1994. All other
Eligible Employees of Master Collectors shall become
Covered Participants in accordance with the requirements
of subsections (a) and (b) above."
5.
Subsection 3.1(a) is amended effective January 1, 1995 by adding
the following at the end of such subsection:
"Effective for Plan Years beginning on or after January 1, 1995,
no Profit Sharing Contributions shall be made under the Plan."
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<PAGE> 5
6.
Subparagraph 3.1(e)(ii)[E] is amended by deleting the last
sentence thereof and by substituting the following:
"In the case of a Highly Compensated Employee who is either a 5%
owner or one of the ten most highly compensated Employees and is
thereby subject to the family aggregation rules of section
414(q)(6) of the Code, the Actual Deferral Percentage for the
family group (which is treated as one Highly Compensated Employee)
is the Actual Deferral Percentage determined by combining the
contributions and compensation of all Eligible Participants who
are family members described in section 414(q)(6)(B) of the Code.
Except to the extent taken into account in the preceding sentence,
the contributions and compensation of all such family members are
disregarded in determining the Actual Deferral Percentage for
Highly Compensated Employees and for those Employees who are not
Highly Compensated Employees."
7.
Paragraph 3.1(e)(ii) is amended by adding the following
subparagraphs [F], [G], [H], and [I]:
"[F] Basic Contributions will be taken into account for
purposes of the Actual Deferral Percentage test for a Plan Year
only to the extent such Basic Contributions are allocated to the
Eligible Participant
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<PAGE> 6
as of a date within that Plan Year in accordance with Treasury
Regulation section 1.401(k)-1(b)(4).
[G] In applying subsection 3.1(e), all Basic
Contributions made under two or more plans aggregated for purposes
of sections 401(a)(4) and 410(b) of the Code (except with respect
to section 410(b)(2)(A)(ii) of the Code) shall be treated as
having been made under a single plan, and if two or more plans are
permissively aggregated for purposes of section 401(k) of the
Code, the aggregated plans shall also satisfy sections 401(a)(4)
and 410(b) of the Code as though they were a single plan.
[H] The Actual Deferral Percentage of a Highly
Compensated Employee will be determined by treating all plans
subject to section 401(k) of the Code under which the Highly
Compensated Employee is eligible to participate (other than those
plans that may not be permissively aggregated) as a single plan.
[I] For purposes of subsection 3.1(e), qualified
nonelective contributions and Matching Contributions may be
treated as Basic Contributions only if the conditions described
under Treasury Regulation section 1.401(k)-1(B)(5) are satisfied."
8.
Subparagraph 3.1(g)(ii)[C] is amended by deleting the current
provision and by substituting the following:
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<PAGE> 7
"In the case of a Highly Compensated Employee who is either a 5%
owner or one of the ten most highly compensated Employees and is
thereby subject to the family aggregation rules of section
414(q)(6) of the Code, the Average Contribution Percentage for the
family group (which is treated as one Highly Compensated Employee)
is the Average Contribution Percentage determined by combining the
contributions and compensation of all Eligible Participants who
are family members as defined in section 414(q)(6) of the Code.
Except to the extent taken into account in the preceding sentence,
the contributions and compensation of all family members are
disregarded in determining the Average Contribution Percentage for
Highly Compensated Employees and for those Employees who are not
Highly Compensated Employees."
9.
Paragraph 3.1(g)(ii) is amended by adding the following
subparagraphs [D], [E] and [F]:
"[D] The Average Contribution Percentage of a Highly
Compensated Employee will be determined by treating all plans
subject to section 401(m) of the Code under which the Highly
Compensated Employee is eligible to participate (other than those
plans that may not be permissively aggregated) as a single plan.
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<PAGE> 8
[E] In applying subsection 3.1(g), all employee and
matching contributions that are made under two or more plans
aggregated for purposes of sections 401(a)(4) and 410(b) of the
Code (other than with respect to section 410(b)(2)(A)(ii) of the
Code) shall be treated as having been made under a single plan and
if two or more plans are permissively aggregated for purposes of
section 401(m) of the Code, the aggregated plans shall also
satisfy sections 401(a)(4) and 410(b) of the Code as though they
were a single plan.
[F] Basic Contributions and qualified matching
contributions may be treated as Matching Contributions only if the
conditions described in Treasury Regulation section
1.401(m)-1(b)(5) are satisfied."
10.
Section 3.1 is amended by adding the following subsection (h):
"(h) QUALIFIED NONELECTIVE CONTRIBUTIONS AND QUALIFIED
MATCHING CONTRIBUTIONS. Notwithstanding any other provision of
the Plan to the contrary, to the extent the Plan Administrator
deems it appropriate to satisfy either the Actual Deferral
Percentage test of paragraph 3.1(e)(ii) or the Average
Contribution Percentage test of paragraph 3.1(g)(i), the Employer
may contribute or reclassify amounts that are designated as
"qualified nonelective contributions"
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<PAGE> 9
within the meaning of section 401(m)(4)(C) of the Code or as
"qualified matching contributions" within the meaning of Treasury
regulations issued pursuant to sections 401(k) and 401(m) of the
Code, which amounts may be allocated, at the direction of the
Employer and in accordance with applicable Treasury regulations
under sections 401(k) and (m) of the Code, only among the
appropriate Accounts of those Eligible Participants who are not
Highly Compensated Employees. For this purpose, a "qualified
nonelective contribution" shall mean a contribution by the
Employer (other than a Matching Contribution) with respect to
which the Eligible Participant may not elect to have the
contribution paid to him in cash rather than being contributed to
the Plan and which shall be subject to the same distribution
restrictions as Basic Contribution in the event it is used to
satisfy the Actual Deferral Percentage Test and which shall be
subject to the same distribution restrictions as a Matching
Contribution to the extent it is used to satisfy the Actual
Contribution Percentage test. Any contributions under this
section shall be treated as "Elected Contributions" only if the
conditions described in Treasury Regulation section
1.401(k)-1(b)(5) are satisfied. Any such contributions shall be
fully vested and nonforfeitable and may not be withdrawn pursuant
to section 4.3."
-9-
<PAGE> 10
11.
The Plan is amended by adding the following new Article 3.1A:
"3.1A MULTIPLE USE LIMITATION. For purposes of the tests
contained in paragraphs 3.1(e)(ii) and 3.1(g)(i), the Plan shall
comply with the multiple use test under Treasury Regulation
section 1.401(m)-2(b), which is incorporated herein by reference.
In the event that the foregoing multiple use test is not
satisfied, the Plan Administrator shall make such corrections and
adjustments necessary to satisfy such test by the reduction of the
Average Contribution Percentage of those Highly Compensated
Employees eligible to make Basic Contributions and receive
Matching Contributions. If the Plan Administrator does not make
the foregoing reductions, the Employer may make a qualified
nonelective or matching contribution as a means of complying with
the multiple use limitations."
12.
Subsection 4.1(d) is amended effective January 1, 1995 by adding
the following at the end of the existing provision:
"Pursuant to the cessation of Profit Sharing Contributions
effective January 1, 1995, all Profit Sharing Accounts shall
become fully vested and nonforfeitable as of that date."
-10-
<PAGE> 11
13.
Subsection 4.2(b) is amended effective January 1, 1995 by adding
the following after the second sentence thereof:
"Notwithstanding the foregoing, with respect to distributions to
be made or begun on or after January 1, 1995, a Participant my
also elect to receive his Account balances in one of the following
forms of distribution:
(i) quarterly, semi-annual or annual installments
over a period not to exceed the life or life
expectancy of the Participant or the joint lives
or life expectancies of the Participant and his
beneficiaries (which life expectancies shall not
be subject to recomputation),
(ii) a single life annuity, or
(iii) a joint and 50% or 100% survivor annuity. In the
event aParticipant at any time elects to receive
an annuity, he shall become subject to the
Annuity Amount rules."
14.
Subsection 4.2(c) is amended effective January 1, 1995 by adding
the following at the end of the existing provision:
"Effective January 1, 1995, the amount to be distributed to a
Participant with respect to amounts invested in the Company Stock
Account shall be
-11-
<PAGE> 12
determined based on the cash value of the shares of Company Stock
on the date of sale."
15.
Subsection 4.3(b) is amended effective January 1, 1995 by deleting
the phrase following the semi-colon and by substituting the following:
"provided, however, that the total value of the Participant's
Basic Account on December 31, 1988 and the Participant's Profit
Sharing Account on December 31, 1994, including both Basic
Contributions and Profit Sharing Contributions and earnings
thereon through such dates, may be withdrawn if the other
requirements set forth in this subsection (b) are satisfied."
16.
Subsection 4.4(b) is amended January 1, 1995 by adding the
following after the first sentence thereof:
"Effective January 1, 1995, no loan consolidations shall be
allowed under the Plan, and a Participant may not have more than
one loan outstanding at any time."
17.
Subsection 4.4(c) is amended January 1, 1995 by adding the
following after the third sentence thereof:
"Effective January 1, 1995, the Plan Administrator and Trustee
shall treat any defaulted loan as an individual
-12-
<PAGE> 13
investment of the Participant's Accounts, and such loan shall no
longer be treated as part of the general investments of the Fixed
Income Fund."
18.
Section 4.5 is amended by adding the following paragraph (e)
effective January 1, 1993 and the following paragraphs (f) and (g) effective
January 1, 1995:
(e) ELIGIBLE ROLLOVER DISTRIBUTIONS.
(i) GENERAL. This subsection applies to
distributions made on or after January 1, 1993. Notwithstanding
any provision of the Plan to the contrary that would otherwise
limit a distributee's election under this subsection, a
distributee may elect, at the time and in the manner prescribed by
the Plan Administrator, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
(ii) DEFINITIONS. For purposes of this
subsection, the following definitions shall apply.
[A] Eligible Rollover Distribution.
An eligible rollover distribution is any
distribution of all or any portion of the balance
to the credit of the distributee, except that an
eligible rollover distribution does not include:
any distribution that is
-13-
<PAGE> 14
one of a series of substantially equal periodic
payments (not less frequently than annually) made
for the life (or life expectancy) of the
distributee or the joint lives (or joint life
expectancies) of the distributee and the
distributee's designated Beneficiary, or for a
specified period of ten years or more; any
distribution to the extent such distribution is
required under section 401(a)(9) of the Code; a
deemed distribution of a loan amount under
section 72(p) of the Code; and the portion of any
distribution that is not includible in gross
income (determined without regard to the
exclusion for net unrealized appreciation with
respect to Employer securities).
[B] Eligible Retirement Plan. An
eligible retirement plan is an individual
retirement account described in section 408(a) of
the Code, an individual retirement annuity
described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the
Code or a qualified trust described in section
401(a) of the Code, that accepts the
distributee's eligible rollover distribution.
However, in the case of an
-14-
<PAGE> 15
eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an
individual retirement account or individual
retirement annuity.
[C] Distributee. A distributee
includes an Employee or former Employee. In
addition, the Employee's or former Employee's
surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the
alternate payee under a qualified domestic
relations order, as defined in section 414(p) of
the Code, are distributees with regard to the
interest of the spouse or former spouse.
[D] Direct Rollover. A direct
rollover is a payment by the Plan to the eligible
retirement plan specified by the distributee.
(f) DISTRIBUTION TIMING. Notwithstanding anything to
the contrary, a Participant receiving a distribution (including a
hardship withdrawal or a loan) under the Plan that is not subject
to the Annuity Amount rules may waive the 30-day period in which
to consider whether to receive a distribution after being clearly
informed that he has the right to consider whether to elect a
distribution for at least 30 days.
(g) UNPAID BENEFITS. If a terminated Participant's
vested Account balances under the Plan do not exceed $10 and
remain unpaid for 1 year because the
-15-
<PAGE> 16
individual entitled to such benefit cannot be located, such
Account balances shall be forfeited. If, however, the individual
entitled to the Account balances thereafter applies to receive
such benefit and the Plan Administrator determines that such
application is valid, the forfeited Accounts, plus gains and
losses based on the assumption that the Accounts had remained
invested in the investment fund or funds from which they were
forfeited, shall be restored."
19.
Paragraph 5.1(a)(i) is amended effective January 1, 1995 by adding
the following at the end of such paragraph:
"provided, however, that effective January 1, 1995, the Profit
Sharing Account shall be merged into the Basic Account;"
20.
Subsection 5.4(b) is amended by deleting the first sentence
thereof and by substituting the following:
"Second, the Basic Contributions for such Plan Year (including any
qualified nonelective contributions treated as Basic
Contributions) shall be credited to the Basic Accounts of those
Participants for whom such contributions were made."
-16-
<PAGE> 17
21.
Subsection 5.4(c) is amended by deleting that portion of the first
sentence thereof that precedes the semicolon and by substituting the following:
"Third, the Matching Contributions for such Plan Year (including
any qualified matching contributions treated as Matching
Contributions) shall be credited to the Matching Accounts of those
Participants for whom such contributions were made."
22.
Subsection 5.4(f) is amended effective January 1, 1995 by deleting
the last sentence thereof and by substituting the following:
"If such forfeited amounts exceed the Matching Contribution such
Plan Year, prior to reduction by the credit for forfeitures, then
such excess amounts shall be allocated among all Active
Participants who are not Highly Compensated Employees on the basis
of Total Compensation for the Plan Year."
23.
Section 5.6 is amended by adding the following subsections (o),
(p), and (q):
"(o) RULES RELATING TO SPECIAL ACCOUNTS FROM THE
TELECHECK PITTSBURGH SAVINGS PLAN. These Special
-17-
<PAGE> 18
Accounts shall be subject to the following additional rules:
(i) These Special Accounts are fully vested and
nonforfeitable.
(ii) These Special Accounts shall be subject to
the Annuity Amount rules.
(iii) Participants may also elect distributions
in the form of
[A] a joint and 100% survivor
annuity with the surviving
spouse or another contingent
annuitant;
[B] a single life annuity with
payments for a period certain of
5 or 15 years;
[C] a single life annuity with an
installment refund feature; and
[D] a fixed period annuity of at
least five years' duration but
not in excess of the life
expectancy of the Participant
and his Beneficiary.
These forms of benefit are available both
with respect to distribution to the
Participant and with respect to any
qualified preretirement survivor annuity;
provided, however, that option [D] above
is not available in the case
-18-
<PAGE> 19
of a qualified preretirement survivor
annuity if the Beneficiary is not the
Participant's spouse.
(p) RULES RELATING TO SPECIAL ACCOUNTS FROM THE
TELECHECK SERVICES, INC. RETIREMENT SAVINGS PLAN. These Special Accounts
shall be subject to the following additional rule:
(i) The Participant may withdraw any amounts
attributable to after-tax contributions and vested
matching contributions.
(q) RULES RELATING TO SPECIAL ACCOUNTS FROM THE GENEX
SERVICES, INC. 401(K) SAVINGS AND PROFIT SHARING PLAN. These Special
Accounts shall be subject to the following additional rules:
(i) Any amounts attributable to matching
contributions with respect to which a Participant made a
special election to have such contributions vest upon the
completion of one year of service under the GENEX
Services, Inc. 401(k) Savings and Profit Sharing Plan
shall continue to be subject to such accelerated vesting
schedule.
(ii) A Participant who has attained age 59-1/2
is entitled to a distribution from his Special Account,
regardless of whether he has terminated employment.
-19-
<PAGE> 20
24.
Subsection 6.2(d) is amended by adding the following paragraph
(11):
"(11) The Plan Administrator shall have the right to use
electronic media to accomplish any or all of its functions under
the Plan."
25.
Subsection 7.1(a) is amended effective January 1, 1995 by adding
the following after the first sentence thereof:
"Notwithstanding the foregoing, effective January 1, 1995, the
amounts held in Profit Sharing Accounts at the time such Accounts
are merged with the Basic Accounts shall be invested in the Fixed
Income Fund and shall thereafter be subject to the investment
direction of Participants as provided under subsection 7.1(c) as
part of the Participants' Basic Accounts."
26.
Paragraph 7.1(b)(ii) is amended effective January 1, 1995 by
changing the name of the investment fund from the "Guaranteed Fund" to the
"Fixed Income Fund."
27.
Paragraph 7.1(b)(iii) is amended effective January 1, 1995 by
changing the name of the investment fund from the "Equity Fund" to the
"Balanced Fund."
-20-
<PAGE> 21
28.
Subsection 7.1(c) is amended effective January 1, 1995 by adding
the following after the second sentence thereof:
"Effective January 1, 1995, the foregoing investment elections and
modifications may be made as of any January 1, April 1, July 1 or
October 1."
29.
Subsection 7.1(c) is further amended effective January 1, 1995 by
deleting the fifth sentence thereof (taking into account the change made by the
preceding paragraph of this amendment) and by substituting the following:
"The Plan Administrator may authorize changes in investment
elections and modifications on dates other than those dates
specified above as special conditions may warrant."
IN WITNESS WHEREOF, the Company has caused this amendment to be
executed by its duly authorized corporate officer and its corporate seal to be
hereto affixed, and the Trustee has executed same under seal and thereby
accepted the Trust the day and year first written above.
THE COMPANY: FIRST FINANCIAL MANAGEMENT
CORPORATION
(Corporate Seal) By: Frank M. Malone
------------------------
Title: Senior Vice President
---------------------
Attest: Barry W. Burt
-----------------
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<PAGE> 22
THE TRUSTEE: WACHOVIA BANK OF GEORGIA, N.A.
(Corporate Seal) By: Peter D.Quinn
-------------
Title: Vice President
--------------
Attest: Vivian Autry
------------
-22-
<PAGE> 1
EXHIBIT 10.3
LEASE
BETWEEN
MACK PARAMUS AFFILIATES, Lessor
-and-
WESTERN UNION FINANCIAL SERVICES, INC., Lessee
Dated: June 30th, 1993
<PAGE> 2
LEASE
MACK PARAMUS AFFILIATES,
As Lessor,
TO
WESTERN UNION FINANCIAL SERVICES, INC.,
As Lessee
PREMISES:
Portions of the Second (2nd),
Third (3rd)
And
Fifth (5th) Floors
At
Mack Centre II,
One Mack Centre Drive,
Paramus, New Jersey
-1-
<PAGE> 3
INDEX
MACK PARAMUS AFFILIATES,
As Lessor,
TO
WESTERN UNION FINANCIAL SERVICES, INC.,
As Lessee
PREMISES:
Portions of the Second (2nd),
Third (3rd)
And
Fifth (5th) Floors
At
Mack Centre II,
One Mack Centre Drive,
Paramus, New Jersey
(All documents are dated as of June 30, 1993
unless otherwise indicated)
1. Lease between Lessor and Lessee.
2. Memorandum of Lease between Lessor and Lessee.
3. Discharge of Memorandum of Lease between Lessor and Lessee (copy only
- originals being held in escrow pursuant to provisions of Escrow
Agreement - Document No. 10 below).
4. Guaranty of Lease by New Valley Corporation ("New Valley").
5. Letter Agreement between Lessor and Lessee relating to possible
relinquishment of portions of the Premises and possible leasing of
additional space.
6. Letter Agreement between Lessor and Lessee relating to repayment of
costs of tenant improvements in the event of default under Lease.
7. Letter Agreement among Lessor, Lessee, New Valley and Saddlemack
Associates, L.P. ("Saddlemack") relating to moving expenses and waiver
of tenant improvement allowance under a previous lease.
8. Surrender and Acceptance among Saddlemack, New Valley, Lessor and
Lessee relating to lease between Saddlemack and New Valley at One Lake
Street, Upper Saddle River, New Jersey and Guaranty of such lease by
Lessee.
9. Release by Saddlemack of Lessee in connection with Guaranty by Lessee
of obligations of New Valley under the Upper Saddle River Lease (copy
only-originals being held in escrow
-2-
<PAGE> 4
<TABLE>
<S> <C>
pursuant to Document No. 10 below until conditions of Surrender and Acceptance (Document No. 8) are met).
10. Escrow Agreement among Lessor, Lessee, New Valley, Saddlemack and Dollinger & Dollinger, P.A. as modified by Extension
(copy only) dated as of August 30, 1993 and Second Extension (copy only) dated as of September 14, 1993.
11. Subordination, Non-Disturbance and Attornment Agreement dated as of September 30, 1993 among The Travelers Insurance
Company, Lessor and Lessee.
12. Subordination, Non-Disturbance and Attornment Agreement dated as of September 30, 1993 among Union Bank of Switzerland,
Lessor and Lessee.
13. Letter dated September 29, 1993 from Union Bank of Switzerland consenting to the execution of the Surrender and Acceptance
(Document No. 8 above) (Copy only).
14. Letter dated September 30, 1993 from Lessor, Lessee, New Valley and Saddlemack to Dollinger & Dollinger, P.A. indicating
satisfaction of conditions for release of documents held under Escrow Agreement (Document No. 10) (Copy only).
15. Resume of Lease.
</TABLE>
-3-
<PAGE> 5
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C> <C>
1. DESCRIPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. BASIC RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
4. USE AND OCCUPANCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
5. CARE AND REPAIR OF PREMISES/ENVIRONMENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
6. ALTERATIONS, ADDITIONS OR IMPROVEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. ACTIVITIES INCREASING FIRE INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8. ABANDONMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
9. ASSIGNMENT AND SUBLEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
10. COMPLIANCE WITH RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
11. DAMAGES TO BUILDING/WAIVER OF SUBROGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
12. EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
13. INSOLVENCY OF LESSEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
14. LESSOR'S REMEDIES ON DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
15. DEFICIENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
16. SUBORDINATION OF LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
17. SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
18. RIGHT TO CURE LESSEE'S/LESSOR'S BREACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
19. MECHANIC'S LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
20. RIGHT TO INSPECT AND REPAIR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
21. SERVICES TO BE PROVIDED BY LESSOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
22. ELECTRICITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
23. ADDITIONAL RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(A) Operating Cost Escalation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(B) Fuel, Utilities and Electric Cost Escalation. . . . . . . . . . . . . . . . . . . . . . . . 17
(C) Tax Escalation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(D) Lease Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(E) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(F) Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(G) Right of Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(H) Occupancy Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
24. INTERRUPTION OF SERVICES OR USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
25. LESSEE'S/LESSOR'S ESTOPPEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
-i-
<PAGE> 6
<TABLE>
<S> <C> <C>
26. HOLDOVER TENANCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
27. LESSOR'S WORK - LESSEE'S DRAWINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
28. RIGHT TO SHOW PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
29. WAIVER OF JURY TRIAL/NON-MANDATORY COUNTERCLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . 22
30. LATE CHARGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
31. NO OTHER REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
32. QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
33. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(A) Lessee's Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(B) Lessor's Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(C) Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
34. RULES OF CONSTRUCTION/APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
35. INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
36. APPLICABILITY TO HEIRS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
37. PARKING SPACES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
38. LESSOR'S EXCULPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
39. BROKER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
40. PERSONAL LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
41. NO OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
42. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(A) Proportionate Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(B) Common Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(C) Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(D) Building Hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(E) Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
43. LEASE COMMENCEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
44. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
45. MORTGAGEE'S NOTICE AND OPPORTUNITY TO CURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
46. INTENTIONALLY OMITTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
47. ACCORD AND SATISFACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
48. EFFECT OF WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
49. NUMBER AND GENDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
50. LESSOR'S RESERVED RIGHT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
51. FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
-ii-
<PAGE> 7
52. CORPORATE AUTHORITY . . . . . . . . . . . . . . . . . . . . . 30
53. GOVERNMENT REQUIREMENTS . . . . . . . . . . . . . . . . . . . 30
54. ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . 31
55. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . 31
56. 24-HOUR ACCESS . . . . . . . . . . . . . . . . . . . . . . . . 31
57. AFTER-HOURS USE . . . . . . . . . . . . . . . . . . . . . . . 31
58. BUILDING NAME . . . . . . . . . . . . . . . . . . . . . . . . 32
59. RIGHT OF FIRST OFFER . . . . . . . . . . . . . . . . . . . . . 32
60. ROOF DISH ANTENNA . . . . . . . . . . . . . . . . . . . . . . 32
61. RENEWAL OPTION . . . . . . . . . . . . . . . . . . . . . . . . 32
62. RECORDING . . . . . . . . . . . . . . . . . . . . . . . . . . 33
63. GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
64. EARLY ACCESS . . . . . . . . . . . . . . . . . . . . . . . . . 34
LIST OF EXHIBITS
----------------
Exhibit A Demised Premises
Exhibit A-1 Office Building Area
Exhibit B Rules & Regulations
Exhibit C Lessor's Workletter
Exhibit D Cleaning
Exhibit E Building Holidays
Exhibit F Guaranty
Exhibit G Certificate of Occupancy
Exhibit H Assigned Parking
Exhibit I Form of Memorandum of Lease
Exhibit J Form of Discharge of Memorandum of
Lease
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<PAGE> 8
LEASE, made the 30th day of June, 1993, between MACK PARAMUS
AFFILIATES, a New Jersey limited partnership, whose address is 370 West Passaic
Street, Rochelle Park, New Jersey 07662 (hereinafter referred to as "Lessor");
and WESTERN UNION FINANCIAL SERVICES, INC., a Delaware corporation, whose
address is One Lake Street, Upper Saddle River, New Jersey 07458 (hereinafter
referred to as "Lessee").
1. DESCRIPTION. Lessor hereby leases to Lessee and Lessee hereby
hires from Lessor, the following space: Approximately 126,785 gross rentable
square feet consisting of approximately 62,000 gross rentable square feet on
the second (2nd) floor, approximately 52,735 gross rentable square feet on the
fifth (5th) floor (hereinafter referred to as "Demised Premises" or "Premises")
approximately as shown on the plan or plans, initialed by the parties hereto,
marked "Exhibit A" and made a part of this Lease, which includes an allocable
share of the Common Facilities, in the building known as Mack Centre II,
located at One Mack Centre Drive, Paramus, New Jersey (hereinafter referred to
as "Building"), which is situated on that certain parcel of land (hereinafter
referred to as "Office Building Area"), as described on Exhibit A-1 attached
hereto and made a part of this Lease, together with the right to use in common
with other leases of the Building, their invitees, customers and employees,
those public areas of the Common Facilities as hereinafter defined.
2. TERM. Subject to the provisions of Section 27 and 43, the Premises
are leased for a term of seven (7) years to commence on December 1, 1993 and to
end at 11:59 p.m. on November 30, 2000 (hereinafter referred to as the "Term"
or "Lease Term").
3. BASIC RENT. The Lessee shall pay to the Lessor during the Term
basic rent in the amount of Seventeen Million One Hundred Seventy-nine Thousand
Three Hundred Sixty-seven and 00/100 ($17,179,367.00) Dollars (hereinafter
referred to as "Term Basic Rent") payable in such coin or currency of the
United States of America as at the time of payment shall be legal tender for
the payment of public and private debts. The Term Basic Rent shall be accrue
as follows:
<TABLE>
<CAPTION>
Annual Monthly
Period Basic Rent Basic Rent
------ ---------- ----------
<S> <C> <C>
Years 1-4 $2,345,522.50 $195,460.20
Year 5-7 $2,599,092.50 $216,591.04
</TABLE>
The aforesaid amounts of Monthly Basic Rent shall be payable in advance on the
first day of each calendar month during the Term, except that a proportionately
lesser sum may be paid for the first and last months of the term of this Lease
if the Lease Term commences, expires or is terminated (except if as a result of
Lessee's default hereunder) on a date other than the first day of the month, in
accordance with the provisions of this Lease herein set forth. Lessee shall
pay Basic Rent, and any Additional rent as hereinafter provided, to Mack
Management Corp., as agent for Lessor, at Lessor's above stated address, or to
such other agent as Lessor may designate in writing, without demand and without
counterclaim, deduction or setoff. As used in this Lease, Basic Rent shall
mean either Term Basic Rent, Annual Basic Rent or Monthly Basic rent as
appropriate.
4. USE AND OCCUPANCY. Lessee, its affiliates and subtenants shall use
and occupy the Premises as general and executive offices purposes and for all
other lawful purposes including, but not limited to, administrative, clerical,
drafting, engineering, legal, professional, purchasing and sales office purpose
and for all activities normally incidental thereto. Lessor represents that the
Certificate of Occupancy attached hereto and
<PAGE> 9
made a part hereof as Exhibit G is current and has not been amended nor, to the
best of Lessor's knowledge, revoked.
5. CARE AND REPAIR OF PREMISES/ENVIRONMENTAL. Lessee covenants to
commit no act of waste and to take good care of the Premises and the fixtures
and appurtenances therein, and shall, in the use and occupancy of the Premises,
comply with all laws, orders and regulations of the federal, state and
municipal governments or any of their departments affecting the Premises
arising out of Lessee's manner of use of the Premises and with any and all
environmental requirements resulting from the Lessee's manner of use of the
Premises; this covenant to survive the expiration or sooner termination of the
Lease. Lessor shall, at Lessee's reasonable expense, make all necessary
repairs to the Premises. Notwithstanding the foregoing, if any repairs or
improvements to the Premises are made necessary in order to comply with laws,
orders and regulations of general application to commercial buildings (as
opposed to any manner of use peculiar to Lessee), then Lessor shall make said
repair and/or improvement, with the cost for same to be included as an
Operating Cost to the extent permitted by Subsection 23(A). Lessor shall make
all necessary repairs to the Common Facilities, including Building Systems
which do not exclusively serve the Demised Premises, and to the parking areas,
if any, the same to be included as an Operating Cost to the extent permitted by
Subsection 23(A), except where the repair has been made necessary by misuse or
neglect by Lessee or Lessee's agents, servants, visitors or licensees, in which
event Lessor shall nevertheless make the repair but Lessee shall pay to Lessor,
as Additional rent, within thirty (30) days of demand, the reasonable costs
therefor. All improvements made by Lessee to the Premises, which are so
attached to the Premises that they cannot be removed without material injury to
the Premises, shall become the property of Lessor upon expiration or sooner
termination of the Lease. Not later than the last day of the Term, Lessee
shall, at Lessee's expense, remove all Lessee's personal property and those
improvements made by Lessee which have not become the property of Lessor,
including trade fixtures, cabinetwork, movable paneling, partitions and the
like; repair all injury done by or in connection with the installation or
removal of said property and improvements; and surrender the Premises in as
good condition as they were at the beginning of the Term, reasonable wear and
damage by fire, the elements, casualty, or other cause not due to the misuse or
neglect by Lessee, Lessee's agents, servants, visitors or licenses excepted.
All other property of Lessee remaining on the Premises after the last day of
the Term of this Lease shall be conclusively deemed abandoned and may be
removed by Lessor, and Lessee shall reimburse Lessor for the actual
out-of-pocket cost of such removal. Lessor may have any such property stored
at Lessee's risk and reasonable expense.
Notwithstanding anything contained herein to the contrary, Lessor
agrees, at its sole cost and expense, and if required by government authority,
to modify the Common Areas of the Building in order to comply with the
Americans with Disabilities Act and the regulations promulgated thereunder, as
the same exists as of the date of this Lease (collectively referred to herein
as "ADA"); and Lessee agrees, if required by governmental authority, that it
shall be reasonable, at its sole cost and expense, for any and all ADA
compliance within the Demised Premises arising out of its manner of use of the
Premises.
Lessee and Lessor acknowledge the existence of environmental laws,
rules and regulations, including but not limited to the provisions of ECRA, as
hereinafter defined. Lessee shall comply with any and all such laws, rules and
regulations. Lessee represents to lessors that Lessee's Standard Industrial
Classification (SIC) Number as designated in the Standard Industrial
Classification Manual prepared by the Office of Management and Budget in the
Executive Office of the President of the United States will not subject the
Premises to ERCA applicability. Any change by Lessee to an operation with a
SIC Number subject to ECRA shall require Lessor's written consent. Any such
proposed change shall be sent in writing to Lessor sixty (60) days prior to the
proposed change. Lessor, at its sole option, may deny consent.
Lessee hereby agrees to execute such documents as Lessor reasonably
deems necessary and to make such applications as Lessor reasonably requires to
assure compliance
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<PAGE> 10
with ECRA. Lessee shall bear all reasonable costs and expenses incurred by
Lessor associated with any required ECRA compliance resulting from Lessee's use
of the Demised Premises including but not limited to state agency fees,
engineering fees, clean-up costs, filing fees and suretyship expenses. As used
in this Lease, ECRA compliance shall include applications for determinations of
nonapplicability by the appropriate governmental authority. The foregoing
undertaking shall survive the termination or sooner expiration of the Lease and
surrender of the Demised Premises and shall also survive sale, or lease or
assignment of the Demised Premises by Lessor. Lessee agrees to indemnify and
hold Lessor harmless from any violation of ECRA occasioned by Lessee's use of
the Demised Premises. The Lessee shall immediately provide the Lessor with
copies of all correspondence, reports, notices, orders, findings, declarations
and other materials pertinent to the Lessee's compliance and the requirements
of the New Jersey Department of Environmental Protection and Energy ("NJDEPE")
under ECRA as they are issued or received by the Lessee.
In the event ECRA compliance becomes necessary due to any action or
inaction on the part of Lessor, including by way of example but not limitation,
a sale of the Building, a change in ownership, initiation of bankruptcy
proceedings, or Lessor's financial reorganization, then Lessor shall be
responsible for the making of all necessary applications and payment of all
application fees related thereto. In all other cases, prior to the expiration
or sooner termination of the Lease Term, in connection with closing,
terminating, or transferring of its operations, Lessee shall be responsible for
making such applications as are required in order to comply with ECRA.
Lessee and Lessor agree not to generate, store, manufacture, refine,
transport, treat, dispose of, or otherwise permit to be present on or about the
Premises, any Hazardous Substances. As used herein, Hazardous Substances shall
be defined as any "hazardous chemical," "hazardous substance" or similar term
as defined in the Comprehensive Environmental Responsibility Compensation and
Liability Act, as amended (42 U.S.C. 9601, et seq.), the New Jersey
Environmental Cleanup Responsibility Act, as amended, N.J.S.A. 13:1K-6 et seq.
("ECRA"), the New Jersey Spill Compensation and Control Act, as amended,
N.J.S.A. 58:10-23.11b, et seq., any rules or regulations promulgated
thereunder, or in any other applicable federal, state or local law, rule or
regulation dealing with environmental protection. It is understood and agreed
that the provisions contained in this Section shall be applicable
notwithstanding the fact that any substance shall not be deemed to be a
Hazardous Substance at the time of its use by the Lessee but shall thereafter
be deemed to be a Hazardous Substance. Notwithstanding anything contained
herein to the contrary, Lessee and Lessor shall be permitted to keep (and in
the case of Lessor, permit to be present at the Building and Office Building
Area) small quantities of normal office supplies which may be included as
Hazardous Substances such as cleaning supplies and copier supplies, provided
the same are properly stored, handled and disposed of in full compliance with
all environmental laws.
Notwithstanding anything contained herein to the contrary, Lessor shall
be responsible for the costs and expenses associated with any asbestos removal
and/or remediation and Hazardous Substances removal only to the extent such
removal and/or remediation is required solely for the purpose of compliance
with federal or state laws of general application and not as a result of the
manner in which Lessee conducts it business or uses its property in the Demised
Premises or any other act or omission by Lessee, or its agents, servants,
employees or contractors within the Demised Premises or the Building,
including, but not limited to, the performance of any construction work by or
for Lessee. Nothing contained herein shall prevent Lessor from receiving
appropriate proportionate share reimbursement from other tenants of the
Building with respect to such compliance with law costs, to the extent Lessor
is permitted to do so pursuant to such other tenants respective leases. Lessor
represents that to the best of its actual knowledge the Building does not
contain any asbestos, other than vinyl asbestos tile.
Lessee agrees to indemnify and hold harmless the Lessor and each
mortgagee of the Premises from and against any and all liabilities, damages,
claims, losses, judgments,
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<PAGE> 11
causes of action, costs and expenses (including the reasonable fees and
expenses of counsel) which may be incurred by the Lessor or any such mortgagee
or threatened against the Lessor or such mortgagee, relating to or arising out
of any breach by Lessee of the undertakings set forth in this Section,
including but not limited to damages, losses and liabilities incurred by Lessor
as a result of Lessor's inability to rent the Demised Premises arising solely
by reason of the breach by Lessee (of the undertakings set forth in this
Section, said indemnity to survive the Lease expiration or sooner termination.
Lessor agrees to indemnify and hold harmless Lessee) from and against any and
all liabilities, damages, claims, losses, judgments, causes of action, costs
and expenses (including the reasonable fees and expenses of counsel) which may
be incurred by Lessee as a result of third-party claims, including without
limitation, claims by employees, agents, contractors and invitees of Lessee, to
the extent related to or arising out of any Hazardous Substances or
environmental condition caused or created by Lessor or determined to have been
in existence at the Demised Premises prior to the Commencement Date of this
Lease, and any and all environmental cleanup costs, administrative and
remediation costs, fines and penalties levied or assessed by the NJDEPE or
other administrative agency having jurisdiction with respect to the Demised
Premises which may be incurred by Lessee as a result of said pre-existing
Hazardous Substances, said pre-existing environmental condition, or Hazardous
Substance or environmental condition caused or created by Lessor.
6. ALTERATIONS, ADDITIONS OR IMPROVEMENTS. Except as hereinafter set
forth, Lessee shall not, without first obtaining the written consent of Lessor,
make any alterations, additions or improvements in, to or about the Premises.
Any request for Lessor's consent with respect to any alterations, additions or
improvements shall require submission of detailed architectural and engineering
plans for Lessor's consent and approval, which consent shall not be
unreasonable withheld or delayed. Notwithstanding anything contained herein to
the contrary, Lessee may, without the need for obtaining Lessor's consent, make
nonstructural alterations and additions within the Premises which do not affect
the Building systems (i.e. heating, ventilating, plumbing, electrical or other
utilities), but Lessee shall, as to said alterations not requiring Lessor's
consent, provide Lessor with as-built plans only to the extent plans were
required by law or if Lessee has otherwise prepared same. Lessor shall have
the right to elect, with respect to those alterations or additions requiring
Lessor's consent, that Lessee remove the same and restore the Premises at the
Lease Term's expiration or sooner termination, said election to be made at the
time Lessor consents (if Lessor shall have consented).
7. ACTIVITIES INCREASING FIRE INSURANCE. Lessee shall not do or
suffer anything to be done on the Premises which will increase the rate of fire
insurance on the Building. Lessor represents that the use of the Premises for
general office use will not, as of the date of this Lease, result in an
increase in the rate of fire insurance on the Building.
8. ABANDONMENT. Lessee shall not, without first obtaining the
written consent of Lessor, abandon the Premises, or allow the Premises to
become vacant or deserted. Notwithstanding the foregoing, Lessor's prior
written consent shall not be required in the event of an abandonment, desertion
or vacation of the Premises so long as Lessee continues to pay the Basic Rent
and Additional Rent, is otherwise in compliance with all of the terms and
provisions of this Lease, and either (i) pays any increase in insurance premiums
as a result of any such conduct or (ii) places and maintains a security guard
at the Premises and complies with any other reasonable requirement of the
applicable insurance company in order to prevent any such increase in insurance
premiums.
9. ASSIGNMENT AND SUBLEASE. Lessee may not mortgage, pledge,
hypothecate, assign, transfer, sublet or otherwise deal with this Lease or the
Premises in any manner except as specifically provided for in this Section 9:
(A) In the event that Lessee desires to sublease the whole or
any portion of the Premises in excess of twenty-five (25%) percent of
the Demised Premises or assign the within Lease to any other party,
Lessee's intent to do
-4-
<PAGE> 12
so ("Proposed Transaction") shall be communicated to Lessor in writing, and,
Lessor shall have the option exercisable in writing to Lessee, within ten (10)
business days of receipt of request therefor from Lessee, to recapture the
portion of the space intended to be sublet or the entire space if the Proposed
Transaction is an assignment or sublet of the whole, said recapture to be for
the duration of the Proposed Transaction, and the within Lessee shall be
released from any and all obligations hereunder for the duration and to the
extent of the Proposed Transaction. In the event Lessor fails to respond to
Lessee within the aforesaid ten (10) day period, Lessee shall notify Lessor of
such failure to respond and if Lessor shall fail to respond within five (5)
days of receipt of such notice, Lessor shall be deemed to have waived its right
of recapture.
(B) In the event that the Lessor elects not to recapture the Lease or
part thereof as the case may be in accordance with 9(A) above, or if the
Proposed Transaction is for twenty-five (25%) percent of the Demised Premises
or less, Lessee may nevertheless assign this Lease or sublet the whole or any
portion of the Premises so offered to Lessor, subject to the Lessor's prior
written consent, which consent shall not be unreasonably withheld or delayed,
and subject to the consent of any mortgagee, trust deed holder or ground
lessor, if required and to be provided within the same time period as Lessor is
required to respond, on the basis of the following terms and conditions.
Lessor shall respond to Lessee's request for consent within ten (10) business
days following receipt of Lessee's notice therefor, failing which Lessee shall
notify Lessor of such failure to respond and if Lessor shall fail to respond
within five (5) days of receipt of said notice, Lessor shall be deemed to have
consented to the assignment or sublet.
(1) The Lessee shall provide to Lessor the name and
address of the assignee or sublessee.
(2) The assignee shall assume, by written
instrument, all of the obligations of this Lease from and
after the effective date of the assignment, and a copy of such
assumption agreement shall be furnished to Lessor within ten
(10) days of its execution. Any sublease shall expressly
acknowledge that said sublessee's rights against the Lessor
shall be no greater than those of the Lessee.
(3) The Lessee and each assignee from and after the
effective date of the assignment shall be and remain liable
for the observance of all the covenants and provisions of this
Lease, including, but not limited to, the payment of Term
Basic Rent reserved herein as and when required to be paid,
through the entire Term of this Lease, as the same may be
renewed, extended or otherwise modified.
(4) The Lessee and any assignee shall promptly pay
to Lessor fifty (50%) percent of any net consideration
received for any assignment or fifty (50%) percent of the net
rent (basic and additional), as and when received in excess of
the Term Basic Rent and Additional Rent required to be paid by
Lessee for the period affected by said assignment or sublease
for the area sublet, computed on the basis of an average
square foot rent for the gross square footage Lessee has
leased. As used herein net consideration and/or net rent
shall mean gross rent (basic or additional rent) or gross
consideration less any reasonable expenses incurred by Lessee
in connection with any assignment
-5-
<PAGE> 13
or subletting (including without limitation, reasonable
brokerage fees, legal fees, advertising costs, and tenant work
or contributions to tenant work), as and when such costs are
paid by Lessee.
(5) In any event, the acceptance by Lessor of any
rent (basic and additional) from the assignee or from any of
the subtenants or the failure of Lessor to insist upon a strict
performance of any of the terms, conditions and covenants
herein shall not release Lessee herein, nor any assignee
assuming this Lease (from and after the effective date of the
assignment), from any and all of the obligations herein during
and for the entire Term of this Lease.
(6) Lessee shall have no claim, and hereby waives the
right to any claim, against Lessor for money damages by reason
of any refusal, withholding or delaying by Lessor of any
consent, and in such event, Lessee's only remedies therefor
shall be an action for specific performance, injunction or
declaratory judgment to enforce any such requirement. Lessor
acknowledges that Lessee may commence such action by means of
an Order to Show Cause before the Superior Court of New
Jersey, in which event Lessor acknowledges Lessee's rights to
an expedited proceeding and to notify Lessor of the
institution of the Order to Show Cause by telephonic means.
Lessor and Lessee further agree that the determination of such
Court shall be conclusive and nonappealable.
(7) Any such sublet or assignment shall not be to any
existing Building tenant if at the time of the proposed sublet
or assignment or at the time of the proposed commencement of
the term of such proposed sublet or assignment Lessor has
contiguous square footage equal in amount to the space
proposed to be sublet or assigned available for leasing within
the Building (or non-contiguous square footage if such
existing Building tenant is willing to accept non-contiguous
space).
(8) Lessee shall not enter into or propose to enter
into any sublease or assignment to any:
(a) government (federal, state or local)
agency, bureau or department;
(b) employment agency;
(c) medical use providing on-site patient
care or counseling;
(d) use providing more than one person for
every 150 gross square feet; or
(e) use not in keeping with the existing
condition of the Building and its occupants.
(C) Any sublet or assignment (i) to an affiliated company or (ii)
in connection with a merger, consolidation, bona-fide sale of Lessee's business
or a division thereof whether pursuant to an asset or stock sale, provided, (in
the case of a stock or asset sale to other than the general public or a class
of
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<PAGE> 14
creditors), this Lease is transferred as part of such stock or asset sale, to a
party or entity acquiring all or substantially all of Lessee's assets or all or
a majority of Lessee's "voting stock" and which party or entity assumes all of
the obligations of this Lease from and after the effective date of the
assignment, shall not be subject to the provisions of Subsections 9(A),
9(B)(4), 9(B)(7) or 9(B)(8) hereof and shall not require Lessor's prior written
consent, but all other provisions of this Section shall apply.
(D) In the event that any or all of Lessee's interest in the Premises
and/or this Lease is transferred by operation of law to any trustee, receiver,
or other representative or agent of Lessee, or to Lessee as a debtor in
possession, and subsequently any or all of Lessee's interest in the Premises
and/or this Lease is offered or to be offered by Lessee or any trustee,
receiver, or other representative or agent of Lessee as to its estate or
property (such person, firm or entity being hereinafter referred to as the
"Grantor"), for assignment, conveyance, lease, or other disposition to a
person, firm or entity other than Lessor (each such transaction being
hereinafter referred to as a "Disposition"), it is agreed that Lessor has and
shall have a right of first refusal to purchase, take, or otherwise acquire,
the same upon the same terms and conditions as the Grantor thereof shall accept
upon such Disposition to such other person, firm, or entity; and as to each
such Disposition the Grantor shall give written notice to Lessor in reasonable
detail of all of the terms and conditions of such Disposition within twenty
(20) days next following its determination to accept the same but prior to
accepting the same, and Grantor shall not make the Disposition until and unless
Lessor has failed or refused to accept such right of first refusal as to the
Disposition, as set forth herein.
Lessor shall have sixty (60) days next following its receipt of the
written notice as to such Disposition in which to exercise the option to
acquire Lessee's interest by such Disposition, and the exercise of the option
by Lessor shall be effected by notice to that effect sent to Grantor; but
nothing herein shall require Lessor to accept a particular Disposition or any
Disposition, nor does the rejection of any one such offer of first refusal
constitute a waiver or release of the obligation of the Grantor to submit other
offers hereunder to Lessor. In the event Lessor accepts such offer of first
refusal, the transaction shall be consummated pursuant to the terms and
conditions of the Disposition described in the notice to Lessor. In the event
Lessor rejects such offer of first refusal, Grantor may consummate the
Disposition with such other person, firm, or entity; but any decrease in price
of more than two (2%) percent of the price sought from Lessor or any change in
the terms of payment for such Disposition shall constitute a new transaction
requiring a further option of first refusal to be given to Lessor hereunder.
(E) Without limiting any of the provisions of Sections 13 and 14, if
pursuant to the Federal Bankruptcy Code (herein the "Code") or any similar law
hereafter enacted having the same general purpose, Lessee is permitted to
assign this Lease notwithstanding the restrictions contained in this Lease,
adequate assurance of future performance by an assignee expressly permitted
under such Code shall be deemed to mean the deposit of cash security in an
amount equal to one (1) year's Annual Basic Rent plus an amount equal to the
Additional Rent for the calendar year preceding the year in which such
assignment is intended to become effective, which deposit shall be held by
Lessor for the balance of the Term, without interest, as security for the full
performance of all of Lessee's obligations under this Lease, to be held and
applied in the manner specified for security in Section 17.
(F) Except as specifically set forth above, no portion of the Demised
Premises or of Lessee's interest in this Lease may be acquired by any other
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<PAGE> 15
person or entity, whether by assignment, mortgage, sublease, transfer,
operation of law or act of the Lessee, nor shall Lessee pledge its
interest in this Lease or in any security deposit required hereunder.
(G) If Lessee is a corporation and if at any time during the
Lease Term the persons owning a majority of its "voting stock" at the
time of the execution of this Lease should cease to own a majority of
such voting stock (except as the result of transfers by bequest or
inheritance), Lessee covenants to notify Lessor of any such transfer
and such transfer shall be deemed an assignment of this Lease. In the
event of such transfer, Lessor may either (a) not unreasonably withhold
or delay its consent thereto or (b) terminate this Lease by notice to
Lessee to be effective ninety (90) days after service. This Section
shall not apply (i) whenever Lessee is a corporation, the outstanding
stock of which is publicly held, or (ii) in connection with any bona
fide transaction whereby (x) all or a majority of the stock of Lessee
is transferred in connection with a financial restructuring of Lessee
or its parent corporation, New Valley Corporation or otherwise;
provided that any such purchaser(s) or transferee(s) thereof (other
than the general public or a class of creditors) shall assume in
writing all of the obligations of this Lease from and after the
effective date of the assignment, or (y) all or substantially all of
the assets of Lessee are sold, including but not limited to the Lease,
and the purchaser or transferee assumes in writing all of the
obligations of this Lease from and after the effective date of the
assignment. For the purposes of this Section 9(G), stock ownership
shall be determined in accordance with the principles set forth in
Section 544 of the Internal Revenue Code of 1986, as amended, to and
including the date of this Lease, and the term "voting stock" shall
refer to shares of stock regularly entitled to vote for the election
of directors of the corporation.
10. COMPLIANCE WITH RULES AND REGULATIONS. Lessee shall observe and
comply with the rules and regulations hereinafter set forth in Exhibit B
attached hereto and made a part hereof and with such further non-discriminatory
reasonable rules and regulations as Lessor may prescribe, on written notice to
Lessee, for the safety, care and cleanliness of the Building and the comfort,
quiet and convenience of other occupants of the Building, provided Lessee's
rights are not diminished or its obligations increased except in a di minimis
manner. Lessee shall not place a load upon any floor of the Demised Premises
exceeding the floor load per square foot area which it was designed to carry
(as more particularly described on Exhibit C) and which is allowed by law.
Lessor reserves the right to reasonably prescribe the weight and position of
all safes, business machines and mechanical equipment to insure the floor load
is not exceeded. Such installations shall be placed and maintained by Lessee,
at Lessee's expense, in settings sufficient, in Lessor's reasonable judgment,
to absorb and prevent vibration, noise and annoyance.
11. DAMAGES TO BUILDING/WAIVER OF SUBROGATION. If the Building is
damaged by fire or any other cause to such extent that the cost of restoration
as reasonably estimated by Lessor, will equal or exceed twenty-five (25%)
percent of the replacement value of the Building (exclusive of foundations)
just prior to the occurrence of the damage, then Lessor may, no later than the
fortieth (40th) day following the damage, give Lessee a notice of election to
terminate this Lease; or if the cost of restoration will equal or exceed fifty
(50%) percent of such replacement value and if the Premises shall not be
reasonably usable for the purpose for which they are leased hereunder, or
should the Demised Premises be so damaged that the same cannot be repaired
within two hundred seventy (270) days from the happening of the casualty [as
reasonably determined by an independent architect or engineer and conveyed by
notice to Lessee within the aforesaid forty (40) day period], then Lessee may,
no later than the fortieth (40th) day following the damage, give Lessor a
notice of election to terminate this Lease. In either said event of election,
this Lease shall be deemed to terminate on the thirtieth (30th) day after the
giving of said notice, and Lessee shall surrender possession of the Premises
within a reasonable time thereafter, and the Term Basic Rent and any Additional
Rent, shall be apportioned as of the date of said surrender and any
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<PAGE> 16
Term Basic Rent or any Additional Rent paid for any period beyond the later of
the thirtieth (30th) day after said notice or the date Lessee surrenders
possession shall be repaid to Lessee, subject to the penultimate paragraph of
this Section 11. If the cost of restoration shall not entitle Lessor to
terminate this Lease, or if despite the cost, Lessor does not elect to
terminate this Lease, Lessor shall restore the Building and the Premises with
reasonable promptness, subject to Force Majeure, as hereinafter defined, and
except as stated above, Lessee shall have no right to terminate this Lease,
unless Lessor shall fail to restore the Building as herein provided. Lessor
need not restore fixtures and improvements owned by Lessee.
Notwithstanding anything contained herein to the contrary, in the
event Lessor shall commence the restoration of the Demised Premises in
accordance with this Section 11, then unless Lessor restores the Premises
within two hundred seventy (270) days from the date of the casualty, as said
period is extended by Force Majeure [but not to exceed an additional ninety
(90) days], Lessee shall have the right to terminate this Lease upon thirty
(30) days' prior notice to Lessor of its intent so to do, which notice shall be
given no earlier than said two hundred seventieth (270th) day as extended by
Force Majeure [but not to exceed an additional ninety (90) days], unless Lessor
completes said restoration within the thirty (30) day period. If the Demised
Premises are substantially destroyed at any time during the last twelve (12)
months of the Term of this Lease or any extension thereof, Lessee may elect to
terminate this Lease on thirty (30) days' prior written notice to Lessor, which
notice must be given within thirty (30) days of the date of the casualty, and
upon the expiration of said thirty (30) day period, this Lease shall thereafter
terminate. Notwithstanding the provisions of this Section or any other
provision of this Lease, Lessor shall not have any obligation whatsoever to
repair, reconstruct, or restore the Premises when the damages resulting from any
casualty covered by the provisions of this Section occur during the last twelve
(12) months of the Term or any extension thereof.
In any case in which use of the Premises is affected by any damage to
the Building, there shall be either an abatement or an equitable reduction in
Term Basic Rent and an equitable reduction in the Base Period Costs as
established in Section 23 depending on the period for which and the extent to
which the Premises are not reasonably usable for the purpose for which they are
leased hereunder. The words "restoration" and "restore" as used in this
Section 11 shall include repairs.
Except as provided in Section 5 hereof, notwithstanding the provisions
of this Section or any other provision of this Lease, in the event of any loss
or damage to the Building, the Premises and/or any contents (herein "property
damage"), each party waives all claims against the other for any such loss or
damage and each party shall look only to any insurance which it has obtained to
protect against such loss (or in the case of Lessee, waives all claims against
any tenant of the Building that has similarly waived claims against such
Lessee), and each party shall obtain, for each policy of such insurance,
provisions waiving any claim against the other party [and against any other
tenant(s) in the Building that has waived subrogation against the Lessee] for
loss or damage within the scope of such insurance.
12. EMINENT DOMAIN. If Lessee's use of the Premises is affected such
that Lessee is unable to use the Demised Premises for the purpose for which it
is leased due to the taking by eminent domain of (a) the Premises or any part
thereof or any estate therein; or (b) any other part of the Building; or (c) a
substantial portion of the parking or permanent denial of adequate access to
the Building; then, in any such event, at Lessee's option, this Lease shall
terminate on the date when title vests pursuant to such taking.
Notwithstanding the foregoing, if Lessor is able to replace those parking
spaces taken so that Lessee shall have the use of a substantial portion of the
parking spaces elsewhere on the Office Building Area or within reasonable
proximity of same, Lessee shall have no option to terminate. The Term Basic
Rent, and any Additional Rent, shall be apportioned as of said termination date
and any Term Basic Rent or Additional Rent paid for any period beyond said date
shall be repaid to Lessee. In the event of a partial taking which does not
effect a termination of this
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<PAGE> 17
Lease but does deprive Lessee of the use of a portion of the Demised Premises,
there shall either be an abatement or an equitable reduction of the Term Basic
Rent, and equitable adjustment reducing the Base Period Costs as hereinafter
defined depending on the period for which and the extent to which the Premises
so taken are not reasonably usable for the purpose for which they are leased
hereunder. Lessee shall not be entitled to any part of the award for such
taking or any payment in lieu thereof, but Lessee may file a separate claim for
any taking of fixtures and improvements owned by Lessee which have not become
Lessor's property, and for moving expenses, provided the same shall in no way
affect or diminish Lessor's award.
13. INSOLVENCY OF LESSEE. Either (a) the appointment of a receiver
to take possession of all or substantially all of the assets of Lessee, or (b)
a general assignment by Lessee for the benefit of creditors, or (c) any action
taken or suffered by Lessee under any insolvency or bankruptcy act, shall
constitute a default of this Lease by Lessee, and Lessor may terminate this
Lease forthwith and upon notice of such termination Lessee's right to
possession of the Demised Premises shall cease, and Lessee shall then quit and
surrender the Premises to Lessor but Lessee shall remain liable as hereinafter
provided in Section 15 hereof.
14. LESSOR'S REMEDIES ON DEFAULT. If Lessee defaults in the payment
of Term Basic Rent, or any Additional Rent, or defaults in the performance of
any of the other covenants and conditions hereof or permits the Premises to
become deserted abandoned or vacated, Lessor may give Lessee notice of such
default, and if Lessee does not cure any Term Basic Rent or Additional Rent
default within five (5) days of the giving of such notice or other default
within thirty (30) days after giving of such notice [or if such other default
is of such nature that it cannot be completely cured within such period, if
Lessee does not commence such curing within such thirty (30) days and
thereafter proceed with reasonable diligence and in good faith to cure such
default], then Lessor may terminate this Lease on not less than ten (10) days'
notice to Lessee, and on the date specified in said notice, Lessee's right to
possession of the Demised Premises shall cease, and Lessee shall then quit and
surrender the Premises to Lessor, but Lessee shall remain liable as hereinafter
provided. If this Lease shall have been so terminated by Lessor pursuant to
Sections 13 or 14 hereof, Lessor may at any time thereafter resume possession
of the Premises by any lawful means and remove Lessee or other occupants and
their effects.
15. DEFICIENCY. In any case where Lessor has recovered possession of
the Premises by reason of Lessee's default, Lessor may, at Lessor's option,
occupy the Premises or cause the Premises to be redecorated, altered, divided,
consolidated with other adjoining premises, or otherwise changed or prepared
reletting, and may relet the Premises or any part thereof as agent of Lessee or
otherwise, for a term or terms to expire prior to, at the same time as, or
subsequent to, the original expiration date of this Lease, at Lessor's option,
and receive Term Basic Rent and Additional Rent therefor. Term Basic Rent and
Additional Rent so received shall be applied first to the payment of such
reasonable expenses as Lessor may have incurred in connection with the recovery
of possession, redecorating, altering, dividing, consolidating with other
adjoining premises, or otherwise changing or preparing for reletting, and the
reletting, including reasonable brokerage and reasonable attorney's fees, and
then to the payment of damages in amounts equal to the Term Basic Rent and
Additional Rent hereunder and to the costs and expenses of performance of the
other covenants of Lessee as herein provided. Lessee agrees, in any such case,
whether or not Lessor has relet, to pay to Lessor damages equal to the Term
Basic Rent and Additional Rent and other sums herein agreed to be paid by
Lessee, in any such case, whether or not Lessor has relet, to pay to Lessor
damages equal to the Term Basic Rent and Additional Rent and other sums herein
agreed to be paid by Lessee, as and when due, less the net proceeds of the
reletting, if Lessee on the several rent days above specified. Lessee shall
not be entitled to any surplus accruing as a result of any such reletting, nor
shall any surplus be applied to offset the damages referred to in the preceding
sentence. In reletting the Premises as aforesaid, Lessor may grant rent
concessions, and Lessee shall not be credited therewith. No such reletting
shall constitute a surrender and acceptance or be deemed evidence thereof. If
Lessor elects, pursuant hereto, actually to occupy and use the Premises or any
part thereof during any part
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<PAGE> 18
of the balance of the Term as originally fixed or since extended, there shall
be allowed against Lessee's obligation for Term Basic Rent and Additional Rent
or damages as herein defined, during the period of Lessor's occupancy, the
reasonable value of such occupancy, not to exceed in any event the Term Basic
Rent and Additional Rent herein reserved and such occupancy shall not be
construed as a release of Lessee's liability hereunder.
Alternatively, in any case where Lessor has recovered
possession of the Premises by reason of Lessee's default, Lessor may at
Lessor's option, and at any time thereafter, and without notice or other action
by Lessor, and without prejudice to any other rights or remedies it might have
hereunder or at law or equity, become entitled to recover from Lessee, as
damages for such breach, in addition to such other sums herein agreed to be
paid by Lessee, to the date or reentry, expiration and/or dispossess, an amount
equal to the difference between the Term Basic Rent and Additional Rent
reserved in this Lease from the date of such default to the date of expiration
of the Term demised and the then fair and reasonable rental value of the
Premises for the same period. Said damages shall become due and payable to
Lessor immediately upon such breach of this Lease and without regard to whether
this Lease be terminated or not, and if this Lease be terminated, without
regard to the manner in which it is terminated. In the computation of such
damages, the difference between any installments of Term Basic Rent and
Additional Rent thereafter becoming due and the fair and reasonable rental
value of the Premises for the period for which such installment was payable
shall be discounted to the date of such default at the rate of not more than
eight (8%) percent per annum.
Lessee hereby waives all right of redemption to which Lessee
or any person under Lessee might be entitled by any law now or hereafter in
force. In addition, in the event of a default which results in the Lessor
recovering possession of the Premises, Lessor will use reasonable efforts to
relet the Premises in order to mitigate its damages provided that Lessor shall
retain the right, in the exercise of its reasonable business judgment, to
approve any tenant and determine the reasonable terms and conditions of any
lease, including, but not limited to, rent and length of term. Notwithstanding
the foregoing, Lessor shall not be obligated to display the Premises to
prospective tenants if Lessor has other premises available in the Building.
However, if prospective tenants do not find such other premises suitable,
Lessor agrees that it will then display the Premises to the prospective
tenants.
Lessor's remedies hereunder are in addition to any remedy
allowed by law.
16. SUBORDINATION OF LEASE. This Lease and any option contained
herein shall, at Lessor's option, or at the option of any holder of any
underlying lease or holder of any first mortgage or first deed of trust, be
subject and subordinate to any such underlying leases and to any such first
mortgage and/or first trust deed which may now or hereafter affect the real
property of which the Premises form a part, and also to all renewals,
modifications, consolidations and replacements of said underlying leases and
said first mortgage or first trust deed. It is hereby understood and agreed
that this Lease shall not be subject and subordinate to any mortgage, deed of
trust or underlying lease which may now or hereafter affect the real property
of which the Demised Premises form a part unless such mortgage, deed of trust
or underlying lease shall include therein a covenant on the part of the holder
thereof or the landlord thereunder (as the case may be) substantially to the
effect that it will not at any time join the Lessee as a party defendant in any
action which may be brought to foreclose said mortgage or deed of trust, or
terminate said underlying lease (as the case may be), or disturb the Lessee's
possession of the Demised Premises, so long as the Lessee is not in default
under any provision of this Lease which continues after notice and the
expiration of any applicable cure period, or provided Lessor obtains, at no
expense to Lessee, a non-disturbance agreement in favor of Lessee from said
mortgagee or holder of any such deed of trust or the landlord thereunder (as
the case may be) providing the above, and provided further that in either event
the Lessee agrees to attorn to said mortgagee or holder of said trust deed or
landlord (as the case may be). Although no instrument or act on the part of
Lessee shall be necessary to effectuate such subordination, Lessee will,
nevertheless, execute and deliver such further instruments confirming such
subordination of
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<PAGE> 19
this Lease as may be desired by the holders of said first mortgage and first
trust deeds or by any of the lessors under such underlying leases. Lessee
hereby appoints Lessor attorney in fact, irrevocably, to execute and deliver
any such instrument for Lessee. If any underlying lease to which this Lease is
subject terminates, Lessee shall, on timely request, attorn to the owner of
the reversion. Lessor represents that other than the first mortgage in effect
as of the date of this Lease with The Travelers Insurance Company, and the
second mortgage in effect as of the date of this Lease with Spear Mortgage
Corporation B.V., Lessor has not entered into any mortgage, deed of trust or
underlying lease affecting the real property of which the Premises forms a part.
17. SECURITY DEPOSIT. In the event any security is required to be
deposited pursuant to the terms of this Lease and in the event Lessor uses any
of said security deposit to cure Lessee's default(s) which continue after any
applicable notice and the expiration of applicable cure periods or meet any of
Lessee's obligations, Lessee covenants to upon demand replace the amount so
utilized. In the event of a bona fide sale, subject to this Lease, Lessor
shall have the right to transfer the security to the vendee, and upon receipt
by such, vendee of the security Lessor shall be considered released by Lessee
from all liability for the return of such security; and Lessee agrees to look
solely to the new lessor for the return of the said security, and it is agreed
that this shall apply to every transfer or assignment made of the security to a
new lessor. The security deposited as provided for herein shall not be
mortgaged, assigned or encumbered by Lessee without the written consent of
Lessor.
In the event of the insolvency of Lessee, or in the event of the
entry of a judgement in bankruptcy in any court against Lessee which is not
discharged within thirty (30) days after entry, or in the event a petition is
filed by or against Lessee under any chapter of the bankruptcy laws of the
State of New Jersey of the United States of America, then in such event, Lessor
may require the Lessee to deposit security in the amount specified in Section
9(E) to adequately assure Lessee's performance of all of its obligations under
this Lease including all payments subsequently accruing. Failure of Lessee to
deposit the security required by this Section within ten (10) days after
Lessor's written demand shall constitute a material breach of this Lease by
Lessee.
18. RIGHT TO CURE LESSEE'S/LESSOR'S BREACH.
(A) If Lessee breaches any covenant or condition of this
Lease which continues after any applicable notice and the expiration of
applicable cure periods, Lessor may, on reasonable notice to Lessee (except
that no notice need be given in case of emergency), cure such breach at the
expense of Lessee and the reasonable actual bona fide amount of all expenses,
including attorney's fees, incurred by Lessor in so doing shall be deemed
Additional Rent payable within thirty (30) days of demand.
(B) If Lessor breaches any covenant or condition of this
Lease, Lessee may, on not less than thirty (30) days notice to Lessor and to
Lessor's mortgagee(s) if Lessee has received notice of said mortgagee(s)'
identity and address (except that no notice need be given in case of
emergency), cure such breach at the expense of Lessor and the reasonable amount
of all expenses, including attorneys' fees, incurred by Lessee in so doing
shall be deemed due and payable on demand.
19. MECHANIC'S LIENS. Lessee shall not do any act, or make any
contract, which may create or be the foundation for any lien or the other
encumbrance upon any interest of Lessor or any ground or underlying lessor
in any portion of the Premises. If, because of any act or omission (or alleged
act or omission) of lessee, any Notice of Intention, mechanic's or other lien,
charge, or order for the payment of money or other encumbrance shell be filed
against Lessor and/or any ground or underlying lessor and/or any portion of the
Premises (whether or not such lien, charge, order, or encumbrance is valid or
enforceable as such), Lessee shall, at its own cost and expense, cause same to
be discharged of record or bonded within twenty (20) days after the filing
thereof; and Lessee shall indemnify and save
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<PAGE> 20
harmless Lessor and all ground and underlying lessor(s) against and from all
reasonable costs; liabilities, suits, penalties, claims, and demands, including
reasonable counsel fees, resulting therefrom. If Lessee fails to comply with
the foregoing provisions, Lessor shall have the option of discharging or
bonding any such lien, charge, order, or encumbrance, and Lessee agrees to
reimburse Lessor, promptly upon demand, for all reasonable costs, expenses and
other sums of money in connection therewith (as additional rental) with
interest at the Prime Rate plus three (3%) percent. As used in this Lease,
Prime Rate shall mean an interest equal to the so-called annual prime rate of
interest established and quoted by Citibank, N.A., New York, New York, from
time to time, as its interest rate charges for unsecured loans to its most
creditworthy corporate customers but in no event greater than the highest
lawful rate from time to time in effect. All materialmen, contractors,
artisans, mechanics, laborers, and any other persons now or hereafter
contracting with Lessee or any contractor or subcontractor of Lessee for the
furnishing of any labor services, materials, supplies, or equipment with
respect to any portion of the Premises, at any time from the date hereof until
the end of the Lease Term, are hereby charged with notice that they look
exclusively to Lessee to obtain payment for same.
20. RIGHT TO INSPECT AND REPAIR. Lessor may enter the Premises but
shall not be obligated to do so (except as required by any provision of this
Lease) at any reasonable time during Building Hours on reasonable notice to
Lessee (except that no notice need be given in case of emergency) for the
purpose of inspection or the making of such repairs, replacement or additions,
in, to, on and about the Premises or the Building, as Lessor deems necessary or
desirable and in connection therewith, Lessor shall take steps to minimize
unreasonable interference with Lessee's use and occupancy of the Demised
Premises, Lessee shall have no claims or cause of action against Lessor by
reason thereof.
21. SERVICES TO BE PROVIDED BY LESSOR. Lessor agrees to furnish,
except on holidays as set forth on Exhibit E attached hereto and made a part
hereof:
(A) The cleaning services, as set forth on Exhibit D attached
hereto and made a part hereof, and subject to the conditions therein
stated. Except as set forth on Exhibit D, Lessee shall pay the cost
of all other cleaning services required by Lessee.
(B) Heating, ventilating and air conditioning (herein
"HVAC"), as appropriate for the season and as set forth on Exhibit C
attached hereto and made a part hereof, together with Common
Facilities lighting and electric energy all during "Building Hours",
as hereinafter defined.
(C) Cold and hot water for drinking and lavatory purposes.
(D) Elevator services during Building Hours [including one
(1) freight elevator]. At least one (1) passenger elevator (located
in the south bank of elevator in the Building) will be available at
all times, subject to Force Majeure.
(E) Restroom supplies and exterior window cleaning pursuant
to Exhibit D.
(F) Lessee's Proportionate Share of listings on the Building
Directory.
The cost of all of the aforesaid service shall be included as a part of
Operating Costs.
22. ELECTRICITY. (A) Lessor shall furnish the Lessor's Standard
Electric Service (as hereinafter defined) which Lessee shall require in the
Demised Premises on a rent inclusion basis. That is, there shall be no charge
to Lessee for such Standard Electric Service by way of measuring the same on
any meter or otherwise, such Standard Electric Service being included in
Lessor's services which are covered by the Term Basic Rent
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<PAGE> 21
reserved hereunder, Lessor shall not be liable in any way to Lessee for any
failure or defect in the supply or character of electric energy furnished to
the Demised Premises by reason of any requirement, act of omission of the
public utility serving the Building with electricity or for any other reason
not attributable to Lessor; Lessor, at Lessee's expense, however, shall furnish
and install all replacement lighting tubes, lamps, bulbs and ballasts required
in the Demised Premises.
(B) The Lessor's Standard Electric Service shall, unless
otherwise provided by agreement in writing between the parties, provide the
electrical current for usual office requirements, equipment and heating,
ventilating and air-conditioning systems, all consistent with the requirements
of Exhibit C attached hereto, from 8:00 a.m. to 6:00 p.m. on every day, Monday
through Friday, and on Saturdays from 8:00 a.m. to 1:00 p.m., but excluding
those holidays set forth on Exhibit E attached hereto. In no event shall
Lessor's Standard Electric Service include electrical current for any computer
room installation. All installations of electrical fixtures, appliances and
equipment within the Demised Premises shall not exceed the electrical capacity
of the Premises as set forth in Exhibit C. Any electricity charges for use of
the HVAC beyond Building Hours by other tenants in the Building or electric
energy utilized by other tenants for any requirements in excess of a 15-amp
line will not be passed on to Lessee. Additionally, Lessee shall not be
required to pay to Lessor the cost of electrical services and energy required
by Lessee in the Premises in excess of Lessor's Standard Electric Service.
(C) In the event that the utility company that furnishes
electric energy to Lessor, for supply to the Lessee, declines to continue
furnishing electric energy to Lessor for Lessor's Standard Electric Service,
Lessor reserves the right to discontinue furnishing electric energy to Lessee
at such time as the utility company servicing the Building arranges for the
distribution of electric service directly to Lessee, upon reasonable notice to
Lessee, and from and after the effective date of such termination, Lessor shall
no longer be obligated to Furnish Lessee with electric energy, provided,
however, that such termination date may be extended for a time reasonably
necessary for Lessee to make arrangement to obtain electric service directly
from the public utility company servicing the Building. If Lessor exercises
such right of termination, this Lease shall remain unaffected thereby and shall
continue in full force and effect; and thereafter Lessee shall diligently
arrange to obtain electric service directly from the utility company servicing
the Building, and may utilize the then existing electric feeders, risers and
wiring serving the Demised Premises to the extent available and safely capable
of being used for such purpose and only to the extent of Lessee's then
authorized connected load. Lessor shall pay those costs required for Lessee's
direct electric service. Commencing with the date when Lessee receives such
direct service, the Annual Basic Rent payable under this Lease shall be reduced
by a sum equal to 39.23(%) percent of Lessor's total cost of electricity for
Lessor's Standard Electric Service, as that is reflected in the Base Utility
and Energy Costs established pursuant to Subsection 23(B) of this Lease, and
the Base Utility and Energy Period Costs shall be reduced by the amount by
which the Annual Basic Rent payable pursuant to this Lease is reduced.
However, to the extent that some of the Lessor's Standard Electric Service
continues to be furnished by Lessor, then the reduction as provided for herein
shall only be adjusted accordingly to reflect said fact.
23. ADDITIONAL RENT. It is expressly agreed that Lessee will pay in addition
to the Term Basic Rent, provided in Section 3 above, an additional rental to
cover Lessee's Proportionate Share, as hereinafter defined, of the increased
cost to Lessor, for each of the categories enumerated herein, over the "Base
Period Costs" (as hereinafter defined) for each of said categories.
Notwithstanding anything contained herein to the contrary, Lessee shall not be
required to pay Lessee's Proportionate Share of the increased cost to Lessor
for Real Estate Taxes over the Base Real Estate Taxes for any period prior to
the commencement of the third (3rd) Lease Year.
(A) Operating Cost Escalation. If during the Lease Term the
Operating Costs paid for the Building in which the Demised Premises
are located and Office Building Area for any Lease Year or
proportionate part thereof if the Lease Term expires prior to the
expiration of a Lease Year
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<PAGE> 22
(herein the "Comparison Period") shall be greater than the Base Operating Costs
(adjusted proportionately if the Comparison Period is less than a Lease Year),
then Lessee shall pay to Lessor, as Additional Rent, its Proportionate Share,
as hereinafter defined, of all such excess Operating Costs. Operating Costs
shall include, by way of illustration and not of limitation: management fees
not to exceed that which is paid for comparable buildings in the area of the
Building not owned by Lessor or its affiliates; labor, including all wages and
salaries, social security taxes, and other taxes which may be levied against
Lessor upon such wages and salaries; supplies; repairs and maintenance;
maintenance and service contracts; painting; wall and window washing; laundry
and towel service; tools and equipment (which are not required to be
capitalized for federal income tax purposes); fire and other insurance; trash
removal; lawn care; snow removal and all other items properly constituting
direct operating costs according to standard accounting practices whether or
not the same shall be enumerated as part of the services or obligations of
Lessor hereunder (hereinafter collectively referred to as the "Operating
Costs"), but not including: depreciation of Building or equipment; interest
on, and amortization of, mortgages or deeds of trust; income or excess profits
taxes; costs of maintaining the Lessor's corporate existence; franchise and
income taxes of Lessor; cost of leasehold/construction improvements for Lessee
or any other tenants, including alterations, painting or decorating of the
Premises and the premises of other tenants, or in preparation for a tenant's
occupancy; salaries and benefits of off-site officers, directors, and executive
personnel, property manager and leasing agents of Lessor or on-site personnel
of Lessor above the level of Building manager; space planning fees;
architectural fees; engineering fees (other than those relating to the general
operation of the Building); real estate commissions; marketing and advertising
expenses incurred in connection with the development and leasing of the
Building or any improvements; any sums paid to a person, firm, corporation or
other entity related to Lessor which is in excess of the amount which would
have been paid in the absence of such relationship; cost of selling,
syndicating, financing, mortgaging, or hypothecating any of Lessor's interest
in the Building or Office Building Area, including, without limitation, any
mortgage or recording tax or expenses, points, commissions, legal fees and
commitment fees; cost associated with the operation of the legal entity which
constitutes Lessor as the same is separate and apart from the cost and
operation of the Building or Office Building Area; cost of disputes between
Lessor and any third party regarding matters not related to the Building or
Office Building Area; the cost of any disputes between Lessor and any employee
or agent of Lessor; cost of defending any lawsuits with mortgagees or ground
lessors; Operating Costs for which Lessor is reimbursed whether by insurance,
by its carriers or otherwise; the cost of any work or service performed for any
tenant (including Lessee) at such tenant's cost; charges (including applicable
taxes) for electricity or any other utilities for which Lessor is entitled to
reimbursement from any tenant other than through Operating Costs; the cost of
any HVAC, janitorial or any other service provided to other tenants in excess
of that required pursuant to this Lease; insurance premiums to the extent
Lessor is entitled to reimbursement from any party other than through the
Operating Costs; any late fees, penalties, interest charges or similar fees
incurred by Lessor; interest, principal payments and other costs of
indebtedness encumbering the Building; any bad debt losses rent losses or
reserves for bad debt or rent losses; costs of any specialty services furnished
by Lessor within the Building unless either (i) requested by Lessee or (ii)
appropriate for the care, maintenance or operation of a first-class office
building; the cost of repairs or restoration necessitated by fire or other
casualty as well as the cost of repair or restoration of the Building following
condemnation; Real Estate Taxes; rent under any ground, overriding and/or
underlying leases; Utility and Energy Costs; the cost of installing, operating
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<PAGE> 23
and maintaining any specialty such as (but not limited to) an observatory,
broadcasting facilities, luncheon club, athletic or recreational club, theater,
(A) rehearsal hall, art gallery or garage; auditing fees other than auditing
fees in connection with the preparation of statement required pursuant to
additional rent or lease escalations provisions; the cost of correcting defects
in the original construction of the Building or in the Building or in the
Building equipment, except that from ordinary wear and tear shall not be deemed
defects for the purpose of this category; cost of any repair made by Lessor to
remedy damage caused by, or resulting from the negligence or willful act of
Lessor, its agents, servants, contractors or employees; any insurance premium
to the extent that Lessor is entitled to be reimbursed therefor by Lessee
pursuant to this Lease or by any other occupant of the Building pursuant to its
lease; the cost of any additions to the Building; legal and other professional
fees and expenses incurred in preparing, negotiating and executing leases,
amendments, terminations and extensions or in resolving any disputes with
tenant or other occupants (unless the resolution of the dispute benefits all
tenants of the Building) or enforcing lease obligations, including, without
limitation, court costs; expenses incurred by Lessor in connection with the
transfer or disposition of the Lessor or Building or any ground, underlying or
overriding lease, including, without limitation, transfer, deed and gains taxes
[except any increase in Real Estate Taxed in connection therewith which may be
included as part of Subsection 23(C) herein]; any compensation paid to clerks,
attendants or other persons, or other costs incurred in commercial concessions
including, without limitation, garage or other parking concessions operated by
Lessor or others on the Office Building Area; bad debt loss, rent loss, or
reserves for either of them; costs for sculpture, paintings or other objects of
art in excess of comparable amounts spent for such items in office buildings of
comparable quality in the competitive area of the Building not owned by Lessor
or its affiliates; fines or penalties incurred by Lessor due to Lessor's
violation of any applicable governmental law, requirement or order; lease
payments for rented equipment, the cost of which equipment constitutes a
capital expenditure if the equipment were purchased; any late fees, penalties,
interest charges or similar fees incurred by Lessor, except in connection with
interest payments related to any payment by Lessor of assessments payable over
the longest time permitted by law; costs associated with the operation of the
business of the entity which constitutes Lessor as the same are distinguished
form the costs of operation of the Building, including, without limitation,
accounting and legal expense, costs of selling, syndicating, financing,
mortgaging or hypothecating Lessor's interest in the Building, costs of any
disputes between Lessor and its employees or building managers; the value or
lost income to Lessor of any office space in the Building which is utilized for
the managing of the Building; and any expenditures required to be capitalized
for federal income tax purposes, unless said expenditures are (i) for the
purpose of reducing Operating Costs within the Building and Office Building
Area (and then only to the extent of the cost savings) or (ii) required under
any governmental law, ordinance or regulation, or amendment, revision or
modification of any existing law, ordinance or regulation enacted after the
date of complete execution and delivery of this Lease, in which event the costs
thereof shall be included. Notwithstanding anything contained herein to the
contrary, the annualized costs of capital expenditures referred to in (i) and
(ii) above shall be included in Operating Costs in the year of installation and
in subsequent years amortized on a straight-line basis over their useful life,
as determined by the Internal Revenue Code of 1986, as amended, and the
applicable regulations thereto, together with interest equal to the Prime Rate
as of the date of installation, with said interest to accrue as of the date of
installation. Additionally, there shall be deducted from Operating Costs all
amounts received by Lessor through proceeds of insurance or condemnation awards
to
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the extent they are compensation for, or reimbursement of, sums previously
including in Operating Expenses hereunder. As used in this Subsection 23(A),
the Base Period Costs for Operating Costs, herein the Base Operating Costs,
shall be those costs incurred during the first Lease Year (hereinafter the
"Base Period").
(B) FUEL, UTILITIES AND ELECTRIC COST ESCALATION (hereinafter "Utility
and Energy Costs"). If during the Lease Term the Utility and Energy Costs,
including any fuel surcharges or adjustments with respect thereto, incurred for
water, sewer, gas, electric and other utilities and heating, ventilating and
air conditioning for the Building to include all leased and leasable areas (not
separately billed or metered within the Building) and Common Facilities
electric, lighting, water, sewer and other utilities for the Building and
Office Building Area, for any Comparison Period shall be greater than the Base
Utility and Energy Costs (adjusted proportionately if the Comparison Period is
less than a Lease Year), then Lessee shall pay to Lessor as Additional Rent and
without regard to the fact that Lessor has agreed to provide said service, its
Proportionate Share, as hereinafter defined, of all such excess Utility and
Energy Costs. As used in this Subsection 23(B), the Base Period Costs for
Fuel, Utilities and Electric, herein the Base Utility and Energy Costs, shall
be determined by multiplying the usage incurred for the Building and Office
Building Area during the first Lease Year (hereinafter the "Base Period") by
the average of the rates in effect (including surcharges and/or adjustments)
during the period from January 1, 1993 through June 30, 1993 (herein "Base
Utility Rate").
(C) TAX ESCALATION. If during the Lease Term the Real Estate Taxes
for the Building and Office Building Area at which the Demised Premises are
located for a Comparison Period shall be greater than the Base Real Estate
Taxes (adjusted proportionately if the Comparison Period is less than a Lease
Year), then Lessee shall pay to Lessor as Additional Rent, its Proportionate
Share, as hereinafter defined, of all such excess Real Estate Taxes.
As used in this Subsection 23(C), the words and terms which
follow mean and include the following:
(i) The Base Period Costs for Real Estate Taxes, herein the
"Base Real Estate Taxes," shall be those Real Estate Taxes assessed
against the Building and Office Building Area during Calendar Year
1992 (hereinafter the "Base Period").
(ii) "Real Estate Taxes" shall mean the property taxes and
assessments imposed upon the Building and Office Building Area, or
upon the Term Basic Rent and Additional Rent, as such, payable to
Lessor, including, but not limited to, real estate, city, county,
village, school and transit taxes, or taxes, assessments or charges
levied, imposed or assessed against the Building and Office Building
Area by any other taxing authority, whether general or specific,
ordinary or extraordinary, foreseen or unforeseen and payable by
Lessor (taking into account any credits, exemptions or deferrals).
If, due to a future change in the method of taxation, any franchise,
income or profit tax shall be levied against Lessor in substitution
for, or in lieu of, or in addition to, any tax which would otherwise
constitute a Real Estate Tax and provided that with respect to any
franchise, income or profit tax which may be levied against Lessor
"in addition to" any tax which would otherwise constitute a Real
Estate Tax, it can be determined from the legislative history that
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<PAGE> 25
such additional tax was intended to be a Real Estate Tax, then such
franchise, income or profit tax and any franchise, income or profit tax
which shall be levied against Lessor "in substitution for, or in lieu
of," any tax which would otherwise constitute a Real Estate Tax, shall
be deemed to a be a Real Estate Tax for the purposes hereof, but
determined as if the Building and Office Building Area were Lessor's
only assets and the income therefrom was Lessor's only income;
conversely, any additional real estate tax hereafter imposed in
substitution for, or in lieu of, any franchise, income or profit tax
(which is not in substitution for, or in lieu of, or in addition to, a
Real Estate Tax as hereinbefore provided) shall not be deemed a Real
Estate Tax for the purposes hereof. Notwithstanding anything contained
herein to the contrary, Lessee shall assume and pay to Lessor in full at
the time of paying the Term Basic Rent any excise, sales, use, gross
receipts or other any taxes (other than a net income or excess profits
tax) which may be imposed on or measured by such Term Basic Rent or
Additional Rent or may be imposed on Lessor or on account of the letting
or which Lessor may be required to pay or collect under any law now in
effect or hereafter enacted, provided that it can be determined from the
legislative history that such taxes are intended to be in substitution
for, or in lieu of, or in addition to any tax which would otherwise
constitute a Real Estate Tax, but determined as if the Building and
Office Building Area were Lessor's only assets and the income therefrom
was Lessor's only income.
Lessee shall pay before delinquency all personal taxes and
assessments on the furniture, fixtures, equipment and other property of Lessee
located in the Premises and on additions and improvements in the Premises
belonging to Lessee.
(D) LEASE YEAR. As used in this Lease, Lease Year shall mean the
twelve (12) month period commencing on the Commencement Date and each twelve
(12) month period thereafter. Once the Base Period Costs are established, in
the event any lease period is less than twelve (12) months, then the Base
Period Costs for the categories listed above shall be adjusted to equal the
proportion that said period bears to twelve (12) months, and Lessee shall pay
to Lessor as Additional Rent for such period, an amount equal to Lessee's
Proportionate Share, as hereinafter defined, of the excess for said period over
the adjusted base with respect to each of the aforesaid categories.
Notwithstanding anything contained herein to the contrary, once the Base Period
Costs are established, Lessor reserves the right to calendarize billing and
payment in order to establish operating consistency.
(E) PAYMENT. At any time, and from time to time, after the
establishment of the Base Period Costs for each of the categories referred to
above, Lessor shall advise Lessee in writing of Lessee's Proportionate Share
with respect to each of the categories as estimated by Lessor in good faith for
the current Lease Year [and for each succeeding Lease Year or proportionate
part thereof if the last period prior to the Lease's termination is less than
twelve (12) months] as then known to Lessor [but such estimates shall not
exceed a ten (10%) percent increase beyond one-twelfth (1/12th) of the prior
year's actual amount payable by Lessee after reconciliation], and thereafter,
Lessee shall pay as Additional Rent, its Proportionate Share, as hereinafter
defined, of the excess of these costs over the Base Period Costs for the then
current period affected by such advise (as same may be periodically revised by
Lessor as additional costs are incurred) in equal monthly
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<PAGE> 26
installments on the first day of each month, such new rates being applied to
any months for which the Monthly Rent shall have already been paid which are
affected by the Operating Cost Escalation and/or Utility and Energy cost
Escalation, and/or Tax Escalation Costs above referred to, as well as the
unexpired months of the current period, the adjustment for the then expired
months to be made at the payment of the next succeeding installment of Monthly
Basic Rent, all subject to final reconciliation at the expiration of each Lease
Year as defined in Subsection 23 (D) hereof [or proportionate part thereof, if
the last period prior to the Lease's termination is less than twelve (12)
months] based upon actual increases, if any. However, at Lessor's option,
Lessor shall be reimbursed by Lessee monthly during the first Lease Year of the
Lease Term for additional Utility and Energy Cost Escalations resulting from an
increase in the monthly rate over the Base Utility Rate.
In the event the last period prior to the Lease's termination
is less than twelve (12) months, the Base Period Costs during said period shall
be proportionately reduced to correspond to the duration of said final period.
If as a result of the final reconciliation at the expiration
of a Lease Year it is determined that Lessee has overpaid Lessor for such Lease
Year by more than five (5%) percent in excess of the estimated amount then, and
in that event, Lessor shall credit Lessee with such overpayment toward the next
installment of Additional Rent due (or shall repay same to Lessee if such
overpayment occurs with respect to the last Lease Year) together with interest
at the then Prime Rate.
(F) BOOKS AND RECORDS. For the protection of Lessee, Lessor shall
maintain books of account which shall be open to Lessee and its
representatives, at all reasonable times so that Lessee can determine such
Operating, Utility, Energy and Tax Costs and that same have, in fact, been
paid. Any disagreement with respect to any one or more of said charges if not
satisfactorily settled between Lessor and Lessee shall be referred by either
party to an independent certified public accountant to be mutually agreed upon,
and if such an accountant cannot be agreed upon, the American Arbitration
Association may be asked by either party to select an arbitrator, whose
decision on the dispute will be final and binding upon both parties, who shall
jointly share any cost of such arbitration. Pending resolution of said
dispute, Lessee shall pay to Lessor without prejudice the sum so billed by
Lessor subject to its ultimate resolution as aforesaid.
(G) RIGHT OF REVIEW. Once Lessor shall have finally determined said
Operating, Utility and Energy or Tax Costs at the expiration of a Lease Year,
then as to the item so established, Lessee shall only be entitled to dispute
said charge as finally established, and Lessee specifically waives any right to
dispute any such charge at the expiration of said one (1) year period.
Notwithstanding the foregoing, if it is determined pursuant to Subsection 23(F)
above that any item(s) was fraudulently included as an Operating, Utility,
Energy or Tax Cost, Lessee shall have the option to audit Lessor's statement
only with respect to the item(s) in question for any Lease years prior thereto
in which such item(s) appear.
(H) OCCUPANCY ADJUSTMENT. If, with respect to Operating Cost
Escalation, as established in Subsection 23(A) hereof, and Utility and Energy
Cost Escalation, as established in Subsection 23(B) hereof, the Building is not
one hundred (100%) occupied during the respective Base Periods, then the Base
Period Costs incurred with respect to said Operating Cost or Utility and Energy
Cost shall be adjusted so as to reflect one hundred (100%) percent
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<PAGE> 27
occupancy during such Base Period. Similarly, if, during any Lease
Year or proportionate part thereof subsequent to the Base Period for
the categories referred to in Subsections 23(A) and (B) above the
Building is less than one hundred (100%) percent occupied during all
or part of the Lease Year involved, the Utility and Energy Cost and
Operating Cost shall not be less than that which would have been
incurred had one hundred (100%) percent of the Building been occupied.
The aforesaid adjustment shall only be made with respect to those items
that are in fact affected by variations in occupancy levels. To the
extent any Operating Cost or Utility and Energy Cost is separately
billed or metered or paid for directly by an Building tenant, to
include but not be limited to Lessee, or for which Lessor receives
reimbursements, said space shall be considered vacant space for
purposes of the aforesaid adjustment.
24. INTERRUPTION OF SERVICES OR USE. Interruption or curtailment of
any service maintained in the Building or at the Office Building Area, if
caused by Force Majeure, as hereinafter defined, shall not entitle Lessee to
any claim against Lessor or to any abatement in Term Basic Rent or Additional
Rent, and shall not constitute a constructive or partial eviction, unless
Lessor fails to take measures as may be reasonable under the circumstances to
restore the service. If Lessor fails to take such measures as may be
reasonable under the circumstances to restore the curtailed service, Lessee's
remedies shall be limited to an equitable abatement of Term Basic Rent and
Additional Rent for the duration of the curtailment beyond said reasonable
period to the extent such Premises are not reasonably usable by Lessee or to a
claim of constructive eviction. If the Premises are rendered untenantable in
whole or in part, for a period of seven (7) consecutive business days, by the
making of repairs, replacements or additions or for any other reason other than
those made with Lessee's consent or caused by misuse or neglect by Lessee, or
Lessee's agents, servants, visitors or licensees, there shall be a
proportionate abatement of Term Basic Rent and Additional Rent from and after
said seventh (7th) consecutive business day and continuing for the period of
such untenantability. In no event shall Lessee be entitled to claim a
constructive eviction from the Premises unless Lessee shall first have notified
Lessor in writing of the condition or conditions giving rise thereto, and, if
the complaints be justified, unless Lessor shall have failed within a
reasonable time after receipt of such notice to remedy, or commence and proceed
with due diligence to remedy, such condition or conditions, all subject to
Force Majeure, as hereinafter defined. The remedies provided for in this
Section 24 (including the remedy of constructive eviction) shall be Lessee's
sole remedies for any interruption of service or use as described above.
Notwithstanding anything contained herein to the contrary, if
Lessee's acts or omissions or those of its agents, servants or employees did
not cause the interruption or curtailment of any such service, and if the
Premises are rendered untenantable as hereinabove described for three (3)
consecutive months, as said date is extended by Force Majeure, Lessee may
cancel this Lease on thirty (30) days prior notice to Lessor, which notice
shall be given on or after said ninetieth (90th) day as extended by Force
Majeure, unless the Premises are rendered tenantable within said thirty (30)
day period.
25. LESSEE'S/LESSOR'S ESTOPPEL. (A) Either party shall, from time
to time, within ten (10) days of the other party's written request, execute,
acknowledge and deliver to the requesting party a written statement certifying
that the Lease is unmodified and in full force and effect, or that the Lease is
in full force and effect as modified and listing the instruments of
modification; the dates to which the Monthly Basic Rent and Additional Rent and
charges have been paid; to the best of the furnishing party's knowledge,
whether or not the requesting party is in default hereunder, and, if so,
specifying the nature of the default; and any other information which the
requesting party shall reasonably request with respect to this Lease.
(B) Either party's failure to deliver such statement to the
requesting party within such time shall be conclusive upon the requesting party
that: (i) this Lease is in full
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<PAGE> 28
force and effect and not modified except as the requesting party may represent;
(ii) not more than one (1) Monthly Installment of Term Basic Rent has been paid
in advance; (iii) there are no such defaults; and (iv) notices to the
furnishing party shall be sent to furnishing party's mailing address as set
forth in this Lease; unless such party delivers a statement to the contrary
within three (3) days following receipt of a notice from the requesting party
that it intends to rely on the information set forth in Subsection (B).
Notwithstanding the presumptions of this Section, the requesting party shall
not be relieved of its obligation to deliver said statement.
It is intended that any such statement delivered pursuant to this Section 25
may be relied on by a prospective purchaser of Lessor's interest or mortgagee
of Lessor's interest or assignee of any mortgage of Lessor's interest, and in
the case of Lessee, by any permitted transferee or party extending lines of
credit to Lessee. Notwithstanding anything contained herein to the contrary,
in no event shall Lessee request the aforesaid estoppel certificate from Lessor
more often than two (2) times in any one Lease Year.
26. HOLDOVER TENANCY. If Lessee holds possession of the Premises
after the Term of this Lease, Lessee shall become a tenant from month to month
under the provisions herein provided, but at a monthly basic rental equal to
the greater of: (i) one hundred twenty-five (125%) percent of the Monthly Basic
Rent payable during the last month of the Term of this Lease or (ii) one
hundred twenty-five (125%) percent of the then fair rental value, and without
the requirement for demand or notice by Lessor to Lessee demanding delivery of
possession of said Premises (but Additional Rent shall continue as provided in
this Lease), which sum shall be payable in advance on the first day of each
month, and such tenancy shall continue until terminated by Lessor, or until
Lessee shall have given to Lessor, at least sixty (60) days prior to the
intended date of termination, a written notice of intent to terminate such
tenancy. The time limitations described in this Section 26 shall not be
subject to extension for Force Majeure. Lessor shall not be liable for claims
related to, or asserted by, the successor tenant, as a result of any holdover
tenancy by Lessee.
27. LESSOR'S WORK - LESSEE'S DRAWINGS. (A) Lessor agrees that, at
Lessor's expense, prior to the commencement of the Term of this Lease, it will
substantially complete all of the work in the Demised Premises in accordance
with Exhibit C attached hereto and made a part hereof. The term "substantially
complete" or "substantial completion" shall be deemed to mean that the work in
question has been completed except for minor punchlist items the non-completion
of which will not interfere with Lessee's use of the Premises for its intended
purposes, which punchlist items Lessor shall complete promptly and with due
diligence. All of said Exhibit C work, whether paid for in whole or in part by
Lessee, is and shall become the Lessor's property on the expiration or sooner
termination of this Lease.
(B) Lessee will supply such drawings and information to Lessor as and
when required as set forth in Exhibit C. Any delay occasioned by Lessee's
failure to supply such drawings and information on or before the dates set
forth in Exhibit C shall not delay the Commencement Date of the Term, as herein
after defined, and Lessee's obligations hereunder and the Commencement Date
shall be the date the Premises would have been delivered to Lessee pursuant to
Section 2, but for Lessee's delay.
(C) Lease Commencement shall occur and the Commencement Date is
defined as that date when Lessor has substantially completed all of the work to
be done by Lessor in accordance with Exhibit C and delivered to Lessee notice
of such anticipated date of substantial completion thirty (30) days prior
thereto, unless Lessor has been precluded from completion said work as a result
of Lessee's acts or omissions including but not limited to its failure to
comply with Subsection 27(B) above. Occupancy by Lessee for the conduct of its
business or the delivery of a Certificate of Occupancy (temporary or permanent)
by Lessor (if required pursuant to local law) shall be prima facie evidence
that Lessor has substantially completed all of the work.
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<PAGE> 29
28. RIGHT TO SHOW PREMISES. Lessor may show the Premises to prospective
purchasers and mortgagees; and, during the twelve (12) months prior to
termination of this Lease, to prospective tenants, during Building Hours on
reasonable notice to Lessee and in a manner so as to minimize interference
with Lessee's use and occupancy of the Demised Premises.
29. WAIVER OF JURY TRIAL/NON-MANDATORY COUNTERCLAIMS. If Lessor
commences any summary proceedings or an action for nonpayment of Term Basic
rent or Additional Rent, Lessee shall not interpose any non-mandatory
counterclaim of any nature or description in any such proceedings or action.
Lessee and Lessor both Waive a trial by jury of any or all issues arising in
any action or proceeding between the parties hereto or their successors under
or connected with this Lease or any of its provisions.
30. LATE CHARGES. Anything in this Lease to the contrary
notwithstanding, at Lessor's option, Lessee shall pay a "Late Charge" of five
(5%) of any installment of Monthly Basic rent or Additional Rent paid more
than five (5) days after the due date thereof, to cover the extra expense
involved in handling delinquent payments. Lessee shall not be charged a Late
Charge the first two (2) time the Lessee is late during each Lease Year of the
Term until Lessee, as to those two (2) times each Lease Year, is given five
(5) days' notice and an opportunity to cure said nonpayment within said notice
period and fails to cure said nonpayment within said time.
31. NO OTHER REPRESENTATIONS. No representations or promises shall be
binding on the parties hereto except those representations and promises
contained herein or in some future writing signed by the party making such
representation(s) or promise(s).
32. QUIET ENJOYMENT. Lessor covenants that if, and so long as, Lessee
pays the Basic Rent, and any additional Rent as herein provided, and performs
the covenants hereof, Lessor shall do nothing to affect Lessee's right to
peaceably and quietly have, hold and enjoy the Premises for the Term herein
mentioned, subject to the provisions of this Lease.
33. INSURANCE.
(A) Lessee's Insurance.
(1) Lessee covenants and represents, said representation being
specifically designed to include Lessor to execute this Lease, that
during the entire Term hereof, at its sole cost and expense, Lessee shall
obtain, maintain and keep in full force and effect the following
insurance:
(a) "All Risk" property insurance against fire, theft,
vandalism, malicious mischief, sprinkler leakage and such additional
perils as are now or hereafter may be, included in a standard
extended coverage endorsement from time to time on general use in
the State of New Jersey upon property of every description and kind
owned by Lessee and or under Lessee's care, custody or control
located in the Building or within the Offices Building Area or for
which Lessee is legally liable or installed by or on behalf of
Lessee, including by way of example and not by way of limitation,
furniture, fixtures, fitting, installations and any other personal
property (but excluding the work done by Lessor in connection with
Exhibit C which is owned by Lessor) in an amount equal to the full
replacement cost thereof.
(b) Comprehensive General Liability Insurance coverage to
include personal injury, bodily injury, broad form
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<PAGE> 30
property damage, operations hazard, owner's protective coverage, blanket
contractual liability, products and completed operations liability naming
Lessor and Lessor's mortgagee or trust deed holder and ground lessors (if
any) as additional named insureds in an amount per occurrence of not less
than Five Million and 00/100 ($5,000,000.00) Dollars combined single limit
bodily injury and property damage. The aforesaid limitations may be
maintained pursuant to combinations of primary and umbrella policies
provided that at least One Million and 00/100 ($1,000,000.00) Dollars shall
be maintained pursuant to the primary policy.
(c) Workers' Compensation insurance in form and amount as
required by law.
(d) Any other form or forms of insurance or any increase in the
limits of any of the aforesaid enumerated coverages or other forms of
insurance as Lessor or the mortgagees or ground lessors (if any) of Lessor
may reasonably require from time to time if in the reasonable opinion of
Lessor or said mortgagees or ground lessors said coverage and/or limits
become less than that commonly maintained by prudent tenants in similar
building in the area by tenants making similar uses.
(2) All insurance policies required pursuant to this
Subsection 33(A) shall be taken out with insurers rated B+Viii by A.M. Best
Company, Oldwick, New Jersey who are licensed to do business in the State of
New Jersey and shall be in standard form utilized in the State of New Jersey.
A certificate evidencing that such insurance is in full force and effect shall
be delivered to Lessor not less than fifteen (15) days prior to the
commencement of the Term hereof. Such insurance policy or certificate will
unequivocally provide an undertaking by the insurers to notify Lessor and the
mortgagees or ground lessors (if any) of Lessor in writing not less than thirty
(30) days prior to any material change, reduction in coverage, cancellation, or
other termination thereof. Notwithstanding anything contained therein to the
contrary, Lessee may provide the aforesaid insurance with a deductible not to
exceed One Hundred Thousand and 00/100 ($100,000.00) Dollars, subject, however,
to reasonable increase commonly maintained by prudent similar tenants in
similar buildings in the area leasing comparable space and making similar uses,
and Lessee shall be deemed a self-insurer with respect to the amount of the
deductible; provided said deductible would not and does not in fact impose
liability on Lessor or any other Building tenant for any reason to include
their negligence, and provided further that Lessee indemnifies and holds Lessor
harmless with respect to any claims against Lessor or any Building tenant as a
result of said deductible to the extent the same would not have existed if the
policies required by Section 33(A) hereof were obtained without a deductible.
The aforesaid insurance may be maintained by a blanket insurance policy
covering other locations.
(3) In the event or damage to or destruction of the Building
and/or Premises entitling Lessor or Lessee to terminate this Lease pursuant to
Section 11 hereof, and if this Lease be so terminated. Lessee will upon receipt
pay to Lessor all of its insurance proceeds, if any, specifically relating to
the leasehold improvements and alterations (but not Lessee's trade fixtures,
equipment, furniture or other personal property of Lessee in the Premises)
which would have become Lessor's property at the Term's expiration or sooner
termination. If the termination of the Lease, at Lessor's election, is due to
damage to the Building, and if the Premises have not been so damaged,
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<PAGE> 31
Lessee will deliver to Lessor, in accordance with the provisions of
this Lease, the improvements and alterations to the Premises which have
become on installation or would have become at the Term's expiration,
Lessor's property.
(4) Lessee agrees that it will not keep or use or
offer for sale (if sales of goods is a permitted use pursuant to
Section 4 hereof) in or upon the Premises or within the Building or
Office Building Area any article which may be prohibited by any
insurance policy in force from time to time covering the Building or
Office Building Area. In the event Lessee's particular manner of
conduct of business in or on the Premises or Building or Office
Building Area, whether or not Lessor has consented to the same,
results in any increase in premiums for insurance carried from time to
time by Lessor with respect to the Building or Office Building Area,
Lessee shall pay such increase in premiums as Additional Rent within
thirty (30) days after being billed therefor by Lessor. In
determining whether increased premiums are a result of Lessee's
particular manner of occupancy a schedule issued by the organization
computing the insurance rate on the Building or Office Building Area
showing the components of such rate shall be conclusive evidence of
the items and charges making up such rate. Lessee shall promptly
comply with all reasonable requirements of the insurance authority or
of any insurer now or hereafter in effect relating to Lessee's use of
the Building, Office Building Area or Premises.
(5) If any insurance policy required to be carried
by Lessor or Lessee shall be canceled or cancellation shall be
threatened or the coverage thereunder reduced or threatened to be
reduced in any way by reason of the use or occupation of the Premises,
Office Building Area or Building or any part thereof by Lessee or any
assignee or sublessee of Lessee or anyone permitted by Lessee to be
upon the Premises, and if Lessee fails to remedy the conditions giving
rise to said cancellation or threatened cancellation or reduction in
coverage on or before the earlier of (i) ten (10) days after notice
thereof from Lessor, or (ii) prior to said cancellation or reduction
becoming effective, Lessee shall be in default hereunder and Lessor
shall have all of the remedies available to Lessor pursuant to this
Lease.
(B) LESSOR'S INSURANCE. Lessor covenants and agrees that
throughout the Term it will insure the Building [excluding any property with
respect to which Lessee is obligated to insure pursuant to Subsection
33(A)(1)(a) above] against damage by fire and standard extended coverage perils
and public liability insurance in such reasonable amounts with such reasonable
deductibles as required by any mortgagee or ground lessor (if any), or if none,
as would be carried by a prudent owner of a similar building in the area but in
no event less than full replacement value of the Building less footings and
foundations. In addition, Lessor shall maintain and keep in force and effect
during the Term, rental income insurance insuring Lessor against abatement or
loss of Term Basic Rent, including items of Additional Rent, in case of fire or
other casualty similarly insured against, in an amount at least equal to the
Term Basic Rent and Additional Rent during, at the minimum, one Calendar Year
hereunder. Lessor may, but shall not be obligated to, take out and carry any
other forms of insurance as it or the mortgagee or ground lessor (if any) of
Lessor may require or reasonably determine available. All insurance carried by
Lessor on the Building or Office Building Area shall be included as an
Operating Expense pursuant to Subsection 23(A). Lessor will not carry
insurance of any kind on Lessee's furniture or furnishings, or on any fixtures,
equipment, appurtenances or improvements (other than those enumerated in
Exhibit C which belong to Lessor) of Lessee under this Lease and Lessor shall
not, except as to the aforesaid Exhibit C items owned by Lessor, be obligated
to repair any damage thereto or replace the same.
(C) WAIVER OF SUBROGATION. Any all risk policy or similar
casualty insurance, which either party obtains in connection with the Premises,
Building or Office
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Building Area shall include a clause of endorsement denying the insurer any
rights of subrogation against the other party (i.e. Lessor or Lessee) for all
perils covered by said policy. Should such waiver not be available must name
the other party as an additional named insured affording it the same coverage
as that provided the party obtaining said coverage.
34. RULES OF CONSTRUCTION/APPLICABLE LAW. Any table of contents,
captions, headings and titles in this Lease are solely for convenience of
reference and shall not affect its interpretation. This Lease shall be
construed without regard to any presumption or other rule requiring
construction against the party causing this Lease to be drafted. If any words
or phrases in this Lease shall have been stricken out or otherwise eliminated,
whether or not any other words or phrases have been added, this Lease shall be
construed as if the words or phrases so stricken out or otherwise eliminated
were never included in this Lease no implication or inference shall be drawn
from the fact that said words or phrases were so stricken out or otherwise
eliminated. Each covenant, agreement, obligation or other provision of this
Lease on Lessee's part to be performed, shall be deemed and construed as a
separate and independent covenant of Lessee, not dependent on any other
provision of this Lease. All terms and words used in this Lease, regardless of
the number of gender in which they are used, shall be deemed to include any
other number and any other gender as the context may require. This Lease
shall be governed and construed in accordance with the laws of the State of New
Jersey (excluding New Jersey conflict of laws) and by the state courts of New
Jersey. If any of the provisions of this Lease, or the application thereof to
any person or circumstances, shall to any extent be invalid or unenforceable,
the remainder of this Lease, or the application of such provision or provisions
to persons or circumstances other than those as to whom or which it is held
invalid or unenforceable, shall not be affected thereby, and every provision of
this Lease shall be valid and enforceable to the fullest extent permitted by
law.
35. INDEMNITY. (A) Lease shall indemnify and save harmless Lessor
and its agents against and from (a) any and all claims (i) arising from (x) the
conduct or management by Lease, its subtenants, licensees, its or their
employees, agents, contractors or invitees on the Demised Premises or of any
business therein, or (y) any work or thing whatsoever done, or any condition
created (other than by Lessor for Lessee's or Lessor's account) in the Demised
Premises or about the Demised Premises (to the extent attributable to Lessee's
acts or omissions or that of its subtenants, licensees, its or their employees,
agents, contractors or invitees) during the Term of this Lease or during the
period of time, if any, prior to the Commencement Date that Lessee may have
been given access to the Demised Premises, or (ii) arising from any negligent
or otherwise wrongful act or omission of Lessee or any of its subtenants or
licensees or its or their employees, agents, contractors or invitees, and (b)
all costs, expenses and liabilities incurred in or in connection with each such
claim or action or proceeding brought thereon. In case any action or
preceeding be brought against Lessor by reason of any such claim, Lessee, upon
notice from Lessor, shall resist and defend such action or proceeding.
(B) Lessor agrees to indemnify and hold Lessee harmless from
the against (a) any and all loss, liability and expense as a result of a claim
against Lessee by any person (other than Lessee, or its subtenants, licenses,
employees, agents, contractors or invitees on the Premises) arising out of
either injury or damage in the Common Facilities caused by Lessor's negligent
or otherwise wrongful act or that of its agents, employees, contractors or
invitees, and (b) all costs, expenses and liabilities incurred in or in
connection with each such claim or action or proceeding brought thereon. In
case any action or proceeding be brought against Lessee by reason of any such
claim, Lessor, upon notice from Lessee, shall resist and defend such action or
proceeding.
(C) The provisions of this Section 35 shall survive the
expiration or sooner termination of this Lease.
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36. APPLICABILITY TO HEIRS AND ASSIGNS. The provisions of this Lease
shall apply to, bind and inure to the benefit of Lessor and Lessee; and their
respective heirs, successors, legal representatives and assigns. It is
understood that the term "Lessor" as used in this Lease means only the owner, a
mortgagee in possession or a term lessee of the Building, so that in the event
of any sale of the Building or of any lease thereof, or if a mortgagee shall
take possession of the Premises, Lessor named herein shall be and hereby is
entirely freed and relieved of all covenants and obligations of Lessor
hereunder accruing thereafter, and it shall be deemed without further agreement
that the purchaser, the term lessee of the Building, or the mortgagee in
possession has assumed and agreed to carry out any and all covenants and
obligations of Lessor hereunder.
37. PARKING SPACES. Lessee's occupancy of the Demised Premises shall
include the use of five hundred seven (507) parking spaces only, fifty (50) of
which Lessor shall assign (as indicated on Exhibit H), and four hundred
fifty-seven (457) of which will be unassigned. Lessee shall, upon request,
promptly furnish to Lessor the license numbers of the cars operated by Lessee
and its subtenants, licensees, invitees, concessionaires, officers and
employees. Lessor reserves the right to reassign assigned parking to
comparable facilities in connection with any modification to the Building or
Office Building Area permitted pursuant to this Lease. Nothing contained
herein shall be deemed to impose any obligation on Lessor to police the parking
area.
38. LESSOR'S EXCULPATION. Lessor shall not be liable to Lessee for
any property damage or business interruption loss suffered by Lessee under any
circumstances, including, but not limited to (i) that arising from the
negligence of Lessor, its agents, servants or invitees, or from defects, errors
or omissions in the construction or design of the Premises and/or the Building
and Office Building Area including the structural and non-structural portions
thereof; or (ii) for loss of or injury to Lessee or to Lessee's property or
that for which Lessee is legally liable from any cause whatsoever, including
but not limited to theft or burglary; or (iii) for that which results from or
is incidental to the furnishing of or failure to furnish or the interruption in
connection with the furnishing of any service which Lessor is obligated to
furnish pursuant to this Lease; or (iv) for that which results from any
inspection, repair, alteration or addition or the failure thereof undertaken or
failed to be undertaken by Lessor; or (v) for any interruption to Lessee's
business, however occurring, but this exculpatory provision shall not preclude
Lessee's remedies as specifically provided for in Section 24 with respect to
interruption of services or use.
39. BROKER. Lessee and Lessor represent and warrant one to the other
than no broker brought about this transaction, and Lessee and Lessor agree to
indemnify and hold each other harmless from any and all claims of any brokers
arising through the applicable indemnitor or in connection with any conduct
which is inconsistent with the representation of the applicable indemnitor.
40. PERSONAL LIABILITY. Notwithstanding anything to the contrary
provided in this Lease, it is specifically understood and agree, such agreement
being a primary consideration for the execution of this Lease by Lessor, that
there shall be absolutely no personal liability on the part of Lessor, its
constituent members, (to include but not be limited to officers, directors,
partners and trustees), their respective successors, assigns or any mortgagee
in possession (for the purposes of this Section, collectively referred to as
"Lessor"), with respect to any of the terms, covenants and conditions of this
Lease, and that Lessee shall look solely to the equity of Lessor in the
Building and the rents, issues, profits and proceeds thereof, for the
satisfaction of each and every remedy of Lessee in the event of any breach by
Lessor of any of the terms, covenants and conditions of this Lease to be
performed by Lessor, such exculpation of liability to be absolute and without
any exceptions whatsoever. A deficit capital account of any portion in Lessor
shall not be deemed an asset or property of Lessor. The foregoing limitation
of liability shall be noted in any judgment secured against Lessor and in the
judgment index.
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41. NO OPTION. The submission of this Lease Agreement for examination
does not constitute a reservation of, or option for, the Premises, and this
Lease Agreement becomes effective as a Lease Agreement only upon execution and
delivery thereof by Lessor and Lessee.
42. DEFINITIONS. (A) PROPORTIONATE SHARE. Lessee's Proportionate
Share, wherever that phrase is used, shall be 39.23(%) percent, which the
parties agree reflects and will be adjusted to reflect the sum arrived at by
dividing the gross square feet of the area rented to Lessee (including an
allocable share of all Common Facilities) as set forth in Section 1 [the
numerator], plus any additional gross square footage leased from time to time
pursuant to this Lease, by 323,200 which is deemed to be the current
approximate total number of gross square feet of the entire Building [the
denominator], measured outside glass line to outside glass line. Lessor shall
have the right to make changes or revisions in the Common Facilities of the
Building so as to provide additional leasing area. Lessor shall also have the
right to construct additional buildings in the Office Building Area for such
purposes as Lessor may deem appropriate and subdivide the lands for that
purpose if necessary, and upon so doing, the Office Building in which the
Demised Premises is located. Notwithstanding anything contained herein to the
contrary, any increases in the total number of gross square footage of the
Building in excess of 323,200 gross rentable square feet whether by
construction of additional buildings in the Office Building Area or otherwise
shall not result in any change in Lessee's Proportionate Share, as hereinabove
stated, and shall not result in any increase in the Operating Costs being
billed to Lessee by reason of such construction or additions or adversely
affect the existing operating condition of the building. If any service
provided for in Subsection 23(A) or any utility provided for in Subsection
23(B) is separately billed or separately metered within the Building, then the
square footage so billed or metered shall be deemed vacant and if applicable
subject to the Occupancy Adjustment set forth in Subsection 23(H). Lessee
understands that as a result of changes in the layout of the Common Facilities
from time to time occurring due to, by way of example and not by way of
limitation, the rearrangement of corridors, the aggregate of all Building
tenant proportionate shares may be equal to, less than or greater than one
hundred (100%) percent.
(B) COMMON FACILITIES. Common Facilities shall include, by
way of example and not by way of limitation, the nonassigned parking areas;
lobby; elevator(s); fire stairs; public hallways; public lavatories; and all
other general Building facilities that service all Building tenants; air
conditioning rooms; fan rooms; janitors' closets; electrical closets; telephone
closets; elevator shafts and machine rooms; flues; stacks; pipe shafts and
vertical ducts with their enclosing walls. Lessee's use of those Common
Facilities not open to all Building tenants is subject to Lessor's consent
which may be denied for any reason but shall not be granted or denied on a
manner so as to discriminate against Lessee. Lessor may at any time close
temporarily any Common Facilities to make repairs of changes therein or to
effect construction, repairs or changes within the Building or Office Building
Area, or to discourage non-tenant parking or to prevent the dedication of the
same, and may do such other acts in and to the Common Facilities as in its
judgement may be desirable to improve the convenience thereof but shall always
in connection therewith endeavor to minimize any inconvenience to Lessee.
(C) FORCE MAJEURE. Force Majeure shall mean and include
those situations beyond either party's control, including by way of example and
not by way of limitation, acts of God; accidents; repairs; strikes; shortages
of labor, supplies or materials; inclement weather; or where applicable, the
passage of time while waiting for an adjustment of insurance proceeds. Any
time limits required to be met by either party hereunder, whether specifically
made subject to Force Majeure or not, except those related to the payment of
Term Basic Rent or Additional Rent or payment of monies by Lessor and except as
to the time periods set forth in Section 26, shall, unless specifically stated
to the contrary elsewhere in this Lease, be automatically extended by the
number of days by which any performance called for is delayed due to Force
Majeure.
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(D) Building Hours. As used in this Lease, the Building Hours
shall be Monday through Friday, 8:00 a.m. to 6:00 p.m., and Saturday, 8:00 a.m.
to 1:00 p.m., excluding those holidays as set forth on Exhibit E attached
hereto and made a part hereof, except that Common Facilities lighting in the
Building and Office Building Area shall be maintained for such additional hours
as, in Lessor's reasonable judgment, is necessary or desirable to insure proper
operation of the Building and Office Building Area.
(E) Additional Rent. As used in this Lease, Additional Rent
shall mean all sums in addition to Term Basic Rent payable by Lessee to Lessor
pursuant to the provisions of this Lease.
43. LEASE COMMENCEMENT.
(A) Notwithstanding anything contained herein to the contrary
and subject to the further provisions of this Section 43, if Lessor, for any
reason whatsoever, including, without limitation, Lessor's negligence, cannot
deliver possession of the Premises as provided for in Subsection 27(A) to
Lessee at the commencement of the agreed Term as set forth in Section 2, this
Lease shall not be void or voidable, nor shall Lessor be liable to Lessee for
any loss or damage resulting therefrom, except as hereinafter specifically set
forth, but in that event, the Lease Term shall be for the full Term as
specified above to commence from and after the date Lessor shall have
substantially completed Lessor's work and delivered possession of the Premises
to Lessee provided Lessor has delivered to Lessee notice of such anticipated
date of substantial completion thirty (30) days prior thereto or from the date
Lessor would have substantially completed Lessor's work and delivered
possession of the Premises to Lessee but for Lessee's failure to timely supply
to Lessor such drawings and/or information required by Exhibit C or for any
other reason attributable to Lessee (herein the "Commencement Date") and to
terminate at 11:59 p.m. of the day immediately preceding said seventh (7th)
anniversary of the Commencement Date, and if requested by Lessor or Lessee,
Lessor and Lessee shall, by a writing signed by the parties, ratify and confirm
said commencement and termination dates. Nothing contained herein shall be
deemed to modify the commencement of the Lease Term as set forth in Section 2
and Lessee's obligations hereunder if Lessor is unable to deliver the Demised
Premises on the Commencement Date by reason of Lessee's failure to comply with
the requirements of Subsection 27(B).
(B) Notwithstanding the foregoing, if the Commencement Date
shall not have occurred (i) on or before December 15, 1993, as said date may
be extended for reasons of (a) those Force Majeure situations applicable only
to the Building and/or Office Building Area or Paramus, New Jersey (the
municipality in which the Building is located), or (b) any other Force Majeure
situation not specific to the Building and/or Office Building Area or Paramus
but in that event said Force Majeure extension shall not exceed three (3)
months; or (ii) on or before the thirtieth (30th) day following Lessor's notice
to Lessee of the anticipated date of substantial completion, and the reason
therefore in either (i) or (ii) has not been as a result of Lessee's acts or
omissions, then, and in such event, as of December 16, 1993 or the thirty-first
(31st) day following Lessor's delivery of such notice [if such thirty-first
(31st) day is on or prior to December 16, 1993], as the case may be, the Basic
Rent due and payable by Lessee's affiliate, New Valley Corporation, pursuant to
that certain Lease Agreement with Lessor's affiliate, Saddlemack Associates
L.P., dated August 18, 1989, as modified August 18, 1989, April 16, 1990 and
September 28, 1991 (herein collectively the "Upper Saddle River Lease"), shall
be adjusted to an amount equal to the Basic Rent due and payable pursuant to
Paragraph 3 of this Lease. Furthermore, if substantial completion has not
occurred by the thirtieth (30th) day following Lessor's notice of the
anticipated date of substantial completion and provided the reason therefor is
not the result of Lessee's acts or omissions, then notwithstanding anything to
the contrary in this Lease or the Surrender and Acceptance Agreement to be
executed simultaneously herewith with respect to the Upper Saddle River Lease,
the Commencement Date shall be ten (10) days after substantial completion and
notice to Lessee thereof. It is hereby understood and agreed that if the
Commencement Date occurs after December 15, 1993 or after the thirtieth (30th)
day
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following Lessor's delivery of such notice [if such thirtieth (30th) day is on
or prior to December 15, 1993] for any reason attributable to Lessee, then and
in that event the Basic Rent due and payable pursuant to the Upper Saddle River
Lease shall remain unchanged and in full force and effect pursuant to its
terms.
(C) In addition to the foregoing and notwithstanding anything
contained in the Lease to contrary, if the Commencement Date shall not have
occurred on or before June 15, 1994, and the reason therefor is solely
attributable to those Force Majeure situations applicable only the Building
and/or Office Building Area or Paramus (the municipality in which the Building
is located) then, and in such event, either party to the Upper Saddle River
Lease may cancel and terminate the Upper Saddle River Lease on one hundred
eighty (180) days' prior written notice to the other party, and unless the
Commencement Date of this Lease occurs within said one hundred eighty (180) day
notice period, the Upper Saddle River Lease and this Lease shall be deemed to
terminate upon the earlier of the expiration of said one hundred eighty (180)
day notice period or Lessee's vacation of the premises covered by the Upper
Saddle River Lease.
If the cancellation option described in this Subparagraph (C)
shall be exercised thereby resulting in the termination of this Lease and the
Upper Saddle River lease, then, and in such event, Lessor shall reimburse
Lessee for the actual reasonable costs incurred by the Lessee under the Upper
Saddle River Lease with respect to moving its business operations from the
Upper Saddle River location, in an amount not to exceed Two Hundred Fifty
Thousand and 00/100 ($250,000.00) Dollars.
Saddlemack Associates L.P. and New Valley Corporation shall
execute this lease for the limited purpose of consenting to those provisions of
this Paragraph 43 which relate to the Upper Saddle River Lease.
44. NOTICES. Any notice by either party to the other shall be in
writing and shall be deemed to have been duly given only if delivered
personally (with a copy by recognized overnight courier service) or if sent by
a recognized overnight courier service or if sent by registered mail or
certified mail in a postpaid envelope addressed, if to Lessee, at the above
described Building to the attention of the President with a copy to the General
Counsel; if to Lessor, at Lessor's address as set forth above, with a copy to
Dollinger & Dollinger, P.A., 365 West Passaic Street, Rochelle Park, New Jersey
07662, Attn: Martin E. Dollinger, Esq.; or, to either at such other address as
Lessee or Lessor, respectively, may designate in writing. Notice shall be
deemed to have been duly given, if delivered personally or by a recognized
overnight courier service, on delivery thereof, and if mailed, upon the tenth
(10th) day after the mailing thereof.
45. MORTGAGEE'S NOTICE AND OPPORTUNITY TO CURE. Lessee agrees to
give any mortgagees and/or trust deed holders, by registered mail, a copy of
any notice of default served upon Lessor, provided that, prior to such notice,
Lessee has been notified in writing (by way of notice of assignment of rents
and leases or otherwise) of the address of such mortgagees and/or trust deed
holders. Lessee further agrees that, if Lessor shall have failed to cure such
default within the time provided for in this Lease, then the mortgagees and/or
trust deed holders shall have an additional thirty (30) days within which to
cure such default, or if such default cannot be cured within that time, then
such additional reasonable time as may be necessary, if within such thirty (30)
days, any mortgagee and/or trust deed holder has commenced and is diligently
pursuing the remedies necessary to cure such default (including but not limited
to commencement of foreclosure proceedings if necessary to effect such cure),
in which event this Lease shall not be terminated while such remedies are being
so diligently pursued.
46. INTENTIONALLY OMITTED.
47. ACCORD AND SATISFACTION. No payment by Lessee or receipt by
Lessor or a lesser amount than the Basic Rent and additional charges payable
hereunder shall be
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deemed to be other than a payment on account of the earliest stipulated Monthly
Basic Rent and Additional Rent, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment for Basic Rent or
Additional Rent be deemed an accord and satisfaction, and Lessor may accept
such check or payment without prejudice to Lessor's right to recover the
balance of such Basic Rent and Additional Rent or pursue any other remedy
provided herein or by law.
48. EFFECT OF WAIVERS. No failure by either party to insist upon the
strict performance of any covenant, agreement, term or condition of this Lease
or to exercise any right or remedy consequent upon a breach thereof, and no
acceptance of full or partial installment of Monthly Basic Rent during the
continuance of any such breach, shall constitute a waiver of any such breach or
of such covenant, agreement, term or condition. No consent or waiver, express
or implied, by either party to or of any breach of any covenant, condition or
duty of the other party shall be construed as a consent or waiver to or of any
other breach of the same or any other covenant, condition or duty, unless in
writing signed by the party to be charged therewith.
49. NUMBER AND GENDER. The terms "Lessor" and "Lessee" wherever used
herein shall be applicable to one or more persons, as the case may be, and the
singular shall include the plural and neuter shall include the masculine and/or
feminine, and if there be more than one, the obligations hereof shall be joint
and several.
50. LESSOR'S RESERVED RIGHT. Lessor and Lessee acknowledge that the
Premises are in a Building which is not open to the general public. Access to
the Building is restricted to Lessor, Lessee, other Building tenants, their
agents, employees and to their invited visitors. In the event of a labor
dispute including a strike, picketing, informational or associational
activities directed at Lessee or any other tenant, Lessor reserves the right
unilaterally to alter Lessee's ingress and egress to the Building or make any
other change in operating conditions to restrict pedestrian, vehicular or
delivery ingress and egress to a particular location; provided, that a
reasonable alternative ingress, egress or operating condition is provided.
51. FEES AND EXPENSES. The parties agree that either party who
brings an action to enforce any obligation of the other party under this Lease
shall, if successful, be entitled to recover from said unsuccessful party all
reasonable attorney's fees and other reasonable expenses incurred in enforcing
said obligation against the unsuccessful party, this to survive the expiration
or sooner termination of this Lease.
52. CORPORATE AUTHORITY. If Lessee is a corporation, Lessee
represents and warrants that this Lease and the undersigned's execution of this
Lease has been duly authorized and approved by the corporation's Board of
Directors. The undersigned officers and representatives of the corporation
executing this Lease on behalf of the corporation represent and warrant that
they are officers of the corporation with authority to execute this Lease on
behalf of the corporation, and within fifteen (15) days of execution hereof,
Lessee will provide Lessor with a corporate resolution confirming the aforesaid.
Lessor represents and warrants to Lessee that the signatory on
behalf of Lessor has the full right, power and authority to act for and on
behalf of Lessor in entering into this Lease.
53. GOVERNMENT REQUIREMENTS. In the event of the imposition of
federal, state, or local governmental control, rules, regulations, or
restrictions on the use or consumption of energy or other utilities or with
respect to any other aspect of this Lease during the Term, both Lessor and
Lessee shall be bound thereby. In the event of a difference in interpretation
of any governmental control, rule, regulation or restriction between Lessor and
Lessee, the interpretation of Lessor shall prevail, and Lessor shall have the
right to enforce compliance, including the right of entry into the Premises to
effect
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compliance, and thereafter Lessee shall have the right to dispute Lessor's
interpretation by submitting the matter to arbitration pursuant to Section 54
herein.
54. ARBITRATION. Whenever in this Lease it is provided that a
dispute shall be determined by arbitration, the arbitration shall be conducted
as provided in this Section. The party desiring such arbitration shall give
written notice to that effect to the other, specifying the dispute to be
arbitrated and the name and address of the person designated to act as the
arbitrator in its behalf. Within ten (10) days after said notice is given, the
other party shall give written notice to the first party, specifying the name
and address of the person designated to act as arbitrator as aforesaid by the
time above specified, then the appointment of the second arbitrator shall be
made in the same manner as hereinafter provided for the appointment of a third
arbitrator. The arbitrators so chosen shall meet within ten (10) days after
the second arbitrator is appointed and within thirty (30) days thereafter shall
decide the dispute.
If within said period they cannot agree on their decision,
they shall appoint a third arbitrator and if they cannot agree on said
appointment, the third arbitrator shall be appointed on their application or on
the application of either party, by the American Arbitration Association in
Somerset, New Jersey. The three arbitrators shall meet and decide the dispute.
A decision in which two of the three arbitrators shall concur shall be binding
and conclusive upon the parties. In designating arbitrators and in deciding
the dispute, the arbitrators shall act in accordance with the rules then in
force of the American Arbitration Association, subject however, to such
limitations as may be placed on them by the provisions of this Lease.
The obligation of Lessor and Lessee to submit a dispute to
arbitration, is limited to disputes arising under those Articles of this Lease
which specifically provide for arbitration.
55. FINANCIAL STATEMENTS. The Lessee agrees, within ninety (90) days
after the end of Lessee's accounting year, at the request of the Lessor, or at
the request of the holder of any first mortgage upon the Demised Premises, to
furnish to the Lessor or mortgagee, a certified balance sheet and profit and
loss statement for the last accounting year, provided that such mortgagee
agrees to keep same confidential and not to disclose any information contained
therein to any other entity, except as may be required by law or in connection
with any litigation between the parties.
56. 24-HOUR ACCESS. Lessee shall be entitled to 24-hour, seven (7)
day a week access to the Demised Premises, but this shall not be construed as
authorization to make use of the Building services beyond the building Hours
without reimbursing the Lessor for the cost thereof in accordance with the
terms of this Lease, and shall be subject to any governmental or municipal laws
and regulations with respect to said 24-hour, seven (7) day a week access.
Lessee shall obtain said access by means of a key or other similar means to be
provided by Lessor to afford access to the Building.
57. AFTER-HOURS USE. Lessee shall be entitled to make use of HVAC
beyond the normal operating hours, at Lessee's sole cost and expense, provided
Lessee shall notify Lessor twenty-four (24) hours prior to such desired
overtime use. It is understood and agreed that Lessee shall pay the sum of
Forty and 00/100 ($40.00) Dollars per hour or part thereof per HVAC zone so
used, plus such additional increase of the aforesaid hourly sum computed by
measuring the increase of the rate in effect (including fuel surcharges or
adjustments) during the month for which such overtime use is requested against
the Base Rate. The Base Rate for purposes hereof shall be the Base Utility
Rate.
In no event shall the Lessee pay less than the sum of Forty
and 00/100 ($40.00) Dollars per hour or part thereof per zone for such
aforesaid overtime use.
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In the event another tenant or tenants requests overtime use from
Lessor to coincide with the zone(s) and period requested by Lessee, Lessor
will, as to said coincidal period, charge Lessee only a pro rata portion of the
overtime charge provided for above, which pro rata share will be determined by
comparing Lessee's total square footage with the total square footage of all
tenants (to include Lessee) having overtime use during such coincidal period
and zone(s).
58. BUILDING NAME. Lessor hereby agrees that, during the Term of
this Lease, provided that the named Lessee herein (Western Union Financial
Services, Inc.) is not in default and is (or an affiliate thereof is) in
possession of at least seventy-five (75%) percent of the Demised Premises
pursuant to this Lease, Lessor shall not name the Building for any competitor
of the named Lessee herein in the financial services or communications business
without Lessee's prior written consent.
59. RIGHT OF FIRST OFFER. Provided Lessee is not in default pursuant
to any of the terms and conditions of this Lease which continued after any
applicable notice and the expiration of any applicable cure period, Lessee
shall have the right of first offer to lease additional space in the Building,
which hereafter may become vacant and available, subject only to whatever prior
rights as to said space exist as the date hereof in connection with the leasing
of space in the Building to the tenants to whom said leases are granted.
Lessor will advise the Lessee of the terms and conditions Lessor would be
willing to accept with respect to said space, and Lessee shall have ten (10)
days within which to respond to Lessor's offer, TIME HEREBY BEING MADE OF THE
ESSENCE. Should Lessee decline Lessor's offer or fail to respond, then, and in
such event, Lessee shall lose the rights of first offer with respect to the
space so offered in the Building, and Lessor shall be free to lease said space
to any other tenant upon substantially the same terms and conditions as that
offered to Lessee. Substantially, as used herein, shall mean terms not
materially different nor financial provisions of more than five (5%) percent
below the financial provisions offered to Lessee by Lessor. If Lessee accepts
Lessor's offer, the additional space shall be leased for the balance of the
Term of this Lease (including any rights of renewal or extensions thereof) and
subject to the terms and provisions of this Lease, except as may otherwise be
set forth in Lessor's offer, and Lessee's Proportionate Share, parking and
Basic Rent shall be modified accordingly.
60. ROOF DISK ANTENNA. Provided Lessor shall have the continued
ability to lawfully allow other tenants or itself the right to install roof top
dish antennas or other communication devices, and provided Lessee, at its sole
cost and expense, obtains all required governmental approvals, and subject to
any prior rights of existing tenants at the Building Lessee may install at its
sole cost and expense one (1) disk antenna and the roof no larger than six (6)
feet in diameter, said antenna not to display any name, logo or identify, and
to be installed in compliance with any and all necessary governmental
approvals. Lessee shall be responsible for any damage caused to Lessor's roof
and indemnifies and holds Lessor harmless from all costs, expenses, and claims
resulting therefrom. Lessor and Lessee shall designate a mutually satisfactory
roof location and installer. Upon the expiration or sooner termination of the
Term of this Lease, Lessee, at Lessor's option, shall or at Lessee's option,
may, remove said antenna and repair all injury done by or in connection with
the installation or removal and said antenna.
61. RENEWAL OPTION. Lessee is hereby granted two (2) options to
renew this Lease upon the following terms and conditions:
(A) At the time of the exercise of each option to renew, the
Lessee shall not be in default in accordance with the terms and
provisions of this Lease which continues after applicable notice and
the expiration of any cure period, and the named Lessee herein
(Western Union Financial Services, Inc.) or its affiliates shall be in
possession of at lest seventy-five (75%) percent of the Premises
demised pursuant to this Lease.
-32-
<PAGE> 40
(B) Notice of the exercise of the first option shall be
sent to the Lessor in writing at least twelve (12) months before the
expiration of the Term of this Lease, and notice of the exercise of
the second option shall be sent to the Lessor in writing at least
twelve (12) months before the expiration of the first renewal option,
TIME HEREBY BEING MADE OF THE ESSENCE with respect to both options.
(C) The renewal terms shall be for the term of three (3)
years each, the first renewal term to commence at the expiration of
the Term of this Lease, and the second renewal term to commence at the
expiration of the first renewal term, and all of the terms and
conditions of this Lease, other than the Basic Rent, shall apply
during any such renewal term.
(D) The Annual Basic Rent to be paid during the first
renewal term shall be the greater of: (i) the sum of Eighteen and
50/100 ($18.50) Dollars per gross rentable square foot of the
Premises; or (ii) the fair rental value per gross rentable square foot
of the Premises at the commencement of the first renewal term. The
Annual Basic Rent to be paid during the second renewal term shall be
the greater of: (i) the fair rental value per gross rentable square
foot of the Premises at the commencement of the second renewal term;
or (ii) the Annual Basic Rent paid during the first renewal term. In
determining the issue of fair rental value, Lessor and Lessee shall
attempt to reach a mutual agreement as to the fair rental value. If
Lessor and Lessee shall be unable to mutually agree as to the fair
rental value, Lessor and Lessee shall each select an independent MAI
appraiser familiar with office buildings located within the Paramus,
New Jersey area comparable to the Building, to determine the fair
rental value. If the two respective appraisals are within five (5%)
percent of each other, then the fair rental value shall be deemed to
be the arithmetic mean of the two appraisals; further provided that if
the two respective appraisals of fair rental value are more than five
(5%) percent apart, the appraisers shall select a third independent
MAI appraiser which appraiser shall be instructed that its
determination as to fair rental value shall be within the
determination of the above- referenced two appraisers or equal to
either one or the other of said two appraisals which third independent
appraisal shall then be binding upon the Lessor and Lessee. The
parties shall share equally in the cost of any such independent
appraiser. Pending resolution of the issue of fair rental value, the
Lessee shall pay Lessor as of commencement of either renewal term, the
Basic Rent payable in the year immediately preceding the commencement
of such renewal term, subject to retroactive adjustment upon final
determination of this issue.
62. RECORDING. Lessor and Lessee agree that either party may
record, at its expense, a memorandum of this Lease, which memorandum shall
include only the description, Term, and renewal options, if any, as more
particularly set forth on Exhibit I attached hereto and made a part hereof, and
the other party will cooperate in the endeavor and execute the memorandum.
Should Lessee seek to record a memorandum prior to the Commencement Date of
this Lease, then, and in such event, it will contemporaneously therewith
deliver a cancellation of the memorandum, in the form and substance attached
hereto as Exhibit J) to be held in escrow by Dollinger & Dollinger, P.A., only
to be recorded in the event of a termination of the Lease or upon the
expiration or sooner termination of the Lease.
63. GUARANTY. This Lease is expressly conditioned on the
execution by NEW VALLEY CORPORATION of the guaranty of the terms, covenants and
conditions in this
-33-
<PAGE> 41
Lease to be performed and observed by Lessee in the form and substance attached
hereto and made a part hereof as Exhibit F.
64. EARLY ACCESS. Lessee shall be permitted to enter upon the
Demised Premises after November 15, 1993 and prior to the Commencement Date of
this Lease for the purpose of moving property into the Demised Premises and for
the purpose of making Lessee's installations therein, all without any
obligation to pay Basic or Additional Rent therefor, provided said work shall
not interfere with or delay the Lessor in completion of the Demised Premises
and provided all of such work shall be performed for the Lessee so as not to
cause or create any labor dispute for Lessor, and further provided that Lessee
complies with all of the other terms and provisions of this Lease, to include
but not be limited to the provisions of Section 33 during such early access
period.
IN WITNESS WHEREOF, The parties hereto have hereunto set their hands
and seals the day and year first above written.
MACK PARAMUS AFFILIATES, Lessor
BY: William L. Mack
-------------------------------------
William L. Mack
WESTERN UNION FINANCIAL SERVICES,
INC., Lessee
BY: John Walters
-------------------------------------
John Walters
SADDLEMACK ASSOCIATES, L.P., only as to
the applicable provisions of Section 43 hereof
BY: William L. Mack
-------------------------------------
William L. Mack
NEW VALLEY CORPORATION, only as to the
applicable provisions of Section 43 hereof
BY: John Walters
-------------------------------------
John Walters
34
<PAGE> 42
FIRST AMENDMENT TO LEASE
THIS AGREEMENT (hereinafter referred to as the "Amendment") made the
3rd day of March 1995, between MACK PARAMUS AFFILIATES, a New Jersey limited
partnership (hereinafter referred to as "Lessor"), whose address is c/o The
Mack Company, 370 West Passaic Street, Rochelle Park, New Jersey 07662; and
WESTERN UNION FINANCIAL SERVICES, INC., a Delaware corporation (hereinafter
referred to as "Lessee"), with offices at One Mack Centre Drive, Paramus, New
Jersey 07652.
W I T N E S S E T H:
WHEREAS, Lessor and Lessee entered into a lease dated June 30, 1993
(hereinafter referred to as the "Lease"), whereby Lessee is presently in
possession of premises containing approximately 126,785 gross rentable square
feet of space consisting of approximately 62,000 gross rentable square feet on
the second (2nd) floor, approximately 52,735 gross rentable square feet on the
third (3rd) floor, and approximately 12,050 gross rentable square feet on the
fifth (5th) floor (hereinafter collectively referred to as the "Premises") in
the building known as Mack Centre II located at One Mack Centre Drive, Paramus,
New Jersey (hereinafter referred to as the "Building"); and
WHEREAS, the parties hereto desire to amend the Lease only in the
respects and on the conditions hereinafter stated.
NOW, THEREFORE, Lessor and Lessee agree as follows:
1. For purposes of this Amendment, capitalized terms shall have the
meanings ascribed to them in the Lease unless otherwise defined herein.
2. Lessor and Lessee hereby confirm that the Commencement Date of the
Term of the Lease was December 1, 1993 and that the expiration date is November
30, 2000.
3. Lessee hereby leases from Lessor, through the remainder of the Lease
Term, additional space consisting of approximately 4,800 gross rentable square
feet on the third (3rd) floor of the Building (hereinafter referred to as the
"Additional Space"), which Additional Space is as shown on Exhibit A attached
hereto and made a part hereof. The term for said Additional Space shall
commence on the date when Lessor substantially completes the work to be
performed pursuant to Exhibit C attached hereto and made a part hereof
("Lessor's Work"), and delivers to Lessee notice of such anticipated date of
substantial completion thirty (30) days prior thereto which date of substantial
completion is anticipated to be August 1, 1995 (hereinafter referred to as the
"Effective Date"). The term "substantially complete" or "substantial
completion" shall be deemed to mean that the work in question has been
completed except for minor punchlist items the non-completion of which will not
interfere with Lessee's use of the Additional Space for its intended purposes,
which punchlist items Lessor shall complete promptly and with due diligence.
Notwithstanding anything contained herein to the contrary, if Lessor, for any
reason whatsoever, cannot deliver possession of the Additional Space to Lessee
by August 1, 1995, this Amendment shall not be void or voidable, nor shall
Lessor be liable to Lessee for any loss or damage resulting therefrom, but in
that event, the Effective Date shall be the date upon which Lessor shall have
substantially completed Lessor's Work and delivered possession of the
Additional Space to Lessee provided Lessor has delivered to Lessee notice of
such anticipated date of substantial completion thirty (30) days prior thereto,
or the date Lessor would have delivered possession of the Additional
1
<PAGE> 43
Space to Lessee but for Lessee's failure to timely supply to Lessor such
drawings and/or information required by Exhibit C or for any other reason
attributable to Lessee. The Additional Space is being leased in its "AS IS"
condition except for Lessor's Work, and from and after the Effective Date
Section 1 of the Lease shall be amended to reflect a total square footage of
131,585 gross rentable square feet.
4. From and after the Effective Date, Section 3 of the Lease shall be
modified to reflect that Lessee shall pay to Lessor during the remainder of the
Term, Basic Rent to accrue as follows:
<TABLE>
<CAPTION>
===================================================================
ANNUAL MONTHLY
PERIOD BASIC RENT BASIC RENT
- -------------------------------------------------------------------
<S> <C> <C>
Effective Date - 11/30/97 $2,434,322.50 $202,860.21
- -------------------------------------------------------------------
12/01/97 - 11/30/00 $2,697,492.50 $224,79l.04
===================================================================
</TABLE>
The aforesaid monthly rents shall be payable in advance on or before the first
day of each and every successive calendar month during the Term hereof, except
that a proportionately lesser sum may be paid for the month in which the
Effective Date occurs and the last month of the Term if the Effective Date is
on a day other than the first day of the month.
5. From and after the Effective Date, Subsections 22(C) and 42(A) of
the Lease shall be amended to reflect that Lessee's Proportionate Share shall
be 40.71(%) percent.
6. From and after the Effective Date, Section 37 of the Lease shall be
amended to reflect that Lessee's total number of parking spaces shall be five
hundred Twenty Six (526), fifty-three (53) of which shall be assigned and four
hundred seventy-three (473) of which shall be unassigned.
7. Lessee and Lessor represent and warrant one to the other that no
broker was instrumental in consummating this Amendment and that Lessor and
Lessee, as the case may be, had no conversations or prior negotiations with any
broker concerning this Amendment. Lessee and Lessor agree to indemnify and hold
each other harmless from any and all claims of brokers and expenses in
connection therewith arising out of or in connection with any conduct
inconsistent with the representations tendered by one to the other herein.
8. This Amendment is expressly conditioned on the execution by First
Financial Management Corporation of an amendment to the Guaranty of Lease dated
June 30, 1993 executed in connection with the Lease, which Guaranty of Lease
was assumed by First Financial Management Corporation in connection with its
acquisition of the stock of Lessee on November 15, 1994, which amendment shall
be in the form attached hereto as Exhibit B, failing which, at Lessor's option,
this Amendment shall be deemed null and void and of no further force or effect.
9. Lessee hereby confirms that Lessee's surrender rights with respect
to the portion of the Premises located on the fifth (5th) floor of the
Building, which rights were granted pursuant to Paragraphs 1 and 3 of a certain
letter agreement dated June 30, 1993 between Lessor and Lessee, have expired
and, therefore, such rights are deemed null and void and of no further force or
effect.
10. Lessee represents, warrants and covenants that to the best of its
knowledge, Lessor is not in default under any of its obligations under the
Lease and that to the best of Lessee's
2
<PAGE> 44
knowledge, Lessee is not in default of any of its obligations under the Lease
and no event has occurred which, with the passage of time or the giving of
notice, or both, would constitute a default by either Lessor or Lessee
thereunder.
11. Except as modified by this Amendment, the Lease and all the
covenants, agreements, terms, provisions and conditions thereof shall remain in
full force and effect and are hereby ratified and affirmed. The covenants,
agreements, terms, provisions and conditions contained in this Amendment shall
bind and inure to the benefit of the parties hereto and their respective
successors and except as otherwise provided in the Lease as modified by this
Amendment, their respective assigns. In the event of any conflict between the
terms contained in this Amendment and the Lease, the terms herein contained
shall supersede and control the obligations and liabilities of the parties.
12. The submission of this Amendment for examination does not
constitute a reservation of, or option for, the Additional Space, and this
Amendment becomes effective only upon execution and delivery thereof by Lessor
and Lessee. Additionally, this Amendment is expressly conditioned upon Lessor
receiving the consent and approval of Lessor's mortgagee to its terms and
provisions. Should said consent not be received, Lessor may, at Lessor's sole
option, cancel this Amendment and thereafter the parties shall have no further
obligations to each other with respect to this Amendment.
IN WITNESS WHEREOF, Lessor and Lessee have hereunto set their hands and
seals as of the date and year first above written, and acknowledge the one to
the other that they possess the requisite authority to enter into this
transaction and to sign this Amendment.
MACK PARAMUS AFFILIATES, Lessor
BY:
-----------------------------
WESTERN UNION FINANCIAL SERVICES,
INC., Lessee
BY:
-----------------------------
3
<PAGE> 1
EXHIBIT 10.8
5251 WESTHEIMER
LEASE AGREEMENT
BY AND BETWEEN
VP 1988-1 LTD., AS LANDLORD
AND
PAYMENT SERVICES COMPANY
AS TENANT
March 27, 1990
<PAGE> 2
LEASE AGREEMENT
This Lease Agreement ("Lease") made and entered into on this 27 day of March,
1990 by and between VPM 1988-1 LTD., a Texas limited partnership (hereinafter
called "Landlord") and PAYMENT SERVICES COMPANY, a Texas corporation
(hereinafter called "Tenant").
WITNESSETH:
I
1.01 Leased Premises.
(a) Subject to and upon the terms hereinafter set
forth,Landlord does hereby lease and demise to Tenant and Tenant does hereby
lease and take from Landlord those certain premises containing approximately
76,481 square feet of "Net Rentable Area" (hereinafter defined), such space
being comprised of approximately 4,171 square feet of Net Rentable Area in the
basement ("Basement") and all of the fifth (5th), seventh (7th), tenth (10th)
and eleventh (11th) floors, in the building (the "Building") currently known as
5251 Westheimer, located on a certain tract or tracts of real property
(collectively the "Land") located at 5251 Westheimer, Houston, Harris County,
Texas and more particularly described on Exhibit "A" attached hereto and made a
part hereof for all purposes. The space hereby leased in the Basement and some
times referred to herein as the "Basement Space", while the other areas in the
Building from time to time subject to this Lease are sometimes herein referred
to as the "Office Space." The Basement Space and the Office Space are
hereinafter called the "Leased Premises" and are outlined on the floor plan
drawings attached hereto as Exhibit "B" and made a part hereof for all
purposes. The Land, Building, the Parking Facilities (hereinafter defined) and
all other improvements now on the Land and those hereafter added thereto or
placed thereon to the extent (but no further) that the same constitute
amenities to the Building or are facilities designed to provide services to the
Building or the tenants there in and all appurtenances to the foregoing are
sometimes collectively referred to herein as the "Property".
(b) The term "Net Rentable Area", as used herein, shall refer
to (i) in the case of an entire floor leased to a single tenant (including, if
applicable, the Basement), the total square footage of all floor area measured
from the inside surface of the exterior glass line or finished outer wall of
the Building to the inside surface of the opposite exterior glass line or
finished outer walls, excluding only Service Areas (defined below) and General
Common Areas (defined below), plus an allocation
<PAGE> 3
(calculated as set forth below) of the square footage of the General Common
Areas, and (ii) in the case of a floor leased to more than one tenant
(including, if applicable, the Basement), the total square footage of all floor
areas within the inside surface of the exterior glass line or finished outer
wall of the Building enclosing the Leased Premises and measured to the
mid-point of demising walls (i.e., walls separating the Leased Premises from
areas leased to or held for lease to other tenants, from On-Floor Common area
(defined below), and from General Common Areas) excluding only Service Areas,
plus an allocation (calculated as set forth below) of the square footage of
the General Common Areas and an allocation (calculated as set forth below) of
the square foot age of the On-Floor Common Areas; no deductions from Net
Rentable Area shall be made for columns or projections necessary to the
Building.
"Service Areas" shall mean the total square footage within (and measured from
the midpoint of the walls enclosing, or from the inside surface of the exterior
glass enclosing, as the case may be) Building stairs, elevator shafts, flues,
vents, stacks, pipe shafts, vertical ducts and other vertical penetrations
(other than those necessary to the Building). Areas for the specific use of
Tenant or other tenants of the Building or installed at the request of Tenant
or other tenants in the Building such as special stairs or elevators are not
included within the definition of Service Areas.
"General Common Areas" shall mean the total square footage of those areas
within (and measured from the midpoint of the walls or from the inside surface
of the exterior glass enclosing) the Building's elevator machine rooms, main
mechanical rooms, electrical rooms,and public lobbies, engineering and cleaning
staging areas, and other areas not leased or held for lease within the Building
but which are reasonably necessary for the proper utilization of the Building
or to provide customary services to the Building. The allocation of the square
footage of the General Common Areas to the areas of the Building leased from
time to time by Tenant shall be equal to the total square footage of the
General Common Areas multiplied by a fraction, the numerator of which is the
Net Rentable Area of the Leased Premises (excluding the allocation of the
General Common Areas) and the denominator of which is the total of all Net
Rentable Area contained in the Building (excluding the allocation of the
General Common Areas).
"On-Floor Common Areas" shall mean the total square footage of those areas
within (and measured from the midpoint of the walls enclosing) public
corridors, elevator foyers, rest rooms, mechanical rooms, janitor closets,
telephone and equipment rooms, and other similar facilities for the use of all
tenants on the floor (including the Basement) on which the Leased Premises are
-2-
<PAGE> 4
located and which are not (other than pursuant to the allocation of On-Floor
Common Areas) included in the leased premises of any other tenant in the
Building. The allocation of the square footage of the On-Floor Common Areas to
the areas of the Building leased from time to time by Tenant shall be equal to
the total On-Floor Common Areas on said floor multiplied by a fraction, the
numerator of which is the Net Rentable Area of the portion of the Leased
premises (excluding the allocations of General Common Areas and On-Floor Common
Areas) located on said floor and the denominator of which is the total of all
Net Rentable Area on said floor (excluding the allocations of General Common
Area and On-Floor Common Areas).
"Parking Facilities" shall mean the parking structure(s) located on the Land
together with any connecting walkways, covered walkways, or other means of
access to the Building, if any, and any additional improvements at any time
related thereto.
(c) The Net Rentable Area in the Leased Premises has been
calculated on the basis of the foregoing definitions and is hereby stipulated
and agreed for all purposes to be 76,481 square feet of Net Rentable Area,
regardless of whether the same is actually more or less. The Building contains
213,539 feet of Net Rentable Area.
1.02 Term: Lease Year.
(a) The term of this Lease for the entire Leased Premises
shall be for an initial term ("Term") of ten (10) Lease Years (hereinafter
defined) after the Commencement Date (hereinafter defined). This Lease shall
be effective from the date of execution; provided, however, that the period
during which rent will accrue shall commence on the date (the "Commencement
Date"), which date shall be the earlier to occur of (i) the date Tenant actually
takes occupancy of any portion of the Leased Premises and commences to conduct
its normal and customary business therefrom or (ii) the Completion Date (as
defined and determined in accordance with the Work Letter Agreement attached
hereto as Exhibit "C") provided, that if (a) the Completion Date has not
occurred by November 1, 1990, (b) the delay in the Completion Date is not a
result of Tenant delay and (c) the Completion Date occurs on or after November
1, 1990 but before January 1, 1991, then Tenant, at its option, may delay the
Commencement Date to the earlier of (x) the date Tenant actually takes occupancy
of any portion of the Leased Premises and commences to conduct its normal and
customary business therefrom or (y) January 1, 1991. Landlord hereby agrees to
keep Tenant advised as to the progress of construction of the Landlord's Work
(as defined in Exhibit C to be constructed pursuant to the work Letter
Agreement and the anticipated Completion Date in respect thereto.
-3-
<PAGE> 5
(b) "Lease Year", as used herein, shall apply to the entire
Leased Premises and shall mean a period of one year during the Term of this
Lease and both the First and Second Renewal Terms (hereinafter defined), with
the first Lease Year beginning on the Commencement Date and continuing until,
but not including, the first annual anniversary of the first Commencement Date.
Each Lease Year shall be the same for the entire Leased Premises.
1.03 Use.
The Leased Premises are to be used and occupied by Tenant (and its
permitted assignees and subtenants) in compliance with all applicable laws,
rules, regulations and ordinances solely for the purpose of office space and
for no other purpose; except that Tenant may maintain in the Leased Premises
employee lunchrooms, coffee bars, dining rooms and kitchens for the foregoing
and areas for storage, computer operations, telecommunications, repair of
Tenant's equipment used with the Leased Premises and other related general
office uses. However, any use of the Leased Premises which will affect the
exterior appearance of the Building, exceeds structural design capacities of
floors or walls, exceeds allocated usage of mechanical, plumbing or electrical
systems of the Building or affects ventilation in the Building must have
Landlord's prior written approval. Further, the Leased Premises shall not be
used for any purpose which would create unreasonable elevator loads or
otherwise unreasonably interfere with Building operations, and Tenant shall not
engage in any activity which is not in keeping with the first class standards
of the Building. Landlord acknowledges that Tenant intends to conduct business
on levels 5 and 7 of the Building on a 24 hour per day basis and will require
off-hour electrical and air handling services, all of which are hereby
consented to by Landlord. Landlord also hereby acknowledges that the conduct of
Tenant's business requires, a large concentration of personnel within limited
office space area and, subject to Tenant's compliance with applicable fire code
and other laws affecting occupancy of the Building, Landlord hereby consents
thereto. The Tenant will not keep any substance or carry on or permit any
operation which might emit dust or offensive odors or conditions into the
Leased Premises or other portions of the Building, or use any apparatus which
might make undue noise or create vibrations in the Building.
1.04 [Intentionally Left Blank].
1.05 Survival.
Any claim, cause of action, liability: or obligation arising under the
Term of this Lease and under the provisions hereof in favor of a party hereto
against or obligating the other party
-4-
<PAGE> 6
hereto shall survive the expiration or any earlier termination of this Lease.
1.06 Condition of Leased Premises.
As a material inducement to the Landlord to execute and deliver this
Lease, the Tenant agrees that it will accept the Leased Premises and leasehold
improvements therein (other than the leasehold improvements to be constructed
by the Landlord in accordance with Exhibit C hereto) in its AS IS condition,
WITH ALL FAULTS; provided, however, no such acceptance by Tenant shall extend
to latent defects. Landlord hereby represents to Tenant that to the best of
Landlord's actual knowledge, the Building and Leased Premises are structurally
fit for use and occupancy, have adequate facilities for the distribution of
utility services, comply with existing applicable law and that the services
described in Section 3.01 will be provided (subject to the provisions thereof)
in accordance with the terms of this Lease. Except for the representations by
Landlord in the immediately preceding sentence hereof, Tenant acknowledges that
neither Landlord nor any of its purported representatives or agents has made
(and except as noted above Landlord hereby specifically disclaims any and
all) representations and warranties of any kind or character as to the physical
condition of the Leased Premises (other than the leasehold improvements to be
constructed by the Landlord in accordance with Exhibit C hereto), either
express or implied, including without limitation, warranties of fitness for any
purposes or any particular use or commercial habitability. Tenant acknowledges
that Landlord does not warrant that the Leased Premises or the Building are
free from asbestos or asbestos containing material or from any other hazardous
materials or substances (as defined in Section 4.05(b) below). Tenant
acknowledges that it has been provided a copy of the most recent environmental
engineering report on the Building prepared by McClelland Management
Services (together with a copy of the supplement thereto dated March 9, 1990)
which reports (the "McClelland Reports") reflect the existence of nominal
amounts of asbestos in the Building. Landlord has advised Tenant that Landlord
intends to proceed with diligence in removing from the Building the asbestos
identified in the McClelland Reports in accordance with the abatement
procedures recommended therein and, upon completion of such abatement, to cause
a subsequent update of the McClelland Reports to be prepared and a copy thereof
provided to Tenant. Tenant agrees that the existence of asbestos of the type
and nature of that reflected in the McClelland Reports in its present form in
the Building shall not constitute an eviction, actual or constructive, of
Tenant or entitle Tenant to offset against its obligations hereunder; provided,
however, if subsequent to the date hereof (i) hazardous materials or substances
of any kind are brought into the Property through no act or omission of Tenant,
its agents, contractors or
-5-
<PAGE> 7
employees, or hazardous materials or substances are found to exist in the
Building or (ii) the form of the asbestos existing in the Building as of the
date hereof is changed through no act of Tenant, its agents, contractors or
employee, such that, in either case, the same are of the nature and quantity
that they constitute a present threat to the health of Tenant's employees, as
determined by or set forth in standards promulgated or adopted by the city of
Houston, State of Texas or other health or governmental officials with
jurisdiction over the same, or otherwise render the Leased Premises unusable in
substantially the same manner as prior to the discovery of such hazardous
material or substance, then Base Rental and other rentals due under this Lease
shall abate commencing five (5) business days after the date such materials are
determined to constitute a present threat or the Leased Premises have been
rendered unusable to the extent and in the proportion that the Leased Premises
are unusable in substantially the same manner prior to the discovery until they
are again usable. Moreover, if Landlord is unable to remedy the same during the
Environmental Cure Period (as hereinafter defined), Tenant shall have the right
(in addition to its right to abate rent as described above), to terminate this
Lease by providing written notice to Landlord to such effect within thirty (30)
days after the expiration of the Environmental Cure Period. As used herein, the
term "Environmental Cure Period" shall mean a period of sixty (60) days
commencing on the date Landlord receives notice of such hazardous material or
substance, or such longer period (not to exceed one year) as may be reasonably
required to remedy such condition provided that Landlord commences such
remedial efforts within said sixty (60) day period and thereafter diligently
prosecutes the same to completion. Tenant shall notify Landlord of the
existence of such hazardous material or substance within thirty (30) days after
Tenant becomes aware of such condition.
II
2.01 Rental Payments.
(a) Commencing on the Commencement Date, and continuing
thereafter throughout the full Term of this Lease, Tenant hereby agrees to pay
the Base Rental (defined below) in accordance with this Section 2.01 and
Section 2.02, and Tenant's Forecast Additional Rental (defined below) and
Tenant's Additional Rental Adjustment (defined below) in accordance with this
Section 2.01 and Section 2.03. The Base Rental and Tenant's Forecast Additional
Rental shall be due and payable in equal monthly installments on the first day
of each calendar month during the Term of this Lease and any extensions or
renewals hereof, and Tenant hereby agrees to pay such rent to Landlord at
Landlord's address as provided herein (or such other address in the continental
United States as may be designated by Landlord from time to time) in advance.
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<PAGE> 8
(b) If the Commencement Date is other than the first day of a
calendar month or if this Lease expires on other than the last day of a
calendar month, then the installments of Base Rental, Tenant's Forecast
Additional Rental and Tenant's Additional Rental for such month or months shall
be prorated and the installment or installments so prorated shall be paid in
advance. Said installments for such prorated month or months shall be
calculated by multiplying the monthly amounts therefor otherwise due hereunder
by a fraction, the numerator of which shall be the number of days of the Term
of this Lease occurring during said commencement or expiration month, as the
case may be, and the denominator of which shall be thirty (30). If the Term
expires on other than the first day of a calendar year, Tenant's Forecast
Additional Rental and Tenant's Additional Rental shall be prorated for such
expiration year by multiplying Tenant's Forecast Additional Rental and Tenant's
Additional Rental by a fraction, the numerator of which shall be the number of
whole and partial months of the Term during the expiration year and the
denominator of which shall be twelve (12). In such event, the calculation
described in Section 2.03(d) shall be made as soon as possible after the
termination of this Lease. Landlord and Tenant hereby agree that the provisions
of this Section 2.01(b) shall survive the expiration or termination of this
Lease.
(c) Tenant agrees to pay all rent and other sums of money as
shall become due from and payable by Tenant to Landlord under this Lease at the
times and in the manner provided in this Lease, without, except as expressly
otherwise provided for in this Lease, abatement, demand, set-off or
counterclaim. All rent and other sums of whatever nature owed by Tenant to
Landlord under this Lease which are not paid within five (5) business days
following the date due shall bear interest from the date due thereof until paid
at the maximum non-usurious interest rate per annum allowed by applicable law
(or if there is no maximum rate, then 18% per annum).
2.02 Base Rental.
As used herein, "Base Rental" shall mean an annual amount equal to
the product of the yearly rate times the number of square feet of Net Rentable
Area of the Leased Premises, as such dollar amount may be adjusted pursuant to
the terms of this Lease. Subject to the other provisions of this Lease, for
each of the Lease Years described in Column A below, Tenant shall pay Base
Rental for each square foot of Net Rentable Area within the Basement Space or
the Office Space, as the case may be, the amount set forth opposite in Column B
and Column C, as the case may be, below:
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<PAGE> 9
<TABLE>
<CAPTION>
Column A Column B Column C
-------- -------- --------
(Lease Years) (Base Rental per square (Base Rental per square
foot of Net Rentable foot of Net Rentable
Area in Office Space) Area in Basement Space)
<S> <C> <C>
1 1990/91 $ 6.35 $ 7.00
2 1991/92 6.85 7.00
3 1992/93 16.00 7.00
4 1993/94 17.39 7.00
5 1994/95 19.63 7.00
6 1995/96 20.63 11.00
7 1996/97 21.63 11.00
8 1997/98 22.63 11.00
9 1998/99 23.63 11.00
10 1999/2000 23.63 11.00
</TABLE>
2.03 Additional rental.
(a) Commencing with calendar year 1991 and continuing
thereafter for each calendar year during the Term and any renewals thereof,
Landlord shall present to Tenant not less than forty-five (45) days prior to the
beginning of said calendar year a statement of Tenant's Forecast Additional
Rental for such calendar year.
(b) As used herein, "Tenant's Forecast Additional
Rental" shall mean Landlord's reasonable estimate of Tenant's Additional Rental
(defined below) for the coming calendar year.
(c) "Tenant's Additional Rental," as that term is used
herein, shall be computed on a calendar year basis and shall mean the Tenant's
Percentage Share (defined below) of Operating Expenses (defined below), to the
extent such sum exceeds Tenant's Percentage Share of Operating Expenses during
the "Base Year". The "Base Year" is the calendar year 1990. As used herein,
"Tenant's Percentage Share" shall mean a fraction, the numerator of which is
the total number of square feet of Net Rentable Area within the Leased Premises
and the denominator of which is the total square footage of all Net Rentable
Area in the Building leased or held for lease. For the purposes of this Lease,
the "Tenant's Percentage Share" shall be thirty-five and eight thousand one
hundred fifty-nine ten thousandths percent (35.8159%) provided, however, that
in the event that the amount of space leased by Tenant shall increase or
decrease subsequent to the beginning date of the Term of this Lease, whether
pursuant to an option to expand or otherwise, Tenant's Percentage Share shall be
appropriately adjusted by Landlord.
(d) No later than one hundred twenty (120) days after the end
of calendar year 1990, Landlord shall deliver to Tenant a
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statement (certified by Landlord as true and correct) of Operating Expenses for
calendar year 1990. No later than one hundred twenty (120) days after the end of
the calendar year 1991 and of each calendar year thereafter during the Term of
this Lease, Landlord shall provide Tenant a statement (certified by Landlord as
true and correct) comparing the Base Year's Operating Expenses and Operating
Expenses for each such calendar year and a statement prepared by Landlord
comparing Tenant's Forecast Additional Rental with Tenant's Additional Rental.
Each such statement shall be accompanied by materials reflecting expenditure of
operating costs by category, which categories shall be utilized on a consistent
basis (together with any categories here after created) through out the term
hereof for the purpose of reporting Operating Expenses. In the event that
Tenant's Forecast Additional Rental exceeds Tenant Additional Rental actually
paid by Tenant for said calendar year, Landlord shall pay Tenant (in the form
of a credit against rentals next due or, if such overpayment is attributable to
the last year of the Term, or any renewal thereof, then in the form of
Landlord's check which shall be delivered to Tenant within thirty days after
the determination of the amount of such over payment) an amount equal to such
excess. In the event that the Tenant's Additional Rental exceeds Tenant's
Forecast Additional Rental for said calendar year, Tenant hereby agrees to pay
Landlord, within thirty (30) days of receipt of the statement, an amount equal
to such difference ("Tenant's Additional Rental Adjustment"). The provisions of
this paragraph shall survive any expiration, termination or cancellation of
this Lease.
(e) Tenant, at Tenant's sole cost and expense, shall have the
right, to be exercised by written notice given to Landlord within one hundred
eighty (180) days after receipt of the aforesaid statement showing Operating
Expenses for the preceding calendar year, to audit, at the place in Houston,
Texas where Landlord maintains its books and records, Landlord's books and
records pertaining only to such Operating Expenses for such preceding calendar
year, provided such audit commences within sixty (60) days after Tenant's
notice to Landlord and thereafter proceeds regularly and continuously to
conclusion and, provided further, that such audit does not unreasonably
interfere with the conduct of Landlord's business. Landlord agrees to cooperate
in good faith with Tenant in the conduct of any such audit. If such audit
reflects an overstatement in Landlord's calculation of operating Expenses of
five percent (5%) or more, then in addition to refunding any excess payments of
Tenant's Additional Rental made by Tenant, Landlord shall reimburse Tenant for
the reasonable cost and expenses incurred by Tenant in causing such audit to be
performed. In that regard, Tenant shall provide to Landlord copies of all
bills, invoices and vouchers evidencing payments made or expenses incurred by
Tenant in conducting such an audit.
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<PAGE> 11
2.04 Operating expenses.
(a) "Operating Expenses," for each calendar year, shall
consist of all operating costs (defined below) for the Property.
(b) For the purposes of this Lease, "operating costs" shall
mean all reasonable and necessary expenses, costs and accruals (excluding
therefrom those items hereinafter provided) of every kind and nature, computed
on an accrual basis in accordance with generally accepted accounting principles
consistently applied, incurred, paid or accrued in connection with, or relating
to, the ownership, maintenance, or operation of the Property during each
calendar year, including, but not limited to, the following:
(1) management fees of the Building manager not
to exceed, however, three percent (3%) of the gross rentals collected
from tenants in the Building excluding rent charged to tenants for
use of the Parking Facilities so long as the same are operated and
managed by an independent third party operator (for such periods as
Landlord or its affiliates operate the same, rent paid by tenants for
the use of the Parking Facilities shall be included in "gross
rentals" for the purpose of calculating management fees);
(2) wages and salaries, including taxes, insurance
and benefits, of all on and off-site employees (exclusive of
Landlord's executive personnel above the level of Building Manager)
engaged in the operation, maintenance and access control of the
Building; provided, however, that if during the Term of this Lease
any such employees are working on other projects of Landlord as well
as the Building, their wages, salaries and related expenses shall be
appropriately allocated among all such projects and only that portion
of such expense applicable to the Property (as reasonably allocated
by Landlord) shall be included in Operating Expenses and, in
addition, a reasonable rental amount for that portion of the on-site
Building management office, or if none is utilized, that portion of
the off-site management office (which shall be located in the
building commonly known as "5333 Westheimer" located at 5333
Westheimer, Houston, Texas) reasonably allocated to the Building by
Landlord (but in no event more than 2,700 square feet of rentable
area) shall be included in Operating Expenses;
(3) cost of all supplies, tools, equipment and
materials to the extent used in operations and maintenance of the
Property, as reasonably allocated by Landlord;
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<PAGE> 12
(4) cost of all utilities including, but not limited to,
the cost of electricity, the cost of water and the cost of power for
heating, lighting, air conditioning and ventilating;
(5) cost of all maintenance and service agreements for
the Property and the equipment therein, including, but not limited to,
access control service, refuse removal, garage operations, window
cleaning, elevator maintenance, janitorial service and landscaping
maintenance;
(6) cost of repairs and general maintenance excluding (a)
repairs, alterations and general maintenance paid by proceeds of
insurance, by Tenant or by third parties, (b) repairs and general
maintenance required to be paid by other tenants or which would have
been paid by insurance required to be maintained by Landlord under
this Lease, but which insurance Landlord has failed to maintain
through no fault of Tenant, (c) alterations attributable solely to
tenants of the Building other than Tenant and (d) repairs and
maintenance attributable to the negligence or willful misconduct of
Landlord, its agents, contractors or employees, in the operation,
maintenance or repair of the Property;
(7) amortization of the cost (together with reasonable
financing charges and installation costs) of any capital investment
items, system, apparatus, device, or equipment which is installed for
the principal purpose of (i) reducing Operating Expenses, (ii)
promoting safety or (iii) complying with governmental requirements
which become effective after the Commencement Date;
(8) the cost of all insurance, including, but not limited
to, the cost of casualty, rental abatement and liability insurance,
and insurance on Landlord's personal property used in connection with
the ownership, operation and maintenance of the Property, plus the
cost of all deductible payments made by Landlord in connection
therewith;
(9) the cost of reasonable accounting fees;
(10) all taxes, assessments and governmental charges,
whether or not directly paid by Landlord, whether federal, state,
county or municipal and whether they be by taxing districts or
authorities presently taxing the Property or by others subsequently
created or otherwise,
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<PAGE> 13
and any other taxes and assessments attributable to the Property or
their operation, excluding, however, taxes on Landlord's personal
property not used in connection with the ownership, operation and
maintenance of the Property, taxes and assessments attributable to the
personal property of other tenants, federal and state taxes on income,
death taxes, franchise taxes, and any taxes imposed or measured on or
by the income of Landlord from the operation of the Property or
imposed in connection with any change in ownership of the Property;
provided, however, that if at any time during the Term of this Lease,
the present method of taxation or assessment shall be so changed that
the whole or any part of the taxes, assessments, levies, impositions or
charges now levied, assessed or imposed on real estate and the
improvements thereon shall be discontinued and as a substitute
therefor, or in lieu of or in addition thereto, taxes, assessments,
levies, impositions or charges shall be levied, assessed or imposed,
wholly or partially, as a capital levy or otherwise, on the rents
received from the Property 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 with respect to the Property, shall be deemed to be included
within the operating costs. Consultation, legal fees and costs
resulting from any challenge (or consideration of a challenge) of tax
assessments as reasonably allocated by Landlord shall also be included
in operating costs. It is agreed that Tenant will be responsible for
ad valorem taxes on its personal property. In the case of special taxes
and assessments which may be payable in installments, only the amount
of each installment accruing during a calendar year shall be included
in the operating costs for such year.
No single item of expense representing an operating cost shall be
included as such more than once (although expense items of the same
category will be so included) and in no event shall Tenant be charged
more than once for any single item of expense previously included in
operating costs.
The Property includes within its boundaries a retail shopping center
("Shopping Center"), such Shopping Center being shown as the
cross-hatched area on Exhibit "A-1" attached hereto and made part
hereof for all purposes. It is the Landlord's and Tenant's intent,
however, that "operating costs" for purposes of this Lease include only
those expenses and costs related to the ownership, maintenance or
operation of all
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<PAGE> 14
portions of the Property other than the Shopping Center. The
Landlord and Tenant acknowledge, however, that certain items
constituting "operating costs" are and shall be incurred by Landlord
for the entire Property including, by way of example, but without
limitation, ad valorem taxes and insurance premiums. As to the
"operating costs" which are incurred as to the entire Property, the
same shall be reasonably prorated by Landlord with 91.4792% thereof
being allocated to the Building and included in "operating costs" for
the purposes of this Lease.
Notwithstanding the foregoing provisions of this Section
2.04(b), "operating costs" shall not include any of the following:
(i) Any costs or expenditures for which Landlord is
entitled to reimbursement by Tenant (other than pursuant to this
Section 2.04(b)), any other tenant of the Property (other than for
general reimbursement of operating costs or increases therein) or any
other third parties, or from insurance or condemnation proceeds.
(ii) Any overhead, administrative or general office
expense other than that represented by the management fee provided for
in this Section 2.04(b).
(iii) The cost of completing initial construction of the
Building or the cost of constructing leasehold improvements for
specific tenants, including all common areas and tenant occupied
spaces.
(iv) The cost of correcting defects in construction of the
Property or in the Building or Parking Facilities equipment, except
that conditions not occasioned by construction defects resulting from
ordinary wear and tear and use shall not be deemed defects for the
purpose of this category.
(v) Leasing commissions, ground rentals, non-cash items,
debt service and other debt costs, and advertising and promotional
expenditures.
(vi) Any cost or expenditure attributable to a breach by
Landlord of its covenants, obligations and duties under this Lease
that would not have been incurred but for such breach.
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<PAGE> 15
(vii) The cost of any work or service performed for, or
materials, items, or facilities furnished to, any tenant of the
Property to a materially greater extent or in a materially more
favorable manner than that furnished generally to all tenants of the
Property.
(viii) The cost of artwork used to decorate the Property.
(ix) Landlord's central office or its operations
conducted, or employees engaged therein (except to the extent provided
in Section 2.04(b)(1);
(x) Capital improvements and additions to the Property or
any non-cash items such as depreciation and amortization, except to
the extent permitted by Section 2.04(b)(7);
(xi) Expenses and wages of leasing personnel and leasing
commissions, attorneys' fees and other costs and expenses incurred by
Landlord in (i) leasing space in the Property (including, without
limitation, cost of tenant improvements made in the Property by
Landlord in connection therewith or any amounts paid by Landlord in
the settlement of, or by assumption of, any prior lease obligations of
a prospective tenant) or (ii) any litigation, or the negotiation or
settlement of any dispute, between Landlord and any person or entity
with respect to the ownership, sale, financing or refinancing,
operation or maintenance of the Property including, without
limitation, the enforcement of any lease obligation except to the
extent that such litigation, dispute or cost incurred in the operation
or maintenance of the Property is caused by the negligence or willful
misconduct of Tenant, its agents, contractors or employees;
(xii) Any costs incurred in connection with the sale,
refinancing, mortgaging or change in ownership of the Property or any
portion thereof, including, without limitation, brokerage commissions,
attorneys' and other professional fees, closing costs and interest
charges;
(xiii) Overhead or profits increment paid to subsidiaries of
affiliates of Landlord for services on or to the Property to the
extent such overhead or profit increment exceeds that which would have
been earned or paid to an independent, third party provider of the
same or similar services;
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<PAGE> 16
(xiv) Costs incurred due to any violation by Landlord of
the terms and conditions of any lease in the Property or of any ground
lease or mortgage encumbering the Property unless caused by the acts
or omissions of Tenant, its contractors, agents or employees, or any
cost, fines or penalties incurred by Landlord due to any failure by
Landlord to comply with all federal, state and local laws, rules and
regulations in its ownership, operation or maintenance of the Property
unless caused by the acts or omissions of Tenant, its agents,
contractors and employees in the performance of its obligations under
this Lease;
(xv) Any cost or expenses incurred by Landlord in the
ownership, operation or maintenance of any retail space which is
located on the Land but is not within the Building; and
(xvi) Expenses and costs relating in any way to the
encapsulation, removal, replacement, repair or abatement of any
hazardous materials within the Property unless the existence of the
same is caused by the acts or omissions of Tenant, its agents,
contractors or employees.
(c) Notwithstanding any language contained herein to the contrary,
Tenant hereby agrees that, during any calendar year in which the entire
Building is not provided with Building Standard Services (as defined in Section
3.01 below) or is not completely occupied, Landlord shall compute all Variable
Operating Costs (defined below) for such calendar year as though the entire
Building was provided with Building Standard Services and was completely
occupied. For purposes of this Lease the term "Variable Operating Costs" shall
mean any operating cost that is variable with the level of occupancy of the
Building (e.g. tenant utilities and tenant cleaning services) as reasonably
determined by Landlord. In the event that Landlord excludes from "operating
costs" any specific costs billed to or otherwise incurred for the particular
benefit of specific tenants of the Building, Landlord shall have the right to
increase "operating costs" by an amount equal to the cost of providing standard
services similar to the services for which such excluded specific costs were
billed or incurred.
2.05 [Intentionally Left Blank].
2.06 Relocation Expense Allowance.
On the Commencement Date and provided Tenant is not in default
hereunder, the Landlord will reimburse the Tenant for Tenant's out-of-pocket
relocation expenses in an amount equal to the sum of (a) $76,481.00 plus (b)
the product of 76,481 times the Savings. The term "Savings" as used in this
Section 2.06 means the
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<PAGE> 17
amount, if any, by which the actual costs and expenses incurred by Landlord
(including a fee of 2% of the hard costs to be paid to Landlord as a fee for
its services in connection with construction of the Landlord's Work, plus the
allowance to be provided by the Landlord for the Card-Key Access System as
provided above, is less than $22.50; provided, however, for purposes of this
Section 2.06, the maximum amount of Savings for which Landlord shall reimburse
Tenant shall be limited to $2.00 and as to any Savings in excess of $2.00,
Tenant shall receive a credit equal to the amount of such savings in excess of
$2.00 against the first Base Rental or Additional Rental due under this Lease.
The amount of Savings shall be determined upon Completion (as defined in
Exhibit C) of the Landlord's Work and verification of the costs and expenses
incurred by Landlord in connection therewith.
2.07 Renewal Options.
Tenant is hereby granted two options to renew this Lease for
successive five (5) year periods upon the terms and conditions set forth in
Exhibit D attached hereto and made part hereof for all purposes.
2.08 Prevailing Market Base Rental Rate.
(a) As used in this Lease, the term "Prevailing Market Base Rental
Rate" shall mean the annual rental rate which a willing landlord and willing
tenant would agree upon for the lease of space in the Galleria area of Houston,
Texas for space comparable to the space in the Building (including, in the case
of the Leased Premises, all of the Landlord's Work but excluding the Tenant's
Work [as defined in Exhibit C attached hereto]) for which the Prevailing Market
Base Rental Rate is being determined (taking into consideration use, location
and/or floor level within the applicable building compared to the location in
the Building of the floors subject to this Lease [i.e., the Leased Premises
include the 10th and 11th floors of the Building which are the top two floors
thereof and comparative space therefor shall be the top two floors of
comparable buildings], definition of net rentable area, leasehold improvements
existing in the comparable space plus build-out allowance offered by the
Landlord in connection with the leasing thereof, quality and location of the
applicable building, rental concessions such as abatements, moving allowances
or landlord's assumption of the tenant's existing lease obligations the time
the particular rate under consideration became effective, relative operating
expenses and relative services provided). It is agreed that bona fide written
offers to lease the relevant space made to Landlord by third parties may (but
shall not be required to) be used by Landlord as an indication of Prevailing
Market Base Rental Rate.
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<PAGE> 18
(b) Whenever in this Lease (including, without limitation, Section
2.07 hereof and the exhibit related thereto) a provision calls for a rental rate
to be, or to be adjusted to, the Prevailing Market Base Rental Rate, the
Landlord and Tenant shall first attempt to mutually agree upon the same during
the thirty (30) day period which commences no sooner than one hundred eighty
(180) days prior to the date the adjustment to the Prevailing Market base
Rental Rate is to become effective; provided, that, in the event that Landlord
and Tenant are unable to agree upon the Prevailing Market Base Rental Rate
within said thirty (30) day period, the Landlord and Tenant shall each select,
within ten (10) days after the expiration of said thirty (30) day period, an
independent MAI appraiser to determine the Prevailing Market Base Rental Rate
and such appraiser shall be instructed to do so within thirty (30) days from
the date of his appointment. If the Prevailing Market Base Rental Rate as
determined by the respective appraisers are within five percent (5%) of each
other, the Prevailing Market Base Rental Rate shall be deemed to be the average
of the two rates; provided, that, if the Prevailing Market Base Rental Rate as
determined by the respective appraisers are more than five percent (5%) apart,
the two (2) appraisers shall jointly select a third independent MAI appraiser
within thirty (30) days after the first thirty (30) day period provided for
above whose determination of the Prevailing Market Base Rental Rate (which, in
all cases, shall be no lower than the lowest determination or higher than the
highest determination by the initial two (2) appraisers selected by Landlord
and Tenant) shall be conclusive and binding upon both Landlord and Tenant. All
appraisers selected hereunder shall be qualified, independent MAI (or any
successor institution thereto) appraisers who shall have been actively engaged
for the five (5) year period immediately preceding the date of their selection
in appraising rental value of leaseholds in the Galleria area of Houston, Texas
and immediately surrounding areas.
Landlord and Tenant shall each bear the cost of the appraiser selected
by it and shall share equally in the costs and expenses of the third appraiser,
if selected. If Landlord or Tenant shall fail to select an appraiser when
required to do so by the provisions hereof, the determination of the appraiser
selected by the other party shall, if made in good faith, be conclusive and
binding on both Landlord and Tenant.
(c) Whenever in this Lease a provision calls for a rental rate to
be, or be adjusted to, the Prevailing Market Base Rental Rate, Tenant shall
continue to pay Tenant's Forecast Additional Rental and Tenant's Additional
Rental with respect thereto. In the event the Prevailing Market Base Rental
Rate is determined to be a "gross" rate (i.e. the rate includes an allowance
for operating expenses), the Base Rental payable by Tenant during the First or
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Second Renewal Term, is the case may be, shall be equal to the applicable
Prevailing Market Base Rental Rate reduced by an amount equal to the Tenant's
Additional Rental for the calendar year immediately preceding the year in which
the Prevailing Market Base Rental Rate is being determined.
2.09 Access System Allowance.
Provided that Tenant is not in default under this Lease and no event
has occurred which with the giving of notice, the lapse of time or both could
ripen into a default) Landlord will reimburse the Tenant for Tenant's
out-of-pocket expenses incurred in connection with the design, construction and
installation of the Card-Key Access System up to a maximum of $25,000, such
sums to be paid to Tenant upon completion of installation of the same. All
other costs and expenses incurred in connection with the installation,
operation, maintenance and monitoring of the Card-Key Access System shall be
paid by and separately contracted for by Tenant. Tenant shall maintain
separate records as to such costs and expenses actually incurred and upon
completion of installation of the Card-Key Access System shall present the same
to Landlord for verification of the amounts due Tenant by Landlord under this
Section 2.09. "Card-Key Access System" shall mean and refer to the card-key
access system to be designed by or at the direction of Tenant (with approval
thereof by Landlord, which approval shall not be unreasonably withheld or
delayed) containing card-key access control to the Leased Premises, the
Building, the Property and the Tenant's Unassigned Parking Area (hereinafter
defined).
2.10 Expansion Options.
Tenant is hereby granted three (3) options to lease additional space
in the Building upon the terms and conditions set forth in Exhibit E attached
hereto and made part hereof for all purposes.
2.11 Right of First Refusal.
Tenant is hereby granted certain rights of first refusal in respect to
the leasing of space in the Building upon the terms and provisions set forth in
Exhibit F attached hereto and made part hereof for all purposes.
2.12 Architectural and Engineering Expense Allowance.
On the Commencement Date and provided Tenant is not then in default be
render, the Landlord will reimburse Tenant for Tenant's out-of-pocket expenses
paid to its architects and engineers in connection with the preparation of
working drawings, plans and specifications for construction of the leasehold
improvements to be
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<PAGE> 20
constructed in accordance with exhibit C attached hereto up to a maximum amount
of $114,721.50.
2.13 Additional Adjustments to Base Rental.
As set forth in Exhibits D, E and F attached hereto, Base Rental may
be adjusted from time to time. Upon any such adjustments to Base Rental, the
parties shall, upon the request of either of them, execute and deliver an
amendment to this Lease reflecting such adjustment.
2.14 Initial Leasehold Improvements.
The Initial Leased Premises subject to this Lease (i.e., the
approximate 76,481 square feet of Net Rentable Area in the Building described
in Section 1.01 of this Lease) shall be improved in accordance with the Work
Letter Agreement attached hereto as Exhibit C. Landlord, at its sole cost and
expense (subject to the provisions of Exhibit C), shall construct or cause
Landlord's Contractor (as defined in Exhibit C) to construct the Landlord's
Work (as defined in Exhibit C). Tenant, at its sole cost and expense, shall be
responsible for constructing the Tenant's Work.
III
3.01 Services.
So long as Tenant is not in default hereunder, Landlord shall furnish
the following services to the Leased Premises during the Term of this Lease
("Building Standard Services"):
(a) Hot and cold water and common use rest rooms and toilets at
locations provided for general use and as reasonably deemed by Landlord to be
standard for the comfortable use and occupancy of the Building, such service to
be provided 24 hours per day, each day during the Term (and all renewals
thereof).
(b) Subject to curtailment as required by governmental laws, rules
or mandatory regulations, (i) central heat and air conditioning in season, at
such temperatures and in such amounts as are reasonably deemed by Landlord to
be standard for the comfortable use and occupancy of the Building, and on such
dates and at such times as are more particularly described on Exhibit G
attached hereto and incorporated herein and (ii) all necessary air handling;
such air handling shall be of the same quality as when Building heaters and
chillers are being used and in sufficient quantity to enable Tenant to operate
its independent heaters and chillers and shall be provided at all times when
Building Standard heating and chilling service is not being provided. As
reflected
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<PAGE> 21
in the Working Drawings (as defined in Exhibit C) Landlord, as part of
Landlord's Work, shall install the independent heating and chiller equipment on
the roof of the Parking Facilities at or near the northwest corner thereof.
(c) Routine maintenance and electric lighting service for all
public areas and special service areas of the Building in the manner and to the
extent reasonably deemed by Landlord to be standard for the comfortable use and
occupancy of the Building provided, that electric lighting service shall be
provided on a 24 hour per day basis to public corridors and elevators to enable
Tenant access to those floors on which Tenant conducts continuous, 24 hours per
day operations.
(d) Janitor service shall be provided five (5) days per week,
exclusive of holidays, in a manner that Landlord reasonably deems to be
consistent with that provided in buildings similarly situated to the Building;
provided, however, no janitorial service shall se provided to Tenant's main
computer room or other restricted access areas within the Leased Premises and
if Tenant's floor coverings or other improvements are other than Building
Standard (such non Building Standard items to be identified as such by Landlord
during Landlord's review of the Tenant Working Drawings) Tenant shall pay one
hundred and fifteen percent (115%) of the actual additional cleaning cost, if
any, attributable thereto. At Tenant's request and upon payment to Landlord of
one hundred fifteen percent (115%) of the actual cost therefor, Landlord shall
provide additional janitorial services to the Leased Premises; provided,
however, Landlord shall provide off hours Janitorial Service (as defined in
Exhibit G hereto) upon the terms and conditions set forth in Exhibit G hereto.
(e) Access control services for the Property on a 24 hour per day
basis and otherwise comparable as to coverage, control and responsiveness (but
not necessarily as to means for accomplishing same) to other similarly situated
multi-tenant office buildings in the Galleria area of Houston, Texas; provided,
however, Landlord shall have no responsibility to prevent, and shall not be
liable to Tenant for, any liability or loss to Tenant, its agents, employees,
guests, invitees and visitors arising out of losses due to theft, burglary, or
damage or injury to persons or property caused by persons gaining access to the
Leased Premises or the Property, and Tenant hereby releases Landlord from all
liability for such losses, damages or injury.
(f) Sufficient electrical capacity on a 24 hour per day basis to
operate (i) incandescent lights, typewriters, calculating machines,
photocopying machines and other machines of similar low voltage electrical
consumption (120/208 volts), provided that the total rated electrical design
load for said lighting and machines
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of low electrical voltage shall not exceed one (1.00) watt per square foot of
Usable Area (defined below); and (ii) lighting and equipment of high voltage
electrical consumption (277/480 volts), provided that the total rated electrical
design load for said lighting and equipment of high electrical voltage shall
not exceed three and four-tenths (3.40) watts per square foot of Usable
Area (each such rated electrical design load to be hereinafter referred to as
the "Building Standard rated electrical design load"). Tenant shall be
allocated Tenant's pro rata share of the Building Standard circuits provided on
the floor(s) Tenant occupies. The term "Usable Area" shall mean the Net
Rentable Area within the Leased Premises minus all On-floor Common Areas and
General Common Areas included therein.
As reflected in the Working Drawings for the initial
construction of leasehold improvements to the Leased Premises, Tenant requires
electrical capacity in excess of the Building Standard electrical design load.
As reflected on the Working Drawings, the Tenant Operating Equipment (as
defined in Exhibit C here to) and certain other electrical facilities within
the Leased Premises shall be separately circuited and metered and Tenant shall
be billed for and pay the costs of electricity consumed by such Tenant
Equipment and other facilities on the basis set forth on Exhibit G attached
hereto. Landlord, in approving the Working Drawings, consents to such
additional consumption of electricity by Tenant and agrees to make available
throughout the Term, and any renewal thereof, sufficient electrical capacity
and facilities to operate the Tenant Operating Equipment and other facilities
circuited and metered through the separate Tenant meter.
With regard to any construction of leasehold improvements
other than the initial improvements to the Leased Premises, should Tenant's
total rated electrical design load exceed the Building Standard rated
electrical design load for either low or high voltage electrical consumption,
or if Tenant's electrical design requires low voltage or high voltage circuits
in excess of Tenant's share of the Building Standard circuits, Landlord may
elect, at its option, (and at Tenant's expense) to install one (1) additional
high voltage panel and/or one (1) additional low voltage panel with associated
feeders and equipment, based on a maximum of two (2) such additional panels
per floor for all tenants on the floor (which additional panels, feeders and
equipment shall be hereinafter referred to as the "additional electrical
equipment). If the additional electrical equipment is installed because
Tenant's low or high voltage rated electrical design load exceeds the applicable
Building Standard rated electrical design load, then a meter shall also be
added (at Tenant's expense) to measure the electricity used through the
additional electrical equipment. The design and installation of any additional
electrical equipment (or any related meter) required by Tenant shall be subject
to the prior
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approval of Landlord (which approval shall not be unreasonably withheld). All
expenses incurred by Landlord in connection with the review and approval of any
additional electrical equipment shall also be reimbursed to Landlord by Tenant.
If any of Tenant's electrical equipment requires conditioned air in excess of
Building Standard air conditioning, the same shall be installed by Landlord (on
Tenant's behalf), and Tenant shall pay all design,installation, metering and
operating costs relating thereto.
(g) All Building Standard fluorescent bulb replacement in all areas
and all incandescent bulb replacement in General Common Areas, Service Areas
and On-Floor Common Areas.
(h) Non-exclusive multiple cab passenger elevator service to the
Leased Premises during Building Operating Hours and at least one (1) cab
passenger elevator service to the Leased Premises twenty-four (24) hours per
day (all subject to temporary cessation for ordinary repair and maintenance and
during times when life safety systems override normal building operating
systems) with freight elevator service available at other times upon reasonable
prior notice to Landlord and at such times as have been scheduled with
Landlord.
To the extent the services described in subsection 3.01 (1),
(b), (c), (f) and (h) above require electricity and water supplied by public
utilities, Landlord's covenants thereunder shall only impose on Landlord the
obligation to use its good faith, reasonable efforts to cause the applicable
public utilities to furnish the same through facilities suitably located on the
Land. Tenant shall have the right (but not the obligation) to utilize one or
more portable electrical generators to provide electricity to the Leased
Premises during any interruption of such service. Failure by Landlord to
furnish the services described in this Section 3.01, or any cessation or
slow-down thereof, shall not render Landlord liable for damages to either
person or property, nor be construed as an eviction, actual or constructive, of
Tenant, nor (except as hereinafter provided) work an abatement of rent, nor
relieve Tenant from fulfillment of any covenant or agreement hereof. In
addition to the foregoing, should any of the equipment or machinery, for any
cause, fail to operate, or function properly, Tenant (except as expressly set
forth hereinbelow) shall have no claim for rebate of rent or damages on account
of an interruption in service occasioned thereby or resulting therefrom;
provided, however, Landlord agrees to use reasonable efforts to promptly repair
said equipment or machinery and to restore said services. Notwithstanding
anything herein to the contrary, with respect to the services described in
Subsection (a), (b), (c), (f) and (h) only, if such interruption in a service
described in said subsections (i) has not been caused by the acts or omissions
of Tenant, its agents, contractors or employees and continues for a
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period of five (5) consecutive business day, then Base Rental and all other
rentals under this Lease shall abate commencing on said fifth (5th) day in
proportion that the Leased Premises are unusable in substantially the same
manner as prior to said interruption until they are again so usable or (ii) has
not been caused by the acts or omissions of Tenant, its agents, contractors or
employees and continues for a period of one hundred twenty (120) consecutive
business days, then Tenant shall have the right and option (in addition to the
abatement described above) to terminate this Lease by providing Landlord
written notice of such election within thirty (30) business days following the
expiration of said one hundred twenty (120) consecutive business day period.
Upon the giving of such notice, Tenant shall vacate the Leased Premises within
one hundred twenty (120) days thereafter.
3.02 Key and Locks.
As described in Section 2.09 above, Tenant shall be responsible for
design, operation, maintenance and monitoring of the Card-Key Access System
including, without limitation, distribution to its employees of card-keys
therefor. Tenant agrees to provide Landlord a list of its employees who have
been issued card-keys and the card-key identification number for each of
them, which listing shall be updated by Tenant not less often than monthly
throughout the Term. No additional locks or access restraints shall be allowed
on any door of the Leased Premises without Landlord's permission. Upon
termination of this Lease, Tenant shall surrender to Landlord all such card keys
and keys to any other locks or doors entering or within the Leased Premises, the
Parking Facilities or the Property, and give to Landlord the explanation of the
combination of all locks for safes, safe cabinets and vault doors, if any, in
the Leased Premises.
3.03 Graphics, Building Directory Board and Name.
Landlord shall provide and install, at Tenant's expense,the signage
about the Building described in Exhibit H attached hereto, and, at Landlord's
expense, Landlord shall install all graphics, letters, and numerals at the
entrance to the Leased Premises and identification strips (based on the ratio
that the Net Rentable Area of the Leased Premises bears to the total Net
Rentable Area of the Building) containing a listing of Tenant's name and such
other information as Tenant shall reasonably require on the Building directory
board in the main lobby of the Building. All such letters and numerals shall be
in the Building standard graphics except that Landlord hereby approves Tenant's
installation of a directory board (in Building Standard size and form) in the
elevator lobby of each floor (other than the main lobby on the ground floor) in
the Building leased fully to Tenant. Tenant agrees that Landlord shall not be
liable for any inconvenience or
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damage occurring as a result of any error or omission in any directory or
graphics. No signs, numerals, letters or other graphics shall be used or
permitted on the exterior of, or may be visible from outside, the Leased
Premises, unless approved in writing by Landlord. Upon the Commencement Date
for the initial Leased Premises, the Building shall be renamed as the
"Telecheck Plaza" and appropriate changes shall be made to the Building
directory reflecting such change. Landlord shall have the right to change the
Building name if at any time during the Term, or any renewal, the named Tenant
herein (i.e., Payment Services Company) is actually occupying less than 20,000
square feet of Net Rentable Area.
Landlord covenants and agrees that so long as this Lease shall remain
in effect, Landlord shall not permit (i) any signage to be placed on the outside
of the Building other than Tenant's sign to be placed thereon or (ii) any
signage to be placed on the outside of the Building Annex (located at the
northeast corner of the Land) other than signage for a commercial or retail
banking facility located on the east, north and south wall of the Building
Annex.
3.04 Parking.
(a) Landlord has advised Tenant that Landlord plans to re-stripe
the Parking Facilities in an attempt to provide additional spaces for the
parking of automobiles herein. Landlord agrees to provide for the Term 358
parking permits for the parking of automobiles in the Parking Facilities
designated by Landlord; provided, however, only forty (40) of the parking
permits will be on a reserved basis and shall be those parking spaces in the
basement level of the Parking Facilities shown on Exhibit J attached hereto and
made part hereof. The foregoing number of parking permits to be provided to
Tenant is based upon a presumed ratio of approximately 4.68 spaces per 1000
square feet of Net Rentable Area in the Building, a ratio Landlord hopes to
achieve upon re-stripping the Parking Facilities. In the event the ratio (after
re-stripping) is less than 4.68 per 1000 square feet of Net Rentable Area in
the Building, the number of permits to be provided Tenant hereunder shall be
adjusted downward (but in no event below 3.8 spaces per 1000 square feet of Net
Rentable Area in the Leased premises) so that tenant is initially provided with
its allocable share (based upon the number of square feet of Net Rentable Area
in the Leased Premises) thereof; provided, however, no such downward adjustment
shall affect Tenant's rights to rent additional unassigned parking permits as
hereafter provided for in this Section 3.04(a). The areas (the "Tenant's
Unassigned Parking Area") in the Parking Facilities for vehicles parked with
the unassigned, non-reserved parking permits rented by Tenant shall be
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distinguished from other areas in the Parking Facilities by one or more
entry/exit gates constructed by Tenant as part of the Card-Key Access System.
Access to and from these areas shall require use of the card keys used for the
Card-Key Access System. The Tenant's Unassigned Parking Area shall be the first
318 parking spaces in the Parking Facilities commencing at the uppermost
parking level in the Parking facilities and counting downward towards the lower
levels of the parking facilities. The entry/exit gate shall be located within
the Parking Facilities so that behind the same there is an aggregate of 318
parking spaces. To the extent Tenant leases additional spaces during the Term,
the entry/exit gate will be relocated (downward in the Parking Facilities), at
Tenant's cost and expense, so that behind the same there is a parking space for
each unassigned, non-reserved parking permit leased by Tenant pursuant hereto.
Upon presentation to Landlord of evidence reasonably satisfactory to Landlord
that the then number of parking permits leased by Tenant hereunder is
inadequate to accommodate Tenant's actual parking needs, Tenant shall be
entitled to rent additional unassigned permits (up to a maximum of 5.0 parking
permits for each 1,000 square feet of Net Rentable Area in the Leased
Premises). Irrespective of the presentation of such reasonably satisfactory
evidence, Landlord shall nonetheless have no obligation to provide Tenant
additional unassigned permits if subsequent thereto there remain insufficient
parking spaces in the Parking Facilities available for rent to provide 3.5
parking spaces for each 1,000 square feet of Net Rentable Area in the Building
not then being leased by Tenant pursuant to this Lease. Landlord covenants and
agrees that in connection with leasing of space in the Building to third
parties after the date hereof, the average number of parking permits rented to
such tenants shall not exceed 3.5 spaces per 1,000 square feet of Net Rentable
Area in the Building covered by such leases unless Landlord makes provision for
terminating the rental arrangement therefor in connection with fulfilling its
agreements hereunder. In no event, however, shall Tenant ever be entitled to
rent (nor shall Landlord be obligated to provide) parking spaces in excess of
the capacity of the Parking Facilities. Notwithstanding any contrary provisions
hereof, the rights of Tenant hereunder shall terminate or expire simultaneously
with the termination, cancellation or expiration of the Lease. Tenant shall
provide to Landlord such information and documentation evidencing the number of
Tenant's full and part-time employees located within the Leased Premises, as
Landlord shall reasonably request from time to time.
(b) There shall be no rent payable for Parking for the first four
(4) Lease Years. Thereafter during the initial Term, rent for the unassigned
parking spaces shall be charged in the amounts set forth below for the number
of spaces which is equal to the greater of (x) the Average Peak Number (as
determined below) minus 100 and (y) 3.8 spaces per 1,000 square feet of Net
Rentable
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Area within the Leased Premises. The Average Peak Number for each calendar
month through the Term shall be determined as follows: Landlord or the Parking
Facilities operator shall determine, pursuant to a mechanism reasonably
acceptable to Landlord and Tenant, for each hour between 10:00 a.m. and 3:00
p.m. on Monday through Friday the number of Tenant parking permit holders that
are parked within the Parking Facilities during such hour or any portion
thereof. The highest number of parking permit holders that are parked for any
hour between 10:00 a.m. and 3:00 p.m. shall be that day's Peak Number. The
average of the ten (10) highest Peak Numbers for a calendar month shall be that
calendar month's Average Peak Number. Tenant shall pay rent as to all 40
reserved parking spaces at all times during Lease Years 5-10 (and during any
Renewal Term).
The monthly rent for each of the parking spaces (both reserved
and unreserved) for which Tenant is obligated to pay rent pursuant to the
immediately preceding paragraph hereof for the Lease Years set forth in Column
A below shall be applicable amounts set forth in Column and Column C,
respectively:
<TABLE>
<CAPTION>
Column A Column B Column C
(Lease Year) (Monthly Rent for each (Monthly Rent for each
unassigned Space) reserved Space)
<S> <C> <C>
5 $30.00 $50.00
6 42.00 70.00
7 42.00 70.00
8 42.00 70.00
9 42.00 70,00
10 42.00 70.00
</TABLE>
The monthly rent for each of the parking spaces (both reserved and
unreserved) for which Tenant is obligated to pay rent during the First Renewal
Term and the Second Renewal Term (as defined in Exhibit E) shall be the
prevailing market monthly rate being charged by comparable garages in the
Galleria area of Houston, Texas and shall be determined in accordance with the
process for determination of Prevailing Market Base Rental Rate.
Said rentals shall be due and payable in advance on the first day of
each calendar month beginning with the first day of the first full calendar
month of the fifth (5th) Lease Year; provided, that a pro rata portion thereof
shall be due and payable for any partial month following the first day of the
fifth (5th) Lease Year to, but not including, the first day of said first
calendar month after the first day of the fifth (5th) Lease Year, which payment
shall be due on the first day of the fifth (5th) Lease Year.
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(c) In the event the parking spaces for the parking permits
(collectively, the "Parking Permits") which Landlord is obligated to provide
are not available to Tenant during any portion of the Term for any reason other
than the acts or omissions of Tenant, its agents, contractors or employees,
then Landlord shall provide Tenant a refund of any parking charges actually
paid for periods during which Parking Permits therefor are not available.
Further, in such event, if Landlord is unable to provide Tenant reasonably
convenient alternate parking facilities (Tenant hereby approving as alternate
parking facilities the garage located adjacent to the 5333 Westheimer
Building) within one hundred twenty (120) days after the Parking Permits become
unavailable, Tenant shall have the right and option to terminate this Lease by
providing written notice to Landlord of such election within ten (10) business
days after the expiration of said one hundred twenty (120) day period whereupon
this Lease shall terminate and Tenant shall vacate the Leased Premises within
one hundred twenty (120) days thereafter.
(d) Landlord may make, modify and enforce reasonable rules and
regulations relating to the parking of vehicles in the Parking Facilities
(including, without limitation, designating areas in the Parking Facilities
exclusively for the use of those persons utilizing unassigned permits under
this Lease), and Tenant agrees to abide by such rules and regulations, so long
as such rules and regulations are applied equally (or, considering the special
parking privileges granted to Tenant, as equally as possible) to all users of
the Parking Facilities. Tenant shall indemnify and hold harmless Landlord from
and against all claims, losses, liabilities, damages, costs and expenses
(including, but not limited to, attorneys' fees and court costs) arising or
alleged to arise out of Tenant's use of any such parking permits or the use
thereof by Tenant's personnel, agents, employees, contractors, guests or
invitees, unless resulting solely from Landlord's gross negligence.
(e) The number of parking permits and the charges therefor as described
in Section 3.04 (a) through (d) relates solely to the Tenant's parking
privileges in respect to the initial Leased Premises subject to this Lease. In
connection with the leasing of additional space in the Building pursuant to
Section 2.10 or Section 2.11, parking shall be allocated on the applicable
ratio of parking spaces per 1000 square feet of Net Rentable Area in effect in
respect to the Parking Facilities for tenants generally, in the case of
additional space leased pursuant to Section 2.10 and, in respect to space
leased pursuant to Section 2.11, in accordance with the Availability Notice in
respect thereto, subject, in each case, to Tenant's rights to rent additional
unassigned parking permits as provided in Section 3.04(a) above. The charges
therefor shall, in the case of additional space leased pursuant to Section
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2.10, be the prevailing market monthly rate being charged by comparable parking
garages in the Galleria area of Houston, Texas, or, in the case of space leased
pursuant to Section 2.11, as set forth in the Availability Notice.
IV
4.01 Care of Leased Premises.
Tenant shall not commit or allow to be committed by Tenant's
employees, agents, visitors invitees or contractors, any waste or damage to any
portion of the Leased Premises, or the Property. Upon the expiration or any
earlier termination of this Lease, Tenant shall surrender the Leased Premises
to Landlord in as good condition as existed on the date of possession by
Tenant, ordinary wear and tear, repairs required to be performed by Landlord
under this Lease, condemnation damage, and damage from casualties not caused by
the acts or omissions of Tenant, its agents, contractors or employees excepted.
Upon such expiration or termination of this Lease, Landlord shall have the
right to re-enter and resume possession of the Leased Premises immediately.
4.02 Entry for Repairs and Inspection.
Tenant shall permit Landlord and its contractors, agents or
representatives to enter into and upon any part of the Leased Premises (except
Tenant's main computer room) during reasonable hours upon (except in
emergencies) reasonable notice to Tenant to inspect or clean the same, to the
extent authorized or required to do so by the other provisions of this Lease,
to make repairs, alterations or additions thereto, and, upon reasonable prior
notice to Tenant, for the purpose of showing the same to prospective tenants
(but only during the last 12 months of the Term) or purchasers and Tenant shall
not be entitled to any abatement or reduction of rent by reason thereof.
Landlord shall use its reasonable efforts not to interfere materially with the
operation of Tenant's business during any such entry. Notwithstanding the
foregoing, Landlord is hereby authorized (without the necessity of further
notice to Tenant) to enter the storage room located in the Basement Space from
time to time for the purpose of gaining access to the adjacent mechanical room
located in the Basement.
4.03 Nuisance.
Tenant shall conduct its business and use its diligent, good faith
efforts to control its agents, employees and contractors and, while they are in
the Leased Premises, its invitees and visitors in such a manner as not to
create any nuisance, or interfere with, annoy or disturb any other tenant or
Landlord in its use, enjoyment or operation of the Property.
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<PAGE> 30
4.04 Laws and Regulations; Rules of Building.
Tenant shall comply with, and Tenant shall cause it employees,
contractors and agents to comply with, and shall use its best efforts to cause
its visitors and invitees to comply with, all laws, ordinances, orders, rules
and regulations of all state, federal, municipal and other governmental or
judicial agencies or bodies relating to the use, condition (other than the
condition of any structural components of the Building) or occupancy of the
Leased Premises, and with the rules of the Building reasonably adopted and
altered by Landlord from time to time for the safety, care and cleanliness of
the Leased Premises and Building and for the preservation of good order
therein. The initial rules of the Building are attached hereto and incorporated
herein as Exhibit F. Landlord shall employ its good faith efforts to enforce
such rules in a consistent and even-handed manner as to all tenants of the
Building.
4.05 Legal Use and Violations of Insurance Coverage; Hazardous Materials
(a) Tenant shall not occupy or use the Leased Premises, or permit
any portion of the Leased Premises to be occupied or used, for any business or
purpose which is, directly or indirectly, forbidden by law, ordinance, or
governmental or municipal regulation or order, or which may be dangerous to
life, limb or property, or permit the maintenance of any public or private
nuisance, or do or permit any act or thing which may disturb the quiet
enjoyment of any other tenant of the Building, or permit anything to be done
which would in any way cause the cancellation of fire, liability, or any other
insurance coverage on the Property or its contents. To the extent Tenant's
occupancy or use of the Leased Premises results in an increase in the rate of
fire, liability or any other insurance coverage on the Property or its contents,
the increased charges shall be paid by Tenant as provided in Section 6.04
below.
(b) Tenant shall not (either with or without negligence) cause or
permit the escape, disposal or release of any biologically or chemically active
or other hazardous substances or materials. Tenant shall not allow the storage
or use of such substances or materials in any manner not sanctioned by law or
by the highest standards prevailing in the industry for the storage and use of
such substances or materials, nor allow to be brought into the Property any
such materials or substances except to use in the ordinary course of Tenant's
business, and then only after written notice is given to Landlord of the
identity of such substances or materials. Without limitation, hazardous
substances and materials shall include those described in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
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<PAGE> 31
U.S.C. Section 9601 et seq., the Resource conservation and Recovery Act, as
amended, 42 U.S.C., Section 6901 et seq., the Texas Solid Waste Disposal Act
and any applicable state or local laws and the regulations adopted under these
acts. If any lender or governmental agency shall ever require testing to
ascertain whether or not there has been any release of hazardous materials due
to the act or omissions of Tenant or any of its agents or employees, then the
reasonable costs thereof shall be reimbursed by Tenant to Landlord upon demand
as additional charges if such requirement applies to the Property. In addition,
Tenant shall execute affidavits, representations and the like from time to time
at Landlord's request concerning Tenant's best knowledge and belief regarding
the presence of hazardous substances or materials on the Property. In all
events, Tenant shall indemnify Landlord in the manner elsewhere provided in
this Lease from any release or storage of hazardous materials in the Leased
Premises occurring while Tenant is in possession, or elsewhere in or about the
Property if caused by Tenant or persons acting under Tenant. These covenants
shall survive the expiration or earlier termination of this Lease.
(c) Landlord covenants and agrees to include the provisions of
Section 4.05(b) (or the substantial equivalent thereof) in each lease hereafter
entered into by Landlord and any third party for space in the Building.
Further, Landlord shall indemnify Tenant from any release or storage of
hazardous materials in the Building or elsewhere about the Property if caused
by Landlord or persons acting at the direction of Landlord (other than Tenant,
any other tenants in the Building or their respective contractors, agents or
employees). Landlord's indemnity, however, shall not extend to asbestos of the
type and nature of that reflected in the McCelland Reports so long as the same
is maintained in its present form or is abated in accordance with applicable
law.
4.06 Landlord's Compliance with Laws.
Landlord shall, at its cost and expense (subject to Tenant's
reimbursement for Tenant's share of Operating Expenses to the extent the same
comprise operating costs) comply with all laws, ordinances, rules, orders and
regulations (state, federal, municipal and other agencies or bodies having any
jurisdiction thereof) relating to the design, construction, use and operation
of the Property, but not the use of any of the premises therein by any tenants.
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<PAGE> 32
V
5.01 Leasehold Improvements.
(a) Tenant hereby agrees that the provisions of the Work Letter
Agreement shall govern the construction of Tenant's initial leasehold
improvements in the initial Leased Premises.
(b) Notwithstanding any language contained herein or in the Work
Letter Agreement to the contrary, if for any reason the Completion Date (as
defined in Exhibit C) has not been achieved on or before one hundred thirty
(130) days from the Delivery Date (as defined in Section 7.07 below) for any
reason other than Landlord's Delay (as defined in the Work Letter Agreement),
Landlord shall not be liable or responsible for any claims, damages or
liabilities in connection therewith or by reason thereof. In the event,
however, that the Completion Date has not been achieved on or before the
expiration of one (1) year from the Delivery Date due to reasons other than
Tenant Delays (as defined in Exhibit C hereto), then Tenant may elect to
terminate this Lease by providing written notice to such effect to Landlord on
or before the expiration of thirteen (13) months from the Delivery Date hereof
in which event neither party hereto shall have any further rights, duties or
obligations one to the other hereunder.
(c) Except as otherwise expressly permitted by the terms of this
Lease, Tenant shall not make or allow to be made any alterations or physical
additions in or to the Leased Premises, or place safes, vaults or other heavy
furniture or equipment within the Leased Premises, without first obtaining the
written consent of Landlord, including Landlord's written approval of Tenant's
contractor(s) and of the plans, working drawings and specifications relating
thereto, such approval not to be unreasonably withheld or delayed. Tenant shall
deliver to Landlord a copy of the "as built" plans and specifications for all
alterations or physical additions so made in or to the Leased Premises.
(d) All alterations, physical additions, or improvements in or
affixed to the Leased Premises (including fixtures) shall become the property
of Landlord upon the expiration or any earlier termination of this Lease;
provided, however, that this subsection shall not apply to Tenant's trade
fixtures, or movable equipment or furniture.
(e) Tenant shall indemnify, defend and hold Landlord harmless from
and against all costs (including reasonable attorneys' fees and costs of suit),
losses, liabilities, or causes of action arising out of or relating to any
alterations, additions or improvements made by Tenant to the Leased Premises,
including, but not limited to, any mechanics' or materialmen's liens asserted
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<PAGE> 33
in connection therewith, which indemnification obligations shall survive any
termination or cancellation of this Lease.
(f) If any mechanic's, materialmen's or other liens are filed
against any portion of the Building, upon Landlord's interest therein or upon
Tenant's leasehold interests by reason of acts or omissions by Tenant or
Tenant's agents, contractors or employees, or because of a claim against Tenant
or Tenant's agents, contractors or employees, Tenant shall cause the same to
be canceled or discharged of record by bond or otherwise within ten (10) days
after notice by Landlord. If Tenant fails to cancel or discharge said lien or
liens within said ten-day period, Landlord may, at its sole option, cancel or
discharge the same, and upon Landlord's demand, Tenant shall promptly reimburse
Landlord for all costs incurred in canceling or discharging such lien or liens.
Tenant will pay, protect and indemnify Landlord, within ten (10) days after
demand therefor, from and against any and all liabilities, losses, claims,
damages, costs and expenses, including attorneys' fees, incurred by Landlord in
connection with the filing of any lien and/or removal of same. No work which
Landlord permits Tenant to perform in the Leased Premises shall be deemed to be
for the immediate use and benefit of Landlord, and no mechanic's, materialmen's
or other liens shall validly attach to the estate of Landlord by reason of
Landlord's consent to such work.
(g) Tenant may remove from the Leased Premises and dispose of as
it deems appropriate all its trade fixtures, movable equipment, computers,
furniture and furnishings installed at its own cost and expense (which shall
include, without limitation, all computer room equipment (other than the raised
flooring, conduits, HVAC facilities and equipment therein), portable computers,
tables, chairs, desks, file cabinets, equipment (other than conduits and
conductors within walls and ceiling spaces push and pull buttons, motion
detectors, smoke detectors and door contacts), including, without limitation,
control cabinets, cameras, and similar items of personalty, at any time or
times provided: (i) such removal must be made not later than the termination of
this Lease and must be performed in such a manner as to minimize to the extent
reasonably possible any interference with or disturbance of other tenants or
occupancy of the Building or any work then being performed by Landlord in or on
the Building (and Tenant and Landlord shall coordinate any work and space being
vacated); (ii) Tenant is not in default in the performance or observance of any
obligation of covenant of this Lease at the time of such removal; and (iii)
such removal may be and is effected without damage to the Leased Premises,
Building or Property, or, to the extent damage is caused thereby, Tenant
promptly repairs at its expense all damage caused by such removal and pays all
costs of clearing and removing of debris caused by or resulting from such
removal and/or repair work,
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which obligations, covenants and agreements of Tenant in respect hereto shall
expressly survive any termination of this Lease.
5.02 Repairs by Landlord.
Landlord shall make (or cause to be made) all repairs, alterations or
additions that affect the Property's structural components or the Property's
mechanical, electrical and plumbing systems provided, however, Landlord's
repair of Tenant's independent air handling equipment, heaters and chillers and
the Card-Key Access System shall be at Tenant's sole cost and expense. In the
event of any damage to such components or systems caused by the act or omission
of Tenant or Tenant's agents, contractors, employees, invitees (other than
Landlord, its agents, contractors or employees) or visitors, the cost of repair
or restoration of such damage shall be paid for solely by Tenant in an amount
equal to Landlord's reasonable costs plus fifteen percent (15%) for
administrative cost recovery. Landlord shall make such repairs to Building
Standard improvements as may be deemed necessary by Landlord for normal
maintenance operations and Landlord shall not otherwise be obligated to make
improvements to, or repairs of, the Leased Premises; provided, however,
Landlord shall, at Tenant's expense, make such improvements to, or repairs of,
the Leased Premises as Tenant shall request in writing, at a cost equal to the
costs incurred by Landlord in such maintenance or such repairs, plus an
additional charge of fifteen percent (15%) for administrative cost recovery.
Subject to the provisions of Article VI and Section 8.04 of this Lease, if
Landlord fails to commence any repairs within the Leased Premises required to
be performed by Landlord under this Section 5.02 within thirty (30) days after
written notice from Tenant (except in the case of an emergency, in which event
no prior notice shall be required) and thereafter continuously and diligently
proceed with such repair work until completion, Tenant may make such repairs
and credit against Base Rental the direct costs reasonably and necessarily
incurred by Tenant in making such repairs, plus an additional charge of fifteen
percent (15%) for administrative cost recovery.
5.03 Repairs by Tenant.
Subject to Section 5.02 and Article VI, Tenant shall at its own cost
and expense, keep the Leased Premises and all leasehold improvements, Tenant's
independent air handling equipment, heaters and chillers and the Card-Key
Access System in a condition similar to the condition as of the Commencement
Date, normal wear and tear excepted and shall perform all repairs and
improvements required by any governmental law, ordination, rule or regulation.
If Tenant fails to commence any repairs to the Leased Premises, leasehold
improvements and other items within thirty (30) days after written notice from
Landlord to Tenant and thereafter continuously and
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diligently proceed with such repair work until completion in accordance with
all applicable law, Landlord may, at its option, make such repairs or any
replacements deemed necessary by Landlord, and Tenant shall pay to Landlord on
demand Landlord's cost thereof plus a charge of fifteen percent (15%) for
administration cost recovery.
VI
6.01 Condemnation.
If all or substantially all of the Leased Premises, or such portion of
the Leased Premises or the Property as would render, in Landlord's or Tenant's
reasonable judgment, the continuance of Tenant's business from the Leased
Premises impracticable, shall be permanently taken or condemned for any public
purpose, then this Lease, at the option of either party upon the giving of
written notice to the other within ten (10) days from the date of such
condemnation or taking, shall forthwith cease and terminate. If less than all
or substantially all of the Leased Premises or any portion of the Property
shall be permanently taken or condemned for any public purpose to the extent
that would in Landlord's or Tenant's reasonable judgment, render continuing
this Lease or the conduct of Tenant's business from the Leased Premises
impracticable, then either party shall have the option of terminating this
Lease by written notice to the other within ten (10) days from the date of such
condemnation or taking. If any portion of the Building or Property not
comprising any portion of the Leased Premises shall be taken or condemned for
any public purpose to such an extent, in Landlord's reasonable judgment, as to
render the continued operation of the Property impracticable, this Lease, at
the option of Landlord upon the giving of written notice to the Tenant within
ten (10) days from the date of such condemnation or taking, shall forthwith
cease and terminate. If this Lease is terminated as provided above, this Lease
shall cease and expire as if the date of transfer of possession of the Leased
Premises, the Property, or any portion thereof, was the expiration date of this
Lease. Notwithstanding anything to the contrary contained herein, Landlords's
obligation to repair such damage is subject to funds being made available to
Landlord therefor by Landlord's Mortgagee (hereinafter defined). In the event
that this Lease is not terminated by Landlord or Tenant as aforesaid, Tenant
shall pay the Base Rental and all other rentals up to the date of transfer of
possession of such portion of the Leased Premises so taken or condemned and
this Lease shall thereupon cease and terminate with respect to such portion of
the Leased Premises so taken or condemned as if the date of transfer of
possession of the Leased Premises was the expiration date of the Term of this
Lease relating to such portion of the Leased Premises. Thereafter the Base
Rental, Tenant's Forecast Additional Rental and Tenant's
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Additional Rental Adjustment shall be adjusted on a pro rata, net rentable
square foot basis. In the event of any condemnation or taking and this Lease is
not so terminated, Landlord shall promptly repair the Leased Premises or the
Property, as the case may be, to Building Standard condition (with Building
Standard materials) so that the remaining portion of the Leased Premises or
Property, as the case may be, shall constitute an architectural unit, fit for
Tenant's occupancy and business; provided, however, that Landlord's obligation
to repair hereunder shall be limited to the extent of the net proceeds made
available to Landlord for such repair from any such condemnation or taking. In
the event of any temporary taking or condemnation for any public purpose of the
Leased Premises or any portion thereof, then this Lease shall continue in full
force and effect except that Base Rental, Tenant's Forecast Additional rental,
and Tenant's Additional Rental shall be adjusted on a pro rata net rentable
square foot basis for the period of time that the Leased Premises are so taken
as of the date of transfer of possession of the Leased Premises and Landlord
shall be under no obligation to make any repairs or alterations. In the event
of any condemnation or taking of the Leased Premises, Tenant hereby assigns to
Landlord the value of all or any portion of the unexpired Term of this Lease
and all leasehold improvements and Tenant may not assert a claim for a
condemnation award therefor; provided, however, Tenant may pursue a separate
attempt to recover an award or compensation against or from the condemning
authority for (i) the value of any fixtures, furniture, furnishings, Tenant
Work and other personal property which were condemned, but which under the
terms of this Lease Tenant is permitted to remove at the end of the Term of
this Lease, (ii) relocation and moving expenses, and (iii) compensation for
loss to Tenant's business; provided that Tenant's pursuit of such claim or
award given as a result thereof, does not delay the delivery of or amount of
award to Landlord.
6.02 Damages from Certain Causes.
Except as otherwise expressly provided for in this Lease, Landlord
shall not be liable or responsible to Tenant or any of its employees, guests,
invitees or agents for any loss or damage to any property or injury to any
person occasioned by theft, fire, act of God, public enemy, riot, strike,
insurrection, trespasser, other tenants in the Building, war, requisition or
order of governmental body or authority, court order or injunction, or any
cause beyond Landlord's reasonable control, or for any damage or inconvenience
which may arise through repair or alteration of any part of the Property and
Tenant hereby forever relinquishes and acquits Landlord from any and all
liability therefor, except in the case of the gross negligence or intentional
misconduct of Landlord.
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6.03 Casualty Clause.
(a) In the event any portion of the Leased Premises, the Building
or any portion of the General Common Areas is damaged by fire or other
casualty, earthquake, flood or by any other cause of any kind or nature
(hereinafter collectively referred to as the "damaged property") and the
damaged property can, in the reasonable written opinion of the Landlord's
architect, be repaired within one hundred eighty (180) calendar days from the
date of notice of Landlord's architect's opinion (such notice to be given no
later than thirty (30) days following the occurrence of the damage), then, the
Lease shall not be terminated and Landlord shall proceed to rebuild or restore
the damaged property to substantially the same condition as existed on the
Completion Date, subject to subsection (d) hereof; provided, however,
Landlord's obligation to repair is subject to funds being made available to
Landlord therefor by Landlord's Mortgagee.
(b) If in the reasonable written opinion of Landlord's architect,
damage to the damaged property cannot be repaired within one hundred eighty
days (180) from the notice of Landlord's architect's opinion (such notice to be
given no later than thirty (30) days following the occurrence of the damage),
then both Landlord and Tenant shall have the right to terminate this Lease by
notifying the other party in writing of such termination within twenty (20)
days of receipt of Landlord's architect's opinion.
(c) Notwithstanding any language herein to the contrary, if at the
time of any such damage, less than one (1) year remains in the Term of this
Lease or in any renewal period, then both Landlord and Tenant shall have the
right to terminate this Lease.
(d) Notwithstanding any language contained herein to the contrary,
in the event this Lease is not terminated as provided hereunder, (i) Landlord
shall be obligated to rebuild or restore the damaged property only to the
extent of the net insurance proceeds available to Landlord for the purpose of
rebuilding and restoration, (ii) if the damaged property is all or any portion
of the Leased Premises, Landlord shall be obligated to rebuild or restore the
damaged property only to substantially the same condition existing as of the
Completion Date provided that Tenant shall bear all costs and expenses,
including without limitation, rentals that are lost due to extended
construction time, in excess of any net insurance proceeds available to
Landlord for the purpose of rebuilding or restoration; and (iii) Tenant shall
be entitled to a pro rata abatement of Base Rental, Tenant's Forecast
Additional Rental, rent paid for parking and Tenant's Additional Rental during
the period of time the Leased Premises, or any portion thereof, are
untenantable due to such damage. At Tenant's election (which shall be made in
writing to Landlord), Landlord agrees to obtain and
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maintain casualty insurance in such amounts as may be necessary to offset the
cost of restoration of and repair to the Leased Premises and items that are
part of the Landlord's Work to substantially the same condition as exists on
the Completion Date provided that Tenant pays for the increased insurance
premiums (i.e. the additional premiums incurred by Landlord in obtaining such
additional casualty insurance) as a separate billed item to Tenant. In the
event of any termination of this Lease under this Section 6.03, this Lease
shall cease and terminate as if the date of such damage was the expiration date
of the Term of this Lease. Notwithstanding any contrary language in this
Section 6.03, if the Leased Premises, the Property, or any portion thereof
shall be damaged through any act or omission of Tenant or its agents,
employees, guests or invitees, the negligence or willful misconduct of Tenant,
such damage shall be repaired by Landlord at the sole expense of Tenant and
rent shall continue hereunder unabated.
6.04 Property Insurance.
Landlord shall maintain standard fire and extended coverage (including
water damage and sprinkler leakage) insurance on the Property (excluding
Tenant's Work) and on all Building Standard improvements. Said insurance shall
be maintained with an insurance company authorized to do business in Texas with
a Best's Insurance Rating Guide (or the equivalent thereof) of B+VIII or
better, in amounts desired by Landlord (but not less than full replacement
value of the Building and Parking Facilities [excluding foundation and
footings]) and payments for losses thereunder shall be made solely to Landlord,
subject to the rights of Landlord's Mortgagee. Tenant shall maintain at its
expense standard fire and extended coverage insurance on all its personal
property, including removable trade fixtures, located in the Leased Premises
and on Tenant's Work and all other additions and improvements (including
fixtures) made by Tenant and not required to be insured by Landlord above. If
the annual premiums to be paid by Landlord shall exceed the standard rates
because of Tenant's operations within, or contents of, the Leased Premises or
because the improvements to the Leased Premises are in excess of Building
Standard improvements, Tenant shall promptly pay the excess amount of the
premium upon request by Landlord, which request shall be accompanied by a
written statement from Landlord's insurance carrier verifying such increase and
the reasons therefor, (and if necessary, Landlord may allocate the insurance
costs of the Property to give effect to this sentence). Upon the request of
Landlord, a duly executed certificate of insurance, reflecting Tenant's
maintenance of the insurance required under this Section 6.04 and Section 6.05,
shall be delivered to Landlord.
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6.05 Liability Insurance.
Landlord (in respect to the Property) and Tenant (in respect to the
Leased Premises) shall each, at their respective cost and expense, maintain a
policy or policies of comprehensive general liability insurance with the
premiums thereon fully paid on or before the due date, issued by and binding
upon a solvent insurance company authorized to transact business in Texas. Such
insurance shall afford minimum protection (which may be affected by primary
and/or excess coverage) of not less than $5,000,000.00 for bodily injury or
death in any one occurrence and of not less than $2,000,000.00 for property
damage in any one occurrence; provided, however, Tenant shall carry such
greater limits of coverage as Landlord may reasonably request from time to time
50 long as Landlord maintains similar limits of coverage.
6.06 Hold Harmless.
Tenant shall indemnify, defend and hold harmless Landlord of, from and
against any and all claims, demands, acts, damages, losses, costs, expenses,
liabilities and judgments suffered by, recovered from and asserted against
Landlord (including reasonable attorneys' fees) resulting from the negligence
of Tenant (but not from the negligence of Landlord) within the Leased Premises
during the Term of this Lease, or any extension or renewal thereof. Landlord
shall indemnify, defend and hold harmless Tenant of, from and against any and
all claims, demands, acts, damages, losses, costs, expenses, liabilities and
judgments suffered by, recovered from and asserted against Tenant (including
reasonable attorneys' fees) resulting from the negligence of Landlord (but not
from the negligence of Tenant) with respect to the Property and the Building
(exclusive of the Leased Premises) during the Term of this Lease, or any
extension or renewal thereof.
6.07 Waiver of Subrogation Rights.
Anything in this Lease to the contrary notwithstanding, Landlord and
Tenant each hereby waives any and all rights of recovery, claim, action or
cause of action, against the other, its agents, servants, partners,
shareholders, officers or employees, for any loss or damage (including the
amount of any deductible attributable thereto) that may occur to the Leased
Premises, the Property or any improvements thereto or thereon, or any personal
property of such party therein or thereon, by reason of fire, the elements, or
any other cause which is required to be insured against under the terms of the
standard fire and extended coverage insurance policies referred to in Section
6.04 hereof, regardless of cause or origin, including negligence of the other
party hereto, its agents, officers, partners, shareholders, servants or
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employees, and each party covenants that no insurer shall hold any right of
subrogation against such other party.
VII
7.01 Default and Remedies.
(a) The occurrence of any of the following shall constitute events
of default:
(1) Base Rental, Tenant's Forecast Additional Rental,
Tenant's Additional Rental Adjustment, or any other sum of money
payable under this Lease is not paid when due;
(2) Tenant's interest in this Lease or the Leased
Premises shall be subjected to any attachment, levy, or sale pursuant
to any order or decree entered against Tenant in any legal proceeding
and such order or decree shall not be vacated within thirty (30) days
of entry thereof; or
(3) Tenant breaches or fails to comply with any term,
provision, condition, or covenant of this Lease, other than as
described in Section 7.01(a)(1), or with any of the Rules and
Regulations now or hereafter established to govern the operation of
the Building or Property.
(4) Tenant shall file a petition under any section or
chapter of the Bankruptcy Code or under any similar law or statute of
the United States or any State thereof, or Tenant shall be adjudged
bankrupt or insolvent in proceedings filed against Tenant thereunder;
or a petition or answer proposing the adjudication of Tenant as a
bankrupt or its reorganization under any present or future federal or
state bankruptcy or similar law shall be filed in any court and such
petition or answer shall not be discharged or denied within ninety
(90) days after the filing thereof.
(5) A receiver or trustee shall be appointed for all or
substantially all of the assets of Tenant or any of Tenant's property
located thereon in any proceeding brought by Tenant, or any such
receiver or trustee shall be appointed in any proceeding brought
against Tenant and shall not be discharged within ninety (90) days
after such appointment or Tenant shall consent to or acquiesce in such
appointment.
(b) Upon the occurrence of any event of default and (i) if the
event of default described in Section 7.01(a)(1) is not cured within ten (10)
days after written notice from Landlord of
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such default, or (ii) the events of default described in Section 7.01(a)(3) is
not cured within thirty (30) days after written notice from Landlord of such
default (or,if the nature of the default is such that it cannot reasonably be
expected to be cured within thirty [30] days, then such curative period shall
be for such reasonable time [not to exceed 90 days] after notice so long as
Tenant promptly commences and diligently and continuously pursues such curative
efforts in good faith), or (iii) the event of default described in any of
Sections 7.01(a)(2), (4) and (5) is not cured immediately, the Landlord shall
have the option to do and perform any one or more of the following in addition
to, and not in limitation of, any other remedy or right permitted it by law or
in equity or by this Lease:
(1) Terminate this Lease by giving notice thereof to
Tenant in which event Tenant shall immediately surrender the Leased
Premises to Landlord and if Tenant fails to do so Landlord may,
without prejudice to any other remedy which it may have for possession
or arrearages in Base Rent, Tenant's Forecast Additional Rental, and
Tenant's Additional Rental Adjustment, (hereinafter collectively
referred to as "Rent") enter upon and take possession of the Leased
Premises and expel or remove Tenant and any other person who may be
occupying the Leased Premises, or any part thereof, by force, if
necessary, without being liable for prosecution or any claim of
damages therefor and Tenant hereby agrees to pay to Landlord on demand
the amount of all loss and damage which Landlord may suffer by reason
of such termination, whether through inability to relet the Leased
Premises on satisfactory terms or otherwise, specifically including,
but not limited to (i) all reasonable expenses necessary to relet the
Leased Premises which shall include the reasonable cost of renovating,
repairing and altering the Leased Premises for a new tenant or
tenants, advertisements and brokerage fees and (ii) any increase in
insurance premiums caused by the vacancy of the Leased Premises.
Nothing contained in this Lease shall limit or prejudice the right of
Landlord to prove for and obtain in proceedings for bankruptcy or
insolvency by reason of the termination of this Lease, an amount equal
to the maximum allowed by any statute or rule of law in effect at the
time when, and governing the proceedings in which, the damages are to
be proved, whether or not the amount be greater, equal to, or less
than the amount of the loss or damages referred to above.
(2) Enter upon and take possession of the Leased Premises
and expel or remove Tenant or any other person who may be occupying
the Leased Premises, or any part thereof, by force, if necessary,
without terminating this Lease,
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Landlord may (but shall be under no obligation to) relet the Leased
Premises or any part thereof for the account of Tenant, in the name of
Tenant or Landlord or otherwise, without notice to Tenant for such
term or terms (which may be greater or less than the period which
would otherwise have constituted the balance of the Term of this
Lease) and on such conditions (which may include concessions or free
rent) and for such uses as Landlord in its absolute discretion may
determine and Landlord may collect and receive any rents payable by
reason of such reletting; and Tenant agrees to pay Landlord on demand
all reasonable expenses necessary to relet the Leased Premises which
shall include the reasonable cost of renovating, repairing and
altering the Leased Premises for a new tenant or tenants,
advertisements and brokerage fees, and Tenant further agrees to pay
Landlord on demand any deficiency that may arise by reason of such
reletting (all such amounts to bear interest at the rate specified in
Section 2.01(c) from the date of demand until paid). Landlord shall
not be responsible or liable for any failure to relet the Leased
Premises or any part thereof or for any failure to collect any rent
due upon any such reletting. No such re-entry or taking of possession
of the Leased Premises by Landlord shall be construed as an election
on Landlord's part to terminate this Lease unless a written notice of
such termination is given to Tenant pursuant to subparagraph (b) (1)
above.
(3) Enter upon the Leased Premises by force if necessary,
and do whatever Tenant is obligated to do under the terms of this
Lease and Tenant agrees to reimburse Landlord on demand for any
reasonable expenses which Landlord may incur in thus effecting
compliance with Tenant's obligations under this Lease and Tenant
further agrees that Landlord shall not be liable for any damages
resulting to Tenant from such action, whether caused by the negligence
of Landlord or otherwise.
(4) No repossession of or re-entering on the Leased
Premises or any part thereof pursuant to subparagraphs (b) (2) and (3)
above or otherwise and no reletting of the Leased Premises or any part
thereof pursuant to subparagraph (b) (2) shall relieve Tenant of its
liabilities and obligations hereunder, all of which survive such
repossession or re-entering. In the event of any such repossession or
re-entering on the Leased Premises or any part thereof by reason of
the occurrence of an event of default, Tenant will pay to Landlord the
Rent required to be paid by Tenant.
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Further, upon the occurrence of any such Event of
default and Tenant's failure to remedy the same within the applicable
curative period following notice, if any, Landlord shall,
notwithstanding any contrary provision of Section 92.008 of the Texas
Property Code, have the right to change all of the locks on doors
providing access to the Leased Premises without the necessity of
placing a sticker on any door to the Leased Premises. In such event,
Landlord shall not be obligated to provide Tenant any keys therefor or
allow Tenant or any other party access to the Leased Premises except
on such terms and conditions as may be acceptable to Landlord in its
sole discretion.
(5) No right or remedy herein conferred upon or reserved
to Landlord is intended to be exclusive of any other right or remedy,
and each and every right and remedy shall be cumulative and in
addition to any other right or remedy given hereunder or now or
hereafter existing at law or in equity or by statute. In addition to
other remedies provided in this Lease, Landlord shall be entitled, to
the extent permitted by applicable law, to injunctive relief in case
of the violation, or attempted or threatened violation, of any of the
covenants, agreements, conditions or provisions of this Lease, or to a
decree compelling performance of any of the covenants, agreements,
conditions or provisions of this Lease, or to any other remedy allowed
to Landlord at law or in equity.
(6) No provision of this Lease shall be deemed to have
been waived by Landlord unless such waiver is in writing and signed by
Landlord, nor shall any custom or practice arising between the parties
in the administration of the terms of this Lease be construed to waive
or lessen Landlord's right to insist upon strict performance of the
terms of this Lease.
7.02 Lien for Rent.
Tenant hereby grants to Landlord a security interest in and to all of
Tenant's personal property now or hereafter located within the Leased Premises
(such contractual security interest being in addition to and cumulative of any
other lien granted Landlord by statute or otherwise), and upon the occurrence
of an event of default by Tenant, Landlord may, in addition to any other
remedies provided herein, enter upon the Leased Premises and take possession of
any and all such goods, wares, equipment, fixtures, furniture, improvements and
other personal property owned by Tenant and situated on the Leased Premises,
without liability for trespass or conversion (and Tenant hereby waives any
right to notice or hearing prior to such taking of possession by Landlord),
foreclose
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the security interest hereby granted and sell the same at public or private
sale, with or without having such property at the sale, after giving Tenant
reasonable notice of the time and place of any public sale or of the time after
which any private sale is to be made, at which sale Landlord or its assigns may
purchase unless otherwise prohibited by law. Notwithstanding the foregoing,
neither Landlord's security interest nor any other lien held by Landlord
(statutory or express) shall extend to or cover Tenant's business records or
the database maintained by Tenant in the conduct of its business. Unless
otherwise provided by law, and without intending to exclude any other manner of
giving Tenant reasonable notice, the requirement of reasonable notice shall be
met if such notice is given in the manner prescribed in this Lease at least
five (5) business days before the date of sale. Any sale made pursuant to the
provision of this Section 7.02 shall be deemed to have been a public sale
conducted in a commercially reasonable manner if held in the Leased Premises
after the time, place and method of sale and a general description of the types
of property to be sold have been advertised in a daily newspaper published in
the county where the Property is located for five (5) consecutive days prior to
the date of sale. The proceeds from any such disposition, less any and all
expenses connected with the taking of possession, holding and selling of the
property (including reasonable attorneys fees and other expenses) shall be
applied as a credit against the indebtedness secured by the security interest
granted in this Section 7.02. Landlord shall have all of the rights of a
secured party under the Texas Business and Commerce Code, as the same may be
amended from time to time. Any surplus shall be paid to Tenant or as otherwise
required by law; and the Tenant shall pay any deficiency forthwith.
Notwithstanding the foregoing, Landlord hereby agrees to subordinate its liens
herein retained (as well as any statutory landlord's lien) to any lien securing
bona fide financing of Tenant's trade fixtures, movable personal property or
equipment placed in the Leased Premises or construction of Tenant's
non-Building Standard leasehold improvements to the Leased Premises provided
that (i) the party to whom such lien is granted by Tenant agrees to be bound by
and perform the obligations of the Tenant under Section 5.01(g) hereinabove and
(ii) the equipment, movable personal property and trade fixtures to which such
subordination extends is identified with specificity.
7.03 Landlord's Default; Tenant's Special Rights to Terminate.
(a) Landlord has provided Tenant a copy of the Deed of Trust held
by Landlord's Mortgagee, which Deed of Trust has been filed for record in the
Office of the County Clerk of Harris County, Texas under Harris County Clerk's
File No. F199350 (the "Deed of Trust"). The Deed of Trust contains provisions,
among
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other things, in respect to the distribution to the Grantor (as such term is
defined therein) of proceeds of condemnation awards and insurance proceeds
payable as a result of casualty damage for the purposes of repair and
restoration. Landlord hereby agrees that it shall constitute default by
Landlord under this Lease in the event Landlord hereafter modifies or amends
such provisions of the Deed of Trust in a manner which results in reducing the
obligations of the holder of the Deed of Trust to distribute such proceeds to
Grantor; provided, however, in no event shall the foregoing provisions of this
Section 7.03(a) be applicable to any modification of the Deed of Trust in
connection with the renewal, modification, extension or rearrangement of the
indebtedness secured by the Deed of Trust or in connection with the refinance
thereof.
(b) Tenant, to the maximum extent permissible under applicable
law, hereby waives the provisions of Section 91.004 of the Texas Property Code,
in respect to Tenant's rights to a lien on the Landlord's non-exempt property
in Tenant's possession and on rent and other sums due from time to time
hereunder by Tenant.
(c) Tenant shall have the right and option to terminate this Lease
if prior to the Completion Date the holder of the Deed of Trust has foreclosed
the lien and security interest thereof (or accepted a deed in lieu thereof).
To exercise such option, Tenant must provide written notice of such election to
Landlord's Mortgagee (or the successful purchaser at such foreclosure sale if
it is not Landlord's Mortgagee) within thirty (30) days after receipt of notice
of such foreclosure (or the execution and delivery of a deed in lieu thereof).
Upon such termination, none of Tenant, Landlord or Landlord's Mortgagee shall
have any further rights, duties or obligations hereunder.
7.04 Attorney's Fees.
If either party defaults in the performance of any of the terms,
agreements or conditions contained in this Lease and the other party places the
enforcement of this Lease, or any part thereof, or the collection of any rent
due or to become due hereunder, or recovery of possession of the Leased
Premises, in the hands of an attorney who files suit upon the same and should
the non-defaulting party prevail in such suit, the prevailing party in any such
litigation which ensues shall, in addition to any other award granted to the
prevailing party, be entitled to recover its reasonable attorneys' fees
incurred in such enforcement effort.
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7.05 No Waiver of Rights.
No failure or delay of either party to exercise any right or power
given it herein or to insist upon strict compliance by the other party of any
obligation imposed on it herein and no custom or practice of either party
hereto at variance with any term hereof shall constitute a waiver or a
modification of the terms hereof by Landlord or any right it has herein to
demand strict compliance with the terms hereof by the other party. No waiver of
any right of either party on one occasion shall operate as a waiver of any of
such rights for any subsequent occurrence. No express waiver shall affect any
condition, covenant, rule, or regulation other than the one specified in such
waiver and then only for the time and in the manner specified in such waiver.
No person has or shall have any authority to waive any provision of this Lease
unless such waiver is expressly made in writing and signed by an authorized
officer of Landlord.
7.06 Holding Over.
In the event of holding over by Tenant after expiration or termination
of this Lease without the written consent of the Landlord, Tenant shall pay as
liquidated damages, solely for such holding over, one hundred fifty percent
(150%) of the rent (including, without limitation, all Base Rental, Tenant's
Forecast Additional Rental and Tenant's Additional Rental Adjustment) as would
have been payable if this Lease had not so terminated or expired for the entire
hold over period. No holding over by Tenant after the term of this Lease shall
be construed to extend this Lease. In the event of any unauthorized holding
over, Tenant shall indemnify Landlord against all claims for damages by any
other tenant to whom Landlord shall have leased all or part of the Leased
Premises effective upon the termination of this Lease. Any holding over with
the express written consent of Landlord shall therefore constitute this Lease
to be a lease from month to month at a Base Rental, Tenant's Forecast
Additional Rental, and all other sums required to be paid by Tenant prior to
the expiration or termination of this Lease as may be determined by Landlord.
7.07 Subordination.
Tenant agrees that the rights of Tenant under this Lease are subject
and subordinate to, and upon the request of Landlord made in writing, Tenant
will confirm the subordination of this Lease to, each ground or land lease now
or hereafter covering all or any part of the Land and to each mortgage or deed
to secure debt which may now or hereafter encumber the Property and/or the
Land, as well as to all renewals, modifications, consolidation, replacements
and extensions thereof in a written form reasonably acceptable to the lessor
under any such ground or land lease and
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the holder of any such mortgage or deed to secure debt; provided, however, that
the lessor under any such ground or land lease and the holder of any such
mortgage or deed to secure debt shall, so long as Tenant shall not be in
default under this Lease, not disturb Tenant in its possession of the Leased
Premises or terminate Tenant's rights hereunder. As a condition to Tenant's
obligations under this Lease, Landlord shall obtain from Landlord's Mortgagee a
non-disturbance and attornment agreement in favor of Tenant in form and
substance reasonably acceptable to Tenant, and shall deliver such agreement to
Tenant within thirty (30) days following the execution of this Lease. If
Landlord's Mortgagee fails to execute such non-disturbance and attornment
agreement by such date, or executes such agreement by such date but in such
form as Tenant, in its reasonable judgement, concludes is adverse to the
interest of Tenant, the Tenant shall have the right, as its sole and exclusive
remedy on account thereof, to terminate this Lease by giving written notice
thereof to Landlord on or before ten (10) days after receipt of such proposed
non-disturbance and attornment agreement in which event neither party hereto
shall have any further rights, duties or obligations hereunder. The date upon
which Tenant accepts such proposed non-disturbance and attornment agreement, or
the expiration of said ten (10) day period without Tenant terminating this
Lease is referred to herein as the "Delivery Date". Tenant agrees that upon the
request of Landlord in writing it will subordinate this Lease from time to time
to the lien of any future mortgage to a bank, insurance company or other
financial institution, irrespective of the time of execution or time of
recording of any such mortgage or mortgages, provided that the holder of any
such mortgage shall enter into an agreement with Tenant, in recordable form,
that in the event of foreclosure or other right asserted under the mortgage by
the holder or any assignee thereof, this Lease and the rights of Tenant
hereunder shall continue in full force and effect and the rights of Tenant
shall not be terminated or disturbed except in accordance with the provisions
of this Lease. Tenant expressly recognizes and agrees that the lessor under any
such ground or land lease and the holder of any such mortgage or deed to secure
debt or any of their successors or assigns or any other holder of such
instrument may sell the Property or the Land in the manner provided for by law
in such instrument; and further, such sale may be made subject to this Lease. In
the event of the enforcement by the lessor under any such ground or land lease
or the grantee under any such mortgage or deed to secure debt of the remedies
provided for by law or by such land or ground lease, mortgage or deed to secure
debt, Tenant will, upon request of any person or party succeeding to the
interest of said lessor or grantee, as a result of such enforcement,
automatically become the Tenant of such successor in interest without change in
the terms or provisions of this Lease; provided, however, that such successor
in interest shall not be bound by (x) any payment of rent for more than one
month in advance except prepayments in the nature
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of security for the performance by Tenant of its obligations under this Lease,
or (y) any amendment or modification of this Lease made without the written
consent of such lessor or grantee or such successor in interest if such lessor,
grantee or successor in interest had previously notified Tenant in writing of
its interest. Upon request by such successor in interest, Tenant shall execute
and deliver an instrument or instruments confirming the attornment herein
provided for in a form reasonably acceptable to such successor in interest.
Notwithstanding anything contained in this Lease to the contrary, in the event
of any default by Landlord in performing its covenants or obligations hereunder
which would give Tenant the right to terminate this Lease, Tenant shall not
exercise such right unless and until (aa) Tenant gives written notice of such
default (which notice shall specify the exact nature of said default and how
the same may be cured and shall be provided concurrently with the notice
provided by Tenant to Landlord) to any lessor under any such land or ground
lease and any holder(s) of any mortgage or deed to secure debt who has
heretofore notified Tenant in writing of its interest and the address to which
notices are to be sent, and (b) said lessor and holder(s) fail to undertake
action to cure said default within thirty (30) days from the giving of such
notice by Tenant. The provisions of Section 9.01 shall govern the manner and
effective date of any notice to be given by Tenant to any such parties.
7.08 Estoppel Certificate or Three-Party Agreement.
At the written request of Landlord, Tenant will execute, from time to
time, an estoppel certificate certifying to such facts (if true) as Landlord
may reasonably require. In the event Tenant fails to execute and deliver the
same within ten (10) business days after request therefor, Landlord shall have
the right (and Tenant hereby empowers Landlord) to execute and deliver such
certificate for and on behalf of and as the binding act of Tenant to the extent
the information set forth therein is true and correct.
VIII
8.01 Sublease or Assignment by Tenant.
(a) Except as expressly provided hereinafter, Tenant shall not,
without the Landlord's prior written consent, (i) assign, convey, mortgage,
pledge, encumber, or otherwise transfer (whether voluntarily, by operation of
law, or otherwise) this Lease or any interest hereunder; (ii) allow any lien to
be placed upon Tenant's interest hereunder; (iii) sublet the Leased Premises or
any part thereof; or (iv) permit the use or occupancy of the Leased Premises or
any part thereof by any one other than Tenant. Any attempt to consummate any of
the foregoing without Landlord's consent shall be of no force or effect. For
purposes hereof, the
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transfer of the ownership or voting rights in a controlling interest of the
voting stock of Tenant (if Tenant is a corporation) or the transfer of a
general partnership interest or a majority of the limited partnership interest
in Tenant (if Tenant is a partnership), at any time throughout the Term of this
Lease, shall be deemed to be an assignment of this Lease; provided, however,
the acquisition of eighty percent (80%) or more of Tenant's stock by any
corporation, the stock of which is registered pursuant to the Securities
Exchange Act of 1934, or the merger or consolidation of Tenant into such
corporation (subject to the following provisions hereof), or the registration
of Tenant's stock pursuant thereto in connection with a public offering of the
same shall not be deemed an assignment of this Lease. Notwithstanding the
foregoing, Tenant shall have the right without Landlord's consent to assign
this Lease or sublet the Leased Premises or any portion thereof to an Affiliate
(hereinafter defined), to MasterCard International, Inc. or Cameron Federal
Employees Credit Union or, in connection with a merger, to assign this Lease to
the surviving corporation in such merger if and only if such surviving
corporation has a net worth (calculated and determined in accordance with
generally accepted accounting principals, consistently applied) immediately
following such merger of not less than $2,500,000. Further, Landlord agrees not
to unreasonably withhold its consent to a requested assignment or sublease of
all or any portion of the Leased Premises to any person or entity with which or
whom Tenant regularly conducts business. In such cases, Tenant shall provide
Landlord a copy of the proposed assignment or sublease on or before the
commencement date thereof and in no event shall the same become effective or
binding upon Landlord until Landlord shall have received a signed copy thereof.
In cases of any assignment to an Affiliate, the Affiliate must, in connection
with any assignment or sublease, assume all the Tenant's obligations, duties
and covenants under this Lease. As used in this Lease, the term "Affiliate"
shall mean and refer to any person or entity controlling, controlled by or
under common control with the Tenant. "Control" shall mean the possession,
direct or indirect, of the power to direct or cause direction of the management
and policies of such person or entity; ownership, directly or indirectly, of at
least fifty-one percent (51%) of the voting securities of, or possession of the
right to vote, in the ordinary direction of its affairs, at least fifty-one
percent (51%) of the voting interests in any person or entity shall be presumed
to constitute such control. Any assignment of sublease to an Affiliate or to
the surviving corporation of a merger (to the extent permitted as provided
hereinabove) or to Mastercard International, Inc. or Cameron Federal Employees
Credit Union is referred to herein as a "Permitted Assignments. Notwithstanding
anything to the contrary contained herein, the named Tenant herein (i.e Payment
Services Company) shall remain fully liable and responsible for the performance
of all the Tenant's duties, covenants, obligations and agreements contained
within this Lease
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irrespective of any assignment or sublease and irrespective of whether or not
Landlord has consented to the same.
(b) Notwithstanding anything herein to the contrary, if at any
time or from time to time during the Term of this Lease Tenant desires to
sublet all or any portion of the Leased Premises or assign all or any portion
or Tenant's interest in this Lease, other than pursuant to a Permitted
Assignment, Tenant shall notify Landlord in writing (hereinafter referred to in
this Section 8.01 as the "Notice") of the terms of the proposed subletting or
assignment, the identity of the proposed sublessee or assignee, the area
proposed to be sublet or covered by the assignment (hereinafter referred to as
"Sublet Space"), and such other information as Landlord may request to evaluate
Tenant's request to sublet or assign. Landlord shall then have the option (i)
to withhold consent to such proposed sublease or assignment, or (ii) to allow
the proposed sublease or assignment subject to the provisions of Section
8.01(c) below, as the case may be, shall be exercisable by Landlord in writing
within a period of thirty (30) calendar days after receipt of the Notice and
any failure by Landlord to exercise any of such options within said thirty (30)
day period shall be deemed to constitute the election of option (i) above.
Landlord hereby agrees to consent to a proposed sublease if, in Landlord's
reasonable opinion, (i) the use to be made of the Leased Premises by the
proposed sublessee does not conflict with exclusive rights granted to other
tenants in the Building or violate any fire, building or other applicable
codes, laws, rules or regulations, (ii) the use to be made of the Leased
Premises or the proposed sublessee's occupancy thereof will require an
occupancy density of not more than one person for each three hundred square
feet of Net Rentable Area occupied or subleased by such proposed sublessee,
(iii) the proposed sublessee's use and occupancy of the Building, its business,
character and reputation are consistent with the first class standard of the
Building.
(c) If Landlord elects to allow the proposed sublease or
assignment, such election shall be subject to Landlord, within twenty (20)
calendar days after receipt of Landlord's notice of election, receiving a copy
of the proposed sublease or assignment, which sublease or assignment must
provide for the assumption of all Tenant's obligations under this Lease, and
such additional information concerning the business, reputation and
credit-worthiness of the proposed sublease or assignee as shall be sufficient
to allow Landlord to form a commercially reasonable judgment with respect
thereto. In the event Landlord fails to approve or disapprove any such sublease
or assignment within thirty (30) days after Landlord's receipt of such
submission from Tenant, such sublease or assignment shall be deemed to be
disapproved; provided, however, that if Landlord approves any proposed sublease
or assignment, Landlord shall receive from Tenant as additional
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rent hereunder fifty percent (50%) of any rents or other sums received by
Tenant pursuant to said sublease or assignment in excess of the rentals payable
to Landlord by Tenant under this Lease with respect to the Sublet Space (after
deducting all of Tenant's reasonable costs associated therewith, including
reasonable brokerage fees and the reasonable cost of remodeling or otherwise
improving the Leased Premises for said sublease or assignee), as such rents or
other sums are received by Tenant from the approved sublessee or assignee.
(d) If Landlord approves in writing the proposed sublessee or
assignee and the terms of the proposed sublease or assignment, but a fully
executed counterpart of such sublease or assignment is not delivered to
Landlord within ninety (90) calendar days after the date of Landlord's written
approval, then Landlord's approval of the proposed sublease or assignment shall
be deemed null and void and Tenant shall again comply with all the conditions
of this Section 8.01 as if the Notice and options hereinafter referred to had
not been given, received or exercised. If Landlord fails to approve the form of
sublease or assignment or the sublessee or assignee, Tenant shall have the
right to submit amended forms or other sublessees or assignees to Landlord to
review for approval.
(e) Notwithstanding the giving by Landlord of its consent to any
sublease or assignment with respect to the Leased Premises, no sublessee or
assignee (other than an Affiliate under a Permitted Assignment) may exercise
any expansion option, right of first refusal option, or renewal option under
this Lease except in accordance with a separate written agreement entered into
directly between such sublease or assignee and Landlord.
(f) Notwithstanding the giving by Landlord of its consent to any
subletting, assignment or occupancy as provided hereunder or any language
contained in such lease, sublease or assignment to the contrary, unless this
Lease is expressly terminated by Landlord, Tenant shall not be relieved of any
of Tenant's obligations or covenants under this Lease and Tenant shall remain
fully liable hereunder.
(g) If, with the consent of the Landlord, the Leased Premises or
any part thereof is sublet or occupied by other than Tenant or this Lease is
assigned, Landlord may, after default by Tenant, collect rent from the
subtenant, assignee or occupant, and apply the net amount collected to the Base
Rental, Tenant's Forecast Additional Rental, Tenant's Additional Rental
Adjustment, and any other sums herein reserved. No such subletting, assignment,
occupancy, or collection shall be deemed (i) a waiver or any of Tenant's
covenants contained in this Lease, (ii) a release of Tenant from further
performance by Tenant of its covenants under
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this Lease, or (iii) a waiver of any of Landlord's other rights hereunder.
8.02 Assignment by Landlord.
Landlord shall have the right to transfer and assign, in whole or in
part, all its rights and obligations hereunder, in the Property, the Land and
all other property referred to herein, and in such event and upon such transfer
(any such transferee to have the benefit of, and be subject to, the provisions
of Sections 8.03 and 8.04 hereof) and assumption of Landlord's obligations
under this Lease arising thereafter by the transferee (subject to the
limitations on the Landlord's liability contained herein) and notice thereof to
Tenant, no further liability or obligation shall thereafter accrue against
Landlord hereunder.
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8.03 Peaceful Enjoyment.
Landlord covenants that Tenant shall and may peacefully have, hold and
enjoy the Leased Premises, subject to the other terms hereof, provided that
Tenant pays the rental and other sums herein recited to be paid by Tenant and
performs all of Tenant's covenants and agreements herein contained. It is
understood and agreed that this covenant and any and all other covenants of
Landlord contained in this Lease shall be binding upon Landlord and its
successors only with respect to breaches occurring during the ownership of the
Landlord's interest hereunder.
8.04 Limitation of Landlord's Personal Liability.
Tenant specifically agrees to look solely to Landlord's interest in
the Property and the rent and other income derived therefrom for the recovery
of any judgment against Landlord, it being agreed that Landlord (and its
partners and shareholders) shall never be personally liable for any such
judgment and that Tenant shall not seek or obtain any such judgment. The
provision contained in the foregoing sentence is not intended to, and shall
not, limit any right that Tenant might otherwise have to (i) obtain injunctive
relief against Landlord or Landlord's successors in interest or (ii) any suit
or action in connection with enforcement or collection of amounts which may
become owing or payable under or on account of insurance maintained by
Landlord.
8.05 Force Majeure.
Landlord and Tenant (except with respect to the payment of Base
Rental, Tenant's Forecast Additional Rental, Tenant's Additional Rental
Adjustment, or any other monetary obligation under this Lease, including any
obligations arising pursuant to the Work Letter Agreement) shall be excused for
the period of any delay and shall not be deemed in default with respect to the
performance of any of the terms, covenants and conditions of this Lease when
prevented from so doing by a cause or causes beyond the Landlord's or Tenant's
(as the case may be) reasonable control, which shall include, without
limitation, all labor disputes, governmental regulations or controls, fire or
other casualty, inability to obtain any material or services, acts of God, or
any other cause not within the reasonable control of Landlord or Tenant (as the
case may be); provided, however, that any delay or prevention caused by Tenant
Delay items shall be deemed to be due to a cause or causes within Tenant's
control; and provided further, however, that none of the foregoing shall affect
any abatement or termination rights expressly granted to Tenant under this
Lease.
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IX
9.01 Notices.
Any notice or other communications required or permitted to be given
under this Lease must be in writing and shall be effectively given or delivered
if hand delivered to the addresses for Landlord and Tenant stated below or if
sent by certified or registered United States Mail, return receipt requested,
to said addresses. Any notice mailed shall be deemed to have been given upon
the earlier of (i) receipt or refusal thereof, or (ii) three days after
depositing the same in the U.S. Mail as aforesaid. Notice effected by hand
delivery shall be deemed to have been given at the time of actual delivery.
Either party shall have the right to change its address to which notices shall
thereafter be sent and the party to whose attention such notice shall be
directed by giving the other party notice thereof in accordance with the
provisions of this Section 9.01. Additionally, Tenant agrees to send copies of
all notices required or permitted to be given to Landlord and to each lessor
under any ground or land lease covering all or part of the Land and each
holder of a mortgage or deed to secure debt encumbering the Property and/or
the Land that notifies Tenant in writing of its interest and the address to
which notices are to be sent.
To the Landlord: With copy to:
VPM 1988-1, Ltd. Liddell, Sapp, Zivley,
c/o Veriquest Real Estate Hill & LaBoon
Services, Inc. 3200 Texas Commerce Tower
5251 Westheimer, Suite 400 Houston, Texas 77002
Houston, Texas 77056 Attn: Mr. Scott Hunsaker
Attn: Mr. Larry Strickland
To the Tenant: With copy to:
Payment Service Company Vinson & Elkins
5251 Westheimer, Suite 1100 2600 First City Tower
Houston, Texas 77056 1001 Fannin
Attn: Mr. John Chaney Houston, Texas 77002
Attn: Mr. James B. Rylander
9.02 Landlord's Mortgagee.
For purposes of the provisions of Section 7.07 of the lease, the name
and address of Landlord's Mortgagee is as follows:
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Teacher's Insurance and Annuity Association
730 Third Avenue
New York, New York
Attn: Investment Officer, Mortgage and
Real Estate Services
Tenant acknowledges that this Lease and the rents payable hereunder
have been pledged by Landlord to Teacher's Insurance and Annuity Association as
security for a loan by Teacher's Insurance and Annuity Association to Landlord
in connection with the ownership of the Property.
9.03 Miscellaneous.
(a) This Lease shall be binding upon and inure to the benefit of the
successors and assigns of Landlord, and shall be binding upon and inure to the
benefit of Tenant, its successors, and, to the extent assignment may be
approved by Landlord hereunder, Tenant's assigns. Where appropriate the
pronouns of any gender shall include the other gender, and either the singular
or the plural shall include the other.
(b) All rights and remedies of Landlord and Tenant under this Lease
shall be cumulative and none shall exclude any other rights or remedies allowed
by law. This Lease is declared to be a contract, and all of the terms hereof
shall be construed according to the laws of the state of Texas. This Lease may
not be altered, changed or amended, except by an instrument in writing executed
by all parties hereto. Further, the terms and provisions of this Lease shall
not be construed against or in favor of a party hereto merely because such
party is the "Landlord" or the "Tenant" hereunder or such party or its counsel
is the draftsman of this Lease.
(c) If Tenant is a corporation, partnership or other entity, Tenant
warrants that all consents or approvals required of third parties (including
but not limited to its Board or Directors or partners) for the execution,
delivery and performance of this Lease have been obtained and that Tenant has
the right and authority to enter into and perform its covenants contained in
this Lease. Likewise, if Landlord is a corporation, partnership or other
entity, Landlord warrants that all consent or approvals required of third
parties (including but not limited to its Board of Directors or partners) for
the execution, delivery and performance of this Lease have been obtained and
that Landlord has the right and authority to enter into and perform its
covenants contained in this Lease.
(d) Wherever in this Lease there is imposed upon Landlord the
obligation to use reasonable efforts or due diligence, Landlord shall be
required to do so only to the extent the same is
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economically feasible and otherwise will not impose upon Landlord extreme
financial or other burdens, or the application of such provision to persons or
circumstances other than those as to which it is invalid or unenforceable,
shall not be affected thereby, and each provision of this Lease shall be valid
and shall be enforceable to the extent permitted by law.
(e) The obligation of Tenant to pay all rent and other sums due from
time to time hereunder constitutes an independent, unconditional covenant and
is not dependent upon performance by Landlord of its obligations and agreements
or covenants, express or implied, hereunder. The foregoing shall not, however,
abridge, modify or effect any specific rights to abatement of rental provided
for elsewhere in this Lease.
(f) If any term or provision of this Lease, or the application thereof
to any person or circumstance, shall to any extent be invalid or unenforceable,
the remainder of this Lease, or the application of such provision to persons or
circumstances other than those as to which it is valid or unenforceable, shall
not be affected thereby, and each provision of this Lease shall be valid and
shall be enforceable to the extent permitted by law.
(g) Time is of the essence in this Lease.
(h) Tenant agrees not to record any memorandum or other evidence of
this Lease in the Real Property Records of Harris County, Texas without
Landlord's prior written consent.
(i) The submission of this Lease by Landlord for examination does not
constitute a reservation of or option for the Leased Premises and this Lease
shall become effective only upon execution by all parties hereto and delivery
thereof by Landlord to Tenant.
(j) All monetary obligations of Landlord and Tenant (including,
without limitation, any monetary obligation of Landlord or Tenant for damages
for any breach of the respective covenants, duties or obligation of Landlord or
Tenant hereunder) are performable exclusively in Harris County, Texas.
(k) There shall be no merger of this Lease or of the leasehold estate
hereby created with the fee estate in the Leased Premises or any part thereof
by reason of the fact that the same person may acquire or hold, directly or
indirectly, this Lease or the leasehold estate hereby created or any interest
in this Lease or in such leasehold estate as well as the fee estate in the
Leased Premises or any interest in such fee estate.
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(l) Nothing contained herein shall be deemed or construed as creating
any partnership or joint venture relationship between Landlord and Tenant, or
any other relationship other than that of landlord and tenant.
9.04 Real Estate Broker.
Each party hereto warrants and represents to the other that no real
estate broker and/or salesman has been involved in this Lease other than Asset
Plus corporation, on behalf of Landlord, and Henry S. Miller/Grubb & Ellis on
behalf of Tenant and each party agrees to indemnify and hold the other harmless
from and against any and all claims of any other real estate broker and/or
salesman due to acts of the indemnifying party or its representatives. The
commission payable to Asset Plus Corporation ("Asset Plus") and Henry S.
Miller/Grubb & Ellis ("Miller") is described in an agreement dated __________ ,
1990 executed by and between Landlord and Asset Plus and an agreement dated
_________, 1990 executed by and between Landlord and Miller, which agreements
are hereby incorporated herein by reference. Landlord agrees to pay such
commissions in accordance with such agreements and to cause its successors-in-
interest (other than Landlord's Mortgagee) to honor the same.
9.05 Restrictions on Leasing.
So long as Tenant is not in default hereunder and the named Tenant
herein (i.e., Payment Services Company) is actually occupying 20,000 square
feet of Net Rentable Area or more, then Landlord agrees not to lease any space
in the Building to Telecredit, S.C.A.N. (Electronic Transaction Corporation),
CheckRite, ChexSystems, J.B.S., Checktronics or CASHEX.
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IN WITNESS WHEREOF, Landlord and Tenant, acting herein by duly
authorized individuals, have caused this Lease to be executed as of the date
aforesaid.
VPM 1988-1 LTD., a Texas limited
partnership
By: VeriQuest Real Estate Services,
Inc., General Manager
By: Larry A. Strickland
----------------------------------
Larry A. Strickland
President
"LANDLORD"
PAYMENT SERVICES COMPANY,
a Texas corporation
By: John D. Chaney
----------------------------------
John D. Chaney, Chairman and Chief
Executive Officer
"TENANT"
By his execution hereinbelow, John D. Chaney, individually,
unconditionally and irrevocably guarantees to Landlord, and its successors
hereunder, that all Base Rental becoming due to Landlord under this Lease
during or otherwise attributable to the first two (2) years of the initial Term
will be promptly paid when due in accordance with the provisions of this Lease.
The undersigned's guaranty obligation shall be reduced, dollar for dollar, for
each dollar of Base Rental paid to Landlord during the first two Lease Years.
The undersigned's guaranty obligations shall be performable without respect to
any circumstance which might constitute a legal or equitable discharge of a
surety or guarantor. The undersigned agrees that this is a guaranty of payment
and not of collection and that the Landlord may proceed to enforce this
guaranty without proceeding against the Tenant or any collateral for the
Tenant's obligations.
John D. Chaney
------------------
JOHN D. CHANEY
-57-
<PAGE> 59
EXHIBITS:
Exhibit A - Land
Exhibit A-1 - Retail Land
Exhibit B - Leased Premises
Exhibit C - Work Letter Agreement
Exhibit D - Renewal Options
Exhibit E - Expansion Options
Exhibit F - Right of First Refusal
Exhibit G - Building Operating Hours
Exhibit H - Signage Plan
Exhibit I - Rules and Regulations
Exhibit J - Reserved Parking Spaces
Exhibit K - Superior Tenant Leases
-58-
<PAGE> 60
FIRST SUPPLEMENT TO AND AMENDMENT
OF LEASE AGREEMENT
THIS FIRST SUPPLEMENT TO AND AMENDMENT OF LEASE AGREEMENT ("First
Supplement") is made and entered into effective this 9th day of July, 1990 by
and between VPM 1988-1 LTD., a Texas limited partnership ("Landlord") and
PAYMENT SERVICES COMPANY, a Texas corporation ("Tenant").
RECITALS:
Landlord and Tenant executed and delivered that certain Lease
Agreement (the "Original Lease") dated April 13, 1990 covering the Leased
Premises in the Building. Reference is here made to the Original Lease for all
purposes and words with initial capital letters used but not defined herein
shall have the respective meanings assigned to them in the Original Lease.
Landlord and Tenant desire to supplement the Original Lease in
connection with lease of additional space in the Building and to make certain
other changes thereto as more fully set forth hereinafter.
AGREEMENTS:
NOW, THEREFORE, for and in consideration of the mutual premises
contained herein and the Original Lease, the Landlord and Tenant hereby agree
as follows:
1. Lease of Sixth Floor Space: Subject to the terms contained
herein and in the Original Lease, as supplemented and amended hereby, Landlord
does hereby lease and demise to Tenant and Tenant does hereby lease and take
from Landlord those certain premises containing approximately 10,232 square
feet of Net Rentable Area on the sixth floor of the Building (the "Sixth Floor
Space"). The Sixth Floor Space is outlined on the floor plan drawing attached
hereto as Exhibit A and made part hereof for all purposes. The portions of Net
Rentable Area of the sixth floor not comprising part of the Sixth Floor Space
are sometimes hereinafter referred to as the "Remaining Sixth Floor Space". By
this reference Exhibit A hereto is hereby incorporated in and made part of
Exhibit B to the Original Lease.
The Sixth Floor Space shall constitute Office Space and from
and after the date hereof shall constitute part of the Leased Premises and
otherwise be included in the "Net Rentable Area" of the Original Lease, as
supplemented and amended hereby. Except as otherwise provided herein, the
lease of the Sixth Floor Space shall be subject to all of the terms and
conditions of the Original Lease, as supplemented and amended hereby, as if the
same had been originally included therein. As a result of the lease of the
Sixth Floor Space, the Net Rentable Area of the Leased Premises is agreed and
stipulated to be 86,713 square feet of Net Rentable Area.
<PAGE> 61
2. Rental Accrual Date for Sixth Floor Space. The lease of the
Sixth Floor Space shall be effective as of the date of execution hereof;
provided, however, rent shall not commence to accrue in respect thereto until
the earlier to occur of (i) the date Tenant actually takes occupancy thereof
and commences to conduct its normal and customary business therefrom or (ii)
the Completion Date in respect to the Sixth Floor Improvements (hereinafter
defined). Notwithstanding anything to the contrary contained herein, the lease
of the Sixth Floor Space shall be for an initial term beginning on the
effective date hereof and ending ten (10) Lease Years from the Commencement
Date for the initial Leased Premises subject to the Original Lease (i.e. the
76,481 square feet of Net Rentable Area).
3. Construction of Sixth Floor Improvements. Landlord and Tenant
are in the process of preparing and agreeing upon the plans and specifications
for the alterations and additions to the Sixth Floor Space in accordance with
the provisions of the Work Letter Agreement. The dates for submission, review
and resubmission of the proposed Working Drawings for the Sixth Floor
Improvements for purposes of the Work Letter Agreement shall be measured from
the date hereof. Landlord shall pay the costs and expenses charged by Tenant's
architects and engineers in connection with preparation of the initial Working
Drawings for the Sixth Floor Improvements (but not any changes thereto
requested by Tenant). Construction of the Sixth Floor Improvements shall be
undertaken in accordance with the provisions of the Work Letter Agreement. The
term "Sixth Floor Improvements" means the alterations and additions to be made
to the Sixth Floor Space pursuant to the approved Working Drawings therefor.
The "Landlord's Work" in respect to the Sixth Floor Improvements shall mean all
of the work identified on the Working Drawings excluding those portions
identified thereon as the "Tenant's Work".
Landlord shall construct the Landlord's Work in regard to the
Sixth Floor Improvements at its sole cost and expense, except to the extent the
cost thereof (including a fee of 2% of the hard costs to be paid to Landlord as
a fee for its services) exceeds $23.50 per square foot of Net Rentable Area
within the Sixth Floor Space. Tenant shall be solely responsible for the
payment of all such excess costs and expenses and shall be solely responsible
for constructing the Tenant's Work in respect to the Sixth Floor Space.
4. Base Rental for Sixth Floor Space. The Base Rental for each
square foot of Net Rentable Area within the Sixth Floor Space for each of the
Lease Years set forth in Column A below shall be the amount set forth opposite
in Column B below:
-2-
<PAGE> 62
<TABLE>
<CAPTION>
Column A Column B
-------- --------
(Lease Years) (Base Rental for Sixth
Floor Space)
<S> <C>
1 $12.04
2 12.54
3 14.54
4 15.54
5 16.54
6 17.54
7 18.54
8 19.54
9 20.54
10 20.54
</TABLE>
For purposes this paragraph 4 and as is described in Section 1.02(b) of the
Original Lease, the first Lease Year for the Sixth Floor Space and each
subsequent Lease Year therefor shall be measured from the Commencement Date for
the initial Leased Premises subject to the Original Lease (i.e. the original
76,481 square feet of Net Rentable Area subject of the Original Lease).
5. Savings. For purposes of the Sixth Floor Improvements, the
term "Savings" shall mean the amount, if any, by which the actual costs and
expenses incurred by Landlord (including a fee of 2% of the hard costs to be
paid to Landlord as a fee for its services) in connection with construction of
the Landlord's Work for the Sixth Floor Improvements is less than $23.50 per
square foot of Net Rentable Area within the Sixth Floor Space. On the
Commencement Date in respect to the Sixth Floor Space, Landlord shall pay to
the Tenant in cash the amount of the Savings up to a maximum of the product
(the "Cash Portion of Savings") obtained by multiplying $2.00 times the number
of square feet of Net Rentable Area within the Sixth Floor Space and, as to any
Savings in excess of the Cash Portion of Savings, Tenant may either use the
same to offset costs and expenses required to be paid by Tenant in connection
with the Completion of the improvements to the initial Leased Premises subject
to the Original Lease (i.e. the original 76,481 square feet of Net Rentable
Area subject to the Original Lease) or as a credit against the first Base
Rental due with respect to the Sixth Floor Space.
6. Tenant's Percentage Share. As a result of the leasing of the
Sixth Floor Space, the term "Tenant's Percentage Share" shall from and after
the date hereof mean forty and six-thousand seventy-six ten thousandths percent
(40.6076%).
7. Special Sixth Floor and Building Rates. The Original Lease is
hereby amended by adding thereto a new Section 2.15 which new section shall be
and read in its entirety as follows:
-3-
<PAGE> 63
"2.15 Limited Duration Base Rates.
(a) Landlord has provided to Tenant rental rates
applicable to the lease by Tenant of all or any portion of the
Remaining Sixth Floor Space during the period of time commencing June
15, 1990 through and including June 14, 1991 (the "Set Rate Period").
If within the Set Rate Period Tenant leases all or any portion of the
Remaining Sixth Floor Space pursuant to this Section 2.15 (as opposed
to in response to an Availability Notice [defined in Exhibit F hereto]
delivered to Tenant pursuant to paragraph (b) of Exhibit F) then the
Base Rental for each square foot of Net Rentable Area so leased for
each of the Lease Years set forth in Column A below shall be equal to
the lesser of (x) the then Prevailing Market Rental Rate for each of
said Lease Years or (y) the sum of the applicable Base Rental set
forth opposite in Column B below increased by (i) in the case of space
so leased during the period from June 15, 1990 through and including
September 14, 1990, $1.25, (ii) in the case of space so leased during
the period from September 15, 1990 through and including December 14,
1990, $1.50, (iii) during the period from December 15, through and
including March 14, 1991, $2.00 and (iv) during the remainder of the
Set Rate Period, $2.50:
<TABLE>
<CAPTION>
Column A Column B
-------- --------
(Lease Years) (Base Rental per square
foot of Net Rentable Area)
<S> <C>
Balance
of Lease Year 1 $10.50
2 11.00
3 13.00
4 14.00
5 15.00
6 16.00
7 17.00
8 18.00
9 19.00
10 19.00
</TABLE>
Portions of the Remaining Sixth Floor Space shall be deemed leased by
Tenant pursuant to this Section 2.15 effective as of the date Tenant
gives Landlord written notice of its desire to do so and specifies
that the same is to be leased pursuant to this Section 2.15(a). Rent
shall commence to accrue as to any space leased pursuant to this
Section 2.15(a) upon the earlier to occur of (i) the date Tenant
actually takes occupancy thereof or (ii) one hundred twenty (120) days
following Tenant's
-4-
<PAGE> 64
delivery of notice to Landlord of Tenant's desire to lease such space.
In connection with any such leasing, Landlord shall
provide Tenant an allowance for the construction of Tenant's
improvements to the premises so leased in the amount of $15.00 for
each square foot of Net Rentable Area leased. In the event the actual
costs and expenses incurred by Landlord in constructing such
improvements is less than the product obtained by multiplying $15.00
times the number of Net Rentable Area leased, the Base Rental for such
space shall be reduced by amortizing the amount of such savings over a
period of years (rounded to the nearest 1/12th of a year) equal to the
unexpired Term as of the date rent begins to accrue in respect to the
premises so leased at a presumed rate of interest of 13% and
subtracting the result thereof from the sum of the applicable Base
Rental plus the increase thereto described in the opening paragraph of
this Section 2.15(a). Landlord also agrees to pay, in connection with
any such leasing, the costs and expenses charged by Tenant's
architects and engineers in connection with preparation of working
drawings for the improvements to such space up to a maximum amount
equal to the product obtained by multiplying $1.50 times the number of
square feet of Net Rentable Area in such space.
(b) Similarly, Landlord has provided to Tenant
rental rates applicable to the lease by Tenant of all or any other
portions of the Building not subject to this Lease during the Set Rate
Period. If within the Set Rate Period Tenant leases all or any such
portions of the Building pursuant to this Section 2.15 (as opposed to
in response to an Availability Notice [defined in Exhibit F hereto]
delivered to Tenant pursuant to paragraph (b) of Exhibit F) then the
Base Rental for each square foot of Net Rentable Area so leased for
each of the Lease Years set forth in Column A below shall be equal to
the lesser of (i) the then Prevailing Market Rental Rate for each of
said Lease Years or (y) the sum of the applicable Base Rental set
forth opposite in Column B below increased by (i) in the case of space
so leased during the period from June 15, 1990 through and including
December 14, 1990, $1.75, (ii) during the period from December 15,
1991 through and including March 14, 1991, $2.00 and (iii) during the
remainder of the Set Rate Period, $2.50:
-5-
<PAGE> 65
<TABLE>
<CAPTION>
Column A Column B
-------- --------
(Lease Years) (Base Rental per square
foot of Net Rentable Area)
<S> <C>
Balance
of Lease Year 1 $10.50
2 11.00
3 13.00
4 14.00
5 15.00
6 16.00
7 17.00
8 18.00
9 19.00
10 19.00
</TABLE>
Portions of the Building shall be deemed leased by Tenant pursuant to
this Section 2.15 effective as of the date Tenant gives Landlord
written notice of its desire to do so and specifies that the same is
to be leased pursuant to this Section 2.15. Rent shall commence to
accrue as to any space leased pursuant to this Section 2.15(b) upon
the earlier to occur of (i) the date Tenant actually takes occupancy
thereof or (ii) one hundred twenty (120) days following Tenant's
delivery of notice to Landlord of Tenant's desire to lease such space.
In connection with any such leasing, Landlord shall
provide Tenant an allowance for the construction of Tenant's
improvements to the premises so leased in the amount of $15.00 for
each square foot of Net Rentable Area leased. In the event the actual
costs and expenses incurred by Landlord in constructing such
improvements is less than the product obtained by multiplying $15.00
times the number of Net Rentable Area leased, the Base Rental for such
space shall be reduced by amortizing the amount of such savings over a
period of years (rounded to the nearest 1/12th) equal to the unexpired
Term as of the date rent begins to accrue with respect to the premises
so lease at a presumed rate of interest of 13% and subtracting the
result thereof from the sum of the applicable Base Rental plus the
increase thereto described in the opening paragraph of this Section
2.15(b). Landlord also agrees to pay, in connection with any such
leasing, the costs and expenses charged by Tenant's architects and
engineers in connection with preparation of working drawings for the
improvements to such space up to a maximum amount equal to the product
obtained by multiplying $1.50 times the number of square feet of Net
Rentable Area in such space.
-6-
<PAGE> 66
(c) Notwithstanding any contrary provisions of
this Section 2.15, Tenant shall only be entitled to lease up to (and
not in excess of) an aggregate of 20,000 square feet of Net Rentable
Area pursuant to the provisions of this Section 2.15."
9. Right of First Refusal. Tenant hereby acknowledges that the
rental rates set forth for the Sixth Floor Space have been calculated and
determined after taking into account the $100,000 credit described in paragraph
(c) of Exhibit F to the Original Lease. Accordingly, Tenant shall not be
entitled to any further credit pursuant to paragraph (c) of said Exhibit F.
10. Miscellaneous.
(a) Except as expressly supplemented and amended hereby,
the Original Lease is hereby ratified and confirmed in all respects. The
Original Lease, as supplemented and amended hereby, and all rights, obligations
and remedies created thereby or existing thereunder shall remain in full force
and effect.
(b) This First Supplement shall be governed and construed
in accordance with the laws of the state of Texas.
EXECUTED effective as of the date and year first above written.
VPM 1988-1 LTD.,
a Texas limited partnership
By: VeriQuest Real Estate
Services, Inc., General
Manager
By: Larry A. Strickland
-----------------------
Larry A. Strickland
President
PAYMENT SERVICES COMPANY,
a Texas corporation
By: John D. Chaney
----------------------------
John D. Chaney, Chairman
and Chief Executive Officer
-7-
<PAGE> 67
By his execution below, John D. Chaney hereby ratifies and confirms
his guaranty of the Tenant's obligations as set forth in the Original Lease and
acknowledges that the same extends to and covers any additional Base Rental
resulting from the lease of the Sixth Floor Space.
John D. Chaney
---------------------------------------
John D. Chaney
Exhibits
A - Sixth Floor Space
-8-
<PAGE> 68
SECOND AMENDMENT TO LEASE AGREEMENT
This Second Amendment to Lease Agreement ("Amendment") is made and
entered into effective as of Feb. 21, 1992, by and between VPM 1988-1, LTD., a
Texas limited partnership, ("Landlord") and PAYMENT SERVICES COMPANY, a Texas
corporation ("Tenant").
W I T N E S S E T H:
RECITALS:
A. Landlord and Tenant previously entered into that certain Lease
Agreement ("Original Lease") dated April 13, 1990 covering 4,171
square feet of Net Rentable Area in the basement and all of the fifth
(5th), seventh (7th), tenth (10th), and eleventh (11th) floors so that
Tenant leased an aggregate of 76,481 square feet of Net Rentable Area
in a building known as 5251 Westheimer or TeleCheck Plaza (the
"Building").
B. Subsequent to the execution of the Original Lease, Landlord and Tenant
executed that certain First Supplement To And Amendment Of Lease
Agreement ("First Amendment") dated July 9, 1990, wherein Landlord
agreed to lease to Tenant the Sixth Floor Space covering 10,232 square
feet of Net Rentable Area of the sixth (6th) floor of the Building
which increased the total Net Rentable Area in the Building leased by
Tenant to 86,713 square feet.
C. As part of the consideration for leasing the Sixth Floor Space,
Landlord gave Tenant a credit equal to $100,000.00 amortized over the
balance of the Lease Term on additional space Tenant leased from
Landlord within the Building prior to August 15, 1993, all as more
particularly set forth in the Original Lease which $100,000.00 credit
was paid to Tenant in the form of a Base Rental reduction as more
particularly set forth in the First Amendment. The Original Lease, as
amended by the terms and provisions of the First Amendment and the
Letter Agreement shall hereinafter be referred to as the "Lease,"
which Lease is incorporated herein by this reference for all purposes.
Words with initial capital letters used in this Amendment but not
defined herein shall have the respective meanings assigned to such
defined terms in the Lease.
D. Landlord and Tenant now desire to amend portions of the Lease (i) to
provide for Tenant to lease the Remaining Sixth Floor Space in two
parcels consisting of two (2) equal parcels each having 4,518 square
feet of Net Rentable Area and each parcel being referred to as "Parcel
1" and "Parcel 2", (ii) to provide for a change in the Base Rental
which will be adjusted to reflect the total dollars expended by
Landlord in the design and construction of the tenant improvements,
(iii) to provide for Landlord to fund a leasehold improvement
allowance and architectural and engineering allowance for tenant
improvements for the Leased Premises, provided the Base Rental is
increased to cover any portion of the allowance expended in the design
and construction of the improvements, (iv) to provide for a 1991 Base
Year for Parcel 1 and, depending upon when Tenant occupies Parcel 2,
either a 1992 or a 1993 Base Year for Parcel 2, (v) to provide for the
relocation of the existing exterior signage and to permit Tenant to
add comparable signage on the east face of the Building; and (vi) to
ratify the parking provisions of the Lease, all as more particularly
set forth below.
Page 1 of 6
<PAGE> 69
AGREEMENT:
IN CONSIDERATION OF THE PREMISES and the mutual agreements herein set
forth and for other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree
as follows:
1. Lease of the Remaining Sixth Floor Space.
Subject to the terms contained herein and in the Lease, as amended by
the terms of this Amendments, Landlord does hereby lease and demise to
Tenant and Tenant does hereby lease and take from Landlord (i) those
certain premises containing approximately 4,518 square feet of Net
Rentable Area (being Parcel 1), and (ii) those certain premises
containing approximately 4,518 square feet of Net Rentable Area (being
Parcel 2) located on the sixth (6th) floor of the Building. The
Remaining Sixth Floor Space is depicted as Parcel 1 and Parcel 2 on
the floor plan attached hereto as Exhibit A. By this reference,
Exhibit A is hereby incorporated in and made part of Exhibit B to the
Lease.
Parcel 1 and Parcel 2 shall constitute Office Space and from and after
the date hereof shall constitute part of the Leased Premises and
otherwise be included in the Net Rentable Area of the Lease. Except
and otherwise provided herein, the lease of Parcel 1 and Parcel 2
shall be subject to all of the terms and conditions of the Lease, as
amended hereby, as if the same had been originally included therein.
Tenant's right to occupy Parcel 1 and Parcel 2 shall be coterminous
with Tenant's right to occupy the Leased Premises. As a result of the
lease of Parcel 1 and Parcel 2, the Net Rentable Area of the Leased
Premises is agreed and stipulated to be 95,749 square feet of Net
Rentable Area.
2. Rental Accrual Date for Parcel 1 and Parcel 2.
The lease of Parcel 1 and Parcel 2 shall be effective as of the date
of this Amendment; provided, however (a) Base Rental and other sums
due under the Lease for Parcel 1 shall not commence to accrue for
Parcel 1 ("Parcel 1 Rent Commencement Date"). until the earlier of (i)
the date Tenant takes occupancy of Parcel 1 and commences to conduct
its normal and customary business therefrom, or (ii) May 1, 1992, and
(b) Base Rental and other sums due under the Lease for Parcel 2 shall
not commence to accrue for Parcel 2 ("Parcel 2 Rent Commencement
Date") until the earlier of (i) three (3) months after the date Tenant
takes occupancy of Parcel 2 and commences to conduct its normal and
customary business therefrom, or (ii) February 1, 1993. The accrual
date for the payment of Base Rental and other sums due under the Lease
for Parcel 2 reflects the agreement of Landlord to grant Tenant three
(3) months of free rent for Parcel 2 as consideration for executing
this Agreement.
3. Base Rental for Parcel 1 and Parcel 2.
Subject to the adjustments as hereinafter set forth in the event
Tenant uses the Allowance (defined below), commencing on the Parcel 1
Rent Commencement Date and on the Parcel 2 Rent Commencement Date and
continuing thereafter for a period of five (5) years, the Base Rental
for Parcel 1 and Parcel 2 shall mean the yearly rate of $10.40 per
square foot of Net Rentable Area of Office Space contained in Parcel 1
or Parcel 2 multiplied by (i) 4,518 square feet of Net Rentable Area
for Parcel 1, and (ii) 4,518 square feet of Net Rentable Area for
Parcel 2. Subject to the adjustments as hereinafter set forth in the
event Tenant uses the Allowance, commencing five (5) years after the
Parcel 1 Rent Commencement Date
Page 2 of 6
<PAGE> 70
and five (5) years after the Parcel 2 Rent Commencement Date and
continuing thereafter for the remainder of the Term, the Base Rental
for Parcel 1 and Parcel 2 shall mean the yearly rate of $15.90 per
square foot of Net Rentable Area of Office Space contained in Parcel 1
or Parcel 2 multiplied by (i) 4,518 square feet of Net Rentable Area
for Parcel 1, and (ii) 4,518 square feet of Net Rentable Area for
Parcel 2.
The Base Rental rates have been established assuming Tenant leases
Parcel 1 and Parcel 2 on an AS-IS basis with Landlord not providing
any Allowance or other concessions other than a $11,746.80 credit
given to Tenant in the form of a three (3) month delay in the
commencement date for Base Rental accrual for Parcel 2.
In accordance with the provisions of Paragraph 6 below, Landlord has
agreed to advance to Tenant an Allowance not to exceed $18.00 per
square foot of Net Rentable Area of Office Space contained in Parcel 1
and Parcel 2 for Tenant to use in the design and construction of
Landlord's Work and Tenant's Work for Parcel 1 and Parcel 2. Landlord
will advance to Tenant the Allowance to be used to fully design,
construct and install Landlord's Work and Tenant's Work provided the
Base Rental for Parcel 1 and Parcel 2 is increased by $.208 per year
per square foot of Net Rentable Area for every $1.00 of costs incurred
by Landlord to design, construct and install the Landlord's Work and
Tenant's Work which increase in Base Rental is reflected in Schedule 1
attached hereto. The adjustment in Base Rental shall be prorated and
adjusted to reflect the actual amounts advanced by Landlord to design,
construct and install the Landlord's Work and Tenant's Work.
4. Base Year for the calculation of Tenant's Additional Rental.
In order to calculate Tenant's Share of Operating Expenses for the
Leased Premises, three (3) different Base Years will be utilized. The
Base Year for the Parcel 1 shall be 1991 with Tenant's Percentage
Share for Parcel 1 being calculated as 2.1158%. The Base Year for
Parcel 2 shall be 1992 unless Tenant occupies Parcel 2 in 1993 in
which even the Base Year for Parcel 2 will be 1993 with Tenant's
Percentage Share for Parcel 2 being calculated as 2.1158%. The Base
Year for the remainder of the Leased Premises shall continue to be
1990 with Tenant's Percentage Share being calculated as 40.6076%.
5. Leasehold Improvements.
(a) Tenant shall have prepared at Tenant's cost for Landlord's
approval drawings, plans and specifications ("Working
Drawings") indicating all changes and improvements
("Landlord's Work") which Tenant desires to have constructed
and installed in Parcel 1 and Parcel 2. Parcel 1 and Parcel 2
will be built out simultaneously. The terms and provisions of
the Work Letter attached to the Original Lease shall govern
the construction of Landlord's Work and Tenant's Work except
as may be expressly provided otherwise in this Paragraph 5. As
soon as the Working Drawings have been approved by Landlord
and Tenant, a copy of a schedule of the Working Drawings shall
be appended to this Amendment and the Working Drawings shall
be deemed incorporated herein for all purposes. Landlord shall
diligently pursue towards completion Landlord's Work depicted
in the Working Drawings in accordance with the Construction
Schedule. Tenant's Architect shall be an architectural firm
selected by Tenant subject to Landlord's approval, which
approval shall not be unreasonably withheld, provided such
architectural firm is duly licensed by the State of Texas.
Tenant shall pay Landlord a coordination fee equal to Five
Thousand and 00/100 Dollars ($5,000.00).
Page 3 of 6
<PAGE> 71
(b) Landlord shall proceed to prepare Parcel 1 and Parcel 2 in
accordance with the Working Drawings (with such minor
variations as Landlord and Tenant agree upon in writing).
Parcel 1 and Parcel 2 will be deemed "completed" when (i) all
Landlord's Work has been substantially completed in accordance
with the Working Drawings, except for punch list items which
do not materially interfere with Tenant's use thereof, and
(ii) Landlord certifies in writing to Tenant as to such
completion. By accepting possession of the leasehold
improvements contained in Parcel 1 and Parcel 2, Tenant shall
be deemed to have accepted the same in its As-Is condition and
to have acknowledged that the same fully complies with
Landlord's covenants and obligations hereunder (subject to any
punch list items which remain to be completed).
(c) All costs and expenses of Landlord's Work and Tenant's Work
shall be paid by Tenant; provided, however, Landlord shall
advance to Tenant an allowance for architectural and
engineering costs, and for the design and construction of
Landlord's Work and Tenant's Work ("Allowance") up to a
maximum of $18.00 per square foot of Net Rentable Area in
Parcel 1 and Parcel 2 equal to $162,648.00 to be advanced by
Landlord to Tenant and credited against such costs and
expenses as incurred. Tenant acknowledges and agrees
Landlord's covenant to advance the Allowance to Tenant is not
a rent concession or an inducement of any kind because if the
Allowance is advanced to Tenant, the Base Rental Tenant is
required to pay for Parcel 1 and Parcel 2 will be increased by
$0.208 per square foot of Net Rentable Area within Parcel 1
and Parcel 2 per year for every dollar per square foot of Net
Rentable Area in Parcel 1 and Parcel 2 that Landlord advances
to Tenant in the form of the Allowance. Tenant shall pay in
cash to Landlord, upon demand, all costs and expenses for
Landlord's Work and Tenant's Work which exceed the Allowance
and for the installation of any improvements or personalty
which are not depicted on the approved Working Drawings.
Landlord's Five Thousand and 00/100 Dollar ($5,000.00)
coordination fee may be paid from the Allowance. In the event
any portion of the Allowance is not used ("Unused Allowance"),
the Unused Allowance may be used prior to February 1, 1993 to
renovate or construct additional improvements to the Leased
Premises provided appropriate Working Drawings are approved by
Landlord. Any use of the Unused Allowance will cause an
increase in the Base Rental for Parcel 1 and Parcel 2 as set
forth in this Paragraph 5. After construction of the
improvements and a final determination of how much of the
Allowance Tenant desires to use, Landlord and Tenant agree to
enter into an appropriate amendment to the Lease to confirm
the adjusted Base Rental for Parcel 1 and Parcel 2.
6. Signage.
Notwithstanding anything to the contrary in Section 3.03 of the Lease,
as part of Tenant's Work, Tenant may relocate at its sole cost and
expense the existing signage located on the south face of the top
floor of the Building to the center south face of the top floor of the
Building. In addition, as part of Tenant's Work, Tenant may at its
sole expense install additional signage comparable in design and
appearance (as described in Exhibit H of the Lease) in the center of
the east face of the top floor of the Building.
Page 4 of 6
<PAGE> 72
7. Parking.
Landlord and Tenant ratify and confirm that the parking provisions of
the Original Lease as set forth in Section 3.04 remain in full force
and effect. To the extent the Net Rentable Area of the Leased Premises
changes as a consequence of Tenant leasing Parcel 1 and/or Parcel 2,
then Parcel 1 and Parcel 2 shall be deemed to be part of the Initial
Leased Premises and the number of parking permits and the charges
therefor for Parcel 1 and Parcel 2 are set forth in Section 3.04 (a)
through (d) of the original Lease.
8. Tenant hereby covenants, represents and warrants to Landlord that:
(a) Tenant is solvent; that no bankruptcy or insolvency
proceedings are pending or contemplated by or against Tenant;
and that this Amendment is the legal, valid and binding
obligation of Tenant enforceable against Tenant in accordance
with its terms, except as enforceability hereof may be limited
by bankruptcy, insolvency, reorganization or moratorium or
other similar laws relating to Landlord's rights and by
general principles which may limit the right to obtain
equitable remedies.
(b) Except as expressly amended by this Amendment, the Lease is in
all respects ratified and confirmed, and the terms,
provisions, representations, warranties, covenants and
conditions thereof shall be and remain in full force and
effect.
(c) The covenants, representations and warranties contained in the
Lease are true and correct in all material respects on and as
of the date hereof as though made on and as of this date, and
to the best of its knowledge and belief Tenant is not in
default in any manner under the Lease or under any document,
writing or instrument executed in connection therewith or
herewith.
(d) All information, reports, statements and other data furnished
by or on behalf of Tenant prior to, contemporaneously with, or
subsequent to the execution of the Lease or this Amendment are
and shall be true and correct to the best of its knowledge and
belief and do not and shall not omit to state any fact or
circumstance necessary to make the information contained
therein or herein not misleading. Upon request of Landlord,
Tenant shall provide to Landlord on a quarterly basis company
prepared financial statements and on an annual basis annual
audited financial statements of the Tenant.
(e) To the best of its knowledge and belief Tenant has no claims,
demands, counterclaims, defenses, allowances, adjustments or
offsets arising out of or in any way related to the Lease (as
amended hereby) or arising out of any document, writing or
instrument executed in connection therewith or herewith.
9. This Amendment (i) shall be binding upon Landlord and Tenant and their
respective heirs, legal representatives, successors and permitted
assigns; (ii) may be renewed, modified or amended only by a writing
signed by each party hereto; (iii) shall be governed by and construed
in accordance with the laws of the State of Texas and the United
States of America; (iv) may be executed in several counterparts, and
each counterpart when so executed and delivered shall constitute an
original agreement, and all such separate counterparts shall
constitute one and the same agreement; and (v) embodies the entire
agreement and understanding between the parties with respect to the
subject matter hereof and supersedes all prior agreements, consents
and understandings relating to such subject matter. All
Page 5 of 6
<PAGE> 73
capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to them in the Lease. The term "Lease" as
used in the Lease or in any other instrument, document or writing
executed in connection therewith or herewith shall mean the Lease as
amended by the First Amendment and this Amendment.
IN WITNESS WHEREOF, this Amendment is executed in multiple counterparts by
Landlord and Tenant effective as of the date first written above.
TENANT:
PAYMENT SERVICES COMPANY,
a Texas corporation
By: John D. Chaney
--------------------------------------------------
John D. Chaney, Chairman/Chief Executive Officer
LANDLORD:
VPM 1988-1, LTD.,
a Texas limited partnership
By: VERIQUEST REAL ESTATE SERVICES, INC.,
its General Partner
By: Larry A. Strickland
---------------------------------------------
Larry A. Strickland, President
Exhibit A - Parcel 1 and Parcel 2
Schedule 1 - Adjustments to Base Rental for Allowance Used by Tenant
Page 6 of 6
<PAGE> 74
THIRD AMENDMENT TO LEASE AGREEMENT
This Third Amendment to Lease Agreement ("Amendment") is made and
entered into effective as of October 5, 1992, by and between VPM 1988-1,
LTD., a Texas limited partnership, ("Landlord") and PAYMENT SERVICES COMPANY,
a Delaware corporation ("Tenant"), as successor in interest by merger to
Payment Services, a Texas corporation ("PSC-Texas").
W I T N E S S E T H:
RECITALS:
A. Landlord and PSC-Texas previously entered into that certain Lease
Agreement ("Original Lease") dated April 13, 1990, covering 4,171
square feet of Net Rentable Area in the basement and all of the fifth
(5th), seventh (7th), tenth (10th), and eleventh (11th) floors so that
PSC-Texas leased an aggregate of 76,481 square feet of Net Rentable
Area in a building known as 5251 Westheimer or TeleCheck Plaza (the
"Building").
B. Subsequent to the execution of the Original Lease, Landlord and
PSC-Texas executed that certain First Supplement To and Amendment Of
Lease Agreement ("First Amendment") dated July 9, 1990, wherein
Landlord agreed to lease to PSC-Texas the Sixth Floor Space covering
10,232 square feet of Net Rentable Area of the sixth (6th) floor of
the Building which increased the total Net Rentable Area in the
Building leased by PSC-Texas to 86,713 square feet.
C. As part of the consideration for leasing the Sixth Floor Space,
Landlord gave PSC-Texas a credit equal to $100,000.00 amortized over
the balance of the Lease Term on additional space PSC-Texas leased
from Landlord within the Building prior to August 15, 1993, all as
more particularly set forth in the Original Lease which $100,000.00
credit was paid to PSC-Texas in the form of a Base Rental reduction as
more particularly set forth in the First Amendment.
D. Landlord and PSC-Texas have executed that certain Second Amendment to
Lease Agreement dated February 21, 1992, ("Second Amendment") in order
(i) to provide for PSC-Texas to lease the Remaining Sixth Floor Space
in two parcels consisting of two (2) equal parcels each having 4,518
square feet of Net Rentable Area and each parcel being referred to as
"Parcel 1" and "Parcel 2," (ii) to provide for a change in the Base
Rental (which will be adjusted to reflect the total dollars expended
by Landlord in the design and construction of the tenant improvements,
(iii) to provide for Landlord to fund a leasehold improvement
allowance and architectural and engineering allowance for tenant
improvements for the Leased Premises, provided the Base Rental is
increased to cover any portion of the allowance expended in the design
and construction of the improvements, (iv) to provide for a 1991 Base
Year for Parcel 1 and, depending upon when PSC-Texas occupied Parcel
2, either a 1992 or 1993 Base Year for Parcel 2, (v) to provide for
the relocation of the existing exterior signage and to permit
PSC-Texas to add comparable signage on the east face of the Building;
and (vi) to ratify the parking provisions of the Lease. The Original
Lease, as amended by the terms and provisions of the First Amendment,
Second Amendment and this Amendment, shall hereinafter be referred to
as the
Page 1 of 8
<PAGE> 75
"Lease", which Lease is incorporated herein by this reference for all
purposes. Words with initial capital letters used in this Amendment
but not defined herein shall have the respective meanings assigned to
such defined terms in the Lease.
E. Tenant is now a wholly-owned subsidiary of Payment Services Company
- U.S. which company is a wholly-owned subsidiary of First Financial
Management Corporation ("FFMC"). Landlord has executed that certain
Release dated July 28, 1992, which released John D. Chaney from his
obligations to guarantee the Lease.
F. Landlord and Tenant now desire to amend the Lease (i) to increase the
Base Rental Tenant is required to pay pursuant to Section 5(c) of the
Second Amendment in order to reflect the monies advanced to Tenant to
construct the improvements contemplated by the Second Amendment, (ii)
to provide for Tenant to lease the space located on the fourth (4th)
floor of the Building in two parcels, the first parcel consisting of
9,865 square feet of Net Rentable Area ("Parcel 3") and the second
parcel consisting of 5,538 square feet of Net Rentable Area ("Parcel
4") and to provide for Tenant to lease space located in the basement
of the Building consisting of 2,125 square feet of Net Rentable Area
(the "Additional Basement Space"), (iii) to provide for a change in
the Base Rental for Parcel 3 and Parcel 4 which will be adjusted to
reflect the total dollars expended by Landlord in the design and
construction of the Tenant improvements, (iv) to provide for Landlord
to fund a leasehold improvement allowance and architectural and
engineering allowance for tenant improvements for the Leased Premises,
provided the Base Rental is increased to cover any portion of the
allowance expended in the design and construction of the improvements,
(v) to provide for a 1992 Base Year for Parcel 3 and the Additional
Basement Space, and a 1995 Base Year for Parcel 4, (vi) provide for
the deletion of Landlord's obligation to provide the First Expansion
Area to Tenant, (vii) to provide for the extension of the Term of the
Lease for Parcel 3 and Parcel 4, and (viii) to ratify the parking
provisions of the Lease, all as more particularly set forth below.
AGREEMENT:
IN CONSIDERATION OF THE PREMISES and the mutual agreements herein set
forth and for other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree
as follows:
1. Lease of Parcel 3, Parcel 4 and the Additional Basement Space.
Subject to the terms contained herein and in the Lease as amended by
the terms of this Amendment, Landlord does hereby lease and demise to
Tenant and Tenant does hereby lease and take from Landlord (i) those
certain premises containing approximately 9,865 square feet of Net
Rentable Area (being Parcel 3), (ii) those certain premises containing
approximately 5,538 square feet of Net Rentable Area (being Parcel 4),
both parcels being located on the fourth (4th) floor of the Building,
and (iii) and those certain premises containing approximately 2,125
square feet of Net Rentable Area (being the Additional Basement
Space). The Additional Basement Space is depicted on the floor plan
attached hereto as Exhibit A-2. Parcel 3 and Parcel 4 are depicted on
the floor
Page 2 of 8
<PAGE> 76
plan attached hereto as Exhibit A-1. By this reference, Exhibit A-1
and Exhibit A-2 are hereby incorporated in and made a part of Exhibit
B to the Lease.
Parcel 3 shall constitute Office Space and from and after the date
hereof shall constitute a part of the Leased Premises and otherwise be
included in the Net Rentable Area of the Lease. Except as otherwise
provided herein, the lease of Parcel 3, Parcel 4 and the Additional
Basement Space shall be subject to all the terms and conditions of the
Lease, as amended hereby, as if the same had been originally included
therein. Tenant's right to occupy Parcel 3, Parcel 4 and the
Additional Basement Space shall be ten (10) years from the Parcel 3
Commencement Date. Parcel 4 will be provided to Tenant rent free for
two (2) years so long as Parcel 4 is used solely for dead storage.
After two (2) years, Tenant will pay Base Rental for Parcel 4 in
accordance with the provisions of Paragraph 2 below.
Parcel 4 will not be provided any Operating Expenses so long as Parcel
4 is used solely for Dead Storage. "Dead Storage" shall be defined as
space not occupied by any personnel or used for any use other than a
storage area; however, if Tenant occupies Parcel 4 and uses same for
any purpose other than Dead Storage, then Landlord shall provide
Building Standard Services for Parcel 4 and Tenant shall pay its
percentage share of Operating Expenses (less any services not required
by Tenant because of such occupancy). The total Net Rentable Area of
the Leased Premises after inclusion of Parcel 3 and the Additional
Basement Space shall be 107,739 square feet and after two years and
the inclusion of Parcel 4, the total Net Rentable Area of the Leased
Premises shall be 113,277 square feet.
2. Rental Accrual Date for Parcel 3, Parcel 4 and the Additional Basement
Space.
The lease of Parcel 3 and the Additional Basement Space shall be
effective as of the date of this Amendment; provided, however (a) Base
Rental and other sums due under the Lease for Parcel 3 and the
Additional Basement Space shall not commence to accrue for Parcel 3
and the Additional Basement Space ("Parcel 3 Rent Commencement Date")
until the earlier of (i) the date Tenant takes occupancy of Parcel 3
and commences to conduct its normal and customary business therefrom,
or (ii) October 15, 1992, and (b) Base Rental and other sums due under
the Lease for Parcel 4 shall not commence to accrue for Parcel 4
("Parcel 4 Rent Commencement Date") until two (2) years after the
Parcel 3 Rent Commencement Date; provided, however, in the event
Tenant occupies Parcel 4 and uses same for any other purpose than Dead
Storage, then Tenant shall pay its pro rata share of the Operating
Expenses (less any services not required by Tenant because of such
occupancy) until the Parcel 4 Rent Commencement Date.
Further, if Tenant elects to use the Allowance (defined below) to
construct improvements to Parcel 4 prior to the Parcel 4 Rent
Commencement Date, then Tenant shall be required to pay Landlord (in
addition to the Base Rental) a monthly amount calculated to be the
total Allowance provided for Parcel 4 by Landlord to Tenant amortized
over the remaining Term of the Lease at an interest rate of ten
percent (10%).
Page 3 of 8
<PAGE> 77
3. Lease Term and Base Rental for the Leased Premises.
The Term of the Lease for the Leased Premises and the Base Rental for
the Leased Premises is set forth on Schedule 1 attached hereto which
is incorporated by this reference. Subject to the adjustments as
hereinafter set forth in the event Tenant uses the Allowance (defined
below), commencing on the Parcel 3 Rent Commencement Date and on the
Parcel 4 Rent Commencement Date and continuing thereafter during the
Term of the Lease, Tenant shall pay the Base Rental for the Leased
Premises set forth on Schedule 1.
The Base Rental rates have been established assuming Tenant leases
Parcel 3 and Parcel 4 on an AS-IS basis with Landlord not providing
any allowance or other concessions to Tenant.
Landlord will advance to Tenant the Allowance to be used to fully
design, construct and install the Landlord's Work and Tenant's Work
provided the Base Rental for Parcel 3 is increased by $.1586 per year
per square foot of Net Rentable Area for every $1.00 of costs incurred
by Landlord to design, construct and install the Landlord's Work and
Tenant's Work which increase in Base Rental is reflected in Schedule 2
attached hereto.
Further, if Tenant elects to use the Allowance (defined below) to
construct improvements to Parcel 4 prior to the Parcel 4 Rent
Commencement Date, then Tenant shall be required to pay Landlord (in
addition to the Base Rental) a monthly amount calculated to be the
total Allowance provided for Parcel 4 by Landlord to Tenant amortized
over the remaining Term of the Lease at an interest rate of ten
percent (10%).
In accordance with the provisions of Paragraph 5 below, Landlord has
agreed to advance to Tenant an Allowance (the "Allowance") not to
exceed $18.00 per square foot of Net Rentable Area of Office Space
contained in Parcel 3 and Parcel 4 for Tenant to use in the design and
construction of the Landlord's Work and Tenant's Work for Parcel 3 and
Parcel 4. The adjustment in Base Rental shall be prorated and adjusted
to reflect the actual amounts advanced by Landlord to design,
construct and install the Landlord's Work and Tenant's Work.
4. Base Year for the calculation of Tenant's Additional Rental
In order to calculate Tenant's Share of Operating Expenses for the
Leased Premises, the following different Base Years will be utilized.
The Base Year for Parcel 1 shall be 1991 with Tenant's Percentage
Share for Parcel 1 being calculated as 2.4637%. The Base Year for
Parcel 2 is 1992, being calculated as 1.7678%. The Base Year for
Parcel 3 and the Additional Basement Space shall be 1992 with Tenant's
Percentage Share for Parcel 3 being calculated as 4.6198% and Tenant's
Percentage Share for the Additional Basement Space being calculated as
1.1806%. The Base Year for Parcel 4 shall be 1994, unless Tenant
occupies Parcel 4 prior to 1994, thus the Base Year shall be the year
such space is occupied with Tenant's Percentage Share for Parcel 4
being calculated as 2.5934%. The Base Year for the remainder of the
Leased Premises shall continue to be 1990 with Tenant's Percentage
Share being calculated as 40.6076% for such remainder.
Page 4 of 8
<PAGE> 78
5. Leasehold Improvements.
(a) Tenant shall have prepared at Tenant's cost for Landlord's
approval drawings, plans and specifications ("Working Drawings")
indicating all changes and improvements ("Landlord's Work") which
Tenant desires to have constructed and installed in the Leased
Premises, Parcel 3, Parcel 4 or the Additional Basement Space. The
terms and provisions of the Work Letter attached to the Original Lease
shall govern the construction of the Landlord's Work and Tenant's Work
except as may be expressly provided otherwise in this Paragraph 5.
Parcel 3 and Parcel 4 do not have to built out simultaneously. As soon
as the Working Drawings have been approved by Landlord and Tenant, a
copy of a schedule of the Working Drawings shall be appended to this
Amendment and the Working Drawings shall be deemed incorporated herein
for all purposes. Landlord shall diligently pursue towards completion
the Landlord's Work depicted in the Working Drawings in accordance
with the Construction Schedule. Tenant's Architect shall be an
architectural firm selected by Tenant subject to Landlord's approval,
which approval shall not be unreasonably withheld, provided such
architectural firm is duly licensed by the State of Texas. Tenant
shall pay Landlord a one time coordination fee equal to $5,500.00 for
the supervision of construction of Landlord's Work and Tenant's Work
for Parcel 4 and Parcel 3.
(b) Landlord shall immediately proceed to prepare Parcel 3 and the
Additional Basement Space and (when advised by Tenant to proceed),
Parcel 4 in accordance with the Working Drawings (with such minor
variations as Landlord and Tenant agree upon in writing). Parcel 3 and
the Additional Basement Space and Parcel 4 will be deemed "completed"
when (i) all Landlord's Work has been substantially completed in
accordance with the Working Drawings, except for punch list items
which do not materially interfere with Tenant's use thereof, and (ii)
Landlord certifies in writing to Tenant as to such completion. By
accepting possession of the leasehold improvements contained in Parcel
3 and the Additional Basement Space and Parcel 4, Tenant shall be
deemed to have accepted the same in its As-Is condition and to have
acknowledged that the same fully complies with Landlord's covenants
and obligations hereunder (subject to any punch list items which
remain to be completed).
(c) All costs and expenses of the Landlord's Work and Tenant's
Work shall be paid by Tenant; provided, however, Landlord shall
advance to Tenant an allowance for the design and construction of the
Landlord's Work and Tenant's Work ("Allowance") up to a maximum of
$18.00 per square foot of Net Rentable Area in Parcel 3 and Parcel 4
equal to $277,254.00 to be advanced by Landlord to Tenant and credited
against such costs and expenses as incurred. Tenant acknowledges and
agrees Landlord's covenant to advance the Allowance to Tenant is not a
rent concession or an inducement of any kind because if the Allowance
is advanced to Tenant, the Base Rental Tenant is required to pay for
Parcel 3 will be increased by $.1586 per square foot of Net Rentable
Area within Parcel 3, per year for every dollar per square foot of Net
Rentable Area in Parcel 3 that Landlord advances to Tenant in the form
of the Allowance. The Base Rental for Parcel 4 shall be increased on a
monthly basis by an amount equal to the total Allowance provided for
Parcel 4 by Landlord to Tenant amortized over the remainder of the
Term of the Lease at an interest rate of ten
Page 5 of 8
<PAGE> 79
percent (10%). Tenant shall pay in cash to Landlord, upon demand, all
costs and expenses for the Landlord's Work and Tenant's Work which
exceed the Allowance and for the installation of any improvements or
personalty which are not depicted on the approved Working Drawings.
The Landlord's $5,500.00 coordination fee may be paid from the
Allowance.
In the event any portion of the Allowance is not used ("Unused
Allowance"), the Unused Allowance may be used prior to January 1, 1995
to renovate or construct additional improvements to the Leased
Premises provided appropriate Working Drawings are approved by the
Landlord. Any use of the Unused Allowance will cause an increase in
the Base Rental for Parcel 3 and Parcel 4 as set forth in this
Paragraph 5. After construction of the improvements and a final
determination of how much of the Allowance Tenant desires to use,
Landlord and Tenant agree to enter into an appropriate amendment to
the Lease to confirm the adjusted Base Rental for Parcel 3 and Parcel
4.
6. Parking. Landlord and Tenant ratify and confirm that the parking
provisions of the Original Lease as set forth in Section 3.04 remain
in full force and effect. Landlord and Tenant acknowledge that Tenant
will continue to have all Parking Rent abate for the Lease Premises
until September 1, 1994. In addition, to the extent the Net Rentable
Area of the Leased Premises changes as a consequence of Tenant leasing
Parcel 3 and Parcel 4, then Parcel 3 and Parcel 4 shall be deemed part
of the initial Leased Premises (and not space obtained pursuant to
Section 2.10 or Section 2.11) and the number of parking permits for
Parcel 3 and Parcel 4 are set forth in Section 3.04(a) through (d) of
the Original Lease. Notwithstanding anything herein to the contrary,
Landlord and Tenant agree that Tenant shall not have to pay rental for
any parking permits provided to Tenant for Parcel 3 and Parcel 4 until
three (3) years after the Parcel 3 Rent Commencement Date. Landlord
and Tenant acknowledge that the Parking Facilities have been
re-striped and the current parking ratio is 4.00.
7. Expansion Option. Landlord and Tenant acknowledge that the inclusion
of Parcel 3 and Parcel 4 as part of the Leased Premises constitutes an
early take down of the ten thousand (10,000) square feet of Net
Rentable Area that Landlord and Tenant had contemplated would
constitute the First Expansion Area as defined in Exhibit E of the
Original Lease. Consequently, the obligation of the Landlord to
provide the First Expansion Area to Tenant has been satisfied and the
provisions of Exhibit E are amended accordingly. Nothing contained
herein shall amend Landlord's obligation to provide Tenant with the
Second Expansion Area or the Third Expansion Area.
8. Termination Option. Notwithstanding anything contained herein to the
contrary, so long as Tenant is not in default under the Lease beyond
any applicable grace period, Tenant shall have the right by giving
written notice to Landlord no later than February 28, 2000, to
terminate its lease of Parcel 3 and Parcel 4 effective as of August
31, 2000, provided Tenant pays to Landlord the Termination Fee
(hereinafter defined).
Tenant's notice to terminate its lease of Parcel 3 and Parcel 4 must
be received by Landlord no later than February 27, 2000. If Tenant
shall terminate its lease of Parcel 3 and Parcel 4, Tenant shall pay
to Landlord a Termination Fee equal
Page 6 of 8
<PAGE> 80
to (a) $61,125.00, plus (b) the unamortized cost of the leasehold
improvements paid for by Landlord for Parcel 3 and Parcel 4 (using an
interest rate of ten percent (10%) over a term of ten years), plus (c)
the unamortized cost of any leasing commissions paid by Landlord for
Parcel 3 and Parcel 4 (using an interest rate of ten percent (10%)
over a term of ten years).
9. Tenant hereby covenants, represents and warrants to Landlord that:
(a) Tenant is solvent; that no bankruptcy or insolvency
proceedings are pending or contemplated by or against Tenant; and that
this Amendment is the legal, valid and binding obligation of Tenant
enforceable against Tenant in accordance with its terms, except as
enforceability hereof may be limited by bankruptcy, insolvency,
reorganization or moratorium or other similar laws relating to
Landlord's rights and by general principles which may limit the right
to obtain equitable remedies.
(b) Except as expressly amended by this Amendment, the Lease is in
all respects ratified and confirmed, and the terms, provisions,
representations, warranties, covenants and conditions thereof shall be
and remain in full force and effect.
(c) The covenants, representations and warranties contained in the
Lease are true and correct in all material respects on and as of the
date hereof as though made on and as of this date, and to the best of
its knowledge and belief Tenant is not in default in any manner under
the Lease or under any document, writing or instrument executed in
connection therewith or herewith.
(d) All information, reports, statements and other data furnished
by or on behalf of Tenant prior to, contemporaneously with, or
subsequent to the execution of the Lease or this Amendment are and
shall be true and correct to the best of its knowledge and belief and
do not and shall not omit to state any fact or circumstance necessary
to make the information contained therein or herein not misleading.
Upon request of Landlord, Tenant shall provide to Landlord on a
quarterly basis company prepared financial statements and on an annual
basis annual audited financial statements of the Tenant and FFMC.
(e) To the best of its knowledge and belief Tenant has no claims,
demands, counterclaims, defenses, allowances, adjustments or offsets
arising out of or in any way related to the Lease (as amended hereby)
or arising out of any document, writing or instrument executed in
connection therewith or herewith.
10. This Amendment (i) shall be binding upon the Landlord and Tenant and
their respective heirs, legal representatives, successors and
permitted assigns; (ii) may be renewed, modified or amended only by a
writing signed by each party hereto; (iii) shall be governed by and
construed in accordance with the laws of the State of Texas and the
United States of America; (iv) may be executed in several
counterparts, and each counterpart when so executed and delivered
shall constitute an original agreement, and all such separate
counterparts shall constitute one and the same agreement; and (v)
together with the Lease, embodies the entire agreement and
understanding between the parties with respect to the subject matter
hereof and supersedes all prior agreements,
Page 7 of 8
<PAGE> 81
consents and understandings relating to such subject matter. All
capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to them in the Lease. The term "Lease" as
used in the Lease or in any other instrument, document or writing
executed in connection therewith or herewith shall mean the Lease as
amended by the First Amendment, Second Amendment and this Amendment.
IN WITNESS WHEREOF, this Amendment is executed in multiple
counterparts by Landlord and Tenant effective as of the date first written
above.
TENANT:
PAYMENT SERVICES COMPANY,
a Delaware corporation
By: Barry W. Burt
-----------------------------
Barry W. Burt, Vice President
LANDLORD:
VPM 1988-1, LTD.,
a Texas limited partnership
By: VERIQUEST REAL ESTATE SERVICES, INC.,
its General Partner
By: Larry A. Strickland
------------------------------
Larry A. Strickland, President
Exhibit A-1 - Parcel 3 and Parcel 4
Exhibit A-2 - Additional Basement Space
Schedule 1 - Base Rental for entire Leased Premises
Schedule 2 - Adjustments to Base Rental for Allowance used by Tenant
Page 8 of 8
<PAGE> 82
FOURTH AMENDMENT TO LEASE AGREEMENT
This Fourth Amendment to Lease Agreement ("Amendment") is made and entered into
effective as of April 5, 1993, by and between VPM 19881, LTD., a Texas limited
partnership, ("Landlord") and PAYMENT SERVICES COMPANY, a Delaware corporation
("Tenant"), as successor in interest by merger to Payment Services, a Texas
corporation ("PSC-Texas").
W I T N E S S E T H:
RECITALS:
A. Landlord and PSC-Texas previously entered into that certain Lease
Agreement ("Original Lease") dated April 13, 1990, covering 4,171
square feet of Net Rentable Area in the basement and all of the fifth
(5th), seventh (7th), tenth (10th), and eleventh (11th) floors so that
Tenant leased an aggregate of 76,481 square feet of Net Rentable Area
in a building known as 5251 Westheimer or TeleCheck Plaza (the
"Building").
B. Subsequent to the execution of the Original Lease, Landlord and Tenant
executed that certain First Supplement To and Amendment Of Lease
Agreement ("First Amendment") dated July 9, 1990, wherein Landlord
agreed to lease to Tenant the Sixth Floor Space covering 10,232 square
feet of Net Rentable Area of the sixth (6th) floor of the Building
which increased the total Net Rentable Area in the Building leased by
PSC-Texas to 86,713 square feet.
C. As part of the consideration for leasing the Sixth Floor Space,
Landlord gave PSC-Texas a credit equal to $100,000.00 amortized over
the balance of the Lease Term on additional space PSC-Texas leased
from Landlord within the Building prior to August 15, 1993, all as
more particularly set forth in the Original Lease which $100,000.00
credit was paid to PSC-Texas in the form of a Base Rental reduction as
more particularly set forth in the First Amendment.
D. Landlord and PSC-Texas have executed that certain Second Amendment to
Lease Agreement dated February 21, 1992, ("Second Amendment") in order
(i) to provide for PSC-Texas to lease the Remaining Sixth Floor Space
in two parcels consisting of two (2) equal parcels each having 4,518
square feet of Net Rentable Area and each parcel being referred to as
"Parcel 1" and "Parcel 2", (ii) to provide for a change in the Base
Rental (which will be adjusted to reflect the total dollars expended
by Landlord in the design and construction of the tenant improvements,
(iii) to provide for Landlord to fund a leasehold improvement
allowance and architectural and engineering allowance for tenant
improvements for the Leased Premises, provided the Base Rental is
increased to cover any portion of the allowance expended in the design
and construction of the improvements, (iv) to provide for a 1991 Base
Year for Parcel 1 and, depending upon when PSC-Texas occupied Parcel
2, either a 1992 or 1993 Base Year for Parcel 2, (v) to provide for
the relocation of the existing exterior signage and to permit
PSC-Texas to add comparable signage on the east face of the Building;
and (vi) to ratify the parking provisions of the Lease Agreement.
-Page 1 of 8-
<PAGE> 83
E. Tenant is now a wholly-owned subsidiary of Payment Services Company -
U.S. which company is a wholly-owned subsidiary of First Financial
Management Corporation ("FFMC"). Landlord has executed that certain
Release dated July 28, 1992, which released John D. Chaney from his
obligations to guarantee the Lease.
F. Landlord and PSC-Texas have executed that certain Third Amendment to
Lease Agreement dated October 5, 1992, ("Third Amendment") in order
(i) to increase the Base Rental Tenant is required to pay pursuant to
Section 5(c) of the Second Amendment in order to reflect the monies
advanced to Tenant to construct the improvements contemplated by the
Second Amendment, (ii) to provide for Tenant to lease the space
located on the fourth (4th) floor of the Building in two parcels, the
first parcel consisting of 9,865 square feet of Net Rentable Area
("Parcel 3") and the second parcel consisting of 5,538 square feet of
Net Rentable Area ("Parcel 4") and to provide for Tenant to lease
space located in the basement of the Building consisting of 2,125
square feet of Net Rentable Area (the "Additional Basement Space"),
(iii) to provide for a change in the Base Rental for Parcel 3 and
Parcel 4 which will be adjusted to reflect the total dollars expended
by Landlord in the design and construction of the Tenant improvements,
(iv) to provide for Landlord to fund a leasehold improvement allowance
and architectural and engineering allowance for tenant improvements
for the Leased Premises, provided the Base Rental is increased to
cover any portion of the allowance expended in the design and
construction of the improvements, (v) to provide for a 1992 Base Year
for Parcel 3 and the Additional Basement Space, and a 1992 Base Year
for Parcel 4, (vi) to provide for the deletion of Landlord's
obligation to provide the First Expansion Area to Tenant, (vii) to
provide for the extension of the Term of the Lease for Parcel 3 and
Parcel 4, and (viii) to ratify the parking provisions of the Lease.
The Original Lease, as amended by the terms and provisions of the
First Amendment, Second Amendment, Third Amendment and this Amendment,
shall hereinafter be referred to as the "Lease", which Lease is
incorporated herein by this reference for all purposes. Words with
initial capital letters used in this Amendment but not defined herein
shall have the respective meanings assigned to such defined terms in
the Lease.
G. Landlord and Tenant now desire to amend the Lease (i) to increase the
Base Rental Tenant is required to pay pursuant to Section 5(c) of the
Third Amendment in order to reflect the monies advanced to Tenant to
construct the improvements contemplated by the Third Amendment, (ii)
to provide for Tenant to lease the space located on the fourth (4th)
floor of the Building in two parcels, the first parcel, being Suite
440, consisting of 2999 square feet of Net Rentable Area ("Parcel 5")
and the second parcel, being Suite 420, consisting of 1,000 square
feet of Net Rentable Area ("Parcel 6"), (iii) to provide for a change
in the Base Rental for Parcel 5 and Parcel 6 which will be adjusted to
reflect the total dollars expended by Landlord in the design and
construction of the Tenant improvements, (iv) to provide for Landlord
to fund a leasehold improvement allowance and architectural and
engineering allowance for tenant improvements for the Leased Premises
and to provide for the relocation of Small Business Loan Services
currently occupying Parcel 5 and Parcel 6, provided the Base Rental is
increased to cover any portion of the allowance expended in the design
and construction of the improvements and the relocation of Small
Business Loan Services, (v) to permit Tenant to install a permanent
emergency generator and to store fuel for the generator at a location
approved by Landlord, (vi) to provide for a 1993 Base Year for Parcel
5 and Parcel 6, (vii) to provide for the extension of the Term of the
Lease for Parcel 5 and Parcel 6, and (viii) to ratify the parking
provisions of the Lease.
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<PAGE> 84
AGREEMENT:
IN CONSIDERATION OF THE PREMISES and the mutual agreements herein set forth and
for other good and valuable considerations, the receipt and sufficiency of
which are hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Lease of Parcel 5 and Parcel 6.
Subject to the terms contained herein and in the Lease as amended by
the terms of this Amendment, Landlord does hereby lease and demise to
Tenant and Tenant does hereby lease and take from Landlord (i) those
certain premises containing approximately 2,999 square feet of Net
Rentable Area (being Parcel 5), and (ii) those certain premises
containing approximately 1,000 square feet of Net Rentable Area (being
Parcel 6), both parcels being located on the fourth (4th) floor of the
Building. Parcel 5 and Parcel 6 are depicted on the floor plan
attached hereto as Exhibit A4-1. By this reference, Exhibit A4-1 is
hereby incorporated in and made a part of Exhibit B to the Lease.
Parcel 5 and Parcel 6 shall constitute Office Space and from and after
the date hereof shall constitute a part of the Leased Premises and
otherwise be included in the Net Rentable Area of the Lease. Except as
otherwise provided herein, the lease of Parcel 5 and Parcel 6 shall be
subject to all the terms and conditions of the Lease, as amended
hereby, as if the same had been originally included therein. Tenant's
right to occupy Parcel 5 and Parcel 6 shall be from the Parcel 5 and 6
Commencement Date until November 24, 2002. The total Net Rentable Area
of the Leased Premises after inclusion of Parcel 5 and Parcel 6 and
Parcel 4 (pursuant to the terms of the Third Amendment), the total Net
Rentable Area of the Leased Premises shall be 117,276 square feet.
2. Rental Accrual Date for Parcel 5 and Parcel 6.
The lease of Parcel 5 and Parcel 6 shall be effective as of the date
of this Amendment; provided, however (a) Base Rental and other sums
due under the Lease for Parcel 5 and Parcel 6 shall not commence to
accrue for Parcel 5 and Parcel 6 ("Parcel 5 and 6 Rent Commencement
Date") until the earlier of (i) the date Tenant takes occupancy of
Parcel 5 and Parcel 6 and commences to conduct its normal and
customary business therefrom, or (ii) April 1, 1993.
3. Lease Term and Base Rental for the Leased Premises.
The Term of the Lease for the Leased Premises and the Base Rental for
the Leased Premises is set forth on Schedule 1 attached hereto which is
incorporated by this reference. Subject to the adjustments as
hereinafter set forth in the event Tenant uses the Allowance (defined
below), commencing on the Parcel 5 and 6 Rent Commencement Date and
continuing thereafter during the Term of the Lease, Tenant shall pay
the Base Rental for the Leased Premises set forth on Schedule 1.
The Base Rental rates have been established assuming Tenant leases
Parcel 5 and Parcel 6 on an AS-IS basis with Landlord not providing
any allowance or other concessions to Tenant.
Landlord will advance to Tenant the Allowance to be used to fully
design, construct and install the Landlord's work and the Tenant's
Work provided the Base Rental for Parcel 5
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<PAGE> 85
and Parcel 6 is increased by $0.1586 per year per square foot of Net
Rentable Area for every $1.00 of costs incurred by Landlord to design,
construct and install the Landlord's Work and Tenant's Work which
increase in Base Rental is reflected in Schedule 2 attached hereto.
In accordance with the provisions of Paraqraph 5 below, Landlord has
agreed to advance to Tenant an Allowance ("Allowance") not to exceed
$18.00 per square foot of Net Rentable Area of Office Space contained
in Parcel 5 and Parcel 6 for Tenant to use in the design and
construction of the Landlord's Work and Tenant's Work for Parcel 5 and
Parcel 6.
4. Base Year for the calculation of Tenant's Additional Rental.
In order to calculate Tenant's Share of Operating Expenses for the
Leased Premises, the following different Base Years will be utilized.
The Base Year for Parcel 1 shall be 1991 with Tenant's Percentage
Share for Parcel 1 being calculated as (2.4637%). The Base Year for
Parcel 2 shall be 1992 with Tenant's Percentage Share for Parcel 2
being calculated as (1.7678%). The Base Year for Parcel 3 and the
Additional Basement Space shall be 1992 with Tenant's Percentage Share
for Parcel 3 being calculated as (4.6198%) and Tenant's Percentage
Share for the Additional Basement Space being calculated as 0.9951%.
The Base Year for Parcel 4 shall be 1992, with Tenant's Percentage
Share for Parcel 4 being calculated as 2.5934%. The Base Year for
Parcel 5 and Parcel 6 shall be 1993 with Tenant's Percentage Share for
Parcel 5 and Parcel 6 collectively being 1.8727%. The Base Year for
the remainder of the Leased Premises shall continue to be 1990 with
Tenant's Percentage Share being calculated as 40.6076% for such
remainder.
5. Leasehold Improvements.
(a) Tenant shall have prepared at Tenant's cost for Landlord's
approval drawings, plans and specifications ("Working
Drawings") indicating all changes and improvements ("Landlord's
Work") which Tenant desires to have constructed and installed
in the Leased Premises. Parcel 5 and Parcel 6 need to be built
out simultaneously. The terms and provisions of the Work
Letter attached to the Original Lease shall govern the
construction of the Landlord's Work and Tenant's Work except
as may be expressly provided otherwise in this Paragraph 5. As
soon as the Working Drawings have been approved by Landlord and
Tenant, a copy of a schedule of the Working Drawings shall be
appended to this Amendment and the Working Drawings shall be
deemed incorporated herein for all purposes. Landlord shall
diligently pursue towards completion the Landlord's Work
depicted in the Working Drawings in accordance with the
Construction Schedule. Tenant's Architect shall be an
architectural firm selected by Tenant subject to Landlord's
approval, which approval shall not be unreasonably withheld,
provided such architectural firm is duly licensed by the State
of Texas. Tenant shall pay Landlord a one time coordination
fee equal to $5,500.00 for the supervision of construction of
Landlord's Work and Tenant's Work for Parcel 5 and Parcel 6.
(b) Landlord shall immediately proceed to prepare Parcel 5 and
Parcel 6 in accordance with the Working Drawings (with such
minor variations as Landlord and Tenant agree upon in
writing). Parcel 5 and Parcel 6 will be deemed
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<PAGE> 86
"completed" when (i) all Landlord's Work has been
substantially completed in accordance with the
Working Drawings except for punch list items which do
not materially interfere with Tenant's use thereof,
and (ii) Landlord certifies in writing to Tenant as
to such completion. By accepting possession of the
leasehold improvements contained in Parcel 5 and
Parcel 6, Tenant shall be deemed to have accepted the
same in its As-Is condition and to have acknowledged
that the same fully complies with Landlord's
covenants and obligations hereunder (subject to any
punch list items which remain to be completed).
(c) All costs and expenses of relocating Small Business
Loan Services, the Landlord's Work and Tenant's Work
shall be paid by Tenant; provided, however, Landlord
shall advance to Tenant an allowance for the design
and construction of the Landlord's Work and Tenant's
Work ("Allowance") up to a maximum of $18.00 per
square foot of Net Rentable Area in Parcel 5 and
Parcel 6 equal to $71,982.00 to be advanced by
Landlord to Tenant and credited against such costs
and expenses as incurred. Tenant acknowledges and
agrees Landlord's covenant to advance the Allowance
to Tenant is not a rent concession or an inducement
of any kind because if the Allowance is advanced to
Tenant, the Base Rental Tenant is required to pay for
Parcel 5 and Parcel 6 will be increased by $0.1586
per square foot of Net Rentable Area within Parcel 5
and Parcel 6 per year for every dollar per square
foot of Net Rentable Area in Parcel 5 and Parcel 6
that Landlord advances to Tenant in the form of the
Allowance. In the event the total costs of (i)
relocating Small Business Loan Services, and (ii)
Tenant's Work, and (iii) Landlord's Work, and (iv)
installation of any improvements or personalty which
were not depicted on the approved Working Drawings
exceeds the amount of the Allowance (such amount
being called the "Overage") Tenant shall pay the
Overage in cash to Landlord, upon demand, or, at
Tenant's election, Landlord will amortize the Overage
in equal monthly installments over five years of the
Term at an interest rate of ten percent (10%) per
annum commencing on the Parcel 5 and Parcel 6
Commencement Date. Landlord shall advise Tenant of
the amount of the Overage, if any, and Tenant shall
either pay the Overage in cash or elect to have the
Overage amortized over five (5) years of the Lease
term, such election to be made within three (3) days
after receipt of Landlord's notifcation of the
Overage. If Tenant elects to pay the Overage as
additional Base Rental, Landlord shall prepare an
amendment to the Lease reflecting the new Base Rental
for the Leased Premises for Tenant's execution. The
Landord's $5,500.00 Coordination Fee may be paid from
the Allowance.
In the event any portion of the Allowance is not used
("Unused Allowance"), the Unused Allowance may be used
prior to January 1, 1995 to renovate or construct
additional improvements to the Leased Premises
provided appropriate Working Drawings are approved by
the Landlord. Any use of the Unused Allowance will
cause an increase in the Base Rental for Parcel 5 and
Parcel 6 as set forth in this Paraqraph 5. After
construction of the improvements and a final
determination of how much of the Allowance Tenant
desires to use, Landlord and Tenant agree to enter
into an appropriate amendment to the Lease to confirm
the adjusted Base Rental for Parcel 5 and Parcel 6.
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<PAGE> 87
6. Generator.
Tenant may install an electrical generator in a location approved in
writing by Landlord. Upon termination of the Lease, Tenant shall
remove the generator and repair any damage associated with its
removal. Upon prior written notice to Landlord, Tenant may temporarily
store diesel fuel in a location approved by Landlord to run the
generator. Such temporary storage shall only for such period of time
as is necessary for Tenant to take precautions to insure that Tenant
will have adequate electrical power during any impending storm or
other event which could reasonably cause the electrical power to the
Leased Premises to be interrupted. Tenant shall not store fuel for the
generator on a permanent basis and will cause the fuel to be removed
when the reason for temporarily storing the fuel has subsided. Tenant
shall indemnify, defend and hold harmless Landlord from loss, damage,
legal fees and costs associated with any fuel spill or leakage from
the fuel storage drums and from any loss, damage, legal fees and costs
associated with damage to the Building arising from the use of the
generator even if the concurrent negligence (but not the gross
negligence or wilful misconduct) of Landlord contributed to the damage
or loss.
7. Parking.
Landlord and Tenant ratify and confirm that the parking provisions of
the Original Lease as set forth in Section 3.04 remain in full force
and effect. Landlord and Tenant acknowledge that Tenant will continue
to have all Parking Rent abate for the Leased Premises until September
1, 1994. In addition, to the extent the Net Rentable Area of the
Leased Premises changes as a consequence of Tenant leasing Parcel 5
and Parcel 6, then Parcel 5 and Parcel 6 shall be deemed part of the
initial Leased Premises (and not space obtained pursuant to Section
2.10 or Section 2.11) and the number of parking permits and the
charges therefor for Parcel 5 and Parcel 6 are set forth in Section
3.04 (a) through (d) of the Original Lease. Notwithstanding anything
herein to the contrary, Landlord and Tenant agree that Tenant shall
not have to pay rental for any parking permits provided to Tenant tor
Parcel 5 and Parcel 6 until November 25, 1995. Landlord and Tenant
acknowledge that the Parking Facilities have been re-stripped and the
current parking ratio is 4.00.
8. Termination Option.
Notwithstanding anything contained herein to the contrary, so long as
Tenant is not in default under the Lease beyond any applicable grace
period, Tenant shall have the right by giving written notice to
Landlord no later than February 28, 2000, to terminate its lease of
Parcel 5 and Parcel 6 effective as of August 31, 2000, provided Tenant
pays to Landlord the Termination Fee (hereinafter defined).
Tenant's notice to terminate its lease of Parcel 5 and Parcel 6 must
be received by Landlord no later than February 27, 2000. If Tenant
shall terminate its lease of Parcel 5 and Parcel 6, Tenant shall pay
to Landlord a Termination Fee equal to (a) the unamortized cost of the
leasehold improvements paid for by landlord for Parcel 5 and Parcel 6
(using an interest rate of ten percent (10%) over a term of ten (10)
years), plus (b) the unamortized cost of any leasing commissions paid
by Landlord for Parcel 5 and Parcel 6 (using an interest rate of ten
percent (10%) over a term of ten (10) years).
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<PAGE> 88
9. Tenant hereby covenants, represents and warrants to Landlord that:
(a) Tenant is solvent; that no bankruptcy or insolvency
proceedings are pending or contemplated by or against Tenant;
and that this Amendment is the legal, valid and binding
obligation of Tenant enforceable against Tenant in accordance
with its terms, except as enforceability hereof may be limited
by bankruptcy, insolvency, reorganization or moratorium or
other similar laws relating to Landlord's rights and by
general principles which may limit the right to obtain
equitable remedies.
(b) Except as expressly amended by this Amendment, the Lease is in
all respects ratified and confirmed, and the terms,
provisions, representations, warranties, covenants and
conditions thereof shall be and remain in full force and
effect.
(c) The covenants, representations and warranties contained in the
Lease are true and correct in all material respects on and as
of the date hereof as though made on and as of this date, and
to the best of its knowledge and belief Tenant is not in
default in any manner under the Lease or under any document,
writing or instrument executed in connection therewith or
herewith.
(d) All information, reports, statements and other data furnished
by or on behalf of Tenant prior to, contemporaneously with, or
subsequent to the execution of the Lease or this Amendment are
and shall be true and correct to the best of its knowledge and
belief and do not and shall not omit to state any fact or
circumstance necessary to make the information contained
therein or herein not misleading. Upon request of Landlord,
Tenant shall provide to Landlord on a quarterly basis company
prepared financial statements and on an annual basis annual
audited financial statements of the Tenant and FFMC.
(e) To the best of its knowledge and belief Tenant has no claims,
demands, counterclaims, defenses, allowances, adjustments or
offsets arising out of or in any way related to the Lease (as
amended hereby) or arising out of any document, writing or
instrument executed in connection therewith or herewith.
10. This Amendment (i) shall be binding upon the Landlord and Tenant and
their respective heirs, legal representatives, successors and
permitted assigns; (ii) may be renewed, modified or amended only by a
writing signed by each party hereto; (iii) shall be governed by and
construed in accordance with the laws of the State of Texas and the
United States of America; (iv) may be executed in several
counterparts, and each counterpart when so executed and delivered
shall constitute an original agreement, and all such separate
counterparts shall constitute one and the same agreement; and (v)
together with the Lease, embodies the entire agreement and
understanding between the parties with respect to the subject matter
hereof and supersedes all prior agreements, consents and
understandings relating to such subject matter. All capitalized terms
used herein and not otherwise defined herein shall have the meanings
ascribed to them in the Lease.
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<PAGE> 89
IN WITNESS WHEREOF, this Amendment is executed in multiple
counterparts by Landlord and Tenant effective as of the date first written
above.
TENANT:
PAYMENT SERVICES COMPANY,
a Delaware corporation
By: Barry W. Burt
---------------------------------
Barry W. Burt, Vice President
LANDLORD:
VPM 1988 1, LTD.,
a Texas limited partnership
By: VERIOUEST REAL ESTATE SERVICES, INC.,
its General Partner
By: Larry A. Stickland, President
---------------------------------
Larry A. Stickland, President
Exhibit A4-1- Parcel 5 and Parcel 6
Schedule 1 - Base Rental for Entire Leased Premises
Schedule 2 - Adjustments to Base Rental
for Allowance Used by Tenant
-Page 8 of 8-
<PAGE> 90
FIFTH AMENDMENT TO LEASE AGREEMENT
This Fifth Amendment to Lease Agreement ("Amendment") is made and entered into
effective as of December 15, 1993, by and between VPM 1988-1, LTD., a Texas
limited partnership, ("Landlord") and TELECHECK SERVICES, INC. ("Tenant"), as
successor in interest to Payment Services Company, a Delaware corporation, as
successor in interest by merger to Payment Services, a Texas corporation
("PSC-Texas").
W I T N E S S E T H :
RECITALS:
A. Landlord and PSC-Texas previously entered into that certain Lease
Agreement ("Original Lease") dated April 13, 1990, covering 4,171
square feet of Net Rentable Area in the basement and all of the fifth
(5th), seventh (7th), tenth (1Oth), and eleventh (11th) floors so that
Tenant leased an aggregate of 76,481 square feet of Net Rentable Area
in a building known as 5251 Westheimer or TeleCheck Plaza (the
"Building").
B. Subsequent to the execution of the Original Lease, Landlord and Tenant
executed that certain First Supplement To and Amendment Of Lease
Agreement ("First Amendment") dated July 9, 1990, wherein Landlord
agreed to lease to Tenant the Sixth Floor Space covering 10,232 square
feet of Net Rentable Area of the sixth (6th) floor of the Building
which increased the total Net Rentable Area in the Building leased by
PSC-Texas to 86,713 square feet of Net Rentable Area.
C. As part of the consideration for leasing the Sixth Floor Space,
Landlord gave PSC-Texas a credit equal to $100,000.00 amortized over
the balance of the Lease Term on additional space PSC-Texas leased
from Landlord within the Building prior to August 15, 1993, all as
more particularly set forth in the Original Lease which $100,000.00
credit was paid to PSC-Texas in the form of a Base Rental reduction as
more particularly set forth in the First Amendment.
D. Landlord and PSC-Texas have executed that certain Second Amendment to
Lease Agreement dated February 21, 1992, ("Second Amendment") in order
(i) to provide for PSC-Texas to lease the Remaining Sixth Floor Space
in two parcels consisting of two (2) equal parcels each having 4,518
square feet of Net Rentable Area and each parcel being referred to as
"Parcel 1" and "Parcel 2", (ii) to provide for a change in the Base
Rental (which will be adjusted to reflect the total dollars expended
by Landlord in the design and construction of the tenant improvements,
(iii) to provide for Landlord to fund a Leasehold Improvement
Allowance and Architectural and Engineering Allowance for tenant
improvements for the Leased Premises, provided the Base Rental is
increased to cover any portion of the allowance expended in the design
and construction of the improvements, (iv) to provide for a 1991 Base
Year for Parcel 1 and, depending upon when PSC-Texas occupied Parcel
2, either a 1992 or 1993 Base Year for Parcel 2, (v) to provide for
the relocation of the existing exterior signage and to permit PSC-
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<PAGE> 91
Texas to add comparable signage on the east face of the Building; and
(vi) to ratify the parking provisions of the Lease Agreement.
E. Tenant is now a wholly-owned subsidiary of Payment Services
Company-U.S. which company is a wholly-owned subsidiary of First
Financial Management Corporation ("FFMC"). Landlord has executed that
certain Release dated July 28, 1992, which released John D. Chaney
from his obligations to guarantee the Lease.
F. Landlord and PSC-Texas have executed that certain Third Amendment to
Lease Agreement dated October 5, 1992, ("Third Amendment") in order
(i) to increase the Base Rental Tenant is required to pay pursuant to
Section 5(c) of the Second Amendment in order to reflect the monies
advanced to Tenant to construct the improvements contemplated by the
Second Amendment, (ii) to provide for Tenant to lease the space
located on the fourth (4th) floor of the Building in two parcels, the
first parcel consisting of 9,865 square feet of Net Rentable Area
("Parcel 3") and the second parcel consisting of 5,538 square feet of
Net Rentable Area ("Parcel 4") and to provide for Tenant to lease
space located in the basement of the Building consisting of 2,125
square feet of Net Rentable Area (the "Additional Basement Space"),
(iii) to provide for a change in the Base Rental for Parcel 3 and
Parcel 4 which will be adjusted to reflect the total dollars expended
by Landlord in the design and construction of the Tenant improvements,
(iv) to provide for Landlord to fund a Leasehold Improvement Allowance
and Architectural and Engineering Allowance for tenant improvements
for the Leased Premises, provided the Base Rental is increased to
cover any portion of the allowance expended in the design and
construction of the improvements, (v) to provide for a 1992 Base Year
for Parcel 3 and the Additional Basement Space, and a 1992 Base Year
for Parcel 4, (vi) to provide for the deletion of Landlord's
obligation to provide the First Expansion Area to Tenant, (vii) to
provide for the extension of the Term of the Lease for Parcel 3 and
Parcel 4, and (viii) to ratify the parking provisions of the Lease.
G. Landlord and PSC-Texas have executed that certain Fourth Amendment to
Lease Agreement dated April 5, 1993 ("Fourth Amendment") in order (i)
to increase the Base Rental Tenant is required to pay, (ii) to provide
for Tenant to lease the space located on the fourth (4th) floor of the
Building in two parcels, the first parcel, being Suite 440, consisting
of 2999 square feet of Net Rentable Area ("Parcel 5") and the second
parcel, being Suite 420, consisting of 1,000 square feet of Net
Rentable Area ("Parcel 6"), (iii) to provide for a change in the Base
Rental for Parcel 5 and Parcel 6 which will be adjusted to reflect the
total dollars expended by Landlord in the design and construction of
the Tenant improvements, (iv) to provide for Landlord to fund a
leasehold improvement allowance and architectural and engineering
allowance for tenant improvements for the Leased Premises and to
provide for the relocation of Small Business Loan Services currently
occupying Parcel 5 and Parcel 6, provided the Base Rental is increased
to cover any portion of the allowance expended in the design and
construction of the improvements and the relocation of Small Business
Loan Services, (v) to permit Tenant to install a permanent emergency
generator and to store fuel for the generator at a location approved
by Landlord, (vi) to provide for a 1993 Base Year for Parcel 5 and
Parcel 6, (vii) to provide for the extension of the Term of the Lease
for Parcel 5 and Parcel 6, and (viii) to ratify the parking provisions
of the Lease.
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<PAGE> 92
H. Landlord and Tenant now desire to amend the Lease (i) to increase
the Base Rental Tenant is required to pay, (ii) to provide for Tenant
to lease the space located on the eighth (8th) floor of the Building,
being Suite 850, consisting of 3,858 square feet of Net Rentable Area
("Parcel 7"), (iii) to provide for a change in the Base Rental for
Parcel 7 which will be adjusted to reflect the total dollars expended
by Landlord in the design and construction of the Tenant improvements,
(iv) to provide for Landlord to fund a Leasehold Improvement Allowance
and Architectural and Engineering Allowance for tenant improvements
for the Leased Premises, provided the Base Rental is increased to
cover any portion of the allowance expended in the design
and construction of the improvements, (v) to provide for a 1993 Base
Year for Parcel 7, (vii) to provide for the extension of the Term of
the Lease for Parcel 7, and (viii) to ratify the parking provisions of
the Lease. The Original Lease, as amended by the terms and provisions
of the First Amendment, Second Amendment, Third Amendment, Fourth
Amendment and this Amendment, shall hereinafter be referred to as the
"Lease", which Lease is incorporated herein by this reference for all
purposes. Words with initial capital letters used in this Amendment
but not defined herein shall have the respective meanings assigned to
such defined terms in the Lease.
AGREEMENT:
IN CONSIDERATION OF THE PREMISES and the mutual agreements herein set forth and
for other good and valuable considerations, the receipt and sufficiency of
which are hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Lease of Parcel 7.
Subject to the terms contained herein and in the Lease as amended by
the terms of this Amendment, Landlord does hereby lease and demise to
Tenant and Tenant does hereby lease and take from Landlord those
certain premises containing approximately 3,858 square feet of Net
Rentable Area (being Parcel 7), located on the eighth (8th) floor of
the Building. Parcel 7 is depicted on the floor plan attached hereto
as EXHIBIT A5-1. By this reference, EXHIBIT A5-1 is hereby
incorporated in and made a part of EXHIBIT B to the Lease.
Parcel 7 shall constitute Office Space and from and after the date
hereof shall constitute a part of the Leased Premises and otherwise be
included in the Net Rentable Area of the Lease. Except as otherwise
provided herein, the lease of Parcel 7 shall be subject to all the
terms and conditions of the Lease, as amended hereby, as if the same
had been originally included therein. Tenant's right to occupy Parcel
7 shall be from the Parcel 7 Commencement Date until November 24,
2002. The total Net Rentable Area of the Leased Premises after
Inclusion of Parcel 7 shall be 121,134 square feet of Net Rentable
Area.
2. Rental Accrual Date for Parcel 7.
The lease of Parcel 7 shall be effective as of the date of this
Amendment; provided, however (a) Base Rental and other sums due under
the Lease for Parcel 7 shall not commence to accrue for Parcel 7
("Parcel 7 Rent Commencement Date") until the earlier of (i) the date
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<PAGE> 93
Tenant takes occupancy of Parcel 7 and commences to conduct its normal
and customary business therefrom, or (ii) November 15, 1993.
3. Lease Term and Base Rental for Parcel 7.
The Term of the Lease for Parcel 7 and the Base Rental for Parcel 7 is
set forth on Schedule-1 of this Fifth Amendment to Lease Agreement
attached hereto which is incorporated by this reference. Subject to
the adjustments as hereinafter set forth in the event Tenant uses the
Allowance (defined below), commencing on the Parcel 7 Rent
Commencement Date and continuing thereafter during the Term of the
Lease, Tenant shall pay the Base Rental for Parcel 7 as set forth on
Schedule-1 of this Fifth Amendment to Lease Agreement.
The Base Rental rates have been established assuming Tenant leases
Parcel 7 on an AS-IS basis with Landlord not providing any allowance
or other concessions to Tenant.
Landlord will advance to Tenant the Allowance to be used to fully
design, construct and install the Landlord's Work and the Tenant's
Work provided the Base Rental for Parcel 7 is increased by $0.1682 per
year per square foot of Net Rentable Area for every $1.00 of costs
incurred by Landlord to design, construct and install the Landlord's
Work and Tenant's Work which increase in Base Rental is reflected in
Schedule 2 attached hereto.
In accordance with the provisions of Paragraph 5 below, Landlord has
agreed to advance to Tenant an Allowance ("Allowance") not to exceed
Eighteen and 00/100 Dollars ($18.00) per square foot of Net Rentable
Area of Office Space contained in Parcel 7 for Tenant to use in the
design and construction of the Landlord's Work and Tenant's Work for
Parcel 7.
4. Base Year for the calculation of Tenant's Additional Rental.
In order to calculate Tenant's Share of Operating Expenses for the
Leased Premises, the following different Base Years will be utilized.
The Base Year for Parcel 1 shall be 1991 with Tenant's Percentage
Share for Parcel 1 being calculated as (2.4637%). The Base Year for
Parcel 2 shall be 1992 with Tenant's Percentage Share for Parcel 2
being calculated as (1.7678%). The Base Year for Parcel 3 and the
Additional Basement Space shall be 1992 with Tenant's Percentage Share
for Parcel 3 being calculated as (4.6198%) and Tenant's Percentage
Share for the Additional Basement Space being calculated as (0.9951%).
The Base Year for Parcel 4 shall be 1992, with Tenant's Percentage
Share for Parcel 4 being calculated as (2.5934%). The Base Year for
Parcel 5, Parcel 6 and Parcel 7 shall be 1993 with Tenant's Percentage
Share for Parcel 5, Parcel 6 and Parcel 7 collectively being
(3.6794%). The Base Year for the remainder of the Leased Premises
shall continue to be 1990 with Tenant's Percentage Share being
calculated as (40.6076%) for such remainder.
5. Leasehold Improvements.
(a) Tenant shall have prepared at Tenant's cost for Landlord's
approval drawings, plans and specifications ("Working
Drawings") indicating all changes and improvements
("Landlord's Work") which Tenant desires to have constructed
and installed in the Leased Premises. The terms and
provisions of the Work Letter attached to the
-Page 4 of 8-
<PAGE> 94
Original Lease shall govern the construction of the Landlord's
Work and Tenant's Work except as may be expressly provided
otherwise in this Paragraph 5. As soon as the Working Drawings
have been approved by Landlord and Tenant, a copy of a
schedule of the Working Drawings shall be appended to this
Amendment and the Working Drawings shall be deemed
incorporated herein for all purposes. Landlord shall diligently
pursue towards completion the Landlord's Work depicted in the
Working Drawings in accordance with the Construction Schedule.
Tenant's Architect shall be an architectural firm selected by
Tenant subject to Landlord's approval, which approval shall
not be unreasonably withheld, provided such architectural
firm is duly licensed by the State of Texas. Tenant shall pay
Landlord a one time coordination fee equal to Five Thousand
Five Hundred and 00/100 Dollars ($5,500.00) for the
supervision of construction of Landlord's Work and Tenant's
Work for Parcel 7.
(b) Landlord shall immediately proceed to prepare Parcel
7 in accordance with the Working Drawings (with such minor
variations as Landlord and Tenant agree upon in writing).
Parcel 7 will be deemed "completed" when (i) all Landlord's
Work has been substantially completed in accordance with the
Working Drawings, except for punch list items which do not
materially interfere with Tenant's use thereof, and (ii)
Landlord certifies in writing to Tenant as to such
completion. By accepting possession of the leasehold
improvements contained in Parcel 7, Tenant shall be deemed to
have accepted the same in its As-Is condition and to have
acknowledged that the same fully complies with Landlord's
covenants and obligations hereunder (subject to any punch
list items which remain to be completed).
(c) All costs and expenses of the Landlord's Work and
Tenant's Work shall be paid by Tenant; provided, however,
Landlord shall advance to Tenant an allowance for the design
and construction of the Landlord's Work and Tenant's Work
("Allowance") up to a maximum of Eighteen and 00/100 Dollars
($18.00) per square foot of Net Rentable Area in Parcel 7 or
a total amount equal to Sixty-Nine Thousand Four Hundred
Forty-Four and 00/100 Dollars ($69,444.00) to be advanced by
Landlord to Tenant and credited against such costs and
expenses as incurred. Tenant acknowledges and agrees Landlord's
covenant to advance the Allowance to Tenant is not a rent
concession or an inducement of any kind because if the
Allowance is advanced to Tenant, the Base Rental Tenant is
required to pay for Parcel 7 will be increased by $0.1682 per
square foot of Net Rentable Area within Parcel 7 per year for
every dollar per square foot of Net Rentable Area in Parcel 7
that Landlord advances to Tenant in the form of the Allowance.
In the event the total costs of (i) Tenant's Work, (ii)
Landlord's Work and (iii) the installation of any
improvements or personalty which were not depicted on the
approved Working Drawings exceeds the amount of the
Allowance (such amount being called the "Overage") Tenant
shall pay the Overage in cash to Landlord, upon demand, or,
at Tenant's election, Landlord will amortize the Overage
in equal monthly installments over five (5) years of the Term
at an interest rate of ten percent (10%) per annum commencing
on the Parcel 7 Commencement Date. Landlord shall advise
Tenant of the amount of the Overage, if any, and Tenant shall
either pay the Overage in cash or elect to have the Overage
amortized over five (5) years of the Lease Term, such
election to be made within three (3) days after receipt of
Landlord's notification of the Overage. If Tenant elects to pay
-Page 5 of 8-
<PAGE> 95
the Overage as additional Base Rental, Landlord shall prepare an
amendment to the Lease reflecting the new Base Rental for the
Leased Premises for Tenant's execution. The Landlord's
$5,500.00 Coordination Fee may be paid from the Allowance.
In the event any portion of the Allowance is not used ("Unused
Allowance"), the Unused Allowance may be used prior to January
1, 1995 to renovate or construct additional improvements to
the Leased Premises provided appropriate Working Drawings are
approved by the Landlord. Any use of the Unused Allowance will
cause an increase in the Base Rental for Parcel 7 as set forth
in this Paragraph 5. After construction of the improvements
and a final determination of how much of the Allowance Tenant
desires to use, Landlord and Tenant agree to enter into an
appropriate amendment to the Lease to confirm the adjusted
Base Rental for Parcel 7.
6. Parking.
Landlord and Tenant ratify and confirm that the parking provisions of
the Original Lease as set forth in Section 3.04 remain in full force
and effect. Landlord and Tenant acknowledge that Tenant will continue
to have all Parking Rent abate for the Leased Premises until September
1, 1994. In addition, to the extent the Net Rentable Area of the
Leased Premises changes as a consequence of Tenant leasing Parcel 7,
then Parcel 7 shall be deemed part of the Initial Leased Premises (and
not space obtained pursuant to Section 2.10 or Section 2.11) and the
number of parking permits and the charges therefor for Parcel 7 are
set forth in Section 3.04 (a) through (d) of the Original Lease.
Notwithstanding anything herein to the contrary, Landlord and Tenant
agree that Tenant shall not pay rental for any parking permits
provided to Tenant for Parcel 7 until November 25, 1995. Landlord and
Tenant acknowledge that the Parking Facilities have been re-striped
and the current parking ratio is 4.00. The attached Schedule 3
identifies the parking permits allocated Tenant.
7. Termination Option.
Notwithstanding anything contained herein to the contrary, so long as
Tenant is not in default under the Lease beyond any applicable grace
period, Tenant shall have the right by giving written notice to
Landlord no later than February 28, 2000, to terminate its lease of
Parcel 7 effective as of August 31, 2000, provided Tenant pays to
Landlord the termination fee (hereinafter defined).
Tenant's notice to terminate its lease of Parcel 7 must be received by
Landlord no later than February 27, 2000. If Tenant shall terminate
its lease of Parcel 7, Tenant shall pay to Landlord a termination fee
(the "Termination Fee") equal to (a) the unamortized cost of the
leasehold improvements paid for by landlord for Parcel 7 (using an
interest rate of ten percent (10%) over the term of this Amendment to
Lease Agreement, plus (b) the unamortized cost of any leasing
commissions paid by Landlord for Parcel 7 (using an interest rate of
ten percent (10%) over the term of this Amendment to Lease Agreement).
-Page 6 of 8-
<PAGE> 96
8. Tenant hereby covenants, represents and warrants to Landlord that:
(a) Tenant is solvent; that no bankruptcy or insolvency
proceedings are pending or contemplated by or against Tenant;
and that this Amendment is the legal, valid and binding
obligation of Tenant enforceable against Tenant in accordance
with its terms, except as enforceability hereof may be
limited by bankruptcy, insolvency, reorganization or
moratorium or other similar laws relating to Landlord's
rights and by general principles which may limit the right
to obtain equitable remedies.
(b) Except as expressly amended by this Amendment, the Lease is in
all respects ratified and confirmed, and the terms, provisions,
representations, warranties, covenants and conditions thereof
shall be and remain in full force and effect.
(c) The covenants, representations and warranties contained in the
Lease are true and correct in all material respects on and as
of the date hereof as though made on and as of this date, and
to the best of its knowledge and belief Tenant is not in
default in any manner under the Lease or under any document,
writing or instrument executed in connection therewith or
herewith.
(d) All information, reports, statements and other data furnished
by or on behalf of Tenant prior to, contemporaneously with, or
subsequent to the execution of the Lease or this Amendment
are and shall be true and correct to the best of its
knowledge and belief and do not and shall not omit to state
any fact or circumstance necessary to make the information
contained therein or herein not misleading. Upon request of
Landlord, Tenant shall provide to Landlord on a quarterly
basis company prepared financial statements and on an annual
basis annual audited financial statements of the Tenant and
FFMC.
(e) To the best of its knowledge and belief Tenant has no claims,
demands, counterclaims, defenses, allowances, adjustments or
offsets arising out of or in any way related to the Lease (as
amended hereby) or arising out of any document, writing or
instrument executed in connection therewith or herewith.
9. This Amendment (i) shall be binding upon the Landlord and Tenant and
their respective heirs, legal representatives, successors and
permitted assigns; (ii) may be renewed, modified or amended only by a
writing signed by each party hereto; (iii) shall be governed by and
construed in accordance with the laws of the State of Texas and the
United States of America; (iv) may be executed in several
counterparts, and each counterpart when so executed and delivered
shall constitute an original agreement, and all such separate
counterparts shall constitute one and the same agreement; and (v)
together with the Lease, embodies the entire agreement and
understanding between the parties with respect to the subject matter
hereof and supersedes all prior agreements, consents and
understandings relating to such subject matter. All capitalized terms
used herein and not otherwise defined herein shall have the meanings
ascribed to them in the Lease.
-Page 7 of 8-
<PAGE> 97
IN WITNESS WHEREOF, this Amendment is executed in multiple
counterparts by Landlord and Tenant effective as of the date first written
above.
TENANT:
TELECHECK SERVICES, INC.
By: Barry W. Burt
-----------------------------
Barry W. Burt, Vice President
LANDLORD:
VPM 1988-1, LTD.,
a Texas limited partnership
By: VERIQUEST REAL ESTATE SERVICES, INC.,
its General Partner
By: Larry A. Strickland
---------------------------
Larry A. Strickland, President
Exhibit A5-1 - Parcel 7
Schedule 1 - Lease Term and Base Rental for Parcel 7
Schedule 2 - Adjustments to Base Rental for Allowance Used by Tenant
Schedule 3 - Parking Allocation
Working Drawings - To be appended
-Page 8 of 8-
<PAGE> 1
EXHIBIT 10.9
================================================================================
LEASE AGREEMENT
between
TRINET ESSENTIAL FACILITIES X, INC.
as Landlord
and
FIRST HEALTH STRATEGIES, INC.
as Tenant
dated as of November 1, 1994
================================================================================
<PAGE> 2
-2-
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. DEMISE OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. RENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. NET LEASE; NON-TERMINABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. UTILITY BILLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
8. REPAIRS AND MAINTENANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
9. IMPOSITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1O. DESTRUCTION OF OR DAMAGE TO PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
11. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
12. GOVERNMENTAL ORDERS; COVENANTS: LANDLORD CURE; PERMITTED CONTEST . . . . . . . . . . . . . . . 16
13. EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
14. DEFAULT: Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
15. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
16. SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
17. LANDLORD'S RIGHT OF ENTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
18. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
19. STATUS OF LEASE; FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
20. MECHANICS' LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
21. END OF TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
22. ALTERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
<PAGE> 3
-3-
<TABLE>
<S> <C>
23. MEMORANDUM OF LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
24. SUBLETTING/ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
25. HAZARDOUS MATERIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
26. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Exhibit A-1 Description of Land
Exhibit A-2 Description of Personal Property
Exhibit A-3 Site Plan
Exhibit B Rent Payments
Exhibit C Repurchase Schedule
Exhibit D Form of Estoppel Certificate
Exhibit E Permitted Exceptions
</TABLE>
<PAGE> 4
THIS LEASE, made and entered into as of November 1, 1994 (together
with all amendments and supplements hereto, this "Lease"), by and between
TRINET ESSENTIAL FACILITIES X, INC., a Maryland corporation (together, with any
successor or assigns, hereinafter called the "Landlord") and FIRST HEALTH
STRATEGIES, INC., a Delaware corporation (together with any permitted successor
or assigns, hereinafter called the "Tenant"). Capitalized terms used herein
not otherwise defined shall have the meanings specified in Annex I hereto.
WITNESSETH
In consideration of the covenants and agreements herein contained, the
parties hereto mutually agree as follows:
1. DEMISE OF PREMISES: Landlord hereby demises and leases to
Tenant and Tenant hereby leases and rents from Landlord the Premises, in its
"as is" condition, subject to the existing state of title (without express or
implied warranty of Landlord with respect to the condition or fitness of the
Premises for a particular use or title thereto, except that Landlord warrants
that it did not convey or encumber the Premises prior to entering into this
Lease except by a mortgage to which Tenant has subordinated its interest
hereunder), consisting of the land parcel more particularly described in
Exhibit A-1 attached hereto and incorporated herein by reference and located at
2569, 2575, 2602, 2614, 2650 and 2686 South Decker Lake Lane and 2601 South
Redwood Road, Salt Lake City, Utah, and the buildings, structures, improvements
now or hereafter located on said land and the personal property used in
connection with the buildings and listed on Exhibit A-2 hereto and incorporated
herein by reference (but excluding Tenant's trade fixtures), parking areas and
driveways, together with any easements, rights, and appurtenances in connection
therewith or belonging thereto all being collectively hereinafter referred to
as "the Premises". No easement for light, air or view included with or
appurtenant to the Premises. Exhibit A-3 is a lot map identifying the four
buildings (each, a "Building") which comprise the Premises, and the land
allocated to each (each, together with the related Building, a "Property
Unit"). For certain purposes hereinafter set forth, Fixed Rent and Landlord's
Investment in each Property Unit are allocated as follows:
<TABLE>
<CAPTION>
Property Unit Fixed Rent % Landlord's Investment
- ------------- ------------ ---------------------
<S> <C> <C>
Building 1 14.73% $1,900,170
Building 2 12.52% $1,615,080
Building 3 45.31% $5,844,990
Building 4 27.44% $3,539,760
</TABLE>
2. USE: Tenant shall use and occupy the Premises for general
office purposes, including computer operations and related functions or for
such other purposes as are consistent
<PAGE> 5
with all applicable laws and restrictions. Tenant shall not use or occupy the
same, or knowingly permit them to be used or occupied, contrary to any statute,
rule, order, ordinance, requirement or regulation applicable thereto, or in any
manner which would violate any certificate of occupancy affecting the same or
which would make void or voidable any insurance then in force with respect
thereto or which would make it impossible to obtain fire or other insurance
thereon required to be furnished hereunder by Tenant, or which would cause
structural injury to the Premises or cause the value or usefulness of the
Premises, or any portion thereof, to materially diminish, or which would
constitute a public or private nuisance or waste, and Tenant agrees that it
will promptly, upon discovery of any such use, take all necessary steps to
compel the discontinuance of such use. Tenant shall not use, suffer or permit
the Premises, or any portion thereof, to be used by Tenant third party or the
public, as such, without restriction or in such manner as might reasonably tend
to impair Landlord's title to the Premises, or in such manner as might
reasonably make possible a claim or claims of adverse usage or adverse
possession by the public, as such, or third persons, or of implied dedication
of the Premises, or any portion thereof. Nothing contained in this Lease and
no action or inaction by Landlord shall be deemed or construed to mean that
Landlord has granted to Tenant any right, power or permission to do any act or
make any agreement that may create, or give rise to or be the foundation for
any such right, title, interest, lien, charge or other encumbrance upon the
estate of the Landlord in the Premises.
3. TERM:
A. The initial term of this Lease (the "Initial Term")
shall be for a period of approximately fifteen (15) years, which term shall
begin on the Commencement Date (as that term is hereinafter defined) and shall
end on November 30, 2009 (the "Lease Expiration Date").
B. The term "Commencement Date" shall mean December 9,
1994 (the "Closing").
C. Unless Tenant elects, at its option, to terminate
this Lease, this Lease will be automatically renewed for three (3) renewal
terms (each, a "Renewal Term") of five (5) years each (individually, the First,
Second and Third Renewal Terms). The First Renewal Term shall commence on the
day after the Lease Expiration Date and shall terminate on the fifth (5th)
anniversary of the Lease Expiration Date. Each of the Second and Third Renewal
Terms shall commence on the day after the date of expiration of the immediately
preceding Renewal Term and shall
-2-
<PAGE> 6
terminate on the fifth (5th) anniversary of the termination of the immediately
preceding Renewal Term. (Each such Renewal Term commencement date shall be
referred to herein as the "Renewal Term Commencement Date" with respect to the
related Renewal Term and each such Renewal Term expiration date shall be
referred to herein as the "Renewal Term Expiration Date" with respect to the
related Renewal Term.) The option to renew the Term of this Lease as described
above shall be by written notice to Landlord at least 12 months prior to the
Lease Expiration Date or 12 months prior to the Renewal Term Expiration Date of
the then current term, as the case may be. If Landlord has not received notice
of termination by the twelfth month prior to the Lease Expiration Date or
Renewal Term Expiration Date, as the case may be, this Lease shall be
automatically extended for the next succeeding Renewal Term, provided that if
Tenant gives a notice of termination prior to the scheduled expiration of the
Initial Term or the then existing Renewal Term, as the case may be but less
than twelve months prior to such scheduled expiration date, this Lease shall
terminate on such scheduled expiration date upon payment by Tenant to Landlord
of an amount equal to the excess of one year's Fixed Rent (measured from the
date such notice of termination is received by Landlord) over the amount of
Fixed Rent paid to Landlord subsequent to the delivery of such notice. All of
the terms, covenants and conditions of this Lease shall continue in full force
and effect during the Renewal Term, except that the minimum rent shall be as
provided for in Paragraph 4. The Initial Term, together with any Renewal
Terms, shall constitute the "Term" of this Lease.
4. RENTAL:
Tenant agrees to pay Landlord without notice, by payments to be sent
to Landlord at its address set forth above, or to such other person or address
as Landlord shall specify by notice during the Term of this Lease, fixed rent
("Fixed Rent") in advance on or before the first day of each month in the
amounts specified on Exhibit B hereto and hereby incorporated herein. If Fixed
Rent is not paid when due, interest shall accrue thereon at the Overdue Rate
from the third day after its due date until payment is made. Under the
circumstances specified in Paragraph 15E, an additional late charge may also be
payable. Whenever in this Lease a payment is due on a date which is not a
business day, such payment shall be due, without penalty for the delay, on the
next succeeding business day.
5. NET LEASE; NON-TERMINABILITY: (a) This is an absolutely net
lease and the Fixed Rent, Additional Rent and all other sums payable hereunder
by Tenant, whether as the purchase price for the Premises or otherwise, shall
be paid without notice
-3-
<PAGE> 7
(except as expressly provided herein), demand, setoff, counterclaim, abatement,
suspension, deduction or defense.
(b) This Lease shall not terminate, nor shall Tenant have any
right to terminate this Lease (except as provided in Paragraphs 10 and 13), nor
shall Tenant be entitled to any abatement or reduction of rent hereunder
(except as otherwise expressly provided herein), nor shall the obligations of
Tenant under this Lease be affected, by reason of (i) any damage to or
destruction of all or any part of the Premises from whatever cause, (ii) the
taking of the Premises or any portion thereof by condemnation, requisition or
otherwise, (iii) the prohibition, limitation or restriction of Tenant's use of
all or any part of the Premises, or any interference with such use, (iv) any
eviction by paramount title or otherwise, (v) Tenant's acquisition or ownership
of all or any part of the Premises otherwise than as expressly provided herein,
(vi) any default on the part of Landlord under this Lease, or under any other
agreement to which Landlord and Tenant may be parties, (vii) the failure of
Landlord to deliver possession of the Premises on the commencement of the term
hereof or (viii) any other cause whether similar or dissimilar to the
foregoing, any present or future law to the contrary notwithstanding. It is
the intention of the parties hereto that the obligations of Tenant hereunder
shall be separate and independent covenants and agreements, that the Fixed
Rent, the Additional Rent and all other sums payable by Tenant hereunder shall
continue to be payable in all events and that the obligations of Tenant
hereunder shall continue unaffected unless the requirement to pay or perform
the same shall have been terminated pursuant to any express provision of this
Lease.
(c) Tenant agrees that it will remain obligated under this Lease
in accordance with its terms, and that it will not take any action to
terminate, rescind or avoid this Lease, notwithstanding (i) the bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution
or winding-up or other proceeding affecting Landlord or its successor in
interest, or (ii) any action with respect to this Lease which may be taken by
any trustee or receiver of Landlord or its successor in interest or by any
court in any such proceeding.
(d) Except as otherwise expressly provided herein, Tenant waives
all rights which may now or hereafter be conferred by law (i) to quit,
terminate or surrender this Lease or the Premises or any part thereof, or (ii)
to any abatement, suspension, deferment or reduction of the Fixed Rent,
Additional Rent or any other sums payable under this Lease.
6. QUIET ENJOYMENT: Landlord covenants with Tenant, that
-4-
<PAGE> 8
upon the payment of the Fixed Rent and Additional Rent and the performance of
all the terms of this Lease, Tenant shall at all times during the Term,
peaceably and quietly enjoy the Premises without any disturbance from Landlord
or from any person claiming by, through, or under Landlord, except as provided
in Paragraph 17 of this Lease.
7. UTILITY BILLS:
Tenant shall pay before delinquency water, sewer, gas, fuel,
electricity, light, heat power and all other utility bills for the Premises and
the business conducted thereon.
8. REPAIRS AND MAINTENANCE:
(a) Tenant shall, at its own sole cost and expense, keep the
Premises in good order and condition, normal wear and tear and damage covered
by insurance excepted, at all times on and after commencement of the Term to
and including the date of the termination of the Term, by lapse of time or
otherwise. Tenant shall promptly and adequately repair and replace all damage
to the Premises and all its component parts, and replace or repair all
landscaping and all damaged or broken fixtures, equipment and appurtenances.
In addition, Tenant shall timely and properly maintain all of the
Premises including, but not necessarily limited to mechanical systems,
electrical systems, plumbing and sewage systems, foundations and floor slabs,
glazing systems, structural steel, masonry walls and wall enclosures, and water
tightness of all curtain walls by a qualified stationary engineer or otherwise,
so as to preserve and protect the useful life, utility and value of such
component.
In addition, Tenant shall maintain and repair, or cause others to maintain and
repair the roof, and repair any material defect in materials or workmanship
relating to the foundation, columns, and structural steel which comprise a part
of the Premises. The time permitted by Tenant to effectuate such repairs shall
be extended for such period as may be necessary provided Tenant is
continuously, diligently and in good faith prosecuting the same. Landlord, not
more frequently than annually during the Term upon prior notice to Tenant
(except in the event of an emergency or extraordinary condition), may cause, at
Landlord's expense, independent private inspectors, qualified in the specific
discipline and reasonably insured (in Tenant's reasonable judgment), to make
inspections of the Buildings and building systems or segments thereof (during
business hours and in a manner so as to minimize the disturbance of Tenant's
business) to
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<PAGE> 9
determine Tenant's compliance under this Paragraph.
If the Tenant does not timely or properly perform repairs as above
provided, Landlord may, but need not, after ten (10) days' notice to Tenant,
make such repairs, replacements or maintenance in a reasonably diligent
fashion, and Tenant shall pay Landlord forthwith upon being billed for same by
Landlord.
Landlord may, but shall not be required to, enter the Premises personally or
through independent inspectors, at all reasonable times upon reasonable notice
(except in the case of an emergency) to inspect the Premises, and to make such
repairs, alterations, improvements and additions to the Premises or to any
equipment or fixtures located on the Premises as Landlord deems reasonably
necessary and which Tenant failed to do as required in this Lease.
(b) It is intended by Tenant and Landlord that Landlord
shall have no obligation, in any manner whatsoever, to repair or maintain the
Premises (or the equipment therein), whether structural or nonstructural, all
of which obligations are intended, as between Landlord and Tenant, to be those
of Tenant. Tenant expressly waives the benefit of any statute now or in the
future in effect which would otherwise afford Tenant the right to make repairs
at Landlord's expense or to terminate this Lease because of Landlord's failure
to keep the Premises in good order, condition and repair.
9. IMPOSITIONS: (a) Tenant covenants and agrees to pay,
during the Term, as Additional Rent, before any fine, penalty, interest or cost
may be added thereto for the nonpayment thereof, all real estate taxes, special
assessments, utility bills referred to in Paragraph 7, street lighting, excise
levies, personal property taxes, licenses, permits, inspection fees, other
governmental charges, and all other charges or burdens of whatsoever kind and
nature (including costs, fees, and expenses of complying with any restrictive
covenants or similar agreements to which the Premises are subject incurred in
the use, occupancy, operation, leasing or possession of the Premises (excluding
any income taxes on the Fixed Rent imposed on Landlord, it being the intent of
the parties hereto that any tax on the net income derived from the Fixed Rent
payable in respect to the Premises imposed by any governmental authority shall
be paid by Landlord), without particularizing by any known name or by whatever
name hereafter called, and whether any of the foregoing be general or special,
ordinary or extraordinary, foreseen or unforseen, which at any time during the
Term may be payable. Tenant shall pay all special (or similar) assessments or
installments thereof (including interest thereon) for public improvements or
benefits
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<PAGE> 10
which, during the Term shall be laid, assessed, levied or imposed upon or
become a lien upon the Premises and which are payable during the Term, or any
portion thereof; provided, however, that if by law any special assessment is
payable or, at the option of the party obligated to make such payment, may be
paid in installments (whether or not interest shall accrue on the unpaid
balance of such special assessment), Tenant may pay the same, together with any
interest accrued on the unpaid balance of such special assessment in
installments as the same respectively become payable and before any fine,
penalty, interest or cost may be added thereto for the nonpayment of any such
installment and the interest thereon. Tenant shall pay all real estate taxes,
whether heretofore or hereafter levied or assessed upon the Premises, or any
portion thereof, which are due and payable during the Term. At the end of the
Term of the Lease, Tenant's obligation to pay such taxes shall be prorated in
the event the tax period and the Term are not coextensive. If Landlord
receives any bill for taxes for which Tenant is responsible hereunder, Landlord
shall deliver such bill to Tenant within 30 days of its receipt. Within 30
days after payment thereof, Tenant shall deliver to Landlord evidence of
payment of all taxes payable by Tenant hereunder.
(b) Except for any tax on the net income derived from the Fixed Rent,
if at any time during the Term, any method of taxation shall be such that there
shall be levied, assessed or imposed on the Landlord, or on the Fixed Rent or
Additional Rent, or on the Premises, or any portion thereof, a capital levy,
gross receipts tax or other tax on the rents received therefrom, or a franchise
tax, or an assessment, gross levy or charge measured by or based in whole or in
part upon such gross Rents, Tenant, to the extent permitted by law, covenants
to pay and discharge the same, it being the intention of the parties hereto
that the Fixed Rent to be paid hereunder shall be paid to Landlord absolutely
net without deduction or charge of any nature whatsoever, foreseeable or
unforeseeable, ordinary or extraordinary, or of any nature, kind, or
description, except as otherwise expressly provided in this Lease.
(c) Tenant covenants to furnish Landlord, within thirty (30) days
after the date upon which any Imposition or other tax, assessment, levy or
charge is payable by Tenant, official receipts of the appropriate taxing
authority, or other appropriate proof satisfactory to Landlord, evidencing the
payment of the same. The certificate, advice or bill of the appropriate
official designated by law to make or issue the same or to receive payment of
any Imposition may be relied upon by Landlord as sufficient evidence that such
Imposition, is due and unpaid at the time of making or issuance of such
certificate,
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<PAGE> 11
advice or bill.
(d) At Landlord's written demand, upon the occurrence of an Event of
Default hereunder and until there shall have elapsed 18 consecutive months
within which no Event of Default has occurred or continued hereunder, Tenant
shall pay into an interest- bearing escrow account controlled by Landlord the
known or estimated yearly real estate taxes and assessments, payable with
respect to the Premises in monthly payments equal to one-twelfth (1/12) of the
known or estimated yearly real estate taxes and assessments, next payable with
respect to the Premises. Interest on such escrow account shall belong to
Tenant. From time to time, after a default hereunder, Landlord may re-estimate
the amount of real estate taxes and assessments, and in such event Landlord
shall notify Tenant, in writing, of such re-estimate and fix future monthly
installments for the remaining period prior to the next tax and assessment due
date in an amount sufficient to pay the re-estimated amount over the balance of
such period after giving credit for payments made by Tenant on the previous
estimate.
If the total monthly payments made by Tenant pursuant to this Paragraph
shall exceed the amount of payments necessary for said taxes and assessments,
such excess over $1,000.00 shall be promptly paid to the Tenant and the balance
shall be credited on subsequent monthly payments of the same nature. However,
if the total of such monthly payments so made under this Paragraph shall be
insufficient to pay such taxes and assessments when due, then Tenant shall pay
to Landlord such amount as may be necessary to make up the deficiency. All such
deposits made by Tenant pursuant to this Paragraph 9(d) shall be deposited in a
federally insured institution reasonably satisfactory to Landlord and Tenant,
and all interest earned thereon shall accrue to the benefit of Tenant. Payment
by Tenant of real estate taxes, assessments, under this Paragraph shall be
considered as performance of such obligation under the provisions of Paragraph
9(a) hereof.
1O. DESTRUCTION OF OR DAMAGE TO PREMISES:
(a) Tenant covenants that in case of damage to or
destruction of any or all of the improvements upon the Premises by fire or any
other cause, insured or uninsured, Tenant will promptly, at its sole cost and
expense, restore, repair, replace or rebuild the improvements so damaged or
destroyed as nearly as practicable to substantially the same condition as
existed immediately prior to such damage or destruction, or with such changes
or alterations as Tenant shall elect to make in conformity with Paragraph 23 of
this Lease. In performing its obligations under this Paragraph 10, Tenant
shall be entitled to
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<PAGE> 12
insurance proceeds under the terms and conditions set forth in Paragraph 11
hereof. Landlord shall have the right to approve the plans and specifications
for the work of repair, replacement or rebuilding, such approval not to be
unreasonably withheld or delayed. Tenant shall diligently obtain all necessary
permits for such work or repair and shall maintain builder risk insurance in
amounts reasonably satisfactory to Landlord until completion of such work.
Such restoration, repairs, replacement or rebuilding shall be commenced
promptly and prosecuted with diligence, subject to unavoidable delays and force
majeure.
(b) Notwithstanding Paragraph 10(a), during the last two
years of the Initial Term and of each Renewal Term, in the case of damage
expected to cost more than $1 million to repair, Tenant shall have the option
of either (x) restoring, repairing, replacing or rebuilding as provided above,
or (y) delivering to Landlord within 60 days of such casualty a notice of
termination of this Lease, which notice shall be accompanied by an irrevocable
offer by Tenant to purchase on the next due date for the Fixed Rent payment,
(the "Termination Date") which occurs not less than 45 days after the delivery
of such notice, any remaining portion of the Premises at a price determined in
accordance with Exhibit C hereto, plus all costs of transferring title to the
Premises to Tenant, including without limitation all transfer taxes, recording
fees and any unwind costs resulting from a prepayment of debt secured in part
by the Premises (but not including prepayment premiums or yield maintenance
premiums). Landlord shall accept or reject such offer by notice given to
Tenant not later than thirty (30) days after receipt of Tenant's notice, and if
Landlord fails to act, it shall be presumed to have accepted the offer. If
Landlord shall have accepted such offer, on the Termination Date, Landlord
shall convey by special warranty deed to Tenant any remaining portion of the
Premises free of liens and encumbrances (except those existing on the
Commencement Date or thereafter created with the written consent of the
Tenant), along with the right to receive any insurance proceeds to which
Landlord is entitled. If Landlord rejects such offer, this Lease shall
terminate on the Termination Date except for liabilities which accrued prior
thereto insurance proceeds shall be allocated as follows: the first dollars up
to the then applicable amount determined in accordance with Exhibit C shall be
paid to Landlord, Tenant shall be entitled to receive the next dollars up to an
amount equal to the present value (discounted at 9% per annum) of the excess,
if any, of the fair market net rental value of the Premises for the remainder
of the then existing Term over the Fixed Rent for the remainder of such Term,
similarly discounted and any remaining proceeds shall be shared equally by
Landlord and Tenant.
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<PAGE> 13
11. INSURANCE:
(a) Tenant at its own cost and expense shall obtain and
continuously maintain in full force and effect during the Term policies of
insurance covering the improvements constructed, installed or located on the
Premises which insurance shall be for the benefit of Tenant and/or Tenant's
parent company as named insured and loss payee, and Landlord and Landlord's
designated mortgagee or trust deed holder, as the additional insureds and loss
payees, against
(i) loss or damage by fire and from such other risks or
hazards now or hereafter covered by an "Extended
Coverage Endorsement", including, but not limited to,
windstorm, hail, explosion, vandalism, riot and civil
commotion, damage from vehicles, smoke damage, water
damage and debris removal;
(ii) loss from flood if the Premises are in a designated
flood or flood hazard area; and
(iii) loss from so-called explosion, collapse, earth
movement and underground hazards; and
(iv) loss or damage from such other risks or hazards of
a similar or dissimilar nature which are now or may
hereafter be customarily insured against with respect
to improvements similar in construction, design,
general location, use and occupancy to the
improvements or the Premises (hereinafter referred to
as "Casualty Insurance").
Such Casualty Insurance shall:
(a) be written with companies licensed to do business in
the State of Utah, having an [A.M. Best's "General
Policy Holding Rating" of [B+] or better and a
financial rating class of XII] or better and
reasonably acceptable to Landlord;
(b) insure the interest of Landlord's mortgagee(s) or
trust deed holder(s) under standard mortgagee clauses
effective as of the Commencement Date;
(c) be maintained continuously through the Term hereof;
and
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<PAGE> 14
(d) provide for a deductible no greater than $100,000.
At all times, the Casualty Insurance coverage shall be in an amount
equal to one hundred percent (100%) of the then "Full Replacement Cost" of the
Improvements and shall include a so-called "Agreed Amount Endorsement". Full
Replacement Cost shall be interpreted to mean the cost of replacing the
improvements on the Premises without deduction for depreciation or wear and
tear, and it shall include a reasonable sum for architectural, engineering,
legal, interest charges, administrative and supervisory fees connected with the
restoration or replacement of Landlord's Improvements in the event of damage
thereto or destruction thereof. Full Replacement Cost shall be determined from
time to time (but not more frequently than once in any two (2) year period), by
the insurer without cost to Landlord. If the insurer is unable or unwilling to
make such determination, the determination shall be made by the mutual
agreement of Landlord and Tenant, and if they shall fail to agree within thirty
days, then Landlord and Tenant shall each appoint a disinterested appraiser,
each of whom shall provide their opinion of Full Replacement Cost. If the
lower of the two appraiser's numbers is at least 90% of the higher, then the
average of such numbers shall be Full Replacement Value. If the lower number
is less than 90% of the higher number, the two appraisers shall select a third
appraiser whose determination shall be final. The cost of the appraisers shall
be paid by Tenant.
If a sprinkler system shall be located in the improvements on the
Premises, sprinkler leakage coverage, shall be procured by Tenant as part of
the Casualty Insurance, and be in form and amount reasonably satisfactory to
Landlord and shall be continuously maintained during the Term, at Tenant's sole
cost and expense.
(b) During the Term, Tenant, at its sole cost and expense, but for
the benefit of Landlord, Landlord's beneficiary, designated agent and mortgagee
or trust deed holder, and for the benefit of Tenant, shall obtain and
continuously maintain, in full force and effect, the following insurance
coverage written by a reputable and financially sound insurance company
authorized to insure and such risks in the State of Utah:
(i) Comprehensive general liability insurance with broad
form liability endorsement for personal injury or property
damage for any loss, liability or damage on, about or relating
to the Premises, or any portion thereof, with limits of not
less than Five Million Dollars ($5,000,000.00) single
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<PAGE> 15
limit coverage on an occurrence basis. Such insurance shall
specifically insure (by contractual liability endorsement)
Tenant's obligations under Paragraph 11 of this Lease.
(ii) Rental interruption insurance for a period of not
less than one (1) full calendar year for the full and complete
obligation of Tenant, during said period, to pay Rent
hereunder.
(iii) Boiler and pressure vessel (including, but not
limited to, pressure pipes, steam pipes and condensation
return pipes) insurance, provided the Building contains a
boiler or other pressure vessel or pressure pipes, in an
amount reasonably satisfactory to Landlord.
(iv) Such other insurance, and in such amounts as may from
time to time be reasonably required by Landlord, against other
insurable hazards which at the time are commonly insured
against in the case of premises and/or buildings or
improvements similar in construction, design, general
location, use and occupancy to those on or appurtenant to the
Premises.
The insurance set forth in this Paragraph 11(b) shall be maintained by
Tenant at not less than the limits set forth herein until reasonably required
to be changed from time to time by Landlord, in writing, whereupon Tenant
covenants to obtain and maintain thereafter such protection in the amount or
amounts so required by Landlord.
Tenant shall maintain a policy or policies of workers' compensation
insurance in amounts required by applicable state law or, to the extent
permitted by state law, self insure the workers compensation liability.
Each policy of insurance required under this Article 11 shall have attached
thereto
(i) an endorsement that such policy shall not be
cancelled or coverage reduced without at least thirty (30)
days prior written notice to Landlord except that only ten
(10) days notice of cancellation will be given in
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<PAGE> 16
the case of cancellation for nonpayment of premium, and
(ii) an endorsement to the effect that the insurance as to
the interest of Landlord, and Landlord's beneficiary,
designated agent, mortgagee or trust deed holder shall not be
invalidated by any act or neglect of any person, the use of
the Premises for a more hazardous purpose than contemplated by
the insurer or a change in ownership of the Premises (by
foreclosure or otherwise).
To the extent the foregoing endorsements are not obtainable in
precisely the form prescribed, Tenant shall obtain reasonably similar
endorsements. All policies of insurance shall be written in such form and
shall be distributed in such companies as shall be reasonably satisfactory to
Landlord. Certificates of insurance acceptable to Landlord shall be delivered
to Landlord by the company or agent issuing the same or accompanied by other
evidence satisfactory to Landlord that the premiums thereon have been paid.
Certificates of insurance acceptable to Landlord shall be delivered to Landlord
on or before the Commencement Date. Prior to the expiration of such policy, a
new certificate of insurance acceptable to Landlord shall be delivered to
Landlord not less than five (5) days prior to the expiration of the then
current policy term.
All insurance coverage required hereunder shall have a so-called "waiver
of subrogation clause" as to Tenant and Landlord.
Nothing in this Paragraph 11 shall prevent Tenant from taking out insurance
of the kind and in the amount provided for under the preceding paragraphs of
this Article under a blanket insurance policy or policies (copies of which or
certificates thereof satisfactory to Landlord shall be delivered to Landlord)
which may cover other properties owned, operated, leased or occupied by Tenant
as well as the Premises; provided, however, that any such policy of blanket
insurance of the kind provided for shall:
(i) contain an "Agreed Amount" endorsement which provides
for settlement on a replacement cost basis for all real and
personal property; and
(ii) not contain any clause which would result in the
insured thereunder being required to carry any insurance with
respect
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<PAGE> 17
to the property covered thereby in an amount not less than any
specific percentage of the Full Replacement Cost of such
property in order to prevent the insureds named from becoming
a co-insurer of any loss with the insurer under such policy.
Further, such policies of blanket insurance shall, as respects the Premises,
contain the various provisions required of such an insurance policy by the
foregoing provisions of this Paragraph 11.
(c) In the event of loss or damage to the Premises or in the event
of a claim in connection with the injury or death of any person at the Premises
or by reason of operations at the Premises, Tenant shall promptly notify
Landlord thereof in writing, shall prepare and present timely claims to the
appropriate insurers on behalf of Tenant, Landlord and any assignee or
mortgagee of Landlord and shall adjust and, in the case of claims involving net
proceeds of not more than $100,000, settle such claim. In the case of property
damage claims involving net proceeds of more than $100,000, Tenant shall have
control of the settlement process so long as no Event of Default is continuing
hereunder.
(d) In the event the net proceeds of any property claim are not in
excess of $100,000, such proceeds shall be payable to Tenant. In the event the
net proceeds are in excess of $100,000 but equal to or less than the
apportioned value of the damaged Building as allocated in Paragraph 1 hereof,
such sum shall be paid to or deposited with either a bank or trust company
having an office in the State of Utah and designated by Tenant, subject to the
reasonable approval of Landlord (herein called the "Proceeds Trustee") in the
name of the Proceeds Trustee as trustee for Landlord and Tenant and disbursed
in the manner hereinafter provided. In the event Landlord mortgages the
Premises with a First Mortgage, the mortgagee thereunder (regardless of its
location) may, at its option, be appointed Proceeds Trustee for so long as such
First Mortgage remains outstanding and such Mortgagee does not control Landlord
or is not controlled by or under common control with Landlord. Insurance
proceeds shall be deposited in an interest bearing account (if available) and
interest shall be distributed to Tenant upon completion of said installation,
repair, replacement or rebuilding, provided no default has occurred and is
continuing hereunder. All checks drawn on said account shall be co-signed by
the Proceeds Trustee and Tenant. Insurance proceeds shall be disbursed to
Tenant by the Proceeds Trustee under the following procedure:
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<PAGE> 18
(i) No more frequently than once per calendar month, Tenant may
request reimbursement for costs incurred by Tenant for work in place to repair
and restore the Premises during the immediately preceding calendar month.
Tenant's request shall certify that all work for which reimbursement is
requested was performed in compliance with the plans and specifications
approved by Landlord pursuant to Paragraph 32 and all applicable laws, and
shall include reasonably satisfactory evidence of the costs incurred by Tenant
and unconditional lien releases in form and substance executed by all
mechanics, materialmen, laborers, suppliers and contractors who performed any
portion of the repair work or applied materials as required to enable the title
insurance company issuing endorsements to Landlord and Mortgagee to issue
current endorsements without exception for mechanic's, materialmen's,
laborer's, supplier's or contractor's liens.
(ii) Within ten (10) days after receiving Tenant's request,
Landlord shall approve or disapprove Tenant's request, which approval shall not
be unreasonably withheld, by written notice to Tenant and the Proceeds Trustee.
If Landlord approves all or any portion of a request and Landlord has received
(and not previously disbursed) insurance proceeds, then Proceeds Trustee shall
pay to or upon the order of Tenant the amount approved by Landlord. If
Landlord disapproves all or any portion of a request, then Landlord's notice
shall state the reasons for that disapproval. In addition, Landlord shall have
the right to impose other conditions upon disbursement so long as they are
consistent with customary construction loan disbursement practices.
(iii) Upon completion of the repair and restoration of the Premises
in a manner reasonably satisfactory to Landlord, any remaining proceeds
received on account of such casualty shall be paid to Tenant.
(e) Tenant shall protect, defend, indemnify and hold
Landlord, its direct or indirect partners, the Mortgagee and their respective
successors and assigns (collectively, the Landlord Group) harmless from and
against any and all claims, losses, costs and judgments (including reasonable
costs of investigation and defense) arising from Tenant's use of the Premises,
or from the conduct of Tenant's business or from any activity, work or things
done, permitted or suffered by Tenant in or about the Premises or elsewhere and
shall further protect, defend, indemnify and hold Landlord Group harmless from
and against any and all claims arising from any breach or default in the
performance of any obligation on Tenant's part to be performed under the terms
of this Lease, or arising from any negligence of Tenant, or any of Tenant's
agents, contractors or
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<PAGE> 19
employees, and from and against all costs, reasonable attorney's fees actually
incurred, expenses and liability incurred in the defense of any such claim or
any action or proceeding brought thereon; and in case any action or proceeding
be brought against a member of Landlord Group by reason of any such claim,
Tenant upon notice from a member of Landlord Group shall defend the same at
Tenant's expense by counsel reasonably satisfactory to Landlord Group or
selected by the insurance carrier. Tenant, as a material part of the
consideration to Landlord, assumes all risk of damage to property or injury to
or death of persons, in, upon or about the Premises arising from any cause and
Tenant waives all claims in respect thereof against Landlord unless caused by
the willful or negligent act of Landlord or its agents.
12. GOVERNMENTAL ORDERS; COVENANTS: LANDLORD CURE; PERMITTED CONTEST:
A. Tenant shall throughout the Term promptly comply or cause compliance
with or remove or cure any violation of any and all present and future laws,
ordinances (zoning or otherwise), orders, rules, regulations and requirements
of all Federal, State, Municipal and other governmental bodies having
jurisdiction over the Premises and the appropriate departments, commissions,
boards and officers thereof, and the orders, rules and regulations of the Board
of Fire Underwriters where the Premises are situated, or any other body now or
hereafter constituted exercising lawful or valid authority over the Premises,
or any portion thereof, or the sidewalks, curbs, roadways, alleys or entrances
adjacent or appurtenant thereto, or exercising authority with respect to the
use or manner of use of the Premises, or such adjacent or appurtenant
facilities, and whether the compliance, curing or removal of any such violation
and the costs and expenses necessitated thereby shall have been foreseen or
unforeseen, ordinary or extraordinary, and whether or not the same shall be
presently within the contemplation of Landlord or Tenant or shall involve any
change in governmental policy, or require structural or extraordinary repairs,
alterations or additions by Tenant and irrespective of the amount of the costs
thereof. Tenant, at its sole cost and expense, shall comply with all
agreements, contracts, easements, restrictions, reservations or covenants, if
any, running with the Land, now existing or hereafter created by Tenant or
consented to in writing by Tenant or requested in writing by Tenant including
without limitation the Restrictive Covenants recorded as Entry No. 2955455 in
Book 4532, Page 768 and as Entry No. 3506515 in Book 5182, Page 528 and the
obligations under the Easement Agreement recorded as Entry No. 5623353 in Book
6771, page 1056 and Easement Relocation Agreement recorded as Entry No. 5841345
in Book 6955, page 291, in each case of Official Records of Salt
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Lake City, Utah. Tenant shall also comply with, observe and perform all
provisions and request of all policies of insurance at any time in force with
respect to the Premises and required to be obtained and maintained under the
terms of Paragraph 11 hereof and shall comply with all development permits
issued by governmental authorities issued in connection with development of the
Premises.
B. If Tenant shall at any time fail to pay any Imposition in accordance
with the provisions of Paragraph 9, or to take out, pay for, maintain and
deliver any of the insurance policies or certificates of insurance provided for
in Paragraph 11, or shall fail to make any other payment or perform any other
act on its part to be made or performed, then Landlord, after ten (10) days
prior written notice to Tenant (or without notice in case of emergency), and
without waiving or releasing Tenant from any obligation of Tenant contained in
this Lease, may, but shall be under no obligation to do so,
(i) pay after said ten (10) days' written notice to
Tenant, any Imposition payable by Tenant pursuant to
the provisions of Paragraph 9;
(ii) take out, pay for and maintain any of the insurance
policies provided for in this Lease; or
(iii) make any other payment or perform any other act on
Tenant's part to be paid or performed hereunder,
except that any time permitted to Tenant to perform
any act required to be performed by Tenant hereunder
shall be extended for such period as may be
necessary to effectuate such performance provided
Tenant is continuously, diligently and in good faith
prosecuting such performance.
Landlord may enter upon the Premises for any such purpose and take all such
action therein or thereon as may be necessary therefor and all such action
taken by Landlord shall be in a reasonably diligent fashion. All sums so paid
by Landlord and all costs and expenses, including a reasonable
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<PAGE> 21
attorney's fees, reasonably incurred by Landlord in connection with the
performance of any such act, together with interest thereon at the Overdue Rate
from the respective dates of Landlord's making of each payment of such cost and
expense, including reasonable attorney's fees, shall be paid by Tenant to
Landlord on demand. Landlord shall not be limited in the proof of any damages
which Landlord may claim against Tenant arising out of or by reason of Tenant's
failure to provide and keep in force insurance as aforesaid, to the amount of
the insurance premium or premiums not paid or incurred by Tenant, and which
would have been payable upon such insurance, but Landlord shall also be
entitled to recover, as damages for such breech, the uninsured amount of any
loss (to the extent of any deficiency between the dollar limits of insurance
required by the provisions of this Lease and the dollar limits of the insurance
actually carried by Tenant), damages, costs and expenses of suit,including
reasonable attorney's fees, suffered or incurred by reason of damage to or
destruction of the Premises, or any portion thereof or other damage or loss
which Tenant is required to insure against hereunder, occurring during any
period when Tenant shall have failed or neglected to provide insurance as
aforesaid.
C. If Tenant desires to contest the validity, amount, propriety, or
accuracy of any Imposition, Tenant shall notify Landlord of same which notice
shall state the nature of the Imposition being contested and the grounds for
such contest. Tenant shall thereupon have the right, at its own expense, to
contest the amount, propriety, accuracy, or validity, in whole or in part, of
any Imposition by appropriate proceedings diligently conducted in good faith,
but only after payment of such Imposition, unless non- payment would not cause
a lien to be filed against title to the Premises or would not otherwise
jeopardize title to the Premises in which event, notwithstanding the provisions
of Paragraph 9(a) hereof, Tenant may postpone or defer payment of such
Imposition. Until the last two years of the then existing Term hereof, Tenant
shall have the sole right to contest Impositions; thereafter, either Landlord
or Tenant may contest the same, subject in the case of Tenant to the terms of
this Paragraph. If nonpayment of such Imposition would result in a lien being
filed (or continued) against the Premises, Tenant shall deposit with Landlord
cash or letter of credit issued by an investment grade bank in the amount of
the Impositions so contested and unpaid, together with all interest and
penalties which may accrue, in landlord's reasonable judgment, in connection
therewith, and all charges that may or might be assessed against or become a
charge on the Premises, or any portion thereof, during the pendency of such
proceedings. If, during the continuance of such proceedings, Landlord shall,
from time to time, reasonably deem the amount deposited, as aforesaid,
insufficient, Tenant shall, upon demand of Landlord, make additional deposits
of such additional sums of money or such additional letter of credit as
Landlord may reasonably request. Upon failure of Tenant to make such
additional deposits, the
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<PAGE> 22
amount theretofore deposited may be applied by Landlord to the payment, removal
and discharge of such Imposition, and the interest, fines and penalties in
connection therewith, and any costs, fees (including reasonable attorney's
fees) and other liability (including reasonable costs incurred by Landlord)
accruing in any such proceedings.
Upon the termination of any such proceedings, Tenant shall pay the amount of
such Imposition or part thereof, if any, as finally determined in such
proceedings, the payment of which may have been deferred during the prosecution
of such proceedings, together with any costs, fees, including attorney's fees,
interest, penalties, fines and other liability in connection therewith. Upon
such payment, Landlord shall return all cash or letter of credit of deposited
with it in respect to the contest of such Imposition, as aforesaid along with
any interest earned thereon as a result of an investment thereof, at Tenant's
request and expense, in a Federally insured security or account. However, at
the written direction of Tenant, Landlord shall make such payment out of the
funds on deposit with Landlord and the balance, if any, shall be returned to
Tenant. Tenant shall be entitled to the refund of any Imposition, penalty,
fine and interest thereon received by Landlord which have been paid by Tenant
or which have been paid by Landlord but for which Landlord has been previously
reimbursed in full by Tenant.
At Tenant's request and sole expense, Landlord shall join in such proceedings
or permit the same to be brought in Landlord's name upon compliance with such
conditions as Landlord may reasonably require. Landlord shall not ultimately
be subject to any liability for the payment of any fees, including attorney's
fees, costs and expenses in connection with such proceedings. Tenant agrees to
pay all such fees (including reasonable attorney's fees), costs and expenses
or, on demand, to make reimbursement to Landlord for such payment. During the
time when any such cash or letter of credit is on deposit with Landlord, and
prior to the time when the same is returned to Tenant or applied against the
payment, removal or discharge of Impositions, as above provided, Tenant shall
be entitled to receive all interest paid thereon. Cash deposits shall bear
interest as above provided if the investment thereof is so requested by Tenant.
13. EMINENT DOMAIN:
A. If all or substantially all of the Premises shall be taken for
public or quasi-public purposes, or if Tenant, after any taking, determines
that such event has rendered the Premises unavailable for use or unsuitable for
restoration for continued use and occupancy in Tenant's business, then Tenant,
in lieu of
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rebuilding as contemplated by Paragraph 13C, shall, not later than 90 days
after such occurrence, deliver to Landlord (i) notice of its intention to
terminate this Lease on a date occurring not more than 95 days nor less than 60
days after such notice (the Termination Date), and (ii) a certificate by the
president or a vice president of Tenant describing the event giving rise to
such termination and stating that such event has rendered the Premises
unavailable for use or unsuitable for restoration for continued use and
occupancy in Tenant's business. Upon payment of all Fixed Rent and Additional
Rent payable through the Termination Date, this Lease shall terminate on the
Termination Date, except with respect to liabilities which arose on or prior to
the Termination Date. Landlord and Tenant may both participate in the
condemnation proceedings and no settlement thereof for an amount less than the
amount of the then applicable purchase price set forth on Exhibit C shall be
entered into without Landlord's consent. Nothing herein contained shall
prevent Tenant from pursuing its own remedies with respect to business
interruption, moving expenses, and Tenant's trade fixtures, provided that such
remedies do not result in a decrease in any award to Landlord. In the case of
termination of this Lease, condemnation proceeds shall be shared as follows:
(1) the first dollars up to the then applicable purchase price set forth on
Exhibit C thereof shall belong to Landlord, (2) the next dollars, up to an
amount equal to the present value (discounted at 9% per annum) of the excess,
if any, of fair market net rental value of the Premises immediately prior to
such condemnation for the balance of the then existing Term over the Fixed Rent
for the balance of such Term similarly discounted shall belong to Tenant, and
(3) the excess, if any, shall be shared equally by Landlord and Tenant. If the
amount of the proceeds, after deducting the cost of obtaining the same, shall
be less than the then applicable amount determined in accordance with Exhibit
C, then in lieu of the foregoing allocation, Tenant shall make and is hereby
deemed to make an irrevocable offer to purchase the Premises on the next date
for the payment of Fixed Rent (the "Termination Date") which occurs not less
than 45 days after the delivery of such notice, at a price determined in
accordance with Exhibit C hereto, plus all costs of transferring title to the
Premises to Tenant, including without limitation all transfer taxes, recording
fees and any unwind costs resulting from a prepayment of debt secured in part
by the Premises (but not including prepayment premiums or make whole amounts).
Landlord shall accept or reject such offer by notice given to Tenant not later
than thirty (30) days after receipt of Tenant's notice, and if Landlord fails
to act, it shall be presumed to have accepted the offer. If Landlord shall
have accepted such offer or is deemed to have accepted such offer, on the
Termination Date, Landlord shall convey by special warranty deed to Tenant any
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remaining portion of the Premises free of liens and encumbrances (except those
existing on the Commencement Date or thereafter created with the written
consent of the Tenant), along with the right to receive any condemnation award
to which Landlord is entitled. If Landlord rejects such offer, this Lease
shall terminate on the Termination Date except for liabilities which accrued
prior thereto.
B. If one or more Buildings are condemned or so substantially
taken as to make their continued use in Tenant's business uneconomic, but other
Buildings constituting part of the Premises will continue to be used by Tenant,
then in lieu of terminating this Lease in its entirety, Tenant may elect to
terminate this Lease only with respect to the condemned Property Units. In
that event, Tenant shall reduce the condemned Property Unit(s) to grade and be
reimbursed for the cost thereof out of the condemnation award, and Fixed Rent
allocated by Paragraph 1 hereof to the condemned Property Units shall cease to
accrue, but shall continue unabated with respect to the rest of the Premises.
The condemnation award will be shared as follows: (1) the first dollars up to
Landlord's Investment allocated by Paragraph 1 hereof to Property Units as to
which this Lease is to be terminated shall belong to Landlord, (2) the next
dollars up to the present value (discounted at 9% per annum) of the excess, if
any, of the fair market net rental value for the remainder of the then existing
Term of the condemned Property Units immediately before the condemnation, over
the Fixed Rent of such Property Units for the same Term similarly discounted
shall belong to Tenant, and (3) any excess shall be shared equally by Landlord
and Tenant. Notwithstanding the foregoing, if the amount of the condemnation
award available for distribution is less than Landlord's Investment allocation
by Paragraph 1 hereof to the Property Units as to which this Lease is to be
terminated, then this Lease shall not terminate as to such Property, but Lessee
may make an offer to purchase the affected Property Units at a price equal to
Landlord's Investment therein under the procedures and with the consequences
set forth in Paragraph 10A.
C. If this Lease shall not be terminated as provided above, then
it shall continue with no abatement or other reduction of Fixed Rent or
Additional Rent, and Tenant shall restore the Premises with all reasonable
dispatch to a complete architectural and mechanical unit as nearly as
practicable to the condition and value of the Premises immediately prior to
said taking but in any event not later than six (6) months from the date of
such taking.
D. In the event the net proceeds from such taking are not in
excess of $100,000, such taking proceeds shall be payable or
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turned over to Tenant. In the event the net proceeds are in excess of $100,000
and this Lease is not terminated pursuant to Paragraph 13A, such sum shall be
paid to or deposited with the Proceeds Trustee, in the name of the Proceeds
Trustee as trustee for Landlord and Tenant and disbursed in the manner provided
in Paragraph 11(d), except that any amount remaining after restoration of the
Premises shall be paid to Landlord.
14. DEFAULT: Events of Default.
The following events, following the expiration of the applicable cure
periods, in this Article are sometimes referred to as an "Event of Default":
(a) If default shall be made in the payment of Fixed Rent and such default
shall continue for ten (10) days after notice, provided that after
notice has been given twice in any eighteen month period, such default
in payment shall constitute an Event of Default after ten (10) days
without the giving of notice;
(b) If default shall be made in the payment of Additional Rent or in the
payment of any other sum required to be paid by Tenant under this
Lease and such default shall continue for ten (10) days after written
notice to Tenant;
(c) If default shall be made by Tenant under the provisions of Article 24
hereof relating to assignment, sublease, mortgage or other transfer of
Tenant's interest in this Lease or in the Premises or in the income
arising therefrom;
(d) If default shall be made in the observance or performance of any of
the other covenants or conditions in this Lease which Tenant is
required to observe and perform and such default shall continue for
thirty (30) days after written notice to Tenant, provided that the
time within which Tenant is permitted to cure the same shall be
extended for such period as may be necessary for the curing provided
Tenant is continuously, diligently and in good faith prosecuting such
cure;
(e) If any representation or warranty made by Tenant herein or in any
certificate, demand or request made pursuant hereto proves to be
incorrect in any material respect when made and the representation or
warranty continues to be incorrect for a period of thirty (30) days
after written notice from Landlord, or if the facts cannot be changed
so as to make the representation or warranty correct within
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such thirty day period, Tenant fails to provide Landlord with
protection (including, by way of example, additional collateral or
letters of credit) against loss arising from breach of such
representation or warranty, such protection to be satisfactory to
Landlord in its sole discretion; or
(f) If the interests of Tenant in this Lease shall be levied on under
execution or other legal process and same is not removed or stayed
within ninety (90) days;
(g) If any voluntary petition of bankruptcy or for corporate
reorganization or any similar relief shall be filed by Tenant;
(h) If any involuntary petition of bankruptcy shall be filed against
Tenant under any Federal or sTate bankruptcy or insolvency act and
shall not have been dismissed within ninety (90) days of the filing
thereof;
(i) If a receiver shall be appointed for Tenant or any of the property of
Tenant by any court and any such receiver shall not have been
discharged within ninety (90) days from the date of his appointment;
(j) If Tenant shall make an assignment for the benefit of creditors;
(k) If Tenant vacates two or more Buildings for twelve consecutive months
and fails to make a rejectable offer to purchase the Premises for the
amount determined in accordance with Exhibit C (subject to the terms
and procedures set forth in Paragraph 10(b)) by the end of such twelve
month period, or having made such offer, fails to make payment if
Landlord accepts the offer and tenders a deed;
(l) If Tenant shall admit, in writing, Tenant's inability to meet Tenant's
debts as they mature; or
(m) If a default shall occur under the Guaranty of Lease, dated as of the
date hereof, from First Financial Management Corporation to Landlord.
Landlord may treat the occurrence of any one or more of the foregoing
Events of Default as a breach of this Lease. For so long as such event of
Default continues the Landlord, at its option and with or without notice or
demand of any kind to Tenant or any other person, may have any one or more of
the remedies provided in this Article 14 or elsewhere in this lease, in
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addition to all other remedies and rights provided at law or in equity.
15. REMEDIES: In the event of any such Event of Default, Landlord may, in
addition to, and not in derogation of any remedies for any preceding breach or
covenant, with or without notice of demand (except as otherwise expressly
provided herein) and without limiting Landlord in the exercise of any right or
remedy which Landlord may have by reason of such default or breach:
A. Immediately or at any time thereafter while such Event of
Default continues, mail a notice of termination addressed to Tenant and proceed
pursuant to and with due process of law, to repossess the same as of Landlord's
former estate without prejudice to any remedies which might otherwise be used
for arrears of rent or prior to breach of covenant, and upon such notice as
aforesaid this Lease shall terminate, but Tenant shall remain liable for its
default hereunder as hereinafter provided. Tenant shall have the right to cure
any default until the expiration of the applicable cure period, if any,
following notice by Landlord, as specified above. Where Landlord has given
notice as provided for above, no further notice shall be required to effectuate
a termination of the Lease, which termination shall occur automatically unless
the default is cured within the time periods provided.
B. Terminate Tenant's right to possession of the Premises by
court order or any lawful means, in which case Tenant's right to possession
under this Lease shall terminate, and Tenant shall immediately surrender
possession of the Premises to Landlord. In such event Landlord shall be
entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant's default, the cost of recovering possession of the Premises; reasonable
expenses of reletting, including renovation and alteration of the Premises
necessary to put them in the condition required by Paragraph 8 hereof;
reasonable attorney's fees and any real estate commissions actually paid; the
worth at the time of award by the court having jurisdiction thereof of the
amount, if any but not less than zero, by which the unpaid rent for the balance
of the term after the time of such award exceeds the amount of such rental loss
for the same period that Tenant proves could be reasonably avoided; and that
portion of any leasing commissions paid by Landlord applicable to the unexpired
Term of this Lease.
C. Maintain Tenant's right to possession, in which case this
Lease shall continue in effect whether or not Tenant shall have abandoned the
Premises. In such event, Landlord shall be entitled to enforce all of
Landlord's rights and remedies under
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this Lease, including the right to recover the Rent as it becomes due
hereunder.
D. Pursue any other remedy now or hereafter available to Landlord
under the laws or judicial decisions of the State of Illinois. Unpaid
installments of Rent and other unpaid monetary obligations of Tenant under the
terms of this Lease shall bear interest from the date due until paid at the
Overdue Rate.
E. Tenant hereby acknowledges that late payment by Tenant to
Landlord of Fixed Rent, Additional Rent and other sums due under this Lease
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult to ascertain. Such costs include,
but are not limited to, processing and accounting charges and late charges
which may be imposed on Landlord by the terms of any mortgage or trust deed
covering the Premises. Accordingly, if any installment of Fixed Rent or any
other sum due to Landlord from Tenant shall not have been received by Landlord
or Landlord's designee within fifteen (15) days after such amount shall be due,
then, without any requirement for notice to Tenant, Tenant shall pay to
Landlord a late charge equal to four percent (4%) of such overdue amount,
together with interest on such overdue amount at the Overdue Rate. The parties
agree that such late charge represents a fair and reasonable estimate of the
costs Landlord will incur by reason of late payment by Tenant. Acceptance of
such late charge by Landlord shall in no event constitute a waiver of Tenant's
default with respect to such overdue amount, nor prevent Landlord from
exercising any of the other rights and remedies granted hereunder; provided
that nothing contained herein shall relieve Landlord of a duty to mitigate
damages under applicable law.
16. SUBORDINATION:
(a) SUBORDINATION, NON-DISTURBANCE. Tenant agrees at any time hereafter,
and from time to time on demand of Landlord, to promptly execute and deliver to
Landlord any instruments, releases or other documents that may be reasonably
required for the purpose of subjecting and subordinating this Lease to the lien
of any mortgage, deed of trust, security instrument, ground or underlying lease
or other document of like nature (hereinafter collectively referred to as
"Mortgage") which at any time may be placed upon the Premises, or any portion
thereof, by Landlord, and to any replacements, renewals, amendments,
modifications, extensions or refinancing thereof, and to each and every advance
made under any Mortgage. It is agreed, nevertheless, that so long as there
exists no Default, such subordination agreement or other instrument, release or
document (herein "Subordination
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Agreement") shall not interfere with, hinder or reduce Tenant's right to quiet
enjoyment under this Lease, nor the right of Tenant to continue to occupy the
Premises, and all portions thereof, and to conduct its business thereon in
accordance with the covenants, conditions, provisions, terms and agreements of
this Lease. Such Subordination Agreement shall provide for a nondisturbance of
Tenant's rights hereunder provided Tenant attorns to the holder of such
Mortgage. The lien of any such Mortgage shall not cover Tenant's Trade
Fixtures or other personal property located in or on the Demised Premises.
(b) MORTGAGEE PROTECTION CLAUSE. In the event of any act or omission of
Landlord constituting a default by Landlord, Tenant shall not exercise any
remedy until Tenant has given Landlord and any mortgagee of the Premises a
thirty (30) day prior written notice of such act or omission, and until a
reasonable period of time (e.g., 30 days) to allow Landlord or the mortgagee to
remedy such act or omission shall have elapsed following the giving of such
notice. However, if act or omission cannot, with due diligence and in good
faith, be remedied within such thirty (30) day period, the Landlord and the
mortgagee shall be allowed such further period of time as may be reasonably
necessary provided that it commence remedying the same with due diligence and
in good faith within said thirty (30) day period. Nothing herein contained
shall be construed or interpreted as requiring any mortgagee to remedy such act
or omission.
(c) ATTORNMENT. If any mortgagee shall succeed to the rights of Landlord
under this Lease or to ownership of the Premises, whether through possession or
foreclosure or the delivery of a deed to the Premises in lieu of foreclosure,
then, upon the written request of such mortgagee so succeeding to landlord's
rights hereunder, provided such mortgagee assumes, in writing, the obligations
of Landlord hereunder accruing on and after the date such mortgagee acquired
title to the Premises, Tenant shall attorn to and recognize such mortgagee as
Tenant's landlord under this Lease, and shall promptly execute and deliver any
instrument that such mortgagee may reasonably request to evidence such
attornment (whether before or after making of the Mortgage). In the event of
any other transfer of Landlord's interest hereunder, upon the written request
of the transferee and Landlord, provided such transferee assumes, in writing,
the obligations of Landlord hereunder accruing on and after the date of such
transfer, Tenant shall attorn to and recognize such transferee as Tenant's
landlord under this lease and shall promptly execute and deliver any instrument
that such transferee and Landlord may reasonably request to evidence such
attornment.
(d) Upon ten business days advance written notice, Tenant
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agrees to execute, acknowledge and deliver a document substantially in the form
of the Assignment of Lease dated as of the date hereof from Landlord to a
Mortgagee and consented to by Tenant, with such changes therein as may be
reasonably requested by an institutional lender, provided no such change alters
the rights of Tenant hereunder.
17. LANDLORD'S RIGHT OF ENTRY: In addition to rights set forth in
Paragraph 25D hereof, upon reasonable notice, from time to time during normal
business hours, such persons as Landlord or any assignee of Landlord shall
designate shall have the right to enter upon the Premises and to inspect same,
exhibit the Premises to prospective purchasers and mortgagees, and examine
Tenant's books and records pertaining to the Premises, insurance policies,
certificates of occupancy and other documents, records and permits in Tenant's
possession with respect to the Premises, all of which shall be customary and
adequate and reasonably satisfactory to Landlord, provided, however, that such
activities by Landlord shall be conducted in such a manner as not to interfere
with the conduct of business by Tenant at the Premises. If no Event of Default
exists hereunder, any such inspections shall be at the expense of Landlord. If
an Event of Default exists hereunder, such inspections shall be at the
reasonable expense of Tenant. During the final one (1) year of the Term,
Landlord shall be entitled to place customary "For Rent" or "For Sale" signs on
the Premises. Such persons as Landlord or any assignee of Landlord shall
designate shall also have the right to enter upon the Premises for the purpose
of making repairs which Landlord is authorized to make under the provisions of
this Lease, provided.
18. NOTICES: Notices, statements, demands, or other communications
required or permitted to be given, rendered or made by either party to the
other pursuant to this Lease or pursuant to any applicable law or requirement
of public authority, shall be in writing (whether or not so stated elsewhere in
this Lease) and shall be deemed to have been properly given, rendered or made,
when received by overnight delivery or overnight courier delivery or facsimile
transmission with a confirmation copy sent by overnight delivery or by
overnight courier delivery addressed to the other parties as follows:
To Landlord: TriNet Essential Facilities X, Inc.
Four Embarcadero Center, Suite 3150
San Francisco, California 94111
Attention: Mark Whiting, President
Fax: (415)391-6259
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With a copy (which shall not constitute notice) to:
TriNet Corporate Realty Trust, Inc.
Four Embarcadero Center, Suite 3150
San Francisco, California 94111
Attention: Charles S. Swanson
Fax: (415)391-6259
With a copy (which shall not constitute notice) to:
Day, Berry & Howard
260 Franklin Street
Boston, Massachusetts
Attention: Lewis A. Burleigh, Esq.
Fax: (617) 345-4745
To Tenant:
FIRST HEALTH Strategies, Inc.
c/o First Financial Management Corporation
3 Corporate Square, Suite 700
Atlanta, Georgia 30319
Attention: Legal Department
Fax: (404)636-7632
With a copy (which shall not constitute notice) to:
Sutherland, Asbill & Brennan
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: H. Edward Hales, Jr., Esq.
Fax: (404)853-8806
Either party may, by notices as aforesaid, designate a different address for
addresses for notice, statements, demands or other communications intended for
it.
19. STATUS OF LEASE; FINANCIAL DATA:
Upon written request of either party, the other party agrees, within twenty
(20) days, to deliver a written status report of this Lease, in the form
provided on attached Exhibit D, provided that neither party shall be obligated
to provide more than four (4) such status reports per year.
20. MECHANICS' LIENS:
LIENS AND RIGHT OF CONTEST . (a) Tenant shall not suffer or permit
any mechanic's lien or other lien to be filed against the Premises, equipment or
materials supplied or claimed to have
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been supplied to the premises at the request of Tenant, or anyone holding the
Premises, or any portion thereof, through or under Tenant. If any such
mechanic's lien or other lien shall at any time be filed against the Premises,
or any portion thereof, Tenant shall cause the same to be discharged of record
within thirty (30) days after the date of filing the same. However, in the
event Tenant desires to contest the validity of any lien it shall (i) on or
before thirty (30) days prior to the due date thereof, notify Landlord, in
writing, that Tenant intends to so contest same; (ii) on or before the due date
thereof, if the amount in controversy exceeds $100,000 or if any mortgagee or
Trust Deed holder of Landlord so requires, deposit with Landlord security (in
form and content reasonably satisfactory to Landlord or Landlord's mortgagee or
trust deed holder) for the payment of the full amount of such lien and, from
time to time, deposit additional security or indemnity so that, at all times,
adequate security or indemnity will be available for the payment of the full
amount of the lien together with all interest, penalties, costs and charges
accrued or accumulated thereon.
If Tenant complies with the foregoing, and Tenant continues, in good faith, to
contest the validity of such lien by appropriate legal proceedings which shall
operate to prevent the collection thereof and the sale or forfeiture of the
Premises, or any part thereof, to satisfy the same, Tenant shall be under no
obligation to pay such lien until such time as the same has been decreed, by
court order, to be a valid lien on the Premises. Any surplus deposit retained
by Landlord, after the payment of the lien shall be repaid to Tenant. Provided
that nonpayment of such lien does not cause Landlord to be in violation of any
of its contractual undertakings, Landlord agrees not to pay such lien during
the period of Tenant's contest. However, if Landlord pays for the discharge of
a lien or any part thereof from funds of Landlord, any amount paid by Landlord,
together with all costs, fees and expenses in connection therewith (including
reasonable attorney's fees of Landlord) together with interest thereon at the
Overdue Rate, shall be repaid by Tenant to Landlord on demand by Landlord.
Tenant shall indemnify and defend Landlord against and save Landlord and the
Premises, and any portion thereof, harmless from and against all losses, costs,
damages, expenses, liabilities, suits, penalties, claims, demands and
obligations, including, without limitation, reasonable attorney's fees,
resulting from the assertion, filing, foreclosure or other legal proceedings
with respect to any such mechanic's lien or other lien or the attempt by Tenant
to discharge same as above provided.
(b) All materialmen, contractors, artisans, mechanics, laborers and any
other person now or hereafter furnishing any labor,
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services, materials, supplies or equipment to Tenant with respect to the
Premises, or any portion thereof, are hereby charged with notice that they must
look exclusively to Tenant to obtain payment for the same. Notice is hereby
given that Landlord shall not be liable for any labor, services, materials,
supplies, skill, machinery, fixtures or equipment furnished or to be furnished
to Tenant upon credit, and that no mechanic's lien or other lien for any such
labor, services, materials, supplies, machinery, fixtures or equipment shall
attach to or affect the estate or interest of Landlord in and to the Premises,
or any portion thereof.
(c) Tenant shall not create, permit or suffer, and, subject to the
provisions of Paragraph 21(a) hereof, shall promptly discharge and satisfy of
record, any other lien, encumbrance, charge, security interest, or other right
or interest which, as a result of Tenant's action or inaction contrary to the
provisions hereof, shall be or become a lien, encumbrance, charge or security
interest upon the Premises, or any portion thereof, or the income therefrom.
21. END OF TERM: (a) Upon the expiration or earlier termination of the
Term of this Lease, Tenant shall surrender the Premises to Landlord in the same
condition and suitable for the same use in which the Premises was originally
received from Landlord except as repaired, rebuilt or altered as required or
permitted by this Lease (and/or except for such casualty damage as Tenant shall
not be required to repair or restore hereunder), and except for normal wear and
tear, and shall surrender all keys to the Premises to Landlord at the place
then fixed for the payment of Fixed Rent and shall inform Landlord of all
combinations on locks, safes and vaults, if any. Except as otherwise provided
herein, Tenant shall at such time remove all of its property (including
Tenant's trade fixtures) therefrom and all alterations and improvements placed
thereon by Tenant if so requested by Landlord. Tenant shall repair any damage
to the Premises caused by such removal, and any and all such property not so
removed when required shall, at Landlord's option, become the exclusive
property of Landlord or be disposed of by Landlord, at Tenant's cost and
expense, without further notice to or demand upon Tenant.
(b) If the Premises are not surrendered as above set forth, Tenant
shall indemnify, defend and hold Landlord harmless from and against loss or
liability resulting from the delay by Tenant in so surrendering Premises,
including, without limitation any claim made by any succeeding occupant founded
on such delay. Tenant's obligation to observe or perform this covenant shall
survive the expiration or other termination of this Lease. In
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addition to the foregoing, and in addition to the Additional Rent, Tenant shall
pay to Landlord a sum equal to 150% of the Fixed Rent herein provided during
each month or portion thereof for which Tenant shall remain in possession of
the Premises or any part thereof after the termination of the Term or of
Tenant's rights of possession, whether by lapse of time or otherwise. The
provisions of this Paragraph 22(b) shall not be deemed to limit or constitute a
waiver of any other rights or remedies of Landlord provided herein at law or at
equity.
(c) All property of Tenant not removed on or before the last day of
the term of this Lease shall be deemed abandoned. Tenant hereby appoints
Landlord its agent to remove all property of Tenant from the Premises upon
termination of this Lease and to cause its transportation and storage for
Tenant's benefit, all at the sole cost and risk of Tenant and Landlord shall
not be liable for damage, theft, misappropriation or loss thereof and Landlord
shall not be liable in any manner in respect thereto. Tenant shall pay all
costs and expenses of such removal, transportation and storage. Tenant shall
reimburse Landlord upon demand for any expenses incurred by Landlord with
respect to removal or storage of abandoned property and with respect to
restoring said Premises to good order, condition and repair.
(d) Except for surrender upon the expiration or earlier
termination of the term hereof, no surrender to Landlord of this Lease or of
the Leased Property shall be valid or effective unless agreed to and accepted
in writing by Landlord.
22. ALTERATIONS:
(a) At any time during the Term of this Lease, Tenant shall have
the right without Landlord's consent to make alterations in and to the
Premises, provided such alterations do not adversely affect the value of the
Premises and are not estimated to cost more than $200,000.
(b) In the case of alterations exceeding the limits of clause (a),
Tenant shall submit to Landlord plans and specifications showing the nature and
extent of such alterations. Landlord shall have a period of thirty (30) days,
time being of the essence, to approve such plans and specifications, such
approval not to be unreasonably withheld.
If Landlord has not responded in said 30 day period, Tenant may deliver to
Landlord a duplicate notice, prominently marked to indicate that failure to
respond within ten (10) days shall constitute approval of the plans, and if
Landlord shall fail to respond within ten (10) days of its receipt of such
duplicate
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<PAGE> 35
notice, the plan shall be deemed approved by Landlord.
If Landlord approves or is deemed to have approved such plans and
specifications, Tenant shall have the right to have such work performed as
approved. If Landlord disapproves such alterations, Tenant shall not perform
the work, but may resubmit plans and specifications designed to meet the
objections raised by Landlord. Prior to commencing work, Tenant shall obtain
at its expense all necessary permits and builder's risk insurance in an amount
reasonably satisfactory to Landlord. Paragraph 21 hereof is applicable in
connection with Alterations. Upon completion of any alteration, Tenant shall
deliver to Landlord updated plans and specifications reflecting such
alterations and a final certificate of occupancy issued subsequent to the
completion of the Alteration. Landlord shall have title to and ownership of
all alterations, and all alterations shall be subject to the provisions of this
Lease. All such alterations shall be at Tenant's expense. All such
alterations referred to in this Paragraph shall be referred to herein as
"Alterations." In any event, the making of Alterations shall be expeditiously
completed in a god and workmanlike manner and in compliance with all applicable
laws, rules, regulations, ordinances and restrictions then in effect.
23. MEMORANDUM OF LEASE: The parties agree to promptly execute a
Memorandum of Lease in recordable form and either of the parties shall have the
right, without notice to the other party, to record such Memorandum of Lease.
24. SUBLETTING/ASSIGNMENT: (a) Tenant shall not assign its interest in
this Lease, but shall have the right, without Landlord's consent, to sublet all
or any portion of the Premises. Prior to an Event of Default, Tenant shall be
entitled to retain all sublease rents. Effective upon the occurrence and
during the continuance of an Event of Default, all rents payable under such
subleases are hereby assigned to Landlord. A copy of any sublease fully
executed and acknowledged by Tenant and sublessee shall be delivered to
Landlord at the time of its execution. No such sublease shall be deemed to
relieve Tenant of any liability for the due and faithful performance of the
terms of this Lease and Tenant shall continue to be directly and primarily
liable hereunder, and not as a guarantor or surety. Tenant shall not assign,
mortgage, pledge, transfer or otherwise encumber of dispose of this Lease, or
any interest therein, or in any manner assign, mortgage, pledge, transfer or
otherwise encumber or dispose of its interest or estate in the Premises, or any
portion thereof, without obtaining Landlord's prior written consent.
Notwithstanding the foregoing, provided Tenant gives
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<PAGE> 36
written notice (hereinafter referred to as "Merger Notice") to Landlord,
Landlord's consent shall not be required for the transfer of all, or
substantially all, of Tenant's rights under the terms of this Lease to (i) an
entity which holds the controlling ownership interest of Tenant; (ii) to an
entity which Tenant holds (and continues to hold during the Term) the
controlling ownership interest; (iii) to an entity which is wholly owned by an
entity which holds the controlling ownership interest of Tenant; or (iv) to the
resultant entity of a merger or consolidation with Tenant.
(b) Notwithstanding anything contained in this Lease to the contrary and
notwithstanding any consent by Landlord to any sublease of the Premises, or any
portion thereof, or to any assignment of this Lease or of Tenant's interest or
estate in the Premises, no sublessee shall assign its sublease nor further
sublease the Premises, or any portion thereof, and no assignee shall further
assign its interest in this lease or its interest or estate in the Premises, or
any portion thereof, nor sublease the Premises, or any portion thereof, without
Landlord's prior written consent in each and every instance which consent shall
not be unreasonably withheld. No such assignment or subleasing shall relieve
Tenant from any of Tenant's obligations in this Lease contained.
(c) Tenant's failure to comply with all of the foregoing provisions shall
(whether or not Landlord's consent is required under this Article), at
Landlord's option, render any purported assignment or subletting null and void
and of no force and effect.
25. HAZARDOUS MATERIAL:
A. Tenant (i) shall comply, and cause the Premises to comply,
with all Environmental Laws (as hereinafter defined) applicable to the Premises
(including the making of all submissions to governmental authorities required
by Environmental Law and the carrying out of any remediation program specified
by such authority) (ii) shall prohibit the use of the Premises for the
generation, manufacture, refinement, production, or processing of any Hazardous
Material (as hereinafter defined) or for the storage, handling, transfer or
transportation of any Hazardous Material (other than in connection with the
operation, business and maintenance of the Premises and in commercially
reasonable quantities as a consumer thereof and supplier of consumer products
and in compliance with Environmental Laws), (iii) shall not permit to remain,
install or permit the installation on the Premises of any surface impoundments,
underground storage tanks, or friable asbestos-containing
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<PAGE> 37
materials and (iv) shall cause any alterations of the Premises to be done in a
way so as to not expose in an unsafe manner the persons working on or visiting
the Premises to Hazardous Materials and in connection with any such alterations
shall remove any Hazardous Materials present upon the Premises which are not in
compliance with Environmental Laws or which present a danger to persons working
on or visiting the Premises.
B. "Environmental Laws" means the Resource Conservation and
Recovery Act of 1976, as amended, 42 U.S.C. Section 6901, et seq. (RCRA), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986, 42.
U.S.C. Section 9601 et seq. (CERCLA), the Toxic Substance Control Act, as
amended, 15 U.S.C. Section 2601 et seq., the Federal Insecticide, Fungicide,
Rodenticide Act, as amended, 7 U.S. Section 136 et seq., Utah Indoor Clean Air
Act, 28381 Utah Code, et seq., and all applicable federal, state and local
environmental laws, ordinances, rules and regulations, as any of the foregoing
may have been or may be from time to time amended, supplemented or supplanted,
and any other federal, state or local laws, ordinances, rules and regulations,
now or hereafter existing relating to regulations or control of Hazardous
Material or materials. The term "Hazardous Materials" as used in this Lease
shall mean substances defined as "hazardous substances", "hazardous materials",
"hazardous wastes" or "toxic substances" in any applicable federal, state or
local statute, rule, regulation or determination, including but not limited to
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 USC Section 9601, et seq.; the Hazardous Materials
Transportation Act, 49 USC, Section 1801, et seq.; the Resource, Conservation
and Recovery Act, 42 USC Section 6901, et seq.; and, asbestos, pcb's,
radioactive substances, methane, volatile hydrocarbons, petroleum or
petroleum-derived substances or wastes, radon, industrial solvents or any other
material as may be specified in applicable law or regulations.
C. Except for liability resulting from or arising out of the
negligent or willful act of Landlord or its Mortgagee or their agents on or
about the Premises or their successors and assigns, Tenant agrees to protect,
defend, indemnify and hold harmless Landlord, its directors, officers,
employees and agents, and any successors to Landlord's interest in the chain of
title to the Premises, their direct or indirect partners, directors, officers,
employees, and agents, from and against any and all liability, including all
foreseeable and all unforeseeable damages including but not limited to
attorney's and consultant's fees, fines, penalties and civil or criminal
damages, directly or indirectly arising out of the use, generation, storage,
treatment, release, threatened release, presence or disposal of
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<PAGE> 38
Hazardous Materials from, on, at, to or under the Premises prior to or during
the Term of this Lease, and including, without limitation, the cost of any
required or necessary repair, response action, remediation, investigation,
cleanup or detoxification and the preparation of any closure or other required
plans, whether such action is required or necessary prior to or following
transfer of title to the Premises. This agreement to indemnify and hold
harmless shall be in addition to any other obligations or liabilities Tenant
may have to Landlord at common law under all statutes and ordinances or
otherwise, and shall survive following the date of expiration or earlier
termination of this Lease. Tenant expressly agrees that the representations,
warranties and covenants made and the indemnities stated in this Lease are not
personal to Landlord, and the benefits under this Lease may be assigned to
subsequent parties in interest to the chain of title to the Premises, which
subsequent parties in interest may proceed directly against Tenant to recover
pursuant to this Lease. Tenant, at its expense, may institute appropriate
legal proceedings with respect to environmental matters of the type specified
in this Paragraph C or lien for such environmental matters, not involving
Landlord or its Mortgagee as a defendant (unless Landlord or its Mortgagee is
the alleged cause of the damage), conducted in good faith and with due
diligence, provided that such proceedings shall not in any way impair the
interests of Landlord or its Mortgagee under this Lease or contravene the
provisions of any First Mortgage. Counsel to Tenant in such proceedings shall
be reasonably approved by Landlord if Landlord is a defendant in the same
proceeding. Landlord shall have the right to appoint co-counsel, which
co-counsel will cooperate with Tenant's counsel in such proceedings. The fees
and expenses of such co-counsel shall be paid by Landlord, unless such
co-counsel are appointed because the interests of Landlord and Tenant in such
proceedings, in Landlord's reasonable judgment, are or have become adverse.
D. Tenant, promptly upon the written request of Landlord from
time to time, but not more than once in any calendar year unless an Event of
Default has occurred and is continuing, shall permit such persons as Landlord
or any assignee of Landlord may designate and (unless an Event of Default has
occurred and is continuing) approved by Tenant (including their liability
insurance coverage), which approval shall not be unreasonably withheld or
delayed ("Site Reviewers") to visit the Premises from time to time and perform
Environmental site investigations and assessments ("Site Assessments") on the
Premises for the purpose of determining whether there exists on the Premises
any environmental condition which may result in any liability, cost or expense
to Landlord or any other owner or occupier of the Premises relating to
Hazardous Material; provided, however, that
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<PAGE> 39
any such Site Reviewer in performing any Site Assessment shall not unreasonably
interfere with the operations or business of Tenant on the Premises. Landlord
will cause any such Site Reviewer to repair any damage to the Premises
resulting from such Site Reviewer's activities. Such Site Assessments may
include both above and below the ground testing for environmental damage or the
presence of Hazardous Material on the Premises and such other tests on the
Premises as may be necessary to conduct the Site Assessments in the opinion of
the Site Reviewers. Tenant shall supply to the Site Reviewers such historical
and operational information regarding the Premises as may be reasonably
requested by the Site Reviewers to facilitate the Site Assessments (other than
information previously supplied in writing to Landlord by Tenant) and shall
make available for meetings with the Site Reviewers appropriate personnel
having knowledge of such matters. The cost of performing and reporting all
Site Assessments shall be paid by Landlord unless an Event of Default has
occurred and is continuing or unless the Site Reviewers discover an
environmental condition caused by Tenant causing the Premises to be in material
noncompliance with applicable Environmental Laws, in either of which events
such cost will be paid by Tenant within thirty (30) days after demand by
Landlord with interest to accrue at the Overdue Rate. Landlord, promptly after
written request by Tenant and payment by Tenant as aforesaid, shall deliver to
Tenant copies of reports, summaries or other compilations of the results of
such Site Assessments. Tenant's sole remedy for Landlord's breach of the
preceding sentence shall be a mandatory injunction, and not a termination of
this Lease or a withholding or reduction of rent.
E. Tenant shall notify Landlord in writing, promptly upon
Tenant's learning thereof, of any:
(a) notice or claim to the effect that Tenant is or may be liable
to any person as a result of the release or threatened release of any Hazardous
Material into the environment on or about the Premises;
(b) notice that Tenant is subject to investigation by any
governmental authority evaluating whether any remedial action is needed to
respond to the release or threatened release of any Hazardous Material into the
environment on or about the Premises;
(c) notice that the Premises is subject to an environmental lien;
and
(d) notice of violation to Tenant or awareness by Tenant of a
condition which might reasonably result in a notice of violation of any
applicable Environmental Law that could have a
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<PAGE> 40
material adverse effect upon the Premises.
26. MISCELLANEOUS PROVISIONS:
A. This Lease and all of the covenants and provisions hereof
shall inure to the benefit of, and be binding upon, the parties hereto and the
heirs, personal representatives, successors and assigns of the parties.
B. The capitalized and underlined titles appearing in this Lease
are for reference only and shall not be considered a part of this lease or in
any way to modify, amend or affect the provisions thereof.
C. This Lease contains the complete agreement of the parties with
reference to the leasing of the Premises.
D. Any provision or provisions of this Lease which shall prove to
be invalid, void or illegal shall in no way affect, impair or invalidate any
other provision hereof, and the remaining provisions hereof shall nevertheless
remain in full force and effect.
E. Whenever Tenant is required to make payments to Landlord other
than Fixed Rent, such payments shall constitute Additional Rent. Whenever
Tenant is required to make payment for insurance or taxes, Landlord shall have
the right after fifteen (15) days notice to Tenant, to make the payment for
Tenant and to recover such sums from Tenant as Additional Rent plus interest on
such sums at the Overdue Rate.
F. This Lease may be executed in one or more counterparts, each
of which shall be an original, and all of which shall constitute one and same
instrument.
G. The term "Landlord" as used in this Lease shall mean only the
owner or owners at the time in question of the fee title, and in the event of
any transfer of such title or interest, Landlord named in this Lease (and in
case of any subsequent transfers then the grantor) shall be relieved from and
after the date of such transfer of all liability as respects Landlord's
obligations thereafter to be performed, provided that any funds in the hands of
Landlord or the then grantor at the time of such transfer, in which Tenant has
an interest, shall be delivered to the grantee. The obligations contained in
this Lease to be performed by Landlord shall, subject as aforesaid, be binding
on Landlord's successors and assigns, only during their respective periods of
ownership.
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<PAGE> 41
H. This Lease shall be governed by and construed and enforced in
accordance with and subject to the laws of the State of Utah.
I. Anything contained herein to the contrary notwithstanding, any
claim based on or in respect of any liability of Landlord under this Lease
shall be enforced only against the Premises and not against any other assets,
properties or funds of (a) Landlord or any director, officer, shareholder,
general partner, limited partner, or direct or indirect partners, employee or
agent of Landlord or its general partners (or any legal representative, heir,
estate, successor or assign of any thereof), (b) any predecessor or successor
partnership or corporation (or other entity) of Landlord or its general
partners, either directly or through Landlord or its predecessor or successor
partnership or corporation (or other entity) of Landlord or its general
partners, and (c) any other person or entity. The foregoing provision is not
intended to deprive Tenant of any injunctive relief to which it may be
entitled.
J. Without the written approval of Landlord and Tenant, no person
other than Landlord (including its direct and indirect partners), Mortgagee,
Tenant and their respective successors and assigns shall have any rights under
this Lease.
K. Where the character or amount of any asset or liability or
item of income or expense is required to be determined or any consolidation or
other accounting computation is required to be made for the purposes of this
Lease, it shall be done in accordance with generally accepted accounting
principles at the time in effect, to the extent applicable, except where such
principles are inconsistent with the express provisions of this Lease.
L. There shall be no merger of this Lease or the leasehold estate
created hereby by reason of the fact that the same Person may acquire, own or
hold, directly or indirectly, in whole or in part, (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate, and (b) the fee estate in the Premises.
M. Notwithstanding anything contained herein to the contrary, the
interests of Tenant and Landlord under this Lease are expressly intended by the
parties hereto to be construed as a leasehold estate held by Tenant and a fee
simple estate held by Landlord, and not as an estate for years held by Tenant
or a remainder interest held by Landlord.
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<PAGE> 42
IN WITNESS WHEREOF, the parties have hereunto set their hands under
seal on the day and year first above written.
TRINET ESSENTIAL FACILITIES X, INC.
Landlord
By: Charles S. Swanson
--------------------------------
Senior Vice President
FIRST HEALTH STRATEGIES, INC.
By: Barry W. Burt
--------------------------------
Name: Barry W. Burt
Title: Vice President
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<PAGE> 43
ANNEX I
DEFINITIONS
The following terms shall have the following meanings for all purposes
of this Lease and shall be equally applicable to both the singular and plural
forms of the terms herein defined.
"Additional Rent" means all amounts, liabilities and obligations other than
Fixed Rent which Tenant assumes or agrees to pay under this Lease to Landlord
or others.
"Closing" is defined in Paragraph 3B of this Lease.
"Commencement Date" is defined in Paragraph 3B of this Lease.
"Event of Default" is defined in Paragraph 14 of this Lease.
"First Mortgage" or "Mortgage" shall mean a first mortgage on the Premises
given by Landlord to the Mortgagee to secure a loan financing or refinancing
the acquisition of the Premises.
"First Mortgage Note" shall mean a promissory note evidencing a loan secured by
a First Mortgage.
"First Renewal Term" is defined in Paragraph 3C of this Lease.
"Fixed Rent" is defined in Paragraph 4 of this Lease.
"Imposition" means the various tax and other charges referred to in Paragraph
9.
"Initial Term" is defined in Paragraph 3A of this Lease.
"Landlord" is defined in the first paragraph of this Lease.
"Lease" is defined in the first sentence of this Lease.
"Lease Expiration Date" is defined in Paragraph 3A of this Lease.
"Lease Year" means each twelve-month period beginning on each December 1 during
the Term.
"Mortgagee" shall mean any first mortgagee with respect to the Premises.
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<PAGE> 44
"Overdue Rate" means a rate equal to fifteen percent (15) per annum (or the
maximum rate allowed by law if such rate is less than fifteen percent (15%) per
annum).
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, trustee(s) of a trust, unincorporated
organization, or government or governmental authority, agency or political
subdivision thereof.
"Permitted Encumbrances" means:
(a) Any liens for taxes, assessments and other governmental charges and
any liens of mechanics, materialmen and laborers for work or services
performed or materials furnished in connection with the Premises,
which are not due and payable;
(b) The easements, rights-of-way, encroachments, encumbrances, restrictive
covenants or other matters in the title set forth in Schedule B to the
policy of owners title insurance (or commitments therefore) delivered
to and accepted by Landlord with respect to the Premises in connection
with the delivery of this Lease as shown on Exhibit E attached hereto;
(c) The Lease and the rights of Tenant under this Lease;
(d) The lien of the Deed of Trust dated as of December 9, 1994, from
Landlord to Bankers Trust Company, as trustee, and any rights granted
thereby; and
"Premises" is defined in Paragraph 1 of this Lease.
"Proceeds Trustee" is defined in Paragraph lID.
"Rent" means Fixed Rent and Additional Rent.
"Renewal Term" is defined in Paragraph 3C of this Lease.
"Renewal Term Commencement Date" is defined in Paragraph 3C of this Lease.
"Renewal Term Expiration Date" is defined in Paragraph 3C of this Lease.
"Second Renewal Term" is defined in Paragraph 3C of this Lease.
"Site Reviewers" is defined in Paragraph 25E of this Lease.
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<PAGE> 45
"Site Assessments" is defined in Paragraph 25E of this Lease.
"Term" means the Initial Term, together with any Renewal Terms.
"Third Renewal Term" is defined in Paragraph 3C of this Lease.
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<PAGE> 46
Exhibit B
Rent Payments
1. [Intentionally omitted.]
2. Each installment of Fixed rent payable for the Premises during
that portion of the Initial Term commencing on December 1, 1994 and ending on
and including November 30, 1999 is $103,753.83 and said installments are
payable on December 1, 1994 and thereafter on the first day of each month to
and including November 1, 1999.
3. Each installment of Fixed Rent payable for the Premises during
that portion of the Initial Term commencing on December 1, 1999 and ending on
and including November 30, 2004 is $108,426.58 and said installments are
payable on December 1, 1999 and thereafter on the first day of each month to
and including November 1, 2004.
4. Each installment of Fixed rent payable for the Premises during
that portion of the Initial Term commencing on December 1, 2004 and ending on
and including November 30, 2009, is $122,674.75 and said installments are
payable on December 1, 2004 and thereafter on the first day of each month to
and including November 1, 2009.
5. Each installment of Fixed Rent payable for the Premises during
the First Renewal Term is $132,488.75 and said installments are payable on
December 1, 2009 and thereafter on the first day of the month to and including
November 1, 2014.
6. Each installment of Fixed Rent payable for the Premises during
the Second Renewal Term is $143,087.83 and said installments are payable on
December 1, 2014 and on the first day of each month thereafter to and including
November 1, 2019.
7. Each installment of Fixed Rent payable for the Premises during
the Third Renewal Term is $154,534.92 and said installments are payable on
December 1, 2019 and on the first day of each month thereafter to and including
November 1, 2024.
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<PAGE> 47
Exhibit C
The applicable amount determined in accordance with Schedule C shall be the
amount set forth opposite the date on which such determination is made, or if
such date is not listed below, then on the next preceding date.
<TABLE>
<S> <C>
December 1, 1994 $12,900,000
January 1, 1995 $12,894,413
February 1, 1995 $12,888,793
March 1, 1995 $12,883,141
April 1, 1995 $12,877,455
May 1, 1995 $12,871,736
June 1, 1995 $12,865,984
July 1, 1995 $12,860,199
August 1, 1995 $12,854,380
September 1, 1995 $12,848,526
October 1, 1995 $12,842,639
November 1, 1995 $12,836,717
December 1, 1995 $12,830,761
January 1, 1996 $12,824,770
February 1, 1996 $12,818,744
March 1, 1996 $12,812,683
April 1, 1996 $12,806,586
May 1, 1996 $12,800,454
June 1, 1996 $12,794,286
July 1, 1996 $12,788,082
August 1, 1996 $12,781,842
September 1, 1996 $12,775,566
October 1, 1996 $12,769,253
November 1, 1996 $12,762,903
December 1, 1996 $12,756,516
January 1, 1997 $12,750,092
February 1, 1997 $12,743,631
March 1, 1997 $12,737,131
April 1, 1997 $12,730,594
May 1, 1997 $12,724,019
June 1, 1997 $12,717,405
July 1, 1997 $12,710,753
August 1, 1997 $12,704,062
September 1, 1997 $12,697,332
October 1, 1997 $12,690,562
November 1, 1997 $12,683,753
December 1, 1997 $12,676,905
January 1, 1998 $12,670,016
February 1, 1998 $12,663,087
March 1, 1998 $12,656,118
April 1, 1998 $12,649,108
May 1, 1998 $12,642,058
</TABLE>
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<PAGE> 48
<TABLE>
<S> <C>
June 1, 1998 $12,634,966
July 1, 1998 $12,627,833
August 1, 1998 $12,620,658
September 1, 1998 $12,613,441
October 1, 1998 $12,606,183
November 1, 1998 $12,598,882
December 1, 1998 $12,591,538
January 1, 1999 $12,584,151
February 1, 1999 $12,576,722
March 1, 1999 $12,569,249
April 1, 1999 $12,561,732
May 1, 1999 $12,554,172
June 1, 1999 $12,546,567
July 1, 1999 $12,538,919
August 1, 1999 $12,531,225
September 1, 1999 $12,523,487
October 1, 1999 $12,515,703
November 1, 1999 $12,507,874
December 1, 1999 and thereafter $12,500,000
</TABLE>
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<PAGE> 1
EXHIBIT 10.10
- -------------------------------------------------------------------------------
OFFICE BUILDING LEASE
Between
WEPREC POWERS POINTE CORPORATION, Landlord
And
FIRST FINANCIAL MANAGEMENT CORPORATION, Tenant
Premises:
Suites 110, 160, 1100, 1200, 1300, and 1400
5660 New Northside Drive
Atlanta, Georgia 30328
- -------------------------------------------------------------------------------
COPYRIGHTED MATERIAL; ALL RIGHTS RESERVED.
1991, CITICORP REAL ESTATE, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Index of Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
ARTICLE 1 Definitions, Premises, Term, Rent
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Leased Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.03 Commencement Date; Certain Obligations Effective Prior to the
Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.04 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.05 Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.06 Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 2 Alterations and Additions
Section 2.01 Tenant Improvement Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.02 Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 3 Operating Expenses
Section 3.01 Expense Stop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.02 Estimates and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.03 Extra Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.04 Operating Expenses Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 4 Tenant's Covenants and Rights
Section 4.01 Parking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.02 Assignment and Subletting . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.03 Care of Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.04 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.05 Tenant's Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.07 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.08 Personal Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.09 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 4.10 Security Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.11 Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.12 Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.13 Telephone Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 5 Landlord's Covenants and Rights
Section 5.01 Quiet Enjoyment and Subordination . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.02 Landlord's Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.03 Alterations by Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.04 Entry by Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.05 Minimize Interference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.06 Landlord's Right to Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 6 Eminent Domain, Casualty, Hazardous Materials
Section 6.01 Eminent Domain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.02 Damage by Fire or Other Casualty . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.03 Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.04 Hazardous Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 7 Events of Default, Remedies
Section 7.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.02 Remedies upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.03 Landlord's Lien and Security Interest . . . . . . . . . . . . . . . . . . . . . 34
Section 7.04 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 8 Miscellaneous Provisions
Section 8.01 Administrative Service Charges . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.02 Late Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.03 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.04 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.05 Authority of Tenant and Landlord . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.06 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.07 Authorities for Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.08 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.09 Definition of Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.11 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.13 No Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.14 Relationship of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.15 Name of Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.16 Successors Bound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.17 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.18 Joint and Several Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 8.19 Easements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.20 Enlarging the Office Building . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.21 Limitation of Landlord Liability . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.22 Short Form Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.23 Assignment of Rents, Leases . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.24 Relocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.25 Rules and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.26 Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.27 Mortgagee Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.28 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.29 Landlord's Failure to Consent . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.30 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.31 No Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.32 No Light or Air Easement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.33 Special Stipulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
EXHIBITS
Exhibit A-1: Floor Plan of Premises (excluding Storage Space)
Exhibit A-2: Floor Plan of Storage Space
Exhibit A-3: Floor Plan of First Refusal Space
Exhibit B: Working Drawings
Exhibit C: Tenant Acceptance Letter
Exhibit D: Rules and Regulations
Exhibit E: Workletter
Exhibit F: Special Stipulations
Exhibit G: Building Services Specifications
Exhibit H: Legal Description of Real Property upon which Office Building is Situated
Exhibit I: Janitorial Specifications
Exhibit J: Subordination, Non-Disturbance and Attornment Agreement
Exhibit K: Plan Showing Location of the Allstate Reserved Parking Spaces
Exhibit L: Building Standard Finishes
</TABLE>
<PAGE> 5
INDEX OF CERTAIN DEFINED TERMS
<TABLE>
<CAPTION>
TERM SECTION
- ---- -------
<S> <C>
Acceptance Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.03(C)
ADA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.05
Aggregate Gross Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.02(C)(1)
Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(B)
Architect's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.02
Base Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01(A)
Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01(B)
BOMA Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.02
Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01(C)
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01(D)
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(A)(3)
Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01(E)
Date of Such Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01(A)
Easement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.01(B)
Environmental Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04(D)
Environmental Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04(D)
Environmental Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04(D)
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(A)
Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01(F)
Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(A)(3)
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04(D)
Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.02(1)(a)
Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06(A)
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.04(A)(2)
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.04(A)(3)(f)
Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preface, 8.09
Landlord's Building Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(B)
Landlord's Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(C)
Landlord's Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.03(A)
Landlord's Notice Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01(G)
Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preface
Maintenance Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.04(A)(3)
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.01(B)
Net Rental Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02(C)
Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.04(A)
Office Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01(H)
Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.04(A)
Operating Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01
Operating Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.02
Parking Spaces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01(I)
Permitted Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01(J)
Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01(K)
Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02(C)
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01(L)
Reletting Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.02(C)(1)
Rent Payment Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01(M)
Rules and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.25(A)
Security Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01(N)
Superior Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.01(B)
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.04(A)(1)
Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preface
Tenant's Additional Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(C)
Tenant's Transfer Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02(C)
Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01(P)
UCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.03(C)
Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.04(A)(3)(d)
Working Drawings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(B)
</TABLE>
<PAGE> 8
OFFICE BUILDING LEASE
5660 New Northside Drive
Atlanta, Georgia
THIS OFFICE BUILDING LEASE (this "Lease") is made as of this 8th day of
March, 1995, by and between WEPREC POWERS POINTE CORPORATION ("Landlord"), a
Georgia corporation, having an office c/o Realty Investment Advisors ("RIA"),
909 Third Avenue, 30th Floor, New York, New York 10043 and FIRST FINANCIAL
MANAGEMENT CORPORATION ("Tenant"), a Georgia corporation, having a principal
place of business at 3 Corporate Square, Suite 700, Atlanta, Georgia 30329.
W I T N E S E T H:
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
and agree as follows:
ARTICLE 1
DEFINITIONS, PREMISES, TERM, RENT
SECTION 1.01 DEFINITIONS. The following terms shall have the meanings
hereinafter set forth throughout this Lease.
(A) "Base Expenses" shall mean an amount (expressed on a per rentable square
foot basis) equal to the Operating Expenses paid during calendar year
1995.
(B) "Base Rent" shall mean the base rent payable by Tenant during the Term, as
follows:
<TABLE>
<CAPTION>
BASE RENT RATE
-------------- PAYMENTS
(EXPRESSED AS DOLLARS PER RENTABLE SQUARE FOOT (BASED ON 72,896 RSF IN PREMISES,
OF THE PREMISES, EXCLUSIVE OF STORAGE SPACE, PER YEAR) EXCLUSIVE OF STORAGE SPACE)
DATES ANNUAL MONTHLY
----- ------ -------
<S> <C>
Commencement
Date through 8/31/96 $18.00 $1,312,128.00 $ 109,344.00
9/1/96 through 8/31/97 $18.00 $1,312,128.00 $ 109,344.00
9/1/97 through 8/31/98 $18.00 $1,312,128.00 $ 109,344.00
9/1/98 through 8/31/99 $18.00 $1,312,128.00 $ 109,344.00
9/1/99 through 8/31/00 $18.00 $1,312,128.00 $ 109,344.00
9/1/00 through 8/31/01 $21.25 $1,549,040.00 $ 129,086.67
9/1/01 through 8/31/02 $21.25 $1,549,040.00 $ 129,086.67
9/1/02 through 8/31/03 $21.25 $1,549,040.00 $ 129,086.67
9/1/03 through 8/31/04 $21.25 $1,549,040.00 $ 129,086.67
9/1/04 through Expiration Date $21.25 $1,549,040.00 $ 129,086.67
Renewal Term, if any 95% of Market Base Rent Rate; see Section 2 of EXHIBIT F
</TABLE>
[Schedule of Base Rent continued on following page]
1
<PAGE> 9
[Schedule of Base Rent continued from preceding page]
<TABLE>
<CAPTION>
BASE RENT RATE
-------------- PAYMENTS
(EXPRESSED AS DOLLARS PER USABLE SQUARE (BASED ON 640 USF IN STORAGE SPACE)
FOOT OF THE STORAGE SPACE PER YEAR)
DATES ANNUAL MONTHLY
----- ------ -------
<S> <C>
Commencement
Date through 8/31/96 $12.00 $ 7,680.00 $ 640.00
9/1/96 through 8/31/97 $12.00 $ 7,680.00 $ 640.00
9/1/97 through 8/31/98 $12.00 $ 7,680.00 $ 640.00
9/1/98 through 8/31/99 $12.00 $ 7,680.00 $ 640.00
9/1/99 through 8/31/00 $12.00 $ 7,680.00 $ 640.00
9/1/00 through 8/31/01 $15.00 $ 9,600.00 $ 800.00
9/1/01 through 8/31/02 $15.00 $ 9,600.00 $ 800.00
9/1/02 through 8/31/03 $15.00 $ 9,600.00 $ 800.00
9/1/03 through 8/31/04 $15.00 $ 9,600.00 $ 800.00
9/1/04 through Expiration Date $15.00 $ 9,600.00 $ 800.00
Renewal Term, if any 95% of Market Base Rent Rate; see Section 2 of EXHIBIT F
</TABLE>
(C) "Broker" shall mean Cushman & Wakefield of Georgia, Inc.
(D) "Building" shall mean, collectively, the Office Building (as defined in
Section 1.01(H) hereof), the Property (as defined in Section 1.01(L)
hereof), and any other building or improvements now or hereafter
constructed on the Property and all other buildings and improvements and
the real property upon which such buildings and improvements are located
within the complex known as 5660.
(E) "Commencement Date" shall mean September 1, 1995.
(F) "Expiration Date" shall mean August 31, 2005.
(G) "Landlord's Notice Address" shall mean Koll/Rubloff, a Division of Koll
Management, 3399 Peachtree Road, Suite 1900, Atlanta, Georgia 30326,
Attention: Property Manager for 5660 New Northside Drive, with a copy of
each Notice (as defined in Section 8.04 hereof) to Landlord to be sent to
(i) WEPREC Powers Pointe Corporation, c/o Realty Investment Advisors, 909
Third Avenue, 30th Floor, New York, New York 10043, Attention: Asset
Manager for 5660 New Northside Drive and (ii) WEPREC Powers Pointe
Corporation, c/o Realty Investment Advisors, 909 Third Avenue, 30th Floor,
New York, New York 10043, Attention: Michael J. Clerkin, Vice President.
(H) "Office Building" shall mean that certain building and other improvements
having a street address of 5660 New Northside Drive, Atlanta, Georgia
30328.
(I) "Parking Spaces" shall mean 3.4 parking spaces per 1,000 usable square feet
in the Premises (exclusive of any storage space such as, without
limitation, the Storage Space) leased from time to time pursuant to the
provisions of this Lease, such spaces to be located in the parking facility
from time to time associated with the Building, sixty percent (60%) of
which shall be spaces located in the enclosed portion of the parking
facility, and forty percent (40%) of which shall be spaces located in the
portion of the parking facility that is not enclosed.
2
<PAGE> 10
(J) "Permitted Uses" shall mean general office and professional business
purposes which are consistent with the operation of the Office Building as
a first class building, including, without limitation, executive,
administrative, legal, and clerical office purposes, all in accordance with
all applicable laws, ordinances, rules and regulations of governmental
authorities and the Rules and Regulations. Without limiting the generality
of the foregoing, but subject to the conditions set forth in the preceding
sentence, the Permitted Uses of the Premises include (i) the operation of a
food service facility for use by Tenant's officers, employees, clients and
invitees, but not for use by other tenants of the Office Building or by the
public in general, and (ii) corporate receptions and social functions at
which food and beverages may be provided to guests of Tenant.
(K) "Premises" shall mean that space shown cross-hatched on the floor plan(s)
annexed hereto as EXHIBIT A-1, known as Suites 160, 1100, 1200, 1300 and
1400, located on the first, eleventh, twelfth, thirteenth, and fourteen
(1st, 11th, 12th, 13th, and 14th) floors of the Office Building, containing
approximately 72,896 rentable square feet and 65,471 usable square feet,
together with the Storage Space. Upon any expansion or contraction of the
Premises pursuant to the terms of this Lease or other agreement of the
parties, the term "Premises" shall be deemed to apply to such space as
adjusted by such expansion or contraction.
(L) "Property" shall mean that certain real property on which the Office
Building is situated, located in the County of Fulton and State of Georgia.
(M) "Rent Payment Address" shall mean 5660 New Northside Drive, Atlanta,
Georgia 30328.
(N) "Security Deposit": Waived.
(O) "Storage Space" shall mean that space shown cross-hatched on the floor
plan(s) annexed hereto as EXHIBIT A-2, known as Suite 110, located on the
first (1st) floor of the Office Building, containing approximately 754
usable square feet.
(P) "Tenant's Notice Address" shall mean, prior to the Commencement Date, 3
Corporate Square, Suite 700, Atlanta, Georgia 30329 Attention: General
Counsel, and after the Commencement Date, 5660 New Northside Drive, Suite
1400, Atlanta, Georgia 30328 Attention: General Counsel.
(Q) The initial term of this Lease shall commence on the Commencement Date and
shall end on the Expiration Date, being approximately ten (10) years. The
term of this Lease shall be subject to renewal as provided in Section 2 of
EXHIBIT F annexed hereto. For purposes of this Lease, the term "Term"
shall mean and refer to the initial term of this Lease and any renewal or
extension thereof, as the context may require or permit.
SECTION 1.02 LEASED PREMISES. Subject to and upon the terms and conditions
set forth herein, Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord the Premises located in the Office Building for the period commencing
on the Commencement Date and ending on the Expiration Date. This Lease shall
create the relationship of landlord and tenant, and no estate shall pass out of
Landlord. Tenant's interest in the Premises is a usufruct, which interest is
not subject to levy or sale and is not assignable, as security or otherwise, by
Tenant, except as otherwise expressly provided herein or in compliance
herewith. Landlord and Tenant hereby agree to be bound by the number of
rentable and usable square feet comprising the Premises, as set forth in
Section 1.01(K) herein. Landlord and Tenant hereby acknowledge and agree that
(a) the number of usable square feet comprising the Premises has been
calculated using the American National Standard Method of Measuring Floor Area
in Office Buildings of the Building Owners and Managers Association
International (ANSI
3
<PAGE> 11
Z65.1-1980), approved July 31, 1980 ("BOMA Standard"); (b) any expansions or
contractions in the size of the usable area of the Premises during the Term of
this Lease shall be measured in accordance with the BOMA Standard; (c) the
number of the initial rentable square feet of the Premises has been calculated
by multiplying (i) the number of the initial usable square feet comprising the
Premises by (ii) 1.109482; (d) any expansions or contractions in the size of
the rentable area of the Premises during the Term of this Lease shall be
calculated by multiplying (i) the number of usable square feet of the Premises
by (ii) 1.109482, in the case of a full floor leased by Tenant, and by 1.15, in
the case of a multi-tenant floor; and (e) the Office Building contains 276,178
rentable square feet of office space on the date of the execution of this
Lease. Prior to the Commencement Date, Landlord shall deliver to Tenant a
written certificate (the "Architect's Certificate") of the Building architect,
as to the number of usable square feet of the Premises and that the foregoing
has been measured in accordance with the BOMA Standard. If the Architect's
Certificate discloses variances from the area calculations set forth in this
Lease, this Lease shall be amended by including in the Acceptance Agreement the
correct area calculations from the certificate. Subject to the terms and
conditions of this Lease, Tenant shall have access to the Premises twenty-four
(24) hours per day, every day of the year during the Term of this Lease.
SECTION 1.03 COMMENCEMENT DATE; CERTAIN OBLIGATIONS EFFECTIVE PRIOR TO THE
COMMENCEMENT DATE.
(A) If the Commencement Date occurs on a date other than the first day of a
calendar month or if the Term expires or is terminated on a day other than the
last day of a calendar month, Base Rent and any Additional Rent (as defined in
Section 1.05 hereof) payable hereunder shall be prorated for such partial month
on the basis of a thirty (30) day month. Tenant shall pay Landlord such
prorated amount payable for the month in which the Commencement Date occurs on
the first day of the month next following, along with all charges and payments
due for such following month which were not paid by Tenant upon the execution
of this Lease.
(B) Subject to the terms and conditions of this Lease (including EXHIBIT E
annexed hereto), Landlord shall deliver possession of the Premises to Tenant
upon execution and delivery of this Lease so that Tenant may commence the
Tenant Improvement work described in Article 2 of this Lease.
(C) Within sixty (60) days after the date the Tenant Improvements are
substantially complete, Landlord and Tenant shall execute an acceptance letter
substantially in the form of EXHIBIT C annexed hereto (the "Acceptance
Letter"), setting forth the Commencement Date and other information required
therein, but the failure by Landlord or Tenant to execute the Acceptance Letter
shall not affect the Commencement Date.
(D) If the Commencement Date is a date certain and/or if Tenant takes
possession or enters into occupancy of the Premises prior to the Commencement
Date for any reason, including for the purpose of preparing the Premises for
occupancy, such possession or occupancy shall be pursuant to all of the terms,
covenants and conditions of this Lease, excluding the obligation to pay Base
Rent, the Operating Payment and, unless otherwise specified to the contrary
herein, any other Additional Rent, which shall commence on the Commencement
Date.
SECTION 1.04 BASE RENT. Tenant shall pay Landlord at the Rent Payment Address
set forth in Section 1.01(M) hereof or at such other address as may be
designated by Landlord from time to time, monthly, in advance, on the first day
of each calendar month during the Term, monthly installments of Base Rent,
without notice or demand and without any setoff, offset, abatement or deduction
whatsoever, except as otherwise expressly and specifically set forth in this
Lease. Notwithstanding the foregoing, upon the execution of this Lease, Tenant
shall pay Landlord the first installment of Base Rent for the first full
calendar month after the expiration of the three (3) month Base Rent abatement
period described in Section 1 of EXHIBIT F annexed hereto and Landlord hereby
acknowledges receipt of such payment, subject to collection.
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SECTION 1.05 ADDITIONAL RENT. All sums other than Base Rent payable by Tenant
under this Lease shall be deemed additional rent ("Additional Rent"),
regardless of whether any such sum is expressly characterized as, or stated to
be, Additional Rent in any other Section of this Lease, and shall be payable on
demand unless other payment dates are set forth herein. Landlord shall have
the same rights and remedies with respect to the failure by Tenant to pay
Additional Rent as Landlord has with respect to the failure by Tenant to pay
Base Rent.
SECTION 1.06 USE. The Premises shall be used and occupied by Tenant solely
for the Permitted Uses, and for no other purpose without the prior written
consent of Landlord, which consent may be withheld for any or for no reason.
ARTICLE 2
ALTERATIONS AND ADDITIONS
SECTION 2.01 TENANT IMPROVEMENT WORK.
(A) Notwithstanding anything to the contrary contained or implied in this
Lease, Tenant agrees that, except as otherwise expressly and specifically set
forth in this Lease, it will accept possession of the Premises in its present
"as is, where is" condition, and that no representations, warranties, or
inducements with respect to any condition of the Premises have been made by
Landlord, or its designated representatives, to Tenant, or its designated
representatives. In furtherance of the foregoing, Tenant hereby acknowledges
that no promises to decorate, alter, repair or improve the Premises, either
before or after the execution of this Lease, except as otherwise expressly and
specifically set forth in this Lease, have been made to Tenant, or its
designated representatives, by Landlord, or its designated representatives.
(B) Landlord and Tenant hereby agree that the provisions of EXHIBIT E
annexed hereto govern the construction of the tenant improvements to the
Premises. Tenant shall undertake and complete the improvements shown in the
Working Drawings (as defined in EXHIBIT E) substantially in accordance with the
approved Working Drawings excepting only those deviations permitted pursuant to
the provisions of EXHIBIT E. If Tenant fails to timely comply with its
obligations under EXHIBIT E with respect to the preparation and delivery of the
Working Drawings, and if such failure continues for a period of thirty (30)
days after notice from Landlord to Tenant, then Landlord, at its sole option,
may terminate this Lease. In such event, Tenant shall be liable for damages to
the extent set forth in Section 7.02(C)(1) hereof and Landlord may apply all or
any part of any prepaid rent in satisfaction of such damages. No material
changes or modifications to the approved Working Drawings shall be made unless
by written change order signed by Landlord and Tenant. A list of the HVAC
design criteria and electrical design criteria for the Office Building is
annexed hereto as EXHIBIT G.
(C) Provided Tenant is not in default of the Lease beyond any applicable
notice and cure or grace period, and subject to and upon the terms and
conditions set forth in EXHIBIT E, Landlord shall provide a tenant improvement
allowance (the "Landlord's Contribution") equal to the sum of (i) the lesser
of (a) Twenty and NO/100 Dollars ($20.00) per rentable square foot of the
Premises (excluding the Storage Space) or (b) the actual cost for the Tenant
Improvements, to be applied against the cost of the Tenant Improvements
described in EXHIBIT E, plus (ii) the lesser of (a) One Dollar ($1.00) per
rentable square foot of the Premises (excluding the Storage Space) or (b) the
actual cost of preparing the space plans and Working Drawings for the Tenant
Improvements described in EXHIBIT E, to be applied against the cost of such
space planning and Working Drawings.
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(D) By execution of the Acceptance Letter, as between Landlord and Tenant,
Tenant shall be deemed conclusively to have accepted the Premises and each of
Landlord and Tenant shall be deemed to have acknowledged that the Premises are
in the condition required by the Working Drawings, except as otherwise shown in
the Acceptance Letter and except for any latent defects. Landlord shall not be
responsible for the repair or completion of any defective or incomplete items
of the Tenant Improvements. Landlord shall not be responsible or have any
liability for loss or damage to any fixtures, equipment or other property of
Tenant or others installed or placed in the Premises by Tenant, its servants,
employees, agents or independent contractors, except when caused by Landlord's
gross negligence or willful misconduct and not relieved by operation of Section
6.03 hereof.
SECTION 2.02 ALTERATIONS.
The term "Alterations" as used herein shall collectively mean any
alterations, additions or improvements to the Premises or any part thereof.
Tenant shall not make any Alterations to the Premises in violation of any of
the Rules and Regulations or in violation of any law, statute, ordinance, rule,
or regulation of any entity having legal jurisdiction over such subjects or
without first giving Landlord notice. Except for minor interior Alterations
which do not involve any Approval Item (defined in Section 4 of Article I of
EXHIBIT E annexed hereto), Tenant shall make no Alterations in or to the
Premises without first obtaining, in writing, Landlord's consent for such
Alterations, which consent shall not be unreasonably withheld or delayed,
subject to the provisions of Section 4 of Article I of EXHIBIT E annexed
hereto. Notwithstanding the foregoing to the contrary, Landlord's consent
shall not be required with respect to Alterations required in case of an
emergency, and, if to the extent the Alteration in question does not constitute
an Approval Item described in items (a), (d), (e), (f) or (g) in Section 4 of
Article I of EXHIBIT E annexed hereto, Tenant shall have the right to make
Alterations to any of the following items in the fourteen (14th) floor portion
of the Premises (but not to any other portion of the Premises), without the
consent of Landlord: (i) sheetrock ceilings, (ii) non-Building standard
restrooms (in terms of design, layout, type of materials and fixtures used, and
number of lavatories installed), (iii) non-Building standard light fixtures,
and (iv) non-Building standard window treatments, provided such window
treatments are consistent with the first-class nature of the Building. Any and
all Alterations to the Premises, irrespective of whether Landlord's consent to
such Alterations was required hereunder, shall be subject to any terms,
covenants, conditions and agreements which Landlord may reasonably prescribe
from time to time. All Alterations to the Premises made or requested by Tenant
shall be at Tenant's sole cost and expense, unless Landlord is otherwise
expressly and specifically obligated to make such Alterations at its expense
pursuant to the terms and conditions of this Lease (in which case Landlord
shall perform the Alteration at its expense pursuant to the express and
specific provision of this Lease requiring same). Upon the expiration of the
Term or sooner termination of this Lease, any Alterations (including the
initial Tenant Improvements made to the Premises pursuant to EXHIBIT E) to the
Premises, excepting movable furniture and trade fixtures, shall become the
property of Landlord and shall be surrendered with the Premises; provided,
however, with respect to any Alteration (including the initial Tenant
Improvements made to the Premises pursuant to EXHIBIT E, but excluding,
however, the Alterations to the fourteenth floor portion of the Premises) which
requires Landlord's consent hereunder and to any Alteration (excluding
Alterations to the fourteenth floor portion of the Premises) which is not
Building standard (irrespective of whether Landlord's consent to such
Alterations, including the initial Tenant Improvements made pursuant to the
Premises pursuant to EXHIBIT E, was required hereunder), Landlord shall have
the right to direct Tenant to remove any such Alterations, in which event
Tenant shall remove same at its sole cost and expense and repair in a good and
workmanlike manner any damage to the Premises occasioned by such removal and
restore the Premises to the condition existing prior to such Alterations,
normal wear and tear excepted. Upon completion of any Alterations made by
Tenant to the Premises (except for those which are only decorative in nature),
Tenant shall submit to Landlord as-built plans or drawings with respect to such
Alterations and operation and maintenance manuals for any and all equipment
installed in and that becomes a part of the Premises, irrespective of whether
Landlord's consent to such Alterations was required hereunder.
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ARTICLE 3
OPERATING EXPENSES
SECTION 3.01 EXPENSE STOP. In the event that Operating Expenses (as defined
in Section 3.04(A) hereof) for any calendar year during the Term or any renewal
or extension thereof on a per rentable square foot basis exceed the Base
Expenses, Tenant shall pay to Landlord, as Additional Rent, the product of (i)
the amount by which Operating Expenses for the Building on a per rentable
square foot basis exceed Base Expenses and (ii) the number of rentable square
feet in the Premises (excluding the Storage Space) as specified in Section
1.01(K) hereof (the "Operating Payment"). The Operating Payment shall be made
pursuant to the provisions of Section 3.02 hereof.
SECTION 3.02 ESTIMATES AND PAYMENTS. Tenant agrees to pay monthly, as
Additional Rent, one-twelfth (1/12) of Landlord's estimate of Tenant's
Operating Payment for the then current calendar year. Landlord will give
Tenant written notice from time to time of such estimated amounts, and Tenant
shall pay such amounts monthly to Landlord in the same manner and at the same
time as Base Rent. Within one hundred fifty (150) days following the end of
each calendar year, or as soon after such one hundred fifty (150) day period as
is reasonably practicable, Landlord will submit to Tenant a statement showing
in reasonable detail Operating Expenses on a per rentable square foot basis for
the preceding calendar year along with a reconciliation of estimated payments
made by Tenant as compared to Tenant's actual Operating Payment for such
calendar year (each, an "Operating Statement"). However, the failure or delay
by Landlord to provide Tenant with an Operating Statement within such 150-day
period shall not constitute a waiver by Landlord of Tenant's obligation to pay
its Operating Payment or of Landlord's rights to send such a statement or a
waiver of its right to reconcile Tenant's Operating Payment; provided, however,
if Landlord shall have failed to submit the Operating Statement to Tenant
within ninety (90) days after notice to Landlord given by Tenant at any time
after the expiration of such 150-day period, then such failure by Landlord to
provide Tenant with an Operating Statement within such 90-day period shall
constitute a waiver by Landlord of Tenant's obligation to pay any additional
Operating Payments for the prior calendar year and a waiver of its right to
reconcile Tenant's Operating Payment for the prior calendar year. Within
thirty (30) days after receipt of an Operating Statement, Tenant shall pay to
Landlord any additional amounts owed to Landlord as shown on the Operating
Statement. Any monies owed Tenant by Landlord shall be applied by Landlord
against the next accruing monthly installment(s) of Additional Rent due from
Tenant. Tenant or its representative shall have the right, upon not less than
ten (10) days prior notice rendered no later than sixty (60) days after
delivery of an Operating Statement (or in the event Landlord shall have failed
to deliver the Operating Statement by the end of said 90-day period, no later
than sixty days after the expiration of said 90-day period), to review, at
Tenant's sole cost, Landlord's books and records with respect to Operating
Expenses during normal business hours, at the location of Landlord's books and
records, but no more than once annually with respect to any given calendar
year. Unless Tenant shall take written exception to any item contained in the
Operating Statement within sixty (60) days after delivery thereof, the
Operating Statement shall be deemed final and accepted by Tenant. If Tenant
disputes an Operating Statement, Tenant shall pay the monies set forth therein
and any other monies then owed by Tenant under this Lease as a condition
precedent to any further review of the content of the Operating Statement. Any
payments due under this Article 3 shall be prorated for any partial calendar
year occurring during the Term. Tenant's obligation to pay any amounts due
under this Article 3 and Landlord's obligation to refund any overpayments made
by Tenant under this Article 3 for the final year of the Term shall survive the
expiration of the Term or earlier termination of this Lease.
SECTION 3.03 EXTRA CHARGES. In addition, Tenant shall pay, as Additional
Rent, all expenses paid or incurred by Landlord which are attributable to
Tenant's use and occupancy of the Premises or which are incurred pursuant to
Tenant's request for additional or overtime services; including, but not
limited to, sales, use or occupancy taxes payable by Landlord based upon Base
Rent and any Additional Rent; overtime HVAC or heating expenses;
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overtime electric charges; charges for keys; or special tenant requests.
Unless such charges are included in the monthly invoice for Base Rent or other
payment dates are otherwise specifically set forth herein, any extra charges
shall be due and payable by Tenant within thirty (30) days after receipt of
invoices for same.
SECTION 3.04 OPERATING EXPENSES DEFINED.
(A) The term "Operating Expenses" shall mean the aggregate of those costs and
expenses paid or incurred by or on behalf of Landlord (whether directly or
through independent contractors) relating to the ownership, maintenance and
operation of the Building or the sidewalks or areas adjacent thereto or for any
other areas for which Landlord shall have any obligation for repair or
maintenance. Without limiting the generality of the foregoing, Operating
Expenses shall include the following:
(1) Taxes - The term "Taxes" shall mean all taxes, fees and
assessments and governmental charges levied, whether by federal, state,
county, municipal, or other taxing districts or authorities presently
or hereafter created, taxing the Building and any other taxes, fees,
charges or assessments attributable to the Building or its operation,
as opposed to the income generated therefrom. In addition, "Taxes"
shall mean all real estate taxes and assessments or substitutes
therefore or supplements thereto upon all or any portion of the
Building or any improvement thereon, for any whole or partial tax year
or period occurring during the Term hereof. If and to the extent that
due to a change in the method of taxation or assessment, any franchise,
capital stock, capital, rent, income, profit or other tax or charge
shall be a substitute for or supplement to any of the foregoing, then
all such items shall be included within the term Taxes for the purposes
of this Lease. All expenses, including attorneys' fees and
disbursements, experts' and other witnesses' fees, incurred in
contesting the validity or amount of any Taxes or in obtaining a refund
of Taxes shall be considered as part of the Taxes for the year in which
paid. Without the prior written consent of Landlord, Tenant may not
contest Taxes. If tenants of at least fifty percent (50%) of the
rentable square feet of the Building shall, by timely notice to
Landlord, request Landlord to do so, Landlord shall institute
appropriate proceedings to reduce the real estate taxes levied or
assessed upon, or the assessed valuation of, the Building for any real
estate tax year and use Landlord's reasonable efforts to effect a
reduction therein. If Tenant shall be one of such requesting tenants,
Tenant shall pay Tenant's proportionate share of the reasonable costs
and expenses of such proceedings and any litigation thereon as
Additional Rent on Landlord's demand therefor, subject to recoupment
from any refund obtained.
(2) Insurance - The term "Insurance" shall mean all insurance of
any type which is commercially reasonable that Landlord, in its sole
discretion, shall deem necessary or advisable to carry, including, but
not limited to, that necessary in order to protect itself, its
affiliates, agents and employees, the Building, all personal property
used in connection therewith, or its interests therein. Landlord shall
have the right, but not the obligation, to change, cancel, decrease or
increase any insurance coverages in respect of the Building, or add
additional forms of insurance as Landlord shall deem necessary or
desirable; and/or to obtain umbrella or other policies covering both
the Building and other assets owned by or associated with Landlord or
its affiliates, in which event the cost thereof shall be equitably
allocated. For the purposes of this subsection, the term "affiliate"
shall mean any entity which controls, is controlled by or is under
common control with Landlord. SEE SECTION 16 OF THE SPECIAL
STIPULATIONS ANNEXED TO THIS LEASE AS EXHIBIT F.
(3) Maintenance Costs - The term "Maintenance Costs" shall mean
all costs paid or incurred in connection with the operation or
maintenance of the Building including, without limitation, all parking
areas (whether temporary or permanent), access roads, driveways, curbs,
truckways, loading areas and docks, retaining walls, lighting
facilities, service corridors, comfort stations, pedestrian sidewalks,
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stairways, plazas, malls, foundations, exterior and demising walls, roofs
over the entire Building including the Premises, escalators, elevators,
courts and ramps, decorative walls, vacant areas, landscaped and planting
areas and facilities, service lines or conduits for gas, water, electric,
sewage, heating, ventilating and air conditioning services, music and
intercom equipment, fire suppression and warning systems, conduits and
appurtenances for use by Tenant in common with other tenants, and other
areas and facilities related to the Building, whether within or outside the
Building. Maintenance Costs shall include, but are not limited to, the
following:
(a) All reasonable expenses incurred in connection with making
the parking facilities for the Building, if any, available for use
by Tenant and others (net of any revenue generated by the parking
facilities) including, but not limited to, any management fees
that Landlord may be required to pay for such use, and all costs
incurred for sweeping, cleaning, litter control, resurfacing,
repainting, restripping, removal and replacement of pavement,
curbs and car stops, and snow and ice removal;
(b) Reasonable wages and salaries for all employees engaged in
operating, maintaining, or providing security for the Building,
and personnel who may provide traffic control relating to ingress
and egress to and from the parking facilities, if any, to the
adjacent public streets. All taxes, insurance and fringe benefits
relating to such employees shall be included;
(c) All reasonable expenses incurred for supplies and
materials used in the operation and maintenance of the Building
including, but not limited to, uniforms, paper products,
decorations, painting and replacement of worn out mechanical or
damaged equipment;
(d) The cost of all utilities (collectively, "Utilities"),
including, but not limited to, the cost of water, electrical
service, heating, lighting, air conditioning and ventilation,
excepting those utilities supplied to tenants of the Building at
their respective premises to the extent paid for by such tenants;
(e) The reasonable cost of all maintenance and service
agreements for the Building and equipment therein, including, but
not limited to, alarm service, cleaning, janitorial service,
security and/or guard service, window cleaning, fire protection,
sprinklers, elevator and mechanical systems maintenance,
exterminating and landscape maintenance;
(f) Amortization, together with Interest, on the cost of
installation of capital improvement items which result in, or are
intended to result in, a reduction in Maintenance Costs.
"Interest" shall be calculated at the lesser of (i) the annual
rate of "Alternate Base Rate II" (as set by Citibank, N.A. from
time to time) plus two percent (2%) per annum or (ii) the maximum
legal rate of interest allowed by the state in which the Building
is located. All such costs shall be amortized over the reasonable
life of the capital improvement items, with the reasonable life
and amortization schedule being determined in accordance with
generally accepted accounting principles, but in no event to
extend beyond the reasonable life of the Building;
(g) Subject to the limitation set forth in item (15) of
Section 9 of the Special Stipulations annexed hereto as EXHIBIT F,
management fees (including, without limitation, salaries and
fringe benefits of Building employees and employees of the
Building's managing agent to the extent chargeable to the
Building), legal fees, accounting costs and disbursements, and
other professional services associated with the operation and
maintenance of the Building;
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(h) The reasonable cost of maintenance and repair of ceilings
and exterior walls, gutters, glass, plate glass, show windows,
plumbing, pipes and fixtures and other equipment; and
(i) The cost of all licenses, permits and other governmental
charges.
(B) In determining the amount of Operating Expenses for any calendar year
during the Term, if less than ninety-five percent (95%) of the rentable area of
the Building shall have been occupied by tenant(s) at any time during any such
calendar year, Operating Expenses shall be determined for such calendar year to
be an amount equal to the expenses which would normally be expected to be
incurred had such occupancy been ninety-five percent (95%) throughout such
calendar year.
(C) Landlord and Tenant agree that for purposes of Sections 3.04(A)(3)(a),
3.04(A)(3)(b), 3.04(A)(3)(c), 3.04(A)(3)(e) and 3.04(A)(3)(h) hereof, (i) any
expense, cost or disbursement referred to therein which is incurred by Landlord
and which is not discretionary shall be deemed to be "reasonable", and (ii) the
relative quality expected for any service or item shall be taken into account
in determining the amount of the expense, cost or disbursement which is
"reasonable" for such service or item. The amount of any expense, cost and
disbursement which is incurred for the services and items described in Sections
3.04(A)(3)(a), 3.04(A)(3)(b), 3.04(A)(3)(c), 3.04(A)(3)(e) and 3.04(A)(3)(h)
hereof shall be deemed prima facie "reasonable", and Tenant shall have the
burden to prove the amount of any such expense, cost or disbursement which is
not reasonable. If the amount of any expense, cost or disbursement incurred by
Landlord for any such service or item is for any reason less than the amount
which would be reasonable for such service or item, Landlord may utilize the
amount of such difference to retain in Operating Expenses an equal amount of
expenses, costs or disbursements which are incurred by Landlord with respect to
such calendar year but which would otherwise be excluded from Operating
Expenses because they are in excess of the amount which would be "reasonable".
ARTICLE 4
TENANT'S COVENANTS AND RIGHTS
SECTION 4.01 PARKING. [SEE SPECIAL STIPULATION 7.]
(A) Tenant shall use the Parking Spaces during the Term. Tenant may not use
additional parking spaces without the prior written consent of Landlord.
Tenant and its agents, employees, contractors, invitees or licensees shall not
interfere with the rights of Landlord or others entitled to similar use of the
parking facilities.
(B) All parking facilities furnished by Landlord shall be subject to the
reasonable control and management of Landlord, who may, from time to time,
establish, modify and enforce reasonable rules and regulations with respect
thereto, provided that there shall be no charge to Tenant or its employees for
use of the Parking Spaces during the Term, including any extensions or renewals
thereof, except in connection with Operating Expenses and except for the
reasonable cost of any access cards. Landlord further reserves the right to
change or reconfigure the parking facilities and designate the parking spaces
therein, to construct or repair any portion thereof, and to restrict or
eliminate the use of any parking areas and do such other acts in and to such
areas as Landlord deems necessary or desirable without such actions being
deemed an eviction of Tenant or a disturbance of Tenant's use of the Premises
and without Landlord being deemed in default hereunder; provided, however, the
number of Parking Spaces and ratio of covered to uncovered Parking Spaces as
set forth in Section 1.01(I) above shall be maintained throughout the Term.
Landlord may, in its sole discretion, convert the parking facilities to a
reserved and/or controlled parking facility; provided, however, the number of
Parking Spaces and ratio of covered to uncovered Parking Spaces as set forth in
Section 1.01(I) above shall be maintained throughout the Term.
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(C) If parking spaces are not assigned pursuant to the terms of this Lease,
Landlord reserves the right at any time to assign parking spaces, and Tenant
shall thereafter be responsible to insure that its employees park in the
designated areas; provided, however, the number of Parking Spaces and ratio of
covered to uncovered Parking Spaces as set forth in Section 1.01(I) above shall
be maintained throughout the Term. Tenant shall, if requested by Landlord,
furnish to Landlord a complete list of the license plate numbers of all
vehicles operated by Tenant, Tenant's employees and agents. Landlord shall not
be liable for any damage of any nature to, or any theft of, vehicles, or
contents thereof, in or about such parking facility. At Landlord's request,
Tenant shall take reasonable steps to cause its employees and agents using
Tenant's parking spaces to execute an agreement confirming the foregoing.
Excessive use of the parking facilities by another tenant shall not be a
default or breach of this Lease by Landlord, and shall not suspend or terminate
any of Tenant's obligations under this Lease, but Landlord agrees to do all
things reasonably necessary to (i) enforce all parking rules and regulations,
and (ii) assure that Tenant's reserved spaces are not used by any person other
than the one for whom the space is reserved.
SECTION 4.02 ASSIGNMENT AND SUBLETTING. [SEE SPECIAL STIPULATION 13.]
(A) Tenant covenants that it shall not, by operation of law or otherwise,
assign, sublet, encumber or mortgage this Lease, or any part thereof, or permit
the Premises to be used by others without the prior written consent of Landlord
in each instance. Any attempt by Tenant to assign, sublet, encumber or
mortgage this Lease without Landlord's consent shall be voidable at Landlord's
election. The consent by Landlord to any assignment, mortgage, encumbrance,
subletting or use of the Premises by others shall not constitute a waiver of
Landlord's right to withhold its consent to any other assignment, subletting,
mortgage, encumbrance or use by others of the Premises. Whether or not
Landlord's consent shall be granted to any proposed assignment or subletting,
Tenant shall reimburse Landlord for the reasonable expenses, including
attorneys' fees and disbursements, incurred by Landlord in connection with
Tenant's request for such consent, not to exceed $1,000.00 for each request.
The absolute and unconditional prohibitions set forth in this Section 4.02 and
Tenant's agreement thereto are material inducements to Landlord to enter into
this Lease with Tenant, and any breach or attempted breach thereof shall
constitute an Event of Default (as defined in Section 7.01(A) hereof) for which
no notice or opportunity to cure need be given. For the purposes of this
Section 4.02, (i) the transfer or issuance of stock ultimately resulting in
ownership of a majority of the issued and outstanding capital stock of any
corporate tenant, or of a corporate subtenant, or the transfer of a majority of
the total interest in any partnership tenant or subtenant, however
accomplished, whether in a single transaction or in a series of related or
unrelated transactions, shall be deemed an assignment of this Lease, or of such
sublease, as the case may be, except that the transfer of the outstanding
capital stock of any corporate tenant, or subtenant, shall not be deemed to
include the sale of such stock by persons or parties through the
"over-the-counter market" or through any recognized stock exchange, (ii)
subject to the provisions of Section 13(b) of EXHIBIT F annexed hereto, a
takeover agreement or similar agreement whereby the obligations of Tenant under
this Lease are assumed by another party shall be deemed a transfer of this
Lease, (iii) any person or legal representative of Tenant, to whom Tenant's
interest under this Lease passes by operation of law, or otherwise, shall be
bound by the provisions of this Section 4.02, (iv) a modification, amendment or
extension of a sublease shall be deemed a sublease and (v) if Tenant consists
of more than one person, a purported assignment, voluntary, involuntary, or by
operation of law by any of the persons executing this Lease shall be deemed a
voluntary assignment of this Lease by Tenant. Notwithstanding anything to the
contrary contained herein, any rights and/or options of first offer, refusal or
extension granted to Tenant shall be personal to the Tenant named herein and to
any permitted assignee. The term "permitted assignee" as used in the preceding
sentence shall mean and refer to (i) an assignee of this Lease the assignment
to whom is permitted under Section 13(b) of EXHIBIT F annexed hereto, and (ii)
an assignee of this Lease consented to by Landlord under this Section 4.02 or
under Section 13(a) of EXHIBIT F annexed hereto.
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(B) No consent by Landlord to an assignment of this Lease shall be effective
unless and until Tenant shall deliver to Landlord an agreement in form and
substance satisfactory to Landlord pursuant to which such assignee assumes and
agrees to be bound by all of the terms, covenants, conditions, provisions and
agreements of this Lease. In no event shall Tenant be released from its
obligations hereunder as a result of any assignment of this Lease, and the
Tenant named herein and any assignee of such Tenant who assumes the obligations
of the named Tenant under this Lease, from and after such assignment, shall be
jointly and severally liable for performance of all obligations of Tenant under
this Lease.
(C) If any Profits (as defined below) are payable or paid by the sublessee or
assignee to Tenant or Tenant's agents or representatives, Tenant shall pay
sixty percent (60%) of such Profits to Landlord as Additional Rent in
accordance with the provisions more particularly described below. "Profits"
shall be calculated and defined as follows: the Base Rent and Additional Rent
payable by Tenant pursuant to this Lease attributable to the assignment of this
Lease or such portion of the Premises covered by such sublease, as the case may
be, shall be subtracted from all rent, amounts and sums which are payable to
Tenant from any transferee, directly or indirectly, attributable to the
assignment of this Lease or any subleased portion of the Premises; such
remainder shall be divided by the number of calendar years remaining in the
Term, in the case of an assignment, or number of calendar years of the term of
the sublease, in the case of a sublease, as the case may be, in order to
calculate the amount of gross profits payable per calendar year. Tenant's
Transfer Costs (as defined below) shall be subtracted from such gross profits
actually received by Tenant on an annual basis until all Tenant's Transfer
Costs have been applied against such gross profits received, and the balance of
such gross profits shall be deemed "Profits" hereunder and payable by Tenant to
Landlord on an ongoing annual basis. Tenant shall pay Landlord's share of such
Profits to Landlord as Additional Rent hereunder for consenting to an
assignment of this Lease or a sublease. Tenant's Transfer Costs means the
outstanding balance from time to time of the sum of the following items:
(i) The cost of any additional tenant improvements required
for the assignment of this Lease or the subleasing of such portion of the
Premises paid by Tenant;
(ii) Reasonable leasing commissions paid by Tenant in
connection with the assignment or sublease to the transferee, not to exceed
the amount of such commissions customarily payable with respect to the
leasing of office space in metropolitan Atlanta, Georgia;
(iii) Rent abatements and other reasonable concessions granted
by Tenant in connection with such assignment or sublease;
(iv) Reasonable marketing expenses paid directly by Tenant to
assign this Lease or sublease the space (to the extent not included in a
brokerage commission paid by Tenant);
(v) Reasonable attorney's fees and reasonable fees for other
outside consultants incurred by Tenant in connection with such assignment
or sublease; and
(vi) Unamortized costs of Tenant Improvements paid by Tenant in
excess of Landlord's Contribution which are properly allocable to the space
that is the subject of the assignment or sublease in question.
If a transferee pays Tenant a lump sum for entering into an assignment of this
Lease or a sublease, within fifteen (15) days after receipt thereof, Tenant
shall pay to Landlord its required share of Profits computed on the excess, if
any, of the lump sum payment over the net discounted present value on said date
of the Net Rental Obligation (defined below) of Tenant under this Lease for the
balance of the Term, in the case of an assignment, or for the
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term of the sublease, in the case of a subleasing, as the case may be. The
"Net Rental Obligation" of Tenant for purposes hereof, is defined as the
excess, if any, of (1) the sum of the total rental obligation of Tenant under
this Lease during said period (including Base Rent and all Additional Rent,
including Tenant's Operating Payment) allocable to the entire Premises, in the
case of an assignment, or to the portion of the Premises subject to such
sublease, as the case may be, plus all of Tenant's Transfer Costs incurred
with respect to said assignment or sublease, as the case may be, over (2) the
total rent payable by the assignee or subtenant, as the case may be, during
said period. This Net Rental Obligation shall be discounted to present value
at the rate of interest then being quoted for A-Rated corporate bonds, with a
term comparable to the Term of this Lease, in the case of an assignment, or to
the term of the sublease in question, in the case of a sublease, by Standard &
Poors and Moody's Investor Services. If the rent payable by said assignee or
subtenant exceeds the sum of the rent payable by Tenant hereunder, in the case
of an assignment, or payable by Tenant hereunder allocable to the portion of
the Premises subject to the sublease, as the case may be, plus Tenant's
Transfer Costs for the period in question incurred with respect to the
assignment or sublease, as the case may be, such excess rent shall not be
included in the calculation of Profits at the time of the payment of the lump
sum to Tenant, but instead, such excess rent shall be considered in the
calculation of Profits on an ongoing annual basis pursuant to the provisions in
this Section 4.02(C) above. Except with respect to a lump sum payment, the
determination of the amount of Profits shall be made on an annual basis in
accordance with the provisions of this Section 4.02(C) above. Landlord shall
have the right, upon prior reasonable notice, to audit during normal business
hours Tenant's books and records relating to proposed assignments and
subleases.
SECTION 4.03 CARE OF PREMISES. Subject to the provisions of Sections 6.01 and
6.02 hereof, Tenant shall maintain and repair the Premises during the Term,
shall not commit waste to the Premises, and shall preserve same in the
condition delivered to Tenant on the Commencement Date, normal wear and tear
excepted; provided, however, subject to the provisions of Sections 4.06(B),
5.02(2)(d), 5.02(3)(e), 6.03, and 8.21 hereof, any repairs or maintenance
otherwise required of Tenant hereunder which are necessitated by the negligence
of Landlord or Landlord's agents, contractors or employees shall be performed
or caused to be performed by Landlord at Landlord's expense. Tenant shall be
responsible for repainting and redecorating the Premises, cleaning drapes or
other window coverings and carpets at reasonable intervals as needed, and
making repairs, replacements and alterations as needed, in a good and
workmanlike manner in accordance with the terms and provisions of this Lease,
including those governing the performance of any Alterations to the Premises,
using contractors licensed in the state in which the Building is located
approved by Landlord in its reasonable judgment, and materials of equal or
better quality and utility to the original work. To avoid any doubt, without
limiting the generality of the foregoing, Tenant, at its sole cost and expense,
shall be responsible for maintaining, repairing and replacing, as needed, any
supplemental air-conditioning and/or heating system(s) installed by or on
behalf of Tenant; Tenant shall give Landlord notice and evidence of the nature
and details of any such work promptly following the completion of same. In
addition, Tenant shall label its computer cabling upon installation of the same
and shall remove such cabling upon the expiration of the Term or earlier
termination of this Lease. Landlord shall repair or replace, at Tenant's sole
cost, any damage done to the Building or any part thereof caused by Tenant or
Tenant's agents, employees, contractors, invitees, visitors or licensees.
Tenant agrees to give Landlord or its managing agent prior written notice of
the necessity for any repairs in or to the Premises, provided that in case of
an emergency Tenant shall use reasonable efforts to give Landlord's managing
agent verbal notice (as opposed to written notice) prior to commencing any such
repair, with written notice to Landlord to follow as soon thereafter as
practical under the circumstances.
SECTION 4.04 COMPLIANCE WITH LAW. Tenant, at its sole expense, shall comply
with all laws, orders and regulations of federal, state, county and municipal
authorities and with any directive of any public officer or officers pursuant
to law which shall impose any violation, order or duty upon Landlord or Tenant
with respect to the Premises or the use or occupation thereof. Tenant shall
not do or permit to be done any act in, on or about the Premises or store
anything therein which (i) will in any way conflict with any law, statute,
ordinance or governmental rule or regulation now in force or which may
hereafter be enacted or promulgated, (ii) is not
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appropriate to the Permitted Uses of the Premises or (iii) will in any way
increase the existing rate of, or adversely affect, or cause a cancellation of,
any fire or other insurance policies covering the Building or any of its
contents. Landlord shall maintain the common areas of the Building in
compliance with Title III of the Americans with Disabilities Act of 1990 and
all regulations promulgated thereunder (the "ADA"). If alterations to the
common areas of the Building are required in order to comply with the ADA as a
result of Tenant's changes or alterations within the Premises or Tenant's use
of the Premises, the cost thereof shall be paid by Tenant within twenty (20)
days after demand by Landlord. Tenant shall maintain the Premises in
compliance with the ADA at its cost and expense. Notwithstanding the
foregoing, the parties acknowledge that certain requirements of the ADA are
ambiguous and not free from doubt in certain respects and consequently that a
party's decisions with respect to compliance therewith shall be subject to the
exercise of discretion and judgment in certain respects. Accordingly, (i)
provided that Tenant's decisions made and actions taken with respect to
compliance therewith are made and taken in a commercially reasonable manner
toward the end of using good faith efforts to comply with the requirements of
the ADA, in no event shall Landlord be entitled to independently require Tenant
to comply with any provision of the ADA if the governmental authority having
jurisdiction thereover does not require compliance, unless such noncompliance
materially and adversely affects the operation of business in the Building or
exposes Landlord to material loss or damage, and (ii) provided that Landlord's
decisions made and actions taken with respect to compliance therewith are made
and taken in a commercially reasonable manner toward the end of using good
faith efforts to comply with the requirements of the ADA, in no event shall
Tenant be entitled to independently require Landlord to comply with any
provision of the ADA if the governmental authority having jurisdiction
thereover does not require compliance, unless such noncompliance materially and
adversely affects the operation of business in the Building or exposes Tenant
to material loss or damage.
SECTION 4.05 TENANT'S INSURANCE.
(A) Tenant shall procure and maintain throughout the Term of this Lease, at its
sole cost and expense, the following insurance:
(1) Commercial General Liability Insurance providing coverage for
bodily injury (including death), property damage and products liability
insurance (where such exposure exists). This policy shall contain a broad
form contractual liability endorsement under which the insurer agrees to
insure Tenant's obligations under Section 4.06(A) hereof. Such insurance
shall have a combined single limit of not less than Three Million Dollars
($3,000,000) per occurrence and Five Million Dollars ($5,000,000) in the
aggregate for all occurrences within each policy year, or such greater
amounts as Landlord may from time to time reasonably require, provided that
such greater amounts are customarily required by landlords of comparable
first-class office buildings in the Geographic Area (defined in Section
5.02 hereof);
(2) Fire and extended coverage insurance covering Tenant's personal
property, fixtures, improvements, wall coverings, floor coverings, window
coverings, alterations, furniture, equipment, lighting, ceilings, heating,
ventilation and air conditioning equipment, interior plumbing and plate
glass against loss or damage by fire, flood, windstorms, hail, earthquakes,
explosion, riot, damage from aircraft and vehicles, smoke damage, vandalism
and malicious mischief and such other risks as are from time to time
covered under "extended coverage" endorsements and special extended
coverage endorsements commonly known as "all risks" endorsements, in an
amount equal to the greater of the full replacement value or the amount
required by the holder of any Mortgage or the lessor under a Superior Lease
(each as defined in Section 5.01 hereof) from time to time and containing
the waiver of subrogation required in Section 6.03 of this Lease;
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(3) State Worker's Compensation Insurance in the statutorily mandated
limits and Employers Liability Insurance with limits of not less than Five
Hundred Thousand Dollars ($500,000), or such greater amount as Landlord may
from time to time reasonably require, provided that such greater amount is
customarily required by landlords of comparable first-class office
buildings in the Geographic Area; and
(4) Such other insurance as Landlord may reasonably require from time
to time, provided that such other insurance is customarily required by
landlords of comparable first-class office buildings in the Geographic
Area.
(B) It is expressly understood and agreed that the foregoing minimum limits of
insurance coverage shall not limit the liability of Tenant for its acts or
omissions as provided in this Lease. All of the foregoing insurance policies
(with the exception of Worker's Compensation Insurance to the extent not
available under statutory law) shall name Landlord, any holder of a Mortgage,
any lessor under a Superior Lease or any managing agent for the Building and
such other parties as Landlord shall from time to time designate as an
additional insured as their respective interests may appear, and, except for
worker's compensation coverage, shall provide that any loss shall be payable to
Landlord and any other additional insured parties as their respective interests
may appear. All insurance required hereunder shall be placed with companies
which are rated B+:IX or better by Best's Insurance Guide and licensed to do
business in the state in which the Building is located. All such policies
shall be written as primary policies, with annual deductibles not to exceed
reasonable deductibles. Any other policies, including Landlord's policy, will
serve as excess coverage. Tenant shall deliver duplicate original copies of
all such policies and all endorsements thereto (or certificates thereof), prior
to the Commencement Date, or, in the case of renewals thereto, fifteen (15)
days prior to the expiration of the prior insurance policy, together with
evidence that such policies are fully paid for, and that no cancellation,
material change or non-renewal thereof shall be effective except upon thirty
(30) days prior written notice from the insurer to Landlord. If Tenant shall
fail at any time to procure and/or maintain the insurance required herein and
not cure such failure within five (5) business days following written notice of
such failure from Landlord or its agent, Landlord may, at its option, procure
such insurance on Tenant's behalf and the cost thereof shall be payable upon
demand, as Additional Rent. Payment by Landlord of any insurance premium or
the carrying by Landlord of any such insurance policy shall not be deemed to
waive or release the default of Tenant with respect thereto.
SECTION 4.06 INDEMNIFICATION.
(A) Subject to the provisions of Section 6.03 hereof, Tenant shall indemnify,
defend and hold harmless Landlord and its officers, directors, employees,
attorneys and agents (collectively, the "Indemnitees") from and against any
and all claims, demands, causes of action, judgments, costs, expenses, and all
losses and damages (including consequential and punitive damages) arising from
Tenant's use of the Premises or from the conduct of its business or from any
activity, work, or other acts or things done, permitted or suffered by Tenant
in or about the Premises, and shall further indemnify, defend and hold harmless
the Indemnitees from and against any and all claims arising from any breach or
default in the performance of any obligation on Tenant's part to be performed
under the terms of this Lease, or arising from any act, omission or negligence
or willful or criminal misconduct of Tenant, or any officer, agent, employee,
independent contractor, guest, licensee, or invitee thereof, and from all
costs, attorneys' fees and disbursements, and liabilities incurred in the
defense of any such claim or any action or proceeding which may be brought
against, out of or in any way related to this Lease. Upon notice from
Landlord, Tenant shall defend any such claim, demand, cause of action or suit
at Tenant's expense by counsel reasonably satisfactory to Landlord in its sole
discretion. Tenant shall give immediate notice to Landlord in case of casualty
or accidents in the Premises. The provisions of this Section 4.06(A) shall
survive the expiration or sooner termination of this Lease.
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(B) As a material part of the consideration to Landlord for this Lease, Tenant
hereby assumes all risk of damage to property or injury to persons in, upon or
about the Premises from any cause, and Tenant hereby waives all claims with
respect thereto against Landlord. Landlord or its agents shall not be liable
for any loss or damage to persons or property resulting from fire, explosion,
falling plaster, steam, gas, electricity, water or rain which may leak from any
part of the Building or from the pipes, appliances or plumbing works therein or
from the roof, street or subsurface or from any other places resulting from
dampness or any other cause whatsoever, or from the act or negligence of any
other tenant or any officer, agent, employee, contractor or guest of any such
tenant, except bodily injury caused by or due to the negligence or willful or
criminal misconduct of Landlord. In addition, Landlord or its agents shall not
be liable for (i) interference with the electrical service, ventilation, or for
any latent defect in the Premises, except as provided in Section 2.01 hereof
(excluding latent defects in the Tenant Improvements), (ii) any loss or damage
for which Tenant is required to insure or (iii) any loss or damage resulting
from any construction, Alterations or repair required or permitted to be
performed by Tenant under this Lease. The provisions of this Section 4.06(B)
shall survive the expiration or sooner termination of this Lease.
(C) Subject to the provisions of Sections 4.06(B), 5.02(2)(d), 5.02(3)(e),
6.03, and 8.21 hereof, Landlord agrees to indemnify and hold Tenant harmless
from all claims or liability for any injury or death to any person or damage to
property caused by the negligence of Landlord or Landlord's agents, servants,
or employees (specifically excepting those resulting from the negligence of
Tenant, its employees, contractors, servants, agents, representatives,
licensees, invitees, subtenants, and assignees). The indemnity and hold
harmless in the preceding sentence shall not be applicable to any such
liability, loss, cost, damage or expense imposed on Tenant by any employee,
partner, agent or contractor of Tenant unless such liability, loss, cost,
damage or expense resulted from the negligence of Landlord or Landlord's
agents, servants, or employees and not from the negligence of Tenant, its
employees, contractors, servants, agents, representatives, licensees, invitees,
subtenants, and assignees. As soon as reasonably practical after Landlord has
received notice of a casualty, accident or event in the common areas of the
Building which will give rise to the indemnification of Tenant pursuant to the
provisions of this Section 4.06(C), Landlord shall endeavor to give prompt
notice of the same to Tenant. The provisions of this Section 4.06(C) shall
survive the expiration of the Term or sooner termination of this Lease.
SECTION 4.07 UTILITIES. Tenant shall not install any equipment (such as
tabulating or computing equipment) in the Premises without Landlord's prior
written consent, which consent shall not be unreasonably withheld or delayed,
if such equipment requires an electrical current other than 120 volt, single
phase, or if such equipment requires special circuits or grounding or
singularly consumes more than 0.5 kilowatts at rated capacity. All costs of
the installation and maintenance of special electrical facilities approved by
Landlord shall be paid by Tenant, as Additional Rent, upon demand. All costs
for extraordinary, unusual or excessive demand by Tenant for electrical or
other utility service and all costs of submetering or monitoring such use shall
be borne by Tenant, and Landlord reserves the right to impose an additional
charge on Tenant for such extraordinary, unusual or excessive demand for
electrical or other utility service in an amount reasonably determined by
Landlord to be due, subject to the provisions of the last sentence of this
Section 4.07; such unusual costs shall include, without limitation, 24-hour
service, high consumption equipment, high concentration lighting and additional
HVAC supplements for equipment or lighting induced heat build-up. For the
purposes hereof, the term "extraordinary, unusual or excessive demand" shall
mean the consumption of electricity by Tenant over a given period of time which
exceeds any of the electricity criteria set forth in this Section 4.07 or in
EXHIBIT G annexed hereto. Landlord reserves the right to install, at Tenant's
sole cost and expense, submeters and related equipment, relating to Tenant's
use of electrical or other utility services for the purposes of monitoring and
billing any excessive use of electricity by Tenant. With respect to any
electrical equipment which is so separately metered, Tenant shall pay within
thirty (30) days of demand the actual average KWH cost of the Building for the
month in question of the electricity consumed through such metered electrical
equipment, plus any reasonable out-of-pocket expenses incurred by Landlord in
connection with the metering thereof, including, without limitation, reasonable
accounting expenses.
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SECTION 4.08 PERSONAL PROPERTY TAXES.
(A) Tenant shall pay or cause to be paid any and all taxes levied or assessed
and payable during the Term upon all of Tenant's equipment, furniture,
fixtures, and other personal property located in the Premises. Landlord agrees
that Tenant may, at its option and at its sole cost and expense, contest by
appropriate proceedings the amount of any such taxes and may delay payment of
such taxes until such contest has been finally determined. Tenant shall
reimburse Landlord within thirty (30) days after written demand from Landlord
for any and all taxes payable by Landlord whether or not now customary or
within the contemplation of the parties hereto, to the extent not included in
Taxes, upon, measured by or attributable to the cost or value of Tenant's
equipment, furniture, fixtures, and other personal property located in the
Premises.
(B) If Tenant causes the Tenant Improvements to exceed in value the value of
Landlord's Contribution, and if the installation or construction of such excess
Tenant Improvements causes an increase in the Taxes on the Building, and if
such increase in the Taxes on the Building is based on a specific assessment on
such excess Tenant Improvements installed by or on behalf of Tenant at its
expense, then Tenant shall pay from time to time, as Additional Rent, any such
increase in Taxes within thirty (30) days after written demand from Landlord.
Landlord agrees that Tenant may, at its option and at its sole cost and
expense, contest by appropriate proceedings the amount of any such taxes and
may delay payment of such taxes until such contest has been finally determined,
so long as (i) Tenant shall in good faith and at its sole cost and expense
contest the same by appropriate legal proceedings which shall operate to
prevent the collection thereof or other realization thereon and the sale, levy
or forfeiture of or upon all or any part of the Building to satisfy the same,
and (ii) at Landlord's request, Tenant shall deposit in escrow with a title
company acceptable to Landlord, or provide other security acceptable to
Landlord, an amount equal to the amount being contested plus a reasonable
additional sum to cover possible costs, interest and penalties.
SECTION 4.09 LIENS.
(A) Tenant shall keep the Premises and the Building free from any liens arising
out of any work performed, materials furnished, or obligations incurred by or
on behalf of Tenant. Should any mechanic's or other lien be filed against the
Premises or the Building by reason of Tenant's or its agents' or contractors'
acts or omissions or because of a claim against Tenant, Tenant shall cause the
same to be canceled and discharged of record by bond or otherwise within ten
(10) days after Tenant's receipt of actual notice of the filing thereof.
Should Tenant fail to discharge such lien within such ten (10) day period,
Landlord may cure same, in which event Tenant shall reimburse Landlord, on
demand, as Additional Rent, for the amount of the lien or the amount of the
bond, if greater, plus all administrative costs incurred by Landlord in
connection therewith. The remedies provided herein shall be in addition to all
other remedies available to Landlord.
(B) Nothing contained in this Lease shall be construed as constituting the
consent or request of Landlord, express or implied, to, or for the performance
by, any contractor, laborer, materialman or vendor of any labor or services or
for the furnishing of any materials for any construction, alteration, addition,
repair or demolition of or to the Premises or any part thereof. Tenant and any
subtenants shall have no power to do any act or make any contract which may
create or be the foundation of any lien, mortgage or other encumbrance upon the
reversionary or other estate of Landlord, or any interest of Landlord in the
Premises. NOTICE IS HEREBY GIVEN THAT LANDLORD IS NOT AND SHALL NOT BE LIABLE
FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR
TO ANYONE HOLDING THE PREMISES OR ANY PART THEREOF, AND THAT NO MECHANICS' OR
OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT
THE INTEREST OF LANDLORD IN AND TO THE PREMISES OR THE BUILDING.
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SECTION 4.10 SECURITY DEPOSIT. [THIS SECTION IS INTENTIONALLY OMITTED.]
SECTION 4.11 SIGNS.
(A) Except as otherwise expressly provided in Section 4.11(C) below, Tenant
shall not, without the prior written consent of Landlord which may be given or
withheld in Landlord's sole discretion, erect or install any type of exterior
or interior window or exterior door signs, or any other type of sign or
placard, whether within or without the Building. Except as otherwise expressly
provided in Section 4.11(C) below, all signs and placards must comply with the
sign criteria promulgated by Landlord from time to time and all applicable
laws. Tenant shall pay all costs of fabrication, installation and maintenance
of all permitted signs or placards.
(B) Prior to vacating the Premises, Tenant shall, at its sole cost and expense,
promptly remove its sign(s) and placards, and upon the removal or alteration of
any of its sign(s) and placards for any reason, Tenant shall repair, paint,
restore or replace the surface beneath such signs or placards damaged by such
removal. If Tenant fails to comply with any of the provisions set forth in
this Section, Landlord may, without liability, enter upon the Premises and
remove the same at Tenant's expense.
(C) Landlord's approval and consent shall not be required, and the Building
standard sign criteria shall not apply to, any sign that (a) is located within
the portion of the Premises which is on any floor of the Office Building leased
entirely by Tenant, (b) is not visible from the exterior of the Premises, and
(c) is in compliance with all applicable laws. Tenant shall have the right to
incorporate the "FFMC" and/or "Western Union" names and logos in all its
signage permitted under this Section 4.11(C), and further shall have the right
to include the "FFMC" and/or "Western Union" names on the Building directory.
SECTION 4.12 SURRENDER. Upon the expiration of the Term or other termination
of this Lease, and without further notice, Tenant shall peaceably and quietly
quit and surrender to Landlord the Premises, broom clean, in the same condition
as existed on the Commencement Date, excepting only ordinary wear and tear and
loss by fire or other casualty which Tenant is not obligated to repair pursuant
to the terms hereof.
SECTION 4.13 TELEPHONE SERVICE. Tenant shall separately arrange with, and pay
directly to, the applicable local public authorities or utilities, as the case
may be, for the furnishing, installation and maintenance of all telephone
services and equipment as may be required by Tenant in the use of the Premises.
Landlord shall not be liable for any damage resulting from Tenant's inability
to receive such service, and any such inability shall not relieve Tenant of any
of its obligations under this Lease. Landlord shall grant to Tenant, at no
cost to Tenant, the right to use the lesser of (i) Tenant's proportionate share
of the available portion of the Building's vertical case shaft for purposes of
Tenant's installation and use of telephone and electrical wiring so that Tenant
may install its own telephone switch and telephone system that will be fully
independent of the telephone system servicing the Building generally and other
tenants in the Building, or (ii) the number of square inches of the available
portion of the Building's vertical case shaft reasonably needed by Tenant for
such purposes.
ARTICLE 5
LANDLORD'S COVENANTS AND RIGHTS
SECTION 5.01 QUIET ENJOYMENT AND SUBORDINATION.
(A) Landlord covenants and agrees that, upon performance by Tenant of all of
the terms, covenants, obligations, conditions and provisions hereof on Tenant's
part to be kept and performed, Landlord shall warrant
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and defend Tenant in the quiet enjoyment and possession of the Premises during
the Term against any and all claims made by, through or under Landlord, subject
and subordinate to the terms and conditions of this Lease. Landlord represents
and warrants to Tenant that as of the date of this Lease, (i) Landlord owns fee
simple title to the real property on which the Office Building is situated, a
legal description of which real property is annexed hereto as EXHIBIT H and
(ii) no portion of the Building is affected by any Mortgage (defined below)
between Landlord and any Mortgage holder.
(B) Subject to the provisions of the first sentence of Section 5.01(A) above,
this Lease is subject and subordinate to any reciprocal easement agreements or
any other easements (each, an "Easement"), and to any renewals, modifications,
increases, extensions, replacements, and substitutions of any thereof, now or
hereafter affecting the Premises and/or the Building, which do not materially,
adversely affect the use of the Premises in accordance with the provisions of
this Lease or otherwise impose duties or obligations on Tenant. This provision
shall be self-operative and no further instrument of subordination shall be
required; provided, however, that Tenant agrees to execute and deliver, upon
request, such further instrument(s) in recordable form confirming this
subordination as may be reasonably requested by Landlord or the holder thereof.
(C) This Lease shall be prior to and superior to any Mortgage (defined below)
or Superior Lease (defined below) now or hereafter encumbering or affecting the
Premises, and to all advances made or hereafter to be made upon the security
thereof; provided, however, Tenant agrees that upon request from the Landlord,
from the holder or proposed holder of any Mortgage or from the lessor or
proposed lessor under any Superior Lease, Tenant shall execute a subordination,
non-disturbance and attornment agreement ("non-disturbance agreement") in form
reasonably satisfactory to Tenant and Tenant's counsel, subordinating this
Lease to such Mortgage or Superior Lease and to the interest of such holder or
lessor and their respective heirs, successors and assigns. Tenant's obligation
to execute and deliver a non-disturbance agreement pursuant to the preceding
sentence is expressly conditioned upon Landlord and such other requesting party
also executing and delivering a non-disturbance agreement in form reasonably
satisfactory to Tenant and Tenant's counsel. Tenant agrees that the form of
the non-disturbance agreement annexed hereto as EXHIBIT J is satisfactory to
Tenant and Tenant's counsel. As used herein, the term "Superior Lease" shall
mean all ground or underlying leases, and any renewals, modifications,
increases, extensions, replacements, and substitutions of any thereof, now or
hereafter affecting the Premises and/or the Building, and the term "Mortgage"
shall mean any mortgage, deed of trust or deed to secure debt, and any
renewals, modifications, increases, extensions, replacements, and substitutions
of any thereof, now or hereafter affecting the Premises and/or the Building.
The holder of any such Mortgage or the lessor under any such Superior Lease
shall agree in such non-disturbance agreement that, so long as Tenant complies
with all of the terms and conditions of this Lease and is not in default
hereunder beyond the period for cure of such default as provided herein, such
mortgagee or lessor or any person or entity acquiring the interest of the
Landlord under this Lease as a result of the enforcement of such Mortgage or
lessee or deed in lieu thereof (the "Successor Landlord") shall not take any
action to disturb Tenant's possession of the Premises during the remainder of
the Term and any extension or renewal thereof and the Successor Landlord shall
recognize all of Tenant's rights under this Lease despite any foreclosure,
lease termination or other action by such mortgagee or lessor, including,
without limitation, the taking of possession of the Building or any portion
thereof by the Successor Landlord or the exercise of any assignment of rents by
the mortgagee or lessor. In any such non-disturbance agreement, Tenant shall
agree to give the holder of the Mortgage (or, in the case of a Superior Lease,
the lessor thereunder) notice of defaults by Landlord hereunder (but only to
the address previously supplied to Tenant in writing) and time periods to cure
such defaults which are at least thirty (30) days in addition to those granted
to Landlord hereunder (which time period shall run from and after such notice
is given to such holder or lessor), and Tenant shall further agree that any
Successor Landlord shall not be liable for any accrued obligation of the former
landlord, or for any act or omission of the former landlord, whether prior to
or after such enforcement proceedings, nor be subject to any counterclaims
which shall have accrued to Tenant against the former landlord prior to the
date upon which such party shall become the owner of the Premises. Such
non-disturbance agreement
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shall also provide that such Successor Landlord shall not be (a) subject to any
offsets which the Tenant might have against the former landlord; or (b) bound
by any Base Rent, Tenant's Operating Payment, Additional Rent or any other
payments which the Tenant under this Lease might have paid for more than one
(1) month in advance to any former landlord under this Lease; or (c) bound by
any amendment or modification of this Lease made without the lessor's or
mortgagee's prior written consent; or (e) bound by any consent by the Landlord
under this Lease to any assignment of the Tenant's interest in this Lease made
without also obtaining the lessor's or mortgagee's prior written consent;
provided, however, if the terms of this Lease are such that the Landlord is
obligated to provide the consent, such lessor or mortgagee shall have no right
to object to the assignment. Landlord will join in the signing of the
non-disturbance agreement.
(D) Notwithstanding anything to the contrary contained herein, at the option of
the holder of any Mortgage, this Lease shall be made superior to such Mortgage
by the insertion therein of a declaration that this Lease is superior.
SECTION 5.02 LANDLORD'S SERVICES. During the Term, Landlord shall operate and
maintain the Building in accordance with all applicable laws and regulations.
Further, Landlord agrees that during the Term Landlord will cause the Building
to be operated, managed and maintained in accordance with the standards of
other similar first-class, multi-tenant office buildings (using a so- called
basket approach, and not by reference to any one specific office building) now
located within that geographic area lying within one mile of either side of
that portion of Interstate Highway 285 that extends from Georgia Highway 400 to
United States Highway 41 (the "Geographic Area"), provided that Landlord shall
not be obligated to incur capital expenditures not reimbursable as Operating
Expenses under this Lease in order to comply with such agreement, and provided
further that nothing contained in this sentence is intended to or shall be
construed to require Landlord to provide any services other than those
expressly set forth in this Section 5.02, below, and provided further, heat,
air conditioning and janitorial service shall be deemed to satisfy the
requirements set forth in this sentence if such services satisfy the applicable
standards set forth in subsections 5.02(1)(a) and 5.02(1)(c) below. Subject to
the payment by Tenant of Base Rent and any Additional Rent, Landlord shall
provide the following services:
(1) Services To Premises: Landlord shall provide to the Premises:
(a) Subject to curtailment as required by mandatory
governmental rules, laws or regulations, heating and air
conditioning in season at such temperatures and in such amounts as
are building standard, as set forth on EXHIBIT G annexed hereto,
during the usual and customary business hours of 8:00 a.m. to 6:00
p.m., Monday through Friday, and 9:00 a.m. to 1:00 p.m. on
Saturday. New Year's Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, Christmas Day (collectively, "Holiday";
provided, however, if in the case of any specific holiday
mentioned in this sentence, a different day shall be observed than
the respective day mentioned, then that day which constitutes the
day observed by national banks in Atlanta, Georgia on account of
said holiday shall constitute the Holiday under this Lease),
Sundays and any hours other than those set forth herein shall not
be deemed usual and customary business hours, and such service
will be provided at these times only if Tenant shall request the
same before noon on a weekday (other than a Holiday) for same day
service, or before noon on the Friday immediately preceding the
Saturday or Sunday such service is desired, or before noon on the
weekday immediately preceding the Holiday such service is desired.
Tenant shall pay for such services, as Additional Rent, within
thirty (30) days after rendition of a bill therefor, at such
hourly charge ($45.00 per hour per floor as of the date of this
Lease) as is from time to time reasonably determined by Landlord
to be the actual cost of providing such services, provided that
there shall be a two (2) hour minimum charge each time any such
additional services are provided. In determining such hourly
rate, Landlord shall take into account the rated average hourly
cost of the heating system,
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ventilating system and air-conditioning system during different
months of the year. Such hourly cost shall include, but is not
limited to, the water cost, power cost, labor cost, management
cost, accounting cost, maintenance cost (including supplies,
repairs and a reserve for replacements) and depreciation cost. If
Landlord fails to comply with the air conditioning requirements
specified on EXHIBIT G annexed hereto, and if such failure is due
in whole or in part to the installation of machines, equipment, or
nonstandard lighting that generate abnormal heat which affect the
temperature otherwise maintained by the air conditioning system,
then unless Tenant acquiesces to such failure, Landlord shall have
the right to install supplemental air conditioning equipment in or
about the Premises, and the cost thereof, including the cost of
installation, operation, electrical use, maintenance, and
metering, shall be paid by Tenant to Landlord, as Additional Rent,
within thirty (30) days of demand.
(b) Electrical energy (not exceeding the present electrical
capacity of the Premises, as described in Section 4.07 hereof and
in EXHIBIT G annexed hereto) upon the following terms and
conditions:
(i) Landlord shall be responsible for
replacing all light bulbs, fluorescent lamps, and all
ballasts used by the Tenant in the Premises, except that
Tenant shall be responsible for replacing all lamps,
bulbs, and ballasts in non-building standard fixtures;
(ii) All meters and additional panel boards,
transformers, feeders, risers, wiring and other conductors
and equipment which may be required to obtain additional
electrical energy required by Tenant from the public
utility company shall be installed and maintained by
Landlord at Tenant's sole expense; and
(iii) Landlord shall not be liable for damages
or consequential damages or in any other way in the event
of loss, damage, failure, interruption, defect or change
in the quantity or character or supply of electricity
furnished to the Premises or of any other utility,
including, but not limited to, air conditioning, heat or
water, and Tenant agrees that such supply may be
interrupted for inspection, repairs, replacement or in
case of emergency; nor shall the foregoing be construed as
a constructive eviction of Tenant, or excuse Tenant from
failing to perform any of its obligations hereunder.
(c) Janitor service five (5) days per week (excluding
Holidays) in accordance with the specifications annexed hereto as
EXHIBIT I; provided, however, if Tenant's floor covering or other
improvements are not building standard, Tenant shall pay, as
Additional Rent, upon rendition of a bill therefor, the additional
cleaning cost, if any, attributable thereto. Unless otherwise
approved by Tenant, Landlord shall cause the janitorial work which
shall be performed within the fourteen (14th) floor portion of the
Premises to be performed after 7:00 p.m. each day in question, and
Landlord shall cause the required exterior window washing which
shall be performed on the windows of the fourteen (14th) floor
portion of the Premises to be performed at times during normal
business hours reasonably convenient to Tenant (scheduled in
advance with Tenant and approved by Tenant, which approval shall
not be unreasonably withheld) within the period the window washing
contractor is scheduled to be working at the Office Building.
Landlord agrees to provide Tenant from time to time with a current
written list of the names of the janitorial contractor's employees
who have access to the fourteen (14th) floor portion of the
Premises. Landlord shall make keys and/or access cards to the
fourteen (14th) floor portion of the Premises available only to
such third parties who may reasonably have a need to access such
area. Subject to and upon the following terms and conditions,
Tenant shall have the right to contract directly with a janitorial
contractor for the performance of the janitorial services to the
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fourteen (14th) floor portion of the Premises: (i) the janitorial
contractor selected by Tenant shall be subject to the prior
approval of Landlord, which approval shall not be unreasonably
withheld; (ii) Tenant shall give Landlord written notice at least
thirty (30) days prior to the effective date of such contract and
the commencement of such services; (iii) such janitorial services
shall be at Tenant's sole costs and expense; (iv) during the term
of such contract, Landlord shall not be required to perform any
janitor service to the fourteen floor; (v) Tenant shall give
Landlord written notice at least thirty (30) days prior to the
effective date of the termination of such contract and of the date
Tenant desires Landlord to resume janitorial services to the
fourteenth floor; (vi) Tenant and Tenant's janitorial contractor
shall coordinate its janitorial work with other work in the Office
Building in accordance with the schedules approved by Landlord,
which approval shall not be unreasonably withheld or delayed;
(vii) Tenant shall provide Landlord from time to time with a
current written list of the names of the janitorial contractor's
employees who have access to the fourteen floor; (viii) Tenant's
janitorial contractor shall not have the right to provide any
services to any portion of the Premises other than the fourteen
floor, and (ix) the janitorial work to be performed by Tenant's
contractor shall be subject to the Rules and Regulations and shall
meet or exceed the quantity and quality of the janitorial
specifications described on EXHIBIT I.
(2) Services To Office Building: Landlord shall provide in the Office
Building:
(a) Hot and cold water, at those points of supply provided for
general use of tenants in the Office Building;
(b) Elevator service in common with other tenants, if needed
and existing, for ingress to and egress from the Premises;
(c) Heat, ventilation, cooling, lighting, electrical service
and domestic running water, in those areas of the Office Building
as may from time to time be designated by Landlord for use during
normal business hours by Tenant in common with other tenants and
persons in the Office Building but under the exclusive control of
Landlord; and
(d) Security and access control services for the Building
comparable as to coverage, control and responsiveness (but not
necessarily as to means for accomplishing same) to other similarly
situated first-class, multi-tenant office buildings in the
Geographic Area, including, without limitation, manned security
24-hours per day, seven days per week; provided, however, Landlord
shall have no responsibility to prevent, Landlord shall not be
liable to Tenant for, and Tenant hereby releases Landlord from any
liability to Tenant or loss to Tenant, its agents, employees and
visitors arising out of, losses due to theft, burglary, or damage
or injury to persons or property caused by persons gaining access
to the Building or the Premises, unless caused by the willful
misconduct or intentional torts of Landlord or Landlord's
employees and not relieved by operation of Section 6.03 of this
Lease. Landlord shall use reasonable, good faith efforts to
prevent theft or damage by other tenants or visitors to the
Building, but Landlord shall not be liable for such theft or
damage except as expressly provided in the preceding sentence. In
addition, Landlord agrees that Landlord shall require its security
contractor to maintain such insurance is a customarily required of
such security contractors by landlords of other first-class
buildings within the Geographic Area. Subject to the terms and
conditions of this Lease, couriers delivering packages to and from
the Premises shall have access to the interior portion of the
Office Building, twenty-four (24) hours per day, every day of the
year during the Term of this Lease.
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(3) Limitations: Landlord shall maintain and repair the foundations,
structure and roof of the Office Building and shall operate, maintain,
repair and replace the systems, facilities and equipment directly necessary
for the provision by Landlord of the services described in this Section
5.02 (unless same are installed by or are the property of Tenant); provided
that:
(a) Landlord shall only be required to maintain such services
as are reasonably possible under the circumstances in the event
all or any part of such systems, facilities and equipment are
destroyed, damaged or impaired until completion of the necessary
repair or replacement;
(b) Subject to the provisions of Section 5.05 hereof, Landlord
may temporarily discontinue any services at such times as may be
necessary or advisable due to causes beyond the reasonable control
of Landlord or for purposes of maintenance, repair, replacement,
testing or examination;
(c) Landlord shall use reasonable diligence in carrying out
its obligations under this Section 5.02, but shall not be liable
under any circumstances for any damages (including consequential
damages) to any person or property for any failure to do so;
(d) No reduction or discontinuance of the services described
in this Section 5.02 shall be construed as an eviction of Tenant
or release Tenant from any of its obligations under this Lease,
except as otherwise provided in Section 6.02 hereof;
(e) Landlord shall have no liability to Tenant, its employees,
agents, invitees or licensees for damages or consequential damages
or in any other way for losses due to any criminal act or for
damages done by unauthorized persons on the Premises or in the
Building unless caused by the willful misconduct or intentional
torts of Landlord or Landlord's employees and not relieved by
operation of Section 6.03 of this Lease, and Landlord shall not be
required to insure against any such losses. Tenant shall
cooperate fully in Landlord's efforts to maintain security in the
Building and shall follow all regulations promulgated by Landlord
with respect thereto; and
(f) Tenant shall reimburse Landlord, upon demand, for the
entire cost of any repairs or maintenance performed by Landlord in
accordance with the terms hereof if the need for same arose as a
result of the negligence or criminal or willful misconduct of
Tenant or its agents, employees, contractors, invitees and
licensees.
SECTION 5.03 ALTERATIONS BY LANDLORD.
(A) Landlord may from time to time:
(1) Subject to the provisions of Section 5.05 below, make repairs,
replacements, changes or additions to the structure, systems, facilities
and equipment in the Premises where necessary to service the Premises or
other parts of the Building; provided, however, that in connection
therewith Landlord shall not unreasonably interfere with the access to or
use of the Premises;
(2) Subject to the provisions of Section 5.05 below, make changes in
or additions to any part of the Building not in or forming part of the
Premises;
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(3) Change or alter the location of any areas of the Building
(including, but not limited to, the parking areas) which may, from time to
time, be designated by Landlord for use during normal business hours by
Tenant in common with other tenants and persons in the Office Building but
under the exclusive control of Landlord; provided, however, the number of
Parking Spaces (including the number of reserved Parking Spaces which have
been granted to Tenant hereunder) and ratio of covered to uncovered Parking
Spaces as set forth in Section 1.01(I) above shall be maintained throughout
the Term;
(4) Subject to Tenant's right of quiet enjoyment described in Section
5.01 above, grant Easement(s) on, over, under and above the Premises; and
(5) Reduce the rentable square footage of the Premises in order to
comply with applicable laws so long as Tenant's use of the Premises is not
materially or adversely affected, in which case Landlord and Tenant shall
enter into a written agreement modifying this Lease and specifying that
such space is no longer a part of the Premises and under this Lease and
containing other appropriate terms and provisions relating to the
elimination of such portion of the Premises from this Lease, including,
without limitation, decreasing the monthly and annual rent as a result
thereof; provided, however, if Tenant reasonably determines that the
remaining portion of the Premises is not economically usable for Tenant's
business purposes, then Tenant may terminate this Lease by notice to
Landlord given on or before the date which is ninety (90) days after the
date that Landlord has so reduced the rentable square footage of the
Premises.
(B) In connection therewith, Landlord and/or its representatives may enter the
Premises and other areas of the Building with such materials as Landlord may
deem necessary, and may erect scaffolding and all other necessary structures in
or about the Premises or the Building. Tenant waives and releases any claims
for damage including loss of business resulting therefrom. During the time as
such work described in Section 5.03(A)(1) above is being carried on in or about
the Premises, the Base Rent provided herein shall not abate unless the Premises
(or the applicable portion thereof) are rendered unusable for more than five
(5) consecutive business days, so long as the repairs are not being made by
Landlord as a result of a default by Tenant under this Lease. If Tenant is
unable to operate its business in the Premises (or any portion thereof) for a
period of five (5) consecutive business days as a result of the performance by
Landlord of the work as authorized by Section 5.03(A)(1) above, and provided
that the work is not being made by Landlord as a result of a default by Tenant
under this Lease, then Base Rent under this Lease shall abate in the proportion
that the Premises are unusable until the entire Premises (or portion thereof
that was rendered unusable) are again usable, such abatement to commence on the
sixth (6th) business day that the Premises (or portion thereof) shall first
become unusable, and such abatement shall not be applicable for any day unless
the Premises (or portion thereof) are unusable on such day.
SECTION 5.04 ENTRY BY LANDLORD.
(A) Landlord and Landlord's agents and representatives shall have the right to
enter the Premises at any time in case of an emergency, and upon reasonable
prior verbal notice at reasonable hours for any purpose permitted pursuant to
the terms of this Lease, including, but not limited to, examining the Premises;
making such repairs or alterations therein as may be necessary or appropriate
in Landlord's sole judgment for the safety and preservation thereof; erecting,
installing, maintaining, repairing or replacing wires, cables, conduits, vents,
ducts, risers, pipes, HVAC equipment or plumbing equipment running in, to, or
through the Premises (provided that such items are not installed in a location
which materially and adversely interferes with the operation of Tenant's
business); showing the Premises to prospective purchasers or mortgagees and,
during the last year of the Term, prospective tenants; and posting notices of
non-responsibility (such notices to be posted only during periods when
construction work is being performed in the Premises). Unless otherwise
instructed by Tenant in writing,
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Landlord shall not enter into the fourteenth (14th) floor portion of the
Premises for the purposes described in this Section 5.04(A) above unless (a)
accompanied by a designated representative of Tenant (it being agreed that
Tenant shall make such designated representative available at all reasonable
hours promptly following Landlord's verbal request for the same), or (b)
Landlord has a legitimate need to have access to the mechanical rooms or to the
roof of the Office Building, or (c) an emergency situation exists; provided,
however, to the extent that Landlord's access to any portion of the Premises is
restricted or limited by Tenant, Landlord shall be relieved of its obligations
to perform those covenants which require access to such space during the period
of time Landlord is denied access to such space. During the time as such
repair work described in this Section 5.04 is being carried on in or about the
Premises, the Base Rent provided herein shall not abate unless the Premises (or
the applicable portion thereof) are rendered unusable for more than five (5)
consecutive business days, so long as the repairs are not being made by
Landlord as a result of a default by Tenant under this Lease. If Tenant is
unable to operate its business in the Premises (or any portion thereof) for a
period of five (5) consecutive business days as a result of the performance by
Landlord of the repair work as authorized by this Section 5.04, and provided
that the repairs are not being made by Landlord as a result of a default by
Tenant under this Lease, then Base Rent under this Lease shall abate in the
proportion that the Premises are unusable until the entire Premises (or portion
thereof that was rendered unusable) are again usable, such abatement to
commence on the sixth (6th) business day that the Premises (or portion thereof)
shall first become unusable, and such abatement shall not be applicable for any
day unless the Premises (or portion thereof) are unusable on such day.
(B) Tenant shall give Landlord a key (and/or access card or access code, as the
case may be) for all of the doors for the Premises, excluding Tenant's vaults,
safes and files. Landlord shall have the right to use any and all means to
open the doors to the Premises in an emergency in order to obtain entry thereto
without liability to Tenant therefor. Any entry to the Premises by Landlord by
any of the foregoing means, or otherwise, shall not be construed or deemed to
be a forcible or unlawful entry into or a detainer of the Premises, or an
eviction, partial eviction or constructive eviction of Tenant from the Premises
or any portion thereof, and shall not relieve Tenant of its obligations
hereunder.
SECTION 5.05 MINIMIZE INTERFERENCE. In performing its covenants under this
Article 5, Landlord shall use reasonable, good faith efforts to minimize
interference with the conduct of Tenant's business in connection with the
performance by Landlord of any work or the provision of any services required
or permitted pursuant to the terms of this Lease, but Landlord shall not be
required to use overtime or premium time labor. Landlord agrees that any such
work performed by Landlord within the Premises which, because of the nature
thereof, could reasonably be performed after normal business hours, shall, at
Tenant's request, be performed after normal business hours, provided that
Tenant shall pay to Landlord the additional cost of such work above the cost
which would be incurred if such work were performed during normal business
hours.
SECTION 5.06 LANDLORD'S RIGHT TO CURE. All agreements and provisions to be
performed by Tenant under any of the terms of this Lease shall be at Tenant's
sole cost and expense and without any abatement of Base Rent or any Additional
Rent. If Tenant shall fail to perform any act or to pay any sum of money
(other than Base Rent) required to be performed or paid by it hereunder, or
shall fail to cure any default and such failure shall continue beyond any
applicable notice and grace period set forth herein, then Landlord may, at its
option, and without waiving or releasing Tenant from any of its obligations
hereunder, make such payment or perform such act on behalf of Tenant. All sums
paid and all costs incurred by Landlord in taking such action shall be deemed
Additional Rent and shall be paid to Landlord on demand.
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ARTICLE 6
EMINENT DOMAIN, CASUALTY, HAZARDOUS MATERIALS
SECTION 6.01 EMINENT DOMAIN.
(A) If, during the Term, all of the Premises shall be taken (or temporarily
taken for a period of nine (9) months or more) by a public authority under any
statute or by right of eminent domain, or purchased under threat of such
taking, this Lease shall automatically terminate on the date on which the
condemning authority takes possession of the Premises ("Date of Such Taking").
(B) If, during the Term, part of the Building is so taken or purchased, and if,
in the reasonable opinion of Landlord, substantial alteration or reconstruction
of the Building is necessary or desirable as a result thereof, whether or not
the Premises are or may be affected, Landlord shall have the right to terminate
this Lease by giving Tenant at least thirty (30) days written notice of such
termination, and thereupon this Lease shall terminate on the date set forth in
such notice.
(C) Notwithstanding the foregoing, if more than one-third (1/3) of the number
of rentable square feet in the Premises is so taken or purchased, Tenant shall
have the right to terminate this Lease by giving Landlord notice no later than
one hundred twenty (120) days after the Date of Such Taking, and thereupon this
Lease shall terminate on the last day of the month following the month in which
notice is given.
(D) Tenant shall immediately surrender to Landlord the Premises and all
interests therein under this Lease on any such date of termination under this
Section 6.01. Landlord may re-enter and take possession of the Premises and
remove Tenant therefrom if necessary, and, in the event of a termination under
this Section 6.01, the Base Rent and any Additional Rent shall abate on the
later of the date of termination or the Date of Such Taking. After such
termination, and on notice from Landlord stating the Base Rent and any
Additional Rent then owing, Tenant shall forthwith pay Landlord such amounts.
(E) If a portion of the Premises is so taken, and no rights of termination
herein conferred are timely exercised, the Term of this Lease shall expire with
respect to the portion so taken on the Date of Such Taking. Landlord shall
restore the Premises to the extent required to exclude from the Premises that
portion so taken. Landlord's obligation in connection with such restoration
shall be limited to the basic building area and in no event shall Landlord be
obligated to replace, repair or restore any improvements to the Premises or
alterations thereof installed therein by or on behalf of Tenant, nor shall
Landlord be obligated to replace, repair or restore Tenant's leasehold
improvements, personal property, furniture, fixtures, equipment or the like.
(F) Upon any such taking or purchase, Landlord shall be entitled to receive and
retain the entire award or consideration for the affected portion of the
Building, and Tenant shall not have or advance any claim against Landlord for
the value of its property or its usufruct interest or the unexpired Term of the
Lease, or for costs of removal or relocation, or business interruption expense
or any other damages arising out of such taking or purchase. Nothing herein
shall be construed to preclude Tenant from prosecuting any claim directly
against the condemning authority for (i) the unamortized cost of constructing
the Tenant Improvements within the Premises as provided in Article 2 above to
the extent the same were installed at Tenant's expense and to the extent such
costs were not reimbursed or contributed to by Landlord, (ii) damage to, and
the cost of removal of, Tenant's chattels or trade fixtures, (iii) the cost of
the removal or relocation of its business and effects, and (iv) the loss
associated with any interruption of its business; provided that any such award
or compensation shall not reduce the amount of the award otherwise payable to
Landlord. If any such award made or compensation paid to either party
specifically includes an award or amount for the other, the party first
receiving the same shall promptly account therefor to the other.
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(G) If all or any portion of the Premises shall be condemned or taken for
governmental occupancy for a period of less than one year, this Lease shall
continue in full force and effect and Tenant shall continue to pay in full all
Base Rent and any Additional Rent herein reserved, without reduction or
abatement, and Tenant shall be entitled to receive, for itself, so much of any
award or payment made for such use as is equal to the payments that are
actually made by Tenant to Landlord during such temporary taking, and Landlord
shall receive the balance thereof.
SECTION 6.02 DAMAGE BY FIRE OR OTHER CASUALTY.
(A) If the Premises shall be damaged by fire or other casualty, then the damage
shall be repaired, except as otherwise provided in this Section 6.02, by and at
the expense of Landlord with reasonable promptness; provided, however, that
Landlord's obligation to restore shall at all times be subject to obtaining all
necessary approvals from all applicable governmental entities, the lessor under
any Superior Lease and the holder of any Mortgage and the willingness of such
lessor or such holder to make the proceeds of casualty insurance policies
available to Landlord for such purposes. The Base Rent and Additional Rent due
Landlord hereunder shall be equitably abated in the proportion which the part
of the Premises which is not usable by Tenant bears to the entire Premises
until the earliest to occur of (a) the one hundred twenty-first (121st) day
after the date on which Landlord has substantially completed the repairs
required to be made by Landlord hereunder, or (b) the ninety-first (91st) day
after the date on which Landlord has approved Tenant's plans and specifications
relating to the restoration of Tenant's leasehold improvements, or (c) the date
on which Tenant has substantially completed the repairs to the leasehold
improvements required to be made by Tenant pursuant to Section 6.02(E) hereof;
provided, however, if and to the extent that the date described in clause (c)
would have occurred earlier but for Tenant delays, then the date described in
clause (c) shall be deemed to have occurred on the date that such compliance
would have occurred but for the Tenant delays. Landlord shall not be liable
for any delay (whether or not within the reasonable control of Landlord) in the
completion of the repair and restoration of the Premises.
(B) If (i) the Premises are totally damaged or rendered wholly untenantable by
fire or other casualty, or (ii) Landlord's architect certifies that the
Premises cannot be repaired within two hundred seventy (270) days after the
casualty, or (iii) the Premises are damaged or destroyed as a result of a risk
which is not insurable under standard fire insurance policies with extended
coverage endorsement, or (iv) the Premises are damaged or destroyed during the
last eighteen (18) months of the Term, or (v) the Building is damaged in whole
or in part (whether or not the Premises are damaged), to such an extent that
the Building cannot, in Landlord's judgment reasonably exercised, be operated
economically as an integral unit as a result of such damage and Landlord elects
not to restore the Building and the Premises to substantially the same
condition as existed prior to such damage, then, in any of such events,
Landlord may, within one hundred twenty (120) days after such fire or other
casualty, give Tenant notice of termination of this Lease, and thereupon the
Term of this Lease shall terminate as of the date Tenant vacates the Premises,
which date shall be no later than (a) one hundred twenty (120) days after the
giving of such notice as to any portion of the Premises with respect to which
Base Rent and Additional Rent are not abated pursuant to the provisions of this
Section 6.02, and (b) thirty (30) days after the giving of such notice as to
any portion of the Premises with respect to which Base Rent and Additional Rent
are so abated.
(C) If Landlord is required under this Section 6.02 to repair and rebuild the
Premises and for any reason whatsoever other than delays caused by Tenant,
fails to commence to repair and rebuild the Premises to the extent required of
Landlord hereunder following damage or destruction within one hundred twenty
(120) days after the date when such damage or destruction occurred (subject to
extension for the period of any delays resulting from causes beyond the
reasonable control of Landlord), Tenant shall have the right to cancel and
terminate this Lease upon delivery of notice to Landlord delivered not more
than twenty (20) days after the expiration of such one
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hundred twenty (120) day period, as same may be extended for delays resulting
from causes beyond the reasonable control of Landlord. If Landlord does not
substantially complete the repair and restoration of the Premises within twelve
(12) months after the date of the casualty (subject to extension for the period
of any delays resulting from causes beyond the reasonable control of Landlord),
Tenant shall have the right to cancel and terminate this Lease upon delivery of
notice to Landlord delivered not more than twenty (20) days after the expiration
of such twelve (12) month period, as same may be extended for delays resulting
from causes beyond the reasonable control of Landlord. Upon any such notice of
termination being given by Tenant in accordance with the terms of this Section
6.02(C), the Term of this Lease shall automatically terminate and end effective
as of the date designated in such notice (but in no event later than one hundred
eighty (180) days after the date of such notice), such termination right being
Tenant's sole and exclusive remedy hereunder (other than the abatement of Base
Rent and Additional Rent provided in Section 6.02(A), above) for such failure to
commence or complete such repair work or rebuilding; provided, however, if
Landlord fails to complete such repair work or rebuilding within said twelve
(12) month period, as same may be extended for delays resulting from causes
beyond the reasonable control of Landlord, Tenant shall also be entitled to any
and all other rights and remedies as may be accorded Tenant under this Lease, at
law or in equity. Notwithstanding any other provision of this Section 6.02,
Landlord shall not be obligated to restore or repair any such damaged or
destroyed structures and other improvements to the extent that, and Tenant shall
not be entitled to terminate this Lease or make any claim or demand for damages
or other sums against Landlord for any failure to rebuild by reason of any
damage or destruction if, any insurance required to be carried by Landlord
hereunder with respect to such damage or destruction is invalidated by the act
or omission of Tenant, or its employees or agents.
(D) Tenant waives the benefit of any statutes of the state in which the
Building is located allocating insurance proceeds or requiring application
thereof in specific ways or relieving Tenant of rental obligations and agrees
that Tenant will not be relieved of the obligations to pay Base Rent or any
Additional Rent in case of damage to or destruction of the Building or the
Premises, except as provided by this Lease.
(E) Landlord's obligations in connection with such repair and/or restoration
work shall and are hereby strictly limited to the replacement of the basic
building area as leased by Landlord to Tenant as of the Commencement Date, and
in no event shall Landlord be obligated to replace, repair or restore any
improvements to the Premises or any alterations thereof which were installed
therein by or on behalf of Tenant, nor shall Landlord be obligated to replace,
repair, or restore Tenant's leasehold improvements, personal property,
furniture, fixtures, equipment or the like. Tenant shall, within a reasonable
period of time, commence to repair and replace, and shall diligently repair or
replace to completion, all at its sole cost and expense, Tenant's own
improvements, furniture, furnishings, trade fixtures and equipment.
(F) Tenant shall give immediate written notice to Landlord of any damage caused
to the Premises by fire or other casualty.
SECTION 6.03 SUBROGATION. Notwithstanding anything to the contrary contained
herein, Landlord and Tenant hereby mutually waive and release their respective
rights of recovery against one another and their officers, agents and employees
for any damage to real or personal property, including resulting loss of use,
interruption of business, and other expenses occurring as a result of the use
or occupancy of the Premises or the Building to the extent of insurance
coverage which would be included in a standard "all-risk" or special form
policy of property insurance. Landlord and Tenant agree that all policies of
insurance obtained by them pursuant to the terms of this Lease shall contain
provisions or endorsements thereto waiving the insurer's rights of subrogation
with respect to claims against the other, and, unless the policies permit
waiver of subrogation without notice to the insurer, each shall notify its
insurance companies of the existence of the waiver and indemnity provisions set
forth in this Lease.
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SECTION 6.04 HAZARDOUS MATERIALS.
(A) During the term of this Lease, Tenant shall comply with all Environmental
Laws and Environmental Permits (each as defined in Section 6.04(D) hereof)
applicable to the operation or use of the Premises, shall cause all other
persons occupying or using the Premises to comply with all such Environmental
Laws and Environmental Permits, shall immediately pay all costs and expenses
incurred by reason of such compliance, and shall obtain and renew all
Environmental Permits required for operation or use of the Premises. Tenant
shall not generate, use, treat, store, handle, release or dispose of, or permit
the generation, use, treatment, storage, handling, release or disposal, of
Hazardous Materials (as defined in Section 6.04(D) hereof) on the Premises, the
Building or the Property or transport or permit the transportation of Hazardous
Materials to or from the Premises, the Building or the Property except for
limited quantities used or stored at the Premises and required in connection
with the routine operation and maintenance of the Premises, and then only in
compliance with all applicable Environmental Laws and Environmental Permits.
(B) Tenant will immediately advise Landlord in writing of any of the following:
(1) any pending or threatened Environmental Claim (as defined in Section
6.04(D) hereof) against Tenant relating to the Premises, the Building or the
Property; (2) any condition or occurrence on the Premises, the Building or the
Property that (a) results in noncompliance by Tenant with any applicable
Environmental Law, or (b) could reasonably be anticipated to form the basis of
an Environmental Claim against Tenant and/or Landlord or the Premises and (3)
the actual or anticipated taking of any removal or remedial action in response
to the actual or alleged presence of any Hazardous Material on the Premises, in
the Building or on the Property. All such notices shall describe in reasonable
detail the nature of the claim, investigation, condition, occurrence or removal
or remedial action and Tenant's response thereto. In addition, Tenant will
provide Landlord with copies of all communications regarding the Premises with
any government or governmental agency relating to Environmental Laws, all such
communications with any person relating to Environmental Claims, and such
detailed reports of any such Environmental Claim as may reasonably be requested
by Landlord. At any time and from time to time during the term of this Lease,
and at Tenant's sole cost and expense, Landlord or its agents may perform an
environmental inspection of the Premises, and Tenant hereby grants to Landlord
and its agents access to the Premises to undertake such an inspection.
(C) Tenant agrees to defend, indemnify and hold harmless the Indemnitees from
and against all obligations (including removal and remedial actions), losses,
claims, suits, judgments, liabilities, penalties (including, by way of
illustration and not by way of limitation, civil fines), damages (including
consequential and punitive damages), costs and expenses (including attorneys'
and consultants' fees and expenses) of any kind or nature whatsoever that may
at any time be incurred by, imposed on or asserted against such Indemnitees
directly or indirectly based on, or arising or resulting from (a) the actual or
alleged presence of Hazardous Materials on the Premises, in the Building or on
the Property which is caused or permitted by Tenant and/or (b) any
Environmental Claim relating in any way to Tenant's operation or use of the
Premises, the Building or the Property. The provisions of this Section 6.04(C)
shall survive the expiration or sooner termination of this Lease.
(D) (1) "Hazardous Materials" means (a) petroleum or petroleum products,
natural or synthetic gas, asbestos in any form, urea formaldehyde foam
insulation, and radon gas; (b) any substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," "contaminants" or "pollutants," or words of
similar import, under any applicable Environmental Law; and (c) any other
substance exposure which is regulated by any governmental authority; (2)
"Environmental Law" means any federal, state or local statute, law, rule,
regulation, ordinance, code, policy or rule of common law now or hereafter in
effect and in each case as amended, and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, relating to the environment, health, safety or Hazardous
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Materials; (3) "Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations, proceedings, consent
orders or consent agreements relating in any way to any Environmental Law or
any Environmental Permit, including without limitation (a) any and all
Environmental Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant to
any applicable Environmental Law and/or (b) any and all Environmental Claims by
any third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment;
and (4) "Environmental Permits" means all permits, approvals, identification
numbers, licenses and other authorizations required under any applicable
Environmental Law.
ARTICLE 7
EVENTS OF DEFAULT, REMEDIES
SECTION 7.01 EVENTS OF DEFAULT.
(A) In addition to any other event specified in this Lease as an event of
default, the occurrence of any one or more of the following events during the
Term (each, individually, an "Event of Default" and collectively, "Events of
Default") shall constitute a breach of this Lease by Tenant and Landlord may
exercise the rights set forth in Section 7.02 of this Lease or as otherwise
provided at law or in equity:
(1) Tenant shall fail to pay any Base Rent or any Additional Rent (or
cure any other default which is curable by the payment of money) within
five (5) business days after the date when the same shall become due and
payable and such failure shall continue for five (5) business days after
written notice of such failure of payment; or (2) Tenant shall default in
the performance of or compliance with any of the other covenants,
agreements, terms or conditions of this Lease to be performed by Tenant
(other than any default curable by the payment of money), and, unless
expressly provided elsewhere in this Lease that no notice and/or
opportunity to cure such default is to be afforded Tenant, such default
shall continue for a period of thirty (30) days after written notice
thereof from Landlord to Tenant, or, in the case of a default which cannot
with due diligence be cured within thirty (30) days, Tenant fails to
commence such cure promptly within such thirty (30) day period and
thereafter diligently prosecute such cure to completion; or (3) Tenant or
any guarantor of Tenant's obligations hereunder ("Guarantor") shall become
insolvent within the meaning of the United States Bankruptcy Code, as
amended from time to time (the "Code"), or shall have ceased to pay its
debts in the ordinary course of business, or shall be unable to pay its
debts as they become due, or Tenant or Guarantor shall notify Landlord that
it anticipates the occurrence of any of the foregoing conditions; or (4)
Tenant or Guarantor shall file, take any action to file, or notify Landlord
that Tenant or Guarantor intends to file, a petition, case or proceeding
under any section or chapter of the Code, or under any similar law or
statute of the United States or any state thereof relating to bankruptcy,
insolvency, reorganization, winding up or composition or adjustment of
debts; or (5) Tenant or Guarantor shall be adjudicated as a bankrupt or
insolvent or consent to, or file an answer admitting or failing reasonably
to contest the material allegations of, a petition filed against it in any
such case or proceeding in the preceding clause (4); or (6) Tenant or
Guarantor shall seek to or consent to or acquiesce in the appointment of
any receiver, trustee, liquidator or other custodian of Tenant or any
Guarantor or any material part of its or their properties, whether or not
the same shall relate to their interests in this Lease; or (7) Tenant or
Guarantor shall make a general assignment for the benefit of creditors; or
take any other action for the purpose of effecting any of the foregoing
clauses (3) through (7); or (8) if, within thirty (30) days after the
filing of an involuntary petition in bankruptcy
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against Tenant or any Guarantor or the commencement of any case or
proceeding against Tenant or any Guarantor seeking any reorganization,
composition, arrangement, liquidation, dissolution, readjustment or similar
relief under any law, such proceeding shall not have been dismissed; or if,
within thirty (30) days after the appointment, without consent or
acquiescence of Tenant or any Guarantor, of any trustee, receiver or
liquidator of Tenant or of any Guarantor, of all or any substantial part of
the properties of Tenant or of any Guarantor, or of all or any part of the
Premises, such appointment shall not have been vacated or stayed on appeal
or otherwise; or if, within thirty (30) days after the expiration of any
such stay, such appointment shall not have been vacated; or if, within
thirty (30) days after the taking of possession without the consent or
acquiescence of Tenant or any Guarantor, by any governmental office or
agency pursuant to statutory authority for the dissolution or liquidation
of Tenant or any Guarantor, such taking shall not have been vacated or
stayed on appeal or otherwise; or (9) any execution or attachment is issued
against Tenant or any of its property whereupon the Premises shall be taken
or occupied or attached, or attempted to be taken or occupied or attached
by someone other than Tenant; or (10) a tax lien or a mechanic's and/or
materialmen's lien is filed against any property of Tenant, or Tenant does
or permits to be done anything which creates a lien upon the Premises or
the Building and such lien is not discharged by Tenant or bonded off by
Tenant to Landlord's satisfaction within thirty (30) days after Tenant
receives actual notice of the filing thereof; or (11) any Guarantor of this
Lease shall default beyond any applicable notice and grace period under
such guaranty.
(B) If any Event of Default described in clauses (1), (3), (4), (5), (6), (7),
(8), (9), (10) and (11) of Section 7.01(A) above occurs more than two (2) times
within any period of twelve (12) months, then, notwithstanding that each such
Event of Default shall have been cured, any further default of the same type
described in clauses (1), (3), (4), (5), (6), (7), (8), (9), (10) and (11)
within such twelve month period shall be deemed an Event of Default for which
no notice or cure period shall apply. If any Event of Default described in
clause (2) of Section 7.01(A) above occurs more than two (2) times within any
period of twelve (12) months, then, notwithstanding that each such Event of
Default shall have been cured, any further default by Tenant in the performance
of or compliance with the same specific covenant, agreement, term or condition
of this Lease to be performed by Tenant which constituted the Event of Default
the two times within such twelve month period shall be deemed an Event of
Default for which no notice or cure period shall apply. For illustration
purposes only and to avoid any doubt as to the intent of the parties expressed
in the immediately preceding sentence, if Tenant shall have failed to comply
with the terms of item 15 of the Rules and Regulations annexed hereto as
EXHIBIT D two times within any period of twelve months, then, notwithstanding
that each such Event of Default shall have been cured, any further failure on
the part of Tenant to comply with the terms of item 15 of the Rules and
Regulations within such twelve month period shall be deemed an Event of Default
for which no notice or cure period shall apply; however, if Tenant shall have
failed to comply with the terms of items 11, 12 and 14 of the Rules and
Regulations one time each within any period of twelve months, then, with
respect to the next failure on the part of Tenant to comply with the terms of
item 11 or of item 12 or of item 14 of the Rules and Regulations within such
twelve month period, Tenant shall be entitled to the applicable notice and cure
period described in clause (2) of Section 7.01(A), above.
SECTION 7.02 REMEDIES UPON DEFAULT.
(A) Upon the occurrence of any Event of Default, Landlord shall have the option
to pursue any one or more of the following remedies without notice or demand
whatsoever, in addition to, or in lieu of, any and all remedies available to
Landlord under the laws of the state in which the Building is located:
(1) Landlord may give Tenant written notice of its election to
terminate this Lease, effective on the date specified therein, whereupon
Tenant's right to possession of the Premises shall cease and this Lease,
except as to Tenant's liability determined in accordance with Section
7.02(C) hereinbelow, shall be terminated.
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(2) Landlord and its agents may immediately re-enter and take
possession of the Premises, or any part thereof, either by summary
proceedings, or by any other applicable action or proceeding, or by force
or otherwise (without being liable for indictment, prosecution or damages
therefor) and may repossess same and expel Tenant and those claiming
through or under Tenant, and remove the effects of both or either, without
being deemed guilty in any manner of trespass, and without prejudice to any
remedies for arrears of rent or Tenant's breach of covenants or conditions.
(3) Should Landlord elect to re-enter as provided hereinabove, or
should Landlord take possession pursuant to legal proceedings or pursuant
to any notice provided by law, Landlord may, from time to time, without
terminating this Lease, relet the Premises or any part thereof in
Landlord's or Tenant's name, but for the account of Tenant (subject to the
provisions of Section 7.02(B)), for such term or terms (which may be
greater or less than the period which would otherwise have constituted the
balance of the Term) and on such terms and conditions (which may include
concessions of free rent and alteration, repair and improvement of the
Premises) as Landlord, in its sole discretion, may determine, and Landlord
may collect and receive the rents therefor without relieving Tenant of any
liability under this Lease or otherwise affecting any such liability.
Landlord shall have no obligation to relet the Premises or any part thereof
and shall in no event be liable for failure to relet the Premises or any
part thereof, or, in the event of any such reletting, for refusal or
failure to collect any rent due upon such reletting, and no such refusal or
failure shall operate to relieve Tenant of any liability under this Lease
or otherwise to affect any such liability. No such re-entry or taking
possession of the Premises by Landlord shall be construed as an election on
Landlord's part to terminate this Lease unless a written notice of such
intention be given to Tenant. No notice from Landlord hereunder or under a
forcible entry and detainer statute or similar law shall constitute an
election by Landlord to terminate this Lease unless such notice
specifically so states. Landlord reserves the right following any such
re-entry and/or reletting to exercise its right to terminate this Lease by
giving Tenant written notice thereof, in which event this Lease will
terminate as specified in said notice.
(4) Allow the Premises to remain unoccupied and collect Base Rent and
Additional Rent from Tenas it comes due.
(B) Tenant hereby waives the service of any notice of intention to re-enter or
to institute legal proceedings to that end which may otherwise be required to
be given under any present or future law. Tenant, on its own behalf and on
behalf of all persons claiming through or under Tenant, including all
creditors, does further hereby waive any and all rights which Tenant and all
such persons might otherwise have under any present or future law to redeem the
Premises, or to re-enter or repossess the Premises, or to restore the operation
of this Lease, after (i) Tenant shall have been dispossessed by a judgment or
by warrant of any court or judge, or (ii) any re-entry by Landlord, or (iii)
any expiration or termination of this Lease and the Term, whether such
dispossess, re-entry, expiration or termination shall be by operation of law or
pursuant to the provisions of this Lease. The words "re-enter", "re- entry"
and "re-entered" as used in this Lease shall not be deemed to be restricted to
their technical legal meanings. In the event of a breach or threatened breach
by Tenant, or any persons claiming through or under Tenant, of any term,
covenant or condition of this Lease on Tenant's part to be observed or
performed, Landlord shall have the right to enjoin such breach and the right to
invoke any other remedy allowed by law or in equity as if re-entry, summary
proceedings and other special remedies were not provided in this Lease for such
breach. The right to invoke the remedies hereinbefore set forth are cumulative
and shall not preclude Landlord from invoking any other remedy allowed at law
or in equity.
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(C) (1) In the event this Lease is terminated in accordance with the
provisions of Section 7.02(A)(1), Tenant shall remain liable to Landlord
for damages in an amount equal to the Base Rent and any Additional Rent and
any other sums due hereunder as of the date of termination of this Lease
plus the Base Rent and any Additional Rent which would have been owing by
Tenant hereunder for the balance of the Term (collectively, the "Aggregate
Gross Rent") had this Lease not been terminated, less the net proceeds, if
any, received as a result of any reletting of the Premises by Landlord
subsequent to such termination, after deducting all of Landlord's expenses
including, without limitation, all repossession costs, brokerage
commissions, legal expenses, attorneys' fees, expenses of employees,
alteration and repair costs and expenses of preparation for such reletting
(collectively, the "Reletting Costs"). Landlord shall be entitled to
collect Base Rent, any Additional Rent and all other damages from Tenant
monthly on the days on which Base Rent and any Additional Rent would have
been payable hereunder if this Lease had not been terminated.
ALTERNATIVELY, at the option of Landlord, in the event this Lease is so
terminated, Landlord shall be entitled to recover forthwith against Tenant,
as liquidated damages and not as a penalty, the present value determined by
application of a reasonable discount rate selected by Landlord of the
Aggregate Gross Rent and the actual or estimated (as reasonably determined
by Landlord) Reletting Costs less the aggregate reasonable rental value of
the Premises for what otherwise would have been the unexpired balance of
the Term (Landlord and Tenant hereby agreeing that Landlord's actual
damages in such event are impossible to ascertain and the amount set forth
hereinabove as Landlord's liquidated damages is a reasonable estimate of
the amount of actual damages which Landlord probably would suffer). In
determining the aggregate reasonable rental value pursuant to the preceding
sentence, the parties hereby agree that all relevant factors shall be
considered as of the time Landlord seeks to enforce such remedy, including,
but not limited to, (i) the length of time remaining in what otherwise
would have been the unexpired balance of the Term, (ii) the then current
market conditions in the Geographic Area, (iii) the likelihood of reletting
the Premises for a period of time equal to what otherwise would have been
the unexpired balance of the Term, (iv) the net effective rental rates
(taking into account all concessions) then being obtained for space of
similar type and size in similar type buildings in the Geographic Area, (v)
the vacancy levels in comparable quality multi-tenant office buildings in
the Geographic Area, (vi) the anticipated duration of the period the
Premises will be unoccupied prior to the reletting, (vii) the anticipated
cost of reletting, and (viii) the current levels of new construction of
multi-tenant office buildings in the Geographic Area that will be completed
during the period in what otherwise would have been the unexpired balance
of the Term and the degree to which such new construction will likely
affect vacancy rates and rental rates in comparable quality multi-tenant
office buildings in the Geographic Area. In the event Landlord shall relet
the Premises for the period which otherwise would have constituted the
unexpired portion of the Term (or any part thereof), the amount of rent and
other sums payable by the tenant thereunder shall be deemed prima facie to
be the rental value for the Premises (or the portion thereof so relet) for
the term of such reletting. Tenant shall in no event be entitled to any
rents collected or payable in respect of any reletting, whether or not such
rents shall exceed the Base Rent and any Additional Rent reserved in this
Lease. ALTERNATIVELY, at the option of Landlord, in the event this Lease
is so terminated, Tenant shall pay to Landlord upon demand a one-time
payment equal to the amount of all loss and damage which Landlord may
suffer by reason of such termination, whether through inability to relet
the Premises on satisfactory terms or otherwise, including, without
limitation, the Base Rent and any Additional Rent and any other sums due
hereunder as of the date of termination of this Lease plus the unamortized
cost of any tenant improvement expenses incurred by Landlord, which shall
be equal to the product of (a) the tenant improvement expenses incurred by
Landlord, and (b) a fraction, the numerator of which shall be the number of
months and/or portions thereof from the date of the occurrence of the Event
of Default to the Expiration Date, not to exceed the number of months in
which Tenant is obligated to pay rent hereunder without any abatement or
concession, and the denominator of which shall be the number of months
and/or portions thereof in the Term less the number of months in the Term
in which Landlord has waived payment of Base Rent or portions thereof. The
provisions of this Section 7.02(C)(1) shall survive the termination of this
Lease.
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(2) In the event Landlord does not elect to terminate this Lease, but
takes possession as provided in Section 7.02(A)(2), Tenant shall pay to
Landlord the Base Rent and any Additional Rent which would be payable
hereunder if such repossession had not occurred, less the net proceeds
received by Landlord, if any, of any reletting of the Premises by Landlord
after deducting the Reletting Costs to the extent not paid to Landlord
pursuant to the following sentence. Tenant shall pay rent and all other
sums due to Landlord, monthly, on the days on which Base Rent would have
been payable hereunder if possession had not been retaken.
(D) (1) This Lease shall continue in effect for so long as Landlord does
not terminate Tenant's right to possession, and Landlord may enforce all
its rights and remedies under this Lease, including the right to recover
the Base Rent and any Additional Rent, as the same become due under this
Lease. Acts of maintenance or preservation or efforts to relet the
Premises or the appointment of a receiver upon the initiative of Landlord
to protect Landlord's interest under this Lease shall not constitute a
termination of Tenant's rights to possession unless Landlord shall have
specifically elected to terminate this Lease as provided in Section
7.02(A)(1) hereof.
(2) No payments of money by Tenant to Landlord after the expiration or
other termination of this Lease after the giving of any notice by Landlord
to Tenant shall reinstate or extend the Term, or make ineffective any
notice given to Tenant prior to the payment of such money. After the
service of notice or the commencement of a suit, or after final judgment
granting Landlord possession of the Premises, Landlord may receive and
collect any sums due under this Lease, and the payment thereof shall not
make ineffective any notice, or in any manner affect any pending suit or
any judgment theretofore obtained.
(E) Landlord and Tenant further acknowledge that, to induce Tenant to enter
into this Lease, and in consideration of Tenant's agreement to perform all of
the terms, covenants and conditions to be performed by Tenant under this Lease,
as and when performance is due during the Term, Landlord has agreed to waive
payment by Tenant of Base Rent or portions thereof during the period(s), if
any, specified herein. Upon the occurrence of an Event of Default under this
Lease, the foregoing waiver of payment of Base Rent or portions thereof shall
be of no further force and effect as to any subsequent payments of Base Rent
otherwise due under this Lease, each of the foregoing waivers shall be deemed
revoked retroactively and Tenant shall immediately pay to Landlord as
Additional Rent any and all payments of Base Rent which have theretofore been
waived. Landlord may, or, at Tenant's request, shall, after the occurrence of
an Event of Default, forward a statement to Tenant setting forth all Base Rent
payments which have theretofore been waived by Landlord and are now payable in
accordance with this Subsection, but the failure to deliver such statement
shall not be deemed to be a waiver of the right to collect such amounts.
SECTION 7.03 LANDLORD'S LIEN AND SECURITY INTEREST. [THIS SECTION IS
INTENTIONALLY OMITTED.]
SECTION 7.04 BANKRUPTCY. Landlord and Tenant understand that, notwithstanding
certain provisions to the contrary contained herein, a trustee or debtor in
possession under the Code may have certain rights to assume or assign this
Lease. Landlord and Tenant further understand that, in any event, Landlord is
entitled under the Code to adequate assurances of future performance of the
terms and provisions of this Lease. The parties hereto agree that, with
respect to any such assumption or assignment, the term "adequate assurance"
shall include at least the following:
(1) Any proposed assignee must have been engaged in the conduct of
business for the five (5) years prior to any such proposed assignment,
which business does not violate the Permitted Uses, and such proposed
assignee shall continue to engage in the Permitted Uses. Landlord's asset
will be substantially impaired if the trustee in bankruptcy or any assignee
of this Lease makes any use of the Premises other than the Permitted Uses.
(2) Any proposed assignee of this Lease must assume and agree to be
personally bound by the terms, covenants and provisions of this Lease.
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ARTICLE 8
MISCELLANEOUS PROVISIONS
SECTION 8.01 ADMINISTRATIVE SERVICE CHARGES. Tenant acknowledges that any
failure by it to timely pay any of its obligations hereunder will result in and
cause monetary loss to Landlord beyond the amount unpaid by Tenant, the exact
amount of such costs being extremely difficult and impracticable to fix. Such
costs include, without limitation, processing and accounting charges and late
charges that may be imposed on Landlord by the terms of any encumbrance
covering the Premises. Therefore, in addition to any other rights and remedies
provided Landlord, any and all payments, whether for rentals due or other
charges, adjustments or assessments, which remain unpaid for five (5) days
after the respective due date, will be subject to an administrative service
charge of five hundred dollars ($500.00). The parties agree that this charge
represents a fair and reasonable estimate of the costs Landlord will incur by
reason of such late payment by Tenant and that such administrative service
charge is intended to be liquidated damages, and not a penalty with respect to
any such late payment. Acceptance of any such administrative service charge
shall not constitute a waiver of Tenant's default with respect to the overdue
amount, or prevent Landlord from exercising any of the other rights and
remedies available to Landlord.
SECTION 8.02 LATE CHARGES. In addition to the administrative service charge
described in Section 8.01 and all other rights and remedies provided Landlord,
all amounts payable hereunder which remain unpaid for five (5) days after their
respective due dates shall bear interest from the date that the same became due
and payable to and including the date of payment, whether or not demand is made
therefor, at the lesser of (i) a variable rate of interest equal to the Prime
Rate (defined below) plus four percent (4%) per annum or (ii) the maximum legal
interest rate allowed by the state in which the Building is located. "Prime
Rate" shall mean the prime rate of interest announced publicly from time to
time by Citibank, N.A., New York, New York, or its successor, or should
Citibank, N.A., or its successor, abolish or abandon the practice of publishing
its prime rate at any time during the term of this Lease, then Landlord shall
designate a comparable reference rate which shall be deemed to be the Prime
Rate hereunder.
SECTION 8.03 HOLDING OVER.
(A) If Tenant remains in possession of the Premises after the expiration or
other termination of the Term, then, at Landlord's option, Tenant shall be
deemed to be occupying the Premises as a tenant at sufferance only, at a
monthly rental equal to the greater of (i) one and one-half (1.5) times the
monthly Base Rent that Landlord is then charging new tenants for space in the
Building or (ii) one and one-half (1.5) times the Base Rent payable hereunder
during the last month of the Term. Tenant shall also pay all Additional Rent
payable under this Lease, prorated for each month during which Tenant remains
in possession. Such tenancy at sufferance may be terminated by Landlord or
Tenant effective as of the last day of any calendar month by delivery to the
other of notice of such termination prior to the first day of such calendar
month. Tenant shall defend, indemnify and hold Landlord harmless from and
against any and all claims, losses and liabilities for damages resulting from
failure to surrender possession upon the expiration of the Term or sooner
termination of this Lease, including, without limitation, any claims made by
any succeeding tenant, and such obligations shall survive the expiration of the
Term or sooner termination of this Lease. To avoid any doubt, the provisions
of the immediately preceding sentence in this Section 8.03(A) shall be
applicable in the event that Tenant remains in possession of the Premises after
the expiration of the 60-day extension of the Term, if applicable, pursuant to
Section 8.03(B) below.
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(B) Provided that Tenant shall not have exercised the Renewal Option (as
defined in Section 2 of EXHIBIT F annexed hereto), Tenant shall have the right
to extend (the "Extension Option") the initial Term of this Lease for a period
of sixty (60) days (the "Extension Period"), commencing on the day following
the Expiration Date and ending on the date which is sixty (60) days after the
Expiration Date, subject to and upon the terms and conditions of this Section
8.03(B). Tenant shall exercise the extension option by delivering written
notice of such election to Landlord at least one hundred eighty days (180)
prior to the Expiration Date; such notice, if given, shall be irrevocable. The
extension of the Term shall be upon the same terms and conditions of this
Lease, except (i) the monthly Base Rent shall be equal to one and one-half
(1.5) times the Base Rent payable hereunder during the month in which the
Expiration Date falls, (ii) Tenant shall have no option to extend the Term of
this Lease beyond the expiration of such Extension Period, (iii) the leasehold
improvements will be provided in their then-existing condition (on an "as is"
basis in the broadest sense of the term) at the time the Extension Period
commences, and (iv) there shall not be any rent abatement period and Tenant
shall not be entitled to cash payment or allowance of any nature or amount
whatsoever. Tenant shall also pay all Additional Rent payable under this
Lease, prorated for the 60-day Extension Period. Tenant shall not have the
right to assign the Extension Option to any sublessee, nor may any such
sublessee exercise or enjoy the benefit of such extension right. Tenant shall
defend, indemnify and hold Landlord harmless from and against any and all
claims, losses and liabilities for damages resulting from failure to surrender
possession upon the expiration of the Extension Period, including, without
limitation, any claims made by any succeeding tenant, and such obligations
shall survive the expiration of the Term or sooner termination of this Lease.
SECTION 8.04 NOTICES.
(A) Any and all notices required or which either party herein may desire to
give to the other (each, a "Notice") shall be made in writing and shall be
given by certified or registered mail, postage prepaid, return receipt
requested, or marked for overnight delivery by a nationally recognized
overnight courier, such as Federal Express or Airborne Express, and shall be
deemed to be given on the third (3rd) business day after the date of posting in
a United States Post Office or branch post office or one day after delivery to
the overnight courier, and shall be delivered to Landlord's Notice Address or
Tenant's Notice Address, as appropriate. The parties agree that copies of all
Notices to be delivered to Landlord and Tenant hereunder shall be
simultaneously delivered to the specified addresses for copies set forth in
Section 1.01(G) and Section 1.01(P), respectively, if any. Copies of any
Notices commencing or relating to any action, suit or proceeding against
Landlord arising hereunder shall also be sent to Citibank, N.A., c/o Realty
Investment Advisors, 909 Third Avenue, 30th Floor, New York, New York 10043,
Attention: General Counsel. Either party may, by notice as aforesaid actually
received, designate a different address or addresses for communications
intended for it. Anything contained herein to the contrary notwithstanding,
any bills or invoices for Base Rent, any Additional Rent or any Landlord's
Operating Statement may be given by hand or by mail (which need not be
registered or certified) and, if so given, shall be deemed given on the date of
delivery or refusal, if by hand, or on the third (3rd) business day following
the date of posting, if mailed.
(B) Notices given hereunder by any party may be given by counsel for such
party. The foregoing notice provisions shall in no way prohibit notice from
being given as provided in the rules of civil procedure of the state in which
the Building is located, as the same may be amended from time to time and any
notice so given shall constitute notice herein.
SECTION 8.05 AUTHORITY OF TENANT AND LANDLORD
(A) If Tenant is a corporation, each individual executing this Lease on behalf
of said corporation represents and warrants that he is duly authorized to
execute and deliver this Lease on behalf of said corporation in accordance with
a duly adopted resolution of the Board of Directors or the By-Laws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms.
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(B) If Tenant is a partnership, joint venture, or other unincorporated
association, each individual executing this Lease on behalf of said
partnership, joint venture or unincorporated association represents and
warrants that he is duly authorized to execute and deliver this Lease on behalf
of said partnership, joint venture or unincorporated association, and that this
Lease is binding upon said partnership, joint venture or unincorporated
association in accordance with its terms. Tenant shall, within thirty (30)
days after the execution of this Lease, deliver to Landlord a document to that
effect.
(C) If Landlord is a corporation, each individual executing this Lease on
behalf of said corporation represents and warrants that he is duly authorized
to execute and deliver this Lease on behalf of said corporation in accordance
with a duly adopted resolution of the Board of Directors or the By-Laws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms. In addition, Landlord shall, within thirty (30) days after the
execution of this Lease, deliver to Tenant evidence reasonably satisfactory to
Tenant of such authorization of the execution and delivery of this Lease.
SECTION 8.06 FINANCIAL STATEMENTS. Tenant shall furnish to Landlord the same
quarterly and annual financial statements it regularly delivers to its
shareholders.
SECTION 8.07 AUTHORITIES FOR ACTION. Landlord may act through its managing
agent for the Building or through any other person who may from time to time be
designated by Landlord in writing. Tenant shall designate in writing one or
more persons to act on its behalf and may from time to time change such
designation by written notice to Landlord. In the absence of any such
designation, the person or persons executing this Lease on behalf of Tenant
shall be deemed to be authorized to act on behalf of Tenant in any matter
provided for herein.
SECTION 8.08 BROKERAGE. Tenant represents and warrants that it has dealt only
with Broker and/or with Landlord and its direct employees, and no other broker
or agent, in connection with the negotiation or execution of this Lease.
Tenant agrees to indemnify and hold Landlord harmless from and against any and
all damage, loss, cost or expense including, without limitation, all attorneys'
fees and disbursements incurred by reason of any claim of or liability to any
other broker or other person for commissions or other compensation or charges
with respect to the negotiation, execution and delivery of this Lease, and such
obligations shall survive the expiration or sooner termination of this Lease.
Landlord represents and warrants to Tenant that, except with respect to Koll
Management Services, Inc., no broker, agent, commission salesperson, or other
person has represented Landlord in the negotiations for and procurement of this
Lease. Landlord agrees to indemnify and hold Tenant harmless from all loss,
cost and damage (including reasonable attorneys' fees and court costs) suffered
or incurred by Tenant as a result of a breach by Landlord of the representation
and warranty contained in the immediately preceding sentence or as a result of
Landlord's failure to pay commissions, fees or compensation due to any broker
who represented Landlord, whether or not disclosed.
SECTION 8.09 DEFINITION OF LANDLORD. The term "Landlord" as used in this
Lease shall mean only the owner of the Building, or the tenant under a Superior
Lease, at the time in question. In the event of any transfer of title to or
lease of the Building, the transferor shall be entirely freed and relieved of
all covenants and obligations of Landlord hereunder (whether express or
implied) without further agreement between the parties or their successors in
interest and Tenant shall look solely to the successor in interest of the
transferor as Landlord under this Lease. This Lease shall not be affected by
such transfer or lease, and Tenant agrees to attorn to the transferee or
assignee, such attornment to be effective and self-operative without the
execution of any further instrument by the parties to this Lease.
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SECTION 8.10 ENTIRE AGREEMENT.
(A) Tenant acknowledges and agrees that it has not relied upon any statements,
representations, agreements or warranties except those expressed in this Lease,
and that this Lease contains the entire agreement of the parties. No amendment
or modification of this Lease shall be binding or valid unless expressed in
writing and executed and delivered by Landlord and Tenant in the same manner as
the execution of this Lease.
(B) The submission of this document for examination and review does not
constitute an option, an offer to lease space, or an agreement to lease space.
This document shall have no binding effect on the parties hereto unless and
until executed and delivered by both Landlord and Tenant and will be effective
only upon Landlord's execution and delivery of same.
SECTION 8.11 FORCE MAJEURE. Any obligation of Landlord which is delayed or
not performed due to Acts of God, strike, riot, shortages of labor or
materials, war (whether declared or undeclared), governmental laws, regulations
or restrictions, governmental action, or lack thereof, or any other causes of
any kind whatsoever which are beyond Landlord's reasonable control, shall not
constitute a default hereunder and shall be performed within a reasonable time
after the end of such cause for delay or nonperformance. Any obligation of
Tenant, other than Tenant's obligation to pay Base Rent, Tenant's Operating
Payment, Additional Rent and all other charges and sums payable by Tenant
hereunder, which is delayed or not performed due to Acts of God, strike, riot,
shortages of labor or materials, war (whether declared or undeclared),
governmental laws, regulations or restrictions, governmental action, or lack
thereof, or any other causes of any kind whatsoever which are beyond Tenant's
reasonable control, shall not constitute a default hereunder and shall be
performed within a reasonable time after the end of such cause for delay or
nonperformance. Notwithstanding anything contained in the preceding sentence
to the contrary, in no event shall any such causes cause a postponement or
delay of the Commencement Date.
SECTION 8.12 SEVERABILITY. If any term or provision of this Lease or the
application thereof to any person or circumstances shall, to any extent, be
illegal, invalid or unenforceable, the remainder of this Lease, or the
application of such term or provision to persons or circumstances other than
those to which it is held invalid or unenforceable, shall not be affected
thereby, and all other terms and provisions of this Lease shall be valid and
enforced to the fullest extent permitted by law.
SECTION 8.13 NO SETOFF. This Lease shall be construed as though the covenants
herein between Landlord and Tenant are independent and, except as otherwise
expressly and specifically set forth in this Lease, Tenant shall not be
entitled to any setoff, offset, abatement or deduction of rent or other amounts
due Landlord hereunder if Landlord fails to perform its obligations hereunder;
provided, however, the foregoing shall in no way impair the right of Tenant to
commence a separate action against Landlord for any violation by Landlord of
the provisions hereof or to which Tenant has not waived any claim pursuant to
the provisions of this Lease so long as notice is first given to Landlord and
any holder of a Mortgage and/or lessor under a Superior Lease, and a reasonable
opportunity is granted to Landlord and such holder and/or lessor to correct
such violation. In no event shall Landlord, any holder of a Mortgage and/or
lessor under a Superior Lease be responsible for any consequential damages
incurred by Tenant, including, without limitation, lost profits or interruption
of business, as a result of any default by Landlord.
SECTION 8.14 RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall
create any relationship between the parties hereto other than that of Landlord
and Tenant, and it is acknowledged and agreed that Landlord shall not be deemed
to be a partner of Tenant in the conduct of its business, or a joint venturer
or a member of a joint or common enterprise with Tenant.
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SECTION 8.15 NAME OF BUILDING. As of the date of this Lease, the official
U.S. Postal address of the Office Building is 5660 New Northside Drive. Upon
notice to Tenant, Landlord shall have the right to designate, or to change, the
name or numbers of the Building without liability to Tenant; provided, however,
so long as the Tenant named herein occupies and does business from at least
65,637 rentable square feet of office space in the Office Building and so long
as no Event of Default has occurred under this Lease and remains uncured beyond
any applicable notice and grace or cure period, the official U.S. Postal
address of the Building shall not be changed to include any name of any person
or entity unless approved by Tenant in its sole and absolute discretion. In
addition, so long as the Tenant named herein occupies and does business from at
least 65,637 rentable square feet of office space in the Office Building and so
long as no Event of Default has occurred under this Lease and remains uncured
beyond any applicable notice and grace or cure period, Tenant may incorporate
as its address on its letterhead, return addresses, and other business
stationery, forms and documentation, the name "FFMC Building" or "Western Union
Building"; provided, however, nothing contained herein shall be deemed to
require Landlord to name or refer to the Office Building as the "FFMC Building"
or "Western Union Building".
SECTION 8.16 SUCCESSORS BOUND. Except as otherwise specifically provided
herein, the terms, covenants and conditions contained in this Lease shall bind
and inure to the benefit of the respective heirs, successors, executors,
administrators and assigns of each of the parties hereto.
SECTION 8.17 INTERPRETATION.
(A) Whenever in this Lease any words of obligation or duty are used, such words
or expressions shall have the same force and effect as though made in the form
of a covenant.
(B) Words of any gender used in this Lease shall be deemed to include any other
gender, and words in the singular shall be deemed to include the plural, when
the context requires.
(C) All pronouns and any variances thereof shall be deemed to refer to the
neuter, masculine, feminine, singular or plural, when the context requires.
(D) No remedy or election given pursuant to any provision in this Lease shall
be deemed exclusive unless so indicated, but each shall, wherever possible, be
cumulative with all other remedies at law or in equity as otherwise
specifically provided herein.
(E) If and to the extent that, any of the provisions of any amendment,
modification or rider (it being agreed that the Rules and Regulations appended
to this Lease as EXHIBIT D are not a "rider") to this Lease conflict or are
otherwise inconsistent with any of the preceding provisions of this Lease, or
of the Rules and Regulations appended to this Lease as EXHIBIT D, whether or
not such inconsistency is expressly noted in such amendment, modification or
rider, the provisions of such amendment, modification or rider shall prevail.
In case of any inconsistency between this Lease and the Rules and Regulations,
such Rules and Regulations shall be deemed to be waived with respect to Tenant
to the extent of such inconsistency.
(F) The parties mutually agree that the headings and captions contained in this
Lease are inserted for convenience of reference only, and are not to be deemed
part of or to be used in construing this Lease. The content of each and every
exhibit which is referenced in this Lease is incorporated into this Lease as
fully as if set forth in the body of this Lease.
(G) This Lease shall be construed in accordance with the laws of the state in
which the Building is located. Unless herein waived, Landlord and Tenant
acknowledge that all of the applicable statutes of such state are superimposed
on the rights, duties and obligations of Landlord and Tenant hereunder.
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(H) Except as expressly contained herein, (i) neither Landlord nor Landlord's
agent or attorneys have made representations, warranties or promises with
respect to the Premises, the Building or this Lease; (ii) Tenant has inspected
the Premises and agrees to take same in its "as-is" condition as of the date of
this Lease; and (iii) Landlord shall have no obligation to do any work in and
to the Premises in order to prepare the Premises for occupancy and use by
Tenant.
(I) Landlord and Tenant each acknowledge and warrant that each has been
represented by independent counsel and has executed this Lease after being
fully advised by said counsel as to its effect and significance. This Lease is
the result of negotiations between the parties and their respective attorneys
and shall be construed in an even and fair manner, regardless of the party who
drafted this Lease, or any provision thereof.
(J) In all instances where Tenant is required by the terms and provisions of
this Lease to pay any sum of money or to do any act at a particular indicated
time or within any indicated period, it is understood and agreed that time is
of the essence.
(K) Whenever in this Lease, (i) Tenant has the right or privilege of giving its
approval or consent, making a judgment, determination or estimate (including
without limitation, estimates of monetary amounts), exercising any option or
election, determining Landlord's conformity to any standard, or otherwise
making a decision or taking action or inaction affecting the rights of Landlord
or Tenant under this Lease, and (ii) Landlord has the right or privilege of
giving its approval or consent, making a judgment, determination or estimate
(including without limitation, estimates of monetary amounts), exercising any
option or election, determining Tenant's conformity to any standard, or
otherwise making a decision or taking action or inaction affecting the rights
of Landlord or Tenant under this Lease and such provision in this Lease
requires that such approvals, consents, judgments, elections and decisions on
the part of Landlord shall not be unreasonably withheld, delayed or
conditioned, it is the intent of Landlord and Tenant that all such approvals,
consents, judgments, elections and decisions shall be governed by standards of
"commercial reasonableness", with due regard to any other factors, standards
and/or limitations otherwise expressed herein with respect to the subject
matter and/or the giving or withholding of any such consent or approval. The
lease transaction evidenced hereby is a commercial transaction. The parties
hereto intend that the reasonableness standard to be implemented in any such
case shall be an objective standard, instead of a subjective one, and shall be
based on, e.g., fairness, good faith and commercial reasonableness standards,
which standards the parties hereto expressly acknowledge and agree are
sufficiently certain, ascertainable, definite, commonly acknowledged and
commonly utilized in commercial real estate transactions in the metropolitan
area in which the Premises are located to be enforceable under applicable laws
of the state in which the Premises are located. Such concept of reasonableness
does not include or comprehend arbitrary or capricious reasons or
considerations based on such factors such as race, religion, pecuniary gain or
mere personal preferences. Landlord and Tenant, for and in behalf of
themselves, and of their respective successors and assigns, hereby agree that
neither of them, nor any of their respective successors or assigns, will
hereafter assert or raise, as a defense, the legal theory that any such
agreement not to unreasonably withhold, condition and/or delay any consent or
approval is so uncertain, indefinite and/or vague as to be an unenforceable
contract provision. The agreements set forth in this paragraph are
acknowledged to be material inducements to each party to execute this Lease.
SECTION 8.18 JOINT AND SEVERAL OBLIGATION. If this Lease is executed by more
than one tenant, Tenant's obligations hereunder shall be the joint and several
obligations of each tenant executing this Lease.
SECTION 8.19 EASEMENTS. Landlord shall have the right to grant any Easements
on, over, under and above the Premises for such purposes as Landlord
determines, provided that such Easements will not materially interfere with
Tenant's use of the Premises.
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SECTION 8.20 ENLARGING THE OFFICE BUILDING. Landlord hereby reserves the
right from time to time to enlarge the Building by constructing additions to
the improvements or other buildings on portions of the Property with or without
any new parking or common areas, and by including within the Property other
properties now or hereafter owned by Landlord adjacent to the Property and
constructing on such additional property buildings, parking areas, and common
areas; provided, however, the number of Parking Spaces (including the number of
reserved Parking Spaces which have been granted to Tenant hereunder) and ratio
of covered to uncovered Parking Spaces as set forth in Section 1.01(I) above
shall be maintained throughout the Term. In such event, all new buildings,
properties, common areas and parking areas shall be treated as though they are
part of the Building and, at the election of Landlord, all operating expenses,
utility costs, real property taxes and other pro rata payments required of
Tenant pursuant to the terms of this Lease shall be applicable to such enlarged
area and all improvements now or hereafter located thereon.
SECTION 8.21 LIMITATION OF LANDLORD LIABILITY. In no event shall Landlord be
liable to Tenant for any failure of other tenants in the Building to operate
their businesses, or for any loss or damage that may be occasioned by or
through the acts or omissions of other tenants. Notwithstanding anything to
the contrary provided in this Lease, neither Landlord, nor any general or
limited partner in or of Landlord, whether direct or indirect, nor any direct
or indirect partners in such partners, nor any disclosed or undisclosed
officers, shareholders, principals, directors, employees, partners, servants or
agents of Landlord, nor any of the foregoing, nor any investment adviser or
other holder of any equity interest in Landlord, their successors, assigns,
agents, or any mortgagee in possession shall have any personal liability with
respect to any provisions of this Lease and, if Landlord is in breach or
default with respect to its obligations or otherwise, Tenant shall look for the
satisfaction of Tenant's remedies solely to (a) Landlord's interest in the
Building and (b) the proceeds of hazard insurance and condemnation awards
attributable to Tenant's claim actually received by Landlord from Landlord's
insurance policy or from the condemning authority (net of any costs and
expenses of obtaining said proceeds or awards) and not applied to the
restoration of the Premises as required by the terms of this Lease.
Notwithstanding the foregoing, (i) nothing contained in this Section 8.21 shall
limit or affect any right that Tenant might otherwise have to obtain injunctive
relief or other remedies or actions against Landlord which do not involve the
personal liability of Landlord to respond in monetary damages from assets other
than Landlord's interest in the Building, provided that such injunctive relief
or other remedies or actions do not require Landlord to expend money or forsake
income to comply therewith, in excess of the then present income, less debt
service, taxes and operating expenses, from the Building, and (ii) nothing
contained in this Section 8.21 shall limit or affect any right that Tenant
might otherwise have to obtain remedies or actions against Landlord with
respect solely to any failure of Landlord to comply with its payment
obligations under Section 2.01(C) of this Lease, which do involve the personal
liability of Landlord to respond in monetary damages from assets other than
Landlord's interest in the Building (specifically excluding the assets of any
partners, directors, officers and shareholders of Landlord). In no event shall
Landlord be liable to Tenant nor shall any interest of Landlord in the Building
be subject to execution by Tenant, for any indirect, special or consequential
damages.
SECTION 8.22 SHORT FORM LEASE. Tenant shall not record this Lease or a
memorandum hereof without the prior written consent of Landlord. Upon
Landlord's request, Tenant agrees to execute and acknowledge a short form lease
in recordable form, indicating the names and addresses of Landlord and Tenant,
a description of the Premises, the Term, the Commencement and Expiration Dates,
and options for renewal, if any, but omitting rent and other terms of this
Lease. Further, upon Landlord's request, Tenant agrees to execute and
acknowledge a termination of lease in recordable form to be held by Landlord
until the Expiration Date or sooner termination of the Term.
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SECTION 8.23 ASSIGNMENT OF RENTS, LEASES.
(A) Tenant agrees that Landlord may assign the rents and its interest in this
Lease to the holder of any Mortgage.
(B) Tenant further agrees that, in the event of such an assignment, Tenant
shall give the holder of such Mortgage a copy of any request for performance by
Landlord or any notice of default by Landlord; and, in the event Landlord fails
to cure any such default, Tenant shall give such holder a reasonable period,
commencing on the last day on which Landlord could cure such default, in which
to cure same.
(C) In the event of such an assignment, Tenant shall be permitted to rely on
any written notice or request received from any such Mortgage holder
instructing Tenant to pay all or any portion of the rents due hereunder
directly to such Mortgage holder, and Tenant shall not be required to make any
inquiries into the validity of such notice or any default by Landlord upon
which such notice may be predicated. Upon receipt of any such notice, Tenant
shall be permitted, and is hereby instructed by Landlord, to pay to such
Mortgage holder all rents coming due hereunder, and all amounts paid to such
Mortgage holder shall be credited and offset against the rents otherwise
payable by Tenant to the Landlord under this Lease.
SECTION 8.24 RELOCATION. [THIS SECTION IS INTENTIONALLY OMITTED.]
SECTION 8.25 RULES AND REGULATIONS.
(A) The rules and regulations set forth in EXHIBIT D annexed hereto (the "Rules
and Regulations") have been adopted by Landlord for the safety and convenience
of all tenants and other persons in the Building. Tenant shall at all times
comply with, and shall cause its employees, agents, contractors, licensees and
invitees to comply with, the Rules and Regulations from time to time in effect.
Landlord may, from time to time, amend, delete or add to the Rules and
Regulations, provided that any such modification:
(1) shall not be inconsistent with any other provision of this Lease;
(2) shall be reasonable and have uniform application to substantially
all tenants in the Building; and
(3) shall be effective only upon delivery of a copy thereof to Tenant
at the Premises or posting same in a conspicuous place within the Building.
(B) Landlord shall use reasonable, good faith efforts to secure compliance by
all tenants and other persons with the Rules and Regulations from time to time
in effect, but shall not be liable to Tenant for failure of any person to
comply with such Rules and Regulations. Any failure by Landlord to enforce any
of the Rules and Regulations will not constitute a waiver of same with respect
to Tenant. Landlord reserves the right, in its sole discretion, to waive,
either temporarily or permanently, application of the Rules and Regulations to
any particular tenant in the Building, provided that the Rules and Regulations
will not be enforced against Tenant in a discriminatory manner.
SECTION 8.26 ESTOPPEL CERTIFICATES.
(a) At any time and from time to time upon written request by Landlord,
Tenant hereby agrees to deliver within ten (10) days after request, a
certificate to Landlord or to any present or proposed (a) mortgagee, (b) lessor
under a Superior Lease or (c) purchaser designated by Landlord, in the form
supplied, certifying: (1) that Tenant has accepted the Premises (or, if Tenant
has not done so, that Tenant has not accepted the Premises, and
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specifying the reasons therefor); (2) that this Lease is in full force and
effect and has not been modified (or if modified, setting forth all
modifications), or, if this Lease is not in full force and effect, the
certificate shall so specify the reasons therefor; (3) the Commencement Date,
the Expiration Date and the terms of any extension options of Tenant; (4) the
date to which the Base Rent and any Additional Rent have been paid under this
Lease and the amount thereof then payable; (5) the amount of the Security
Deposit and prepaid rent, if any, being held by Landlord; (6) whether there are
then any existing defaults by Landlord in the performance of its obligations
under this Lease, and, if there are any such defaults, specifying the nature
and extent thereof; (7) that no notice has been received by Tenant of any
default under this Lease which has not been cured, except as to defaults
specified in the certificate; (8) the capacity of the person executing such
certificate, and that such person is duly authorized to execute the same on
behalf of Tenant; (9) whether the right of first refusal set forth in Section 3
of EXHIBIT F annexed hereto is in effect; and (10) any other information
reasonably requested by Landlord, its present or proposed purchaser, the holder
of any Mortgage or lessor under a Superior Lease.
(b) Within ten (10) days after request therefor by Tenant, but in no event
more than two (2) times in any calendar year, Landlord agrees to execute and
deliver to Tenant an estoppel certificate addressed to Tenant and any existing
or proposed assignee of this Lease or sublessee of the Premises, certifying (if
such be the case) that this Lease is unmodified and is in full force and effect
(and if there have been modifications, that the same is in full force and
effect as modified and stating said modifications), stating that Landlord is
not aware of any defaults or events of default by Tenant under this Lease (to
the extent same may be determined at the time in question), or stating those of
which Landlord is aware; and stating the date to which Base Rent, Tenant's
Additional Rent, and other charges have been paid. Such certificate shall also
include such other factual information as may be reasonably required by Tenant
or such existing or proposed assignee or sublessee; provided, however, Landlord
shall not be obligated to execute any such certificate which would have the
effect of amending this Lease, increasing the obligations or liability of
Landlord hereunder, or reducing or limiting the liability or obligations of
Tenant hereunder. The granting of any such certificate by Landlord, even if
addressed to an existing or proposed assignee or sublessee, shall not be deemed
to be a consent by Landlord to any such assignment or subletting.
SECTION 8.27 MORTGAGEE REQUIREMENTS. [THIS SECTION IS INTENTIONALLY OMITTED.]
SECTION 8.28 ATTORNEYS' FEES. In the event of any action or proceeding
brought by Landlord against Tenant under this Lease, Landlord shall be entitled
to recover court costs and the reasonable, actual fees and disbursements of its
attorneys in such action or proceeding (whether at the administrative, trial or
appellate levels). Landlord shall also be entitled to recover reasonable,
actual attorneys' fees and disbursements incurred in connection with a Tenant
default hereunder which does not result in the commencement of any action or
proceeding.
SECTION 8.29 LANDLORD'S FAILURE TO CONSENT. If Tenant shall request
Landlord's consent hereunder and Landlord shall fail or refuse to give such
consent, Tenant shall not be entitled to any damages for the withholding of its
consent, it being intended that Tenant's sole remedy shall be an action for
specific performance or injunction or arbitration (in the manner described in
this Section 8.29, below) and that such remedy shall be available only in those
cases where Landlord has expressly agreed in writing not to unreasonably
withhold its consent or where, as a matter of law, Landlord may not
unreasonably withhold its consent. In those cases where Landlord has expressly
agreed in writing not to unreasonably withhold its consent or where, as a
matter of law, Landlord may not unreasonably withhold its consent, and if
Tenant shall request Landlord's consent hereunder and Landlord shall fail or
refuse to give such consent, and if Tenant reasonably believes in good faith
that Landlord has unreasonably withheld its consent, then, in lieu of
commencing an action for specific performance or injunctive relief, Tenant may
give Landlord written notice of any such dispute within five (5) days after
Tenant becomes aware of the existence of such dispute. If the parties are
unable, after good faith negotiations, to resolve such dispute within five (5)
working days after Landlord's receipt of such notice, the matter shall be
submitted
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to arbitration pursuant to the provisions of this Section. In the event such
dispute is not resolved through negotiation within the aforesaid five (5)
working day period, Landlord and Tenant shall promptly select an independent
member of the American Arbitration Association, and Landlord and Tenant shall
submit such dispute to arbitration by such person. The person selected as
arbitrator shall be a reputable, disinterested party having at least fifteen
(15) years of experience in the businesses of the ownership and the management
of first-class, multi-tenant office projects in the metropolitan Atlanta,
Georgia area. In the event Landlord and Tenant fail to agree upon the
selection of such arbitrator within five (5) working days after the expiration
of such five (5) working day period, either Landlord or Tenant, upon notice to
the other, may request the appointment of the aforesaid independent arbitrator
by the Chief Judge of the Fulton County Superior Court. The arbitration shall
be conducted, to the extent consistent with this Section, in accordance with
the then prevailing rules of the American Arbitration Association (or any
successor association). The arbitrator shall render his or her decision in
writing, and such decision award shall be final, conclusive and binding on the
parties, and counterpart copies thereof shall be delivered to each of the
parties. It is understood and agreed that in rendering such decision, the
arbitrator shall not add to, subtract from, or otherwise modify the provisions
of this Lease, including, without limitation, Tenant shall not be entitled to
any damages and the arbitrator shall not have the right to award Tenant any
damages. Judgment may be had on the decision of the arbitrator so rendered in
any court of competent jurisdiction. The fees and expenses of the arbitrator
under this Section shall be borne by the non-prevailing party. The provisions
of this Section shall survive the expiration or termination of this Lease.
Whenever any consent or approval of Landlord is required or permitted in this
Lease or when any instrument, document or action must be satisfactory to
Landlord, and this Lease does not expressly impose any limitation or condition
upon the discretion of Landlord with respect to any such consent, approval or
review, then no condition or limitation is intended to be, or shall be,
implied, it being intended that, in all such events, the granting or denial of
any such consent or approval or the determination of Landlord's satisfaction
shall be based upon Landlord's exercise of its sole and absolute discretion.
SECTION 8.30 NO WAIVER. The failure of Landlord to exercise its rights in
connection with this Lease or any breach or violation of any term, covenant or
condition herein contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term,
covenant or condition herein contained. The subsequent acceptance of Base Rent
and any Additional Rent hereunder by Landlord shall not be deemed to be a
waiver of any preceding breach by Tenant of any term, covenant or condition of
this Lease other than the failure of Tenant to pay the particular amount of
Base Rent or any Additional Rent so accepted, regardless of Landlord's
knowledge of such preceding breach at the time of acceptance of such monies.
SECTION 8.31 NO MERGER. The voluntary or other surrender of possession of the
Premises by Tenant, or a mutual cancellation of this Lease, shall not result in
a merger of Landlord's estate and Tenant's usufruct interest under this Lease,
and shall, at the option of Landlord, either terminate any or all existing
subleases or subtenancies, or operate as an assignment to Landlord of any or
all of such subleases or subtenancies.
SECTION 8.32 NO LIGHT OR AIR EASEMENT. Any diminution or shutting off of
light or air by any structure which is now or hereafter erected on the Property
or upon property adjacent to the Property shall not affect this Lease or impose
any liability on Landlord.
SECTION 8.33 SPECIAL STIPULATIONS. The special stipulations attached hereto
as EXHIBIT F are hereby incorporated herein by this reference as though fully
set forth. To the extent the special stipulations conflict with or are
inconsistent with the foregoing provisions of this Lease or any exhibit to this
Lease, the special stipulations shall control.
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IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this
Lease as of the day and year first above written.
TENANT:
FIRST FINANCIAL MANAGEMENT CORPORATION,
a Georgia corporation
By: Stephen D. Kane
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Name: Stephen D. Kane
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Title: Senior Executive Vice President & Chief Administrative Officer
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Federal Tax I.D. Number or
Social Security Number: 58-1107864
-----------------
Date: March 8, 1995
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[Signatures Continue on Following Page]
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[Signatures Continued from Preceding Page]
LANDLORD:
WEPREC POWERS POINTE CORPORATION
By: Michael J. Clerkin
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Name: Michael J. Clerkin
-----------------------------------------------------------------
Title: Vice President
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Date: March 10, 1995
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46
<PAGE> 54
EXHIBIT F
SPECIAL STIPULATIONS
1. CONDITIONAL PARTIAL ABATEMENT OF BASE RENT. Subject to the
provisions of Section 7.02(E) of this Lease, and provided Tenant is not in
default under this Lease beyond any applicable notice and cure or grace period,
the payment of Base Rent shall abate during the three (3) month period
beginning September 1, 1995 and ending November 30, 1995. Except for such
conditional partial abatement of Base Rent, no other rent shall abate during
such period.
2. RENEWAL OPTION.
(a) As long as Tenant is not in default in the performance of its
covenants under this Lease, and provided that at the end of the initial term of
the Lease the Premises contain at least 65,637 rentable square feet of office
space, Tenant is hereby granted the option to renew (the "Renewal Option") the
Term of this Lease for a period of five (5) additional years (the "Renewal
Term"). Tenant shall exercise the Renewal Option by delivering written notice
of such election to Landlord at least twelve (12) months prior to the
expiration of the initial Term of this Lease. The renewal of this Lease shall
be upon the same terms and conditions of this Lease, except (i) the Base Rent
during the Renewal Term shall be calculated based on ninety-five percent (95%)
of the prevailing Market Base Rent Rate (defined below) at the time the Renewal
Term commences, (ii) Tenant shall have no option to renew this Lease beyond the
expiration of the Renewal Term, (iii) Tenant shall not have the right to assign
its renewal rights to any sublessee of the Premises or assignee of the Lease
(except to a permitted assignee of this Lease, as defined in Section 2(d)
below), nor may any such sublessee or assignee exercise or enjoy the benefit of
such renewal rights, (iv) the leasehold improvements will be provided in their
then-existing condition (on an "as is" basis in the broadest sense of the term)
at the time the Renewal Term commences, and (v) there shall not be any rent
abatement period and Tenant shall not be entitled to cash payment or allowance
of any nature or amount whatsoever. Notwithstanding the foregoing, Tenant
shall have no right to exercise such option to renew, and Landlord shall have
no obligation to renew this Lease, unless (A) this Lease shall be in full force
and effect upon the date of the exercise of the Renewal Option and the date of
the expiration of the original Term, and (B) on the date of the exercise of the
Renewal Option and the date of the expiration of the original Term there shall
exist no default on the part of Tenant under this Lease beyond any applicable
notice and cure or grace period. If Tenant shall fail to exercise the Renewal
Option within the time permitted or conditions (A) and (B) set forth above are
not entirely satisfied, the Renewal Option shall automatically terminate, this
Lease shall expire at the expiration of the original Term and Tenant shall have
no further right thereafter to renew this Lease or to acquire any interest
whatsoever in the Premises. If Tenant shall remain in possession of the
Premises after the expiration of the original Term without there having been
executed between Landlord and Tenant an amendment to this Lease as contemplated
by the terms of this Section, then Tenant shall be a Tenant holding over as
provided in this Lease.
(b) Whenever used in this Lease, the term "Market Base Rent Rate" shall
mean Landlord's reasonable determination of the annual gross Base Rent rate per
rentable square foot (exclusive of expense pass-through additions) then being
charged in first-class office buildings located in northwest suburban Atlanta,
Georgia, for space comparable to the space for which the Market Base Rent Rate
is being determined (taking into consideration use, location and/or floor level
within the applicable building, the definition of rentable square feet,
leasehold improvements provided, remodeling credits or allowances granted,
quality, age and location of the applicable building, rent concessions [such as
abatements or lease assumptions], the provision of free or paid unassigned
parking, the time the particular rate under consideration became effective,
size of tenant, relative operating expenses, relative services provided, etc.).
It is agreed that bona fide written offers to lease comparable space located
elsewhere in the Building from unaffiliated third parties (at arms length) may
be used by Landlord as an indication of Market Base Rent Rate.
EXHIBIT F
PAGE 1 OF 15
<PAGE> 55
(c) In the event Tenant disagrees with Landlord's determination of such
Market Base Rent Rate, then within no more than fifteen (15) days after Tenant
receives Landlord's written determination of such rate Tenant shall give
Landlord notice of Tenant's disagreement and the parties shall, therefore,
negotiate in good faith in an attempt to agree on a Market Base Rent Rate. In
the event that Landlord and Tenant are unable to establish through good faith
negotiations a Market Base Rent Rate within sixty (60) days after Tenant first
receives Landlord's written determination of such rate, Tenant shall give
Landlord notice of its desire to arbitrate such rate, which notice shall be
accompanied by the identity of an arbitrator appointed by Tenant. Thereafter,
Landlord shall have fifteen (15) days in which to appoint its arbitrator, and
within fifteen (15) days after the appointment of Landlord's arbitrator the two
arbitrators theretofore appointed shall appoint a third arbitrator. If the two
arbitrators cannot agree on the appointment of a third arbitrator within
fifteen (15) days, then either party shall have the right to apply to the
presiding judge of the Superior Court of Fulton County, Georgia for the
selection of the third arbitrator. After the appointment of such third
arbitrator, the arbitration board thus elected shall have thirty (30) days in
which to reach a majority agreement on the Market Base Rent Rate as defined
above, which determination shall be final and binding upon the parties hereto.
If the arbitrators are unable to reach a majority agreement within such thirty
(30) day period, then each of the arbitrators shall render his or her separate
appraisal within such stipulated time, and the three appraisals shall be
averaged in order to establish such rate; provided, however, that if the low
appraisal and/or the high appraisal are more than ten percent (10%) lower
and/or higher than the middle appraisal, the low appraisal and/or the higher
appraisal shall be disregarded. If only one appraisal is disregarded, the
remaining two appraisals shall be averaged in order to establish such rate. If
both the low appraisal and the high appraisal are disregarded, the middle
appraisal shall establish such rate. After the Market Base Rent Rate has been
established, the arbitrators shall immediately notify the parties in writing
and Tenant shall have a period of fifteen (15) days after receipt of such
notice from the arbitrators to irrevocably rescind its exercise of the Renewal
Option granted herein by delivering written notice of such recision to
Landlord. If Tenant fails to deliver a notice of recision to Landlord within
said 15-day period, Tenant shall be deemed conclusively to have elected to
renew this Lease for the Renewal Term at the Market Base Rent Rate established
by the arbitrators. Each arbitrator appointed hereunder shall be a member of
the American Institute of Real Estate Appraisers (MAI) with at least five (5)
years of full-time commercial appraisal experience in the metropolitan Atlanta,
Georgia area, and no such arbitrator shall have any other existing contractual
relationship with either party hereto. Landlord and Tenant shall pay the fees
of their respectively appointed arbitrators and the fee of the third arbitrator
shall be shared equally by Landlord and Tenant. In the event Base Rent is to
be paid in accordance with the Market Base Rent Rate and such Market Base Rent
Rate is then subject to dispute or arbitration as provided herein, Tenant shall
nevertheless pay an amount of Base Rent equal to the Market Base Rent Rate as
determined by Landlord during the pendency of any such dispute or arbitration;
provided that Landlord shall promptly refund any amounts subsequently
determined to have been overpaid by Tenant.
(d) Tenant shall not have the right to assign the Renewal Option to any
sublessee of the Premises or any portion thereof or to any assignee of this
Lease, except to a permitted assignee, nor may any such sublessee or assignee
(except a permitted assignee) exercise or enjoy the benefit of such right of
first refusal. The term "permitted assignee" as used in this Section 2 shall
mean and refer to (i) an assignee of this Lease the assignment to whom is
permitted under Section 13(b) of EXHIBIT F of this Lease, and (ii) an assignee
of this Lease consented to by Landlord under Section 4.02 of this Lease or
under Section 13(a) of EXHIBIT F of this Lease.
EXHIBIT F
PAGE 2 OF 15
<PAGE> 56
3. RIGHT OF FIRST REFUSAL.
(a) Landlord and Tenant acknowledge that there is currently
approximately fifteen thousand eight hundred six (15,806) rentable square feet
of office space on the eleventh (11th) floor of the Office Building
(hereinafter the "First Refusal Space"), as demarcated on EXHIBIT A-3 to this
Lease as the "First Refusal Space". Landlord acknowledges that Tenant may wish
to expand the Premises and lease a portion or portions of the First Refusal
Space. Tenant, however, acknowledges that Landlord must be in a position to
lease the First Refusal Space to other tenants. In order to accommodate
Tenant's desires regarding the First Refusal Space and Landlord's requirement
for future leasing of the First Refusal Space, Landlord shall grant to Tenant
the right of first refusal to lease the First Refusal Space in accordance with
the terms and conditions contained herein. In the event Landlord obtains a
written offer from a prospective tenant to lease all or any portion of the
First Refusal Space and Landlord desires to accept such offer, then Landlord
shall submit to Tenant in writing the lease term, base rental rate (and any
free rent), and tenant improvement allowance of such proposed offer to lease
(hereinafter referred to as the "Offer"). Prior to the date which is five
hundred forty-five (545) days after the Commencement Date, Tenant shall have
the right and option to lease the First Refusal Space covered by the Offer upon
the same terms and conditions as this Lease and for a term expiring as of the
Expiration Date of this Lease; provided, however, there shall not be any rent
abatement period, and provided, further, Landlord's Contribution shall be
reduced to an amount equal to the product of (i) Twenty Dollars ($20.00), and
(ii) the number of rentable square feet of the First Refusal Space covered by
the Offer, and (iii) a fraction, the numerator of which shall be the number of
months from the commencement date (described below) for the First Refusal Space
covered by the Offer to the Expiration Date and the denominator of which shall
be one hundred twenty (120). From and after the date which is five hundred
forty-five (545) days after the Commencement Date, Tenant shall have the right
and option to lease the First Refusal Space covered by the Offer upon the same
monetary terms and conditions, including any offer of free rent and leasehold
improvement allowances, as embodied in the copy of such Offer submitted to
Tenant by Landlord, but upon the same terms and conditions as this Lease and
for a term expiring as of the Expiration Date of this Lease; provided, however,
in the event the remaining months in the Term are less than the number of
months in the term embodied in the Offer, then such free rent and leasehold
improvement allowances shall be reduced to the amounts that bear the same ratio
to the free rent and leasehold improvement allowances embodied in the Offer as
the remaining months in the Term bears to the number of months of the term
embodied in the Offer. If Tenant shall elect to exercise its right to lease
the First Refusal Space covered by the Offer, written notice of such election
shall be given to Landlord within five (5) days from the time that Tenant first
received a copy of the Offer from Landlord (hereinafter referred to as the
"Offer Period"), which notice by Tenant shall specify a date that Tenant shall
lease the space covered by the Offer, which commencement date (which date shall
also be the rent start date for such space) shall not be earlier than ten (10)
days after the giving of notice thereof nor later than the commencement date
set forth in the Offer.
(b) Upon the exercise of its right to lease the First Refusal Space
covered by the Offer, Landlord and Tenant shall enter into a written agreement
modifying and supplementing this Lease and specifying that the First Refusal
Space is a part of the Premises and under this Lease and containing other
appropriate terms and provisions relating to the addition of such area to this
Lease, including, without limitation, increasing, adjusting or augmenting rent
as a result of the addition of such space.
(c) If a right to lease pursuant to this Section shall not be exercised
within the Offer Period or shall be waived (no notice is deemed to be a waiver
of such right), then Landlord shall have the right to offer such space to the
prospective tenant, and if such transaction is consummated, Tenant's rights
under this Section shall automatically terminate and be of no further force or
effect.
EXHIBIT F
PAGE 3 OF 15
<PAGE> 57
(d) Notwithstanding the foregoing right of first refusal and any other
provision of this Lease to the contrary, such right of first refusal is
conditioned upon this Lease being in full force and effect and there being no
default under this Lease beyond any applicable notice and cure or grace period.
If Tenant fails to exercise the foregoing right of first refusal as provided in
and in strict accordance with the terms of this Section, or if the conditions
in this subsection (d) are not entirely satisfied, the foregoing right of first
refusal shall automatically terminate and be of no further force or effect, or
if exercised, shall be null and void.
(e) Tenant shall not have the right to assign its right of first refusal
to any sublessee of the Premises or any portion thereof or to any assignee of
this Lease, except to a permitted assignee of this Lease, nor may any such
sublessee or assignee (except a permitted assignee) exercise or enjoy the
benefit of such right of first refusal. The term "permitted assignee" as used
in the preceding sentence shall mean and refer to (i) an assignee of this Lease
the assignment to whom is permitted under Section 13(b) of EXHIBIT F of this
Lease, and (ii) an assignee of this Lease consented to by Landlord under
Section 4.02 of this Lease or under Section 13(a) of EXHIBIT F of this Lease.
4. SATELLITE DISH/ANTENNA. During the Term, Landlord shall grant to Tenant a
non-exclusive license to install, maintain, repair, replace and operate two (2)
(or if Tenant's proportionate share of the available portion of the roof of the
Office Building, as determined by Landlord in its sole discretion, supports a
greater number, then such greater number) satellite dishes and/or antennas
(together with any related wires, conduits and other equipment necessary or
desirable for the proper operation of such satellite dishes and/or antennas,
collectively the "Satellite") in a location(s) on the roof of the Office
Building designated by Landlord and reasonably acceptable to Tenant (the
"Equipment Space Area") upon and subject to all of the terms and conditions set
forth herein. The Satellite shall be used only by Tenant solely to transmit
and receive aerial transmissions in connection with the business of Tenant;
Tenant shall not have the right to use or allow any other person or entity to
use the Satellite for a fee. The rights under this Section 4 are personal to
the Tenant named herein and are not assignable. Subject to the Rules and
Regulations, Tenant, its employees, agents and contractors shall have the
right, upon prior reasonable notice to Landlord's managing agent, to enter or
leave the roof for purposes of accessing the Satellite. Tenant shall pay to
Landlord, as additional rental, on a monthly basis, the actual costs incurred
by Landlord in furnishing electric power for the operation of the Satellite.
Landlord shall have the right to install, at Tenant's expense, a meter to
monitor Tenant's use of electricity furnished by Landlord in the operation of
the Satellite. The Satellite installed shall be and remain the property of
Tenant, and Tenant shall, prior to the expiration or termination of this
license, remove the Satellite (including all installation and anchoring
hardware) installed in the Equipment Space Area and elsewhere in the Office
Building, and surrender the Equipment Space Area in substantially the same
condition existing prior to the installation of the Satellite. Tenant shall be
liable for, and shall promptly reimburse Landlord for, the cost of repairing
all damage done to the Equipment Space Area or to the Office Building by such
removal, including filling and sealing any holes or cavities left by the
removal of installation or anchoring hardware. Tenant shall, at its sole cost
and expense, obtain all governmental permits or licenses required for the
installation, repair, maintenance, operation and removal of the Satellite and
shall provide Landlord with evidence thereof. Landlord agrees to fully
cooperate with Tenant in obtaining all such permits and authorization, at no
cost or expense to Landlord. Tenant's installation, repair, maintenance,
operation and removal of the Satellite shall be subject to and performed in
accordance with the terms and conditions of this Lease and all applicable Legal
Requirements (defined below) in effect from time to time. Tenant shall, at its
sole cost and expense, and at its sole risk, install the Satellite in a good
and workmanlike manner, and in compliance with all applicable Legal
Requirements, including, but not limited to, all building, electric,
communications, and safety codes, ordinances, standards, regulations and
requirements of the Federal Communications Commission and any other
Governmental Authority (defined below).
EXHIBIT F
PAGE 4 OF 15
<PAGE> 58
Tenant shall conduct the installation and maintenance of the Satellite in a
good and workmanlike manner so as to not interfere with any other tenant or
occupant of the Building. The operation of the Satellite shall not disturb or
interfere with the systems of the Building or with any other tenant or occupant
of the Building. Landlord shall not erect or permit the erection of any other
antenna or satellite dish at the Building so as to unreasonably interfere with
the operation of the Satellite. Tenant shall deliver to Landlord Tenant's
plans and specifications for the installation of the Satellite and for the
aesthetic screening of same for review and approval by Landlord not less than
thirty (30) days prior to commencing installation of the Satellite. The
Satellite shall be installed substantially in accordance with the plans and
specifications approved by Landlord, and the installation shall be performed by
contractors approved by Landlord, which approval shall not be unreasonably
withheld or delayed. In no event shall the installation or operation of the
Satellite damage the Office Building or existing structure on the Office
Building, or interfere with the maintenance of the Office Building, any system
currently serving the Office Building, any radio or telecommunications
equipment currently being operated from or within the Office Building or in any
manner invalidate any existing warranties in place on the Office Building or on
any improvements to the Office Building. Landlord shall not be liable to
Tenant for any stoppages or shortages of electrical power furnished to the
Satellite or to the Equipment Space Area because of any act, omission or
requirement of the public utility serving the Office Building, or the act or
omission of any other tenant, licensee or contractor of the Office Building, or
for any other cause beyond the control of Landlord, and Tenant shall not be
entitled to any rental abatement for any such stoppage or shortage of electric
power. Tenant shall operate the Satellite in strict compliance with Landlord's
rules and regulations, now or hereafter promulgated, and all applicable Legal
Requirements. Tenant shall, at Tenant's expense, be solely responsible
throughout the Term for maintaining, servicing and repairing the Satellite and
for repairing any damage to the Office Building or any systems or equipment
serving the Office Building caused by the Satellite or by any act, negligence
or misconduct of Tenant, Tenant's employees, agents or contractors, while
installing, using, servicing, repairing, maintaining or removing the Satellite.
Tenant shall protect, defend, indemnify and save Landlord and its trustees,
agents, employees, other tenants, licensees and invitees harmless from and
against any and all obligations, costs (including costs of litigation and
attorneys' fees), expenses, claims, damages and liabilities of any nature
whatsoever arising out of or in connection with the existence, installation,
construction, operation, repair, maintenance and/or removal of the Satellite.
As used herein, the term "Governmental Authority" shall mean the United States,
the state, county, city and political subdivision in which the Office Building
is located or which exercises jurisdiction over the Building, and any agency,
department, commission, board, bureau or instrumentality of any them which
exercises jurisdiction over the Office Building, and the term "Legal
Requirements" shall mean any law, statute, ordinance, order, rule, regulation
or requirement of a Governmental Authority.
5. HEALTH CLUB FACILITY. Subject to the Rules and Regulations relating to
the of the Office Building health club facility as Landlord may implement from
time to time, the Office Building health club facility shall be made available
to Tenant and to its employees located at the Premises at no cost to Tenant or
to its employees located at the Premises except in connection with Operating
Expenses and except for the cost of any keys or access cards. Landlord
reserves the right to relocate the health club facility to different space in
the Building at any time and from time to time.
6. INTERRUPTION OF MAJOR SERVICES.
(a) In the event that there is a failure to furnish the water,
plumbing, electricity, elevator or heating or air-conditioning services
Landlord is required to provide as specified in this Lease and Tenant is unable
to operate its business in the Premises or any portion thereof as a result of
the interruption of any such service (a "Service Interruption") for a period of
more than five (5) consecutive business days
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after Landlord or Landlord's managing agent has received written notice from
Tenant of such Service Interruption, Tenant's Base Rent shall abate, based upon
the portion or portions of the Premises affected by such Service Interruption
and the degree of adverse affect of the interruption upon the normal conduct of
Tenant's business at the Premises, until such interruption is remedied;
provided, however, such abatement shall not be applicable if the Service
Interruption shall have been caused by the negligence or willful misconduct of
Tenant, its agents, employees or contractors; and provided, further, Landlord
may prevent or stop any such abatement of Base Rent by providing substantially
the same service by temporary or alternative means at no additional cost to
Tenant until the cause of loss of service can be corrected, and provided
further, abatement under this Section shall be Tenant's sole and exclusive
remedy for loss of service and Tenant shall have no right to terminate this
Lease, except as otherwise expressly and specifically set forth in Section 6(b)
below.
(b) In the event that all or any substantial portion of the Premises
is rendered unfit for the conduct of Tenant's business for more than ninety
(90) consecutive days after written notice to such effect from Tenant to
Landlord or Landlord's managing agent by reason of the cessation of utilities
or all passenger elevator service, which cessation is the result of the
negligence or willful misconduct of Landlord, or its agents, employees or
contractors, Tenant shall have the right, to be exercised by written notice
from Tenant to Landlord given at any time prior to the restoration of such
utilities or at least one passenger elevator, to terminate this Lease,
effective as of the date designated by Tenant in such written notice (which
date shall not be later than sixty (60) days after the date of such notice);
provided, however, that with respect to any such cessation that cannot with
reasonable diligence be cured within such ninety (90) day period, provided that
Landlord shall commence such cure within such ninety (90) day period and shall
diligently prosecute such cure to completion within a reasonable period of time
(but in no event to exceed sixty (60) days), such ninety (90) day period shall
be extended for a reasonable period of time (in no event to exceed an
additional thirty (30) days). Notwithstanding the foregoing provisions of this
Section 6(b), if the subject cessation of utilities or all passenger elevator
service results from a casualty caused by the negligence or willful misconduct
of Landlord, or its agents, employees or contractors, the provisions of Section
6.02 of this Lease shall control restoration and Tenant's right to terminate,
if applicable.
7. PARKING. There shall be no charge to Tenant or its employees for the
Parking Spaces during the Term, including any extensions or renewals thereof,
except in connection with Operating Expenses and except for the cost of any
access cards. All of the Parking Spaces shall be non-reserved; provided,
however, Tenant shall have the right to elect by notice to Landlord to convert
up to fifteen (15) of the Parking Spaces to reserved spaces. All such reserved
spaces shall be located in the area(s) as the parties may mutually agree.
Subject to the provisions of Section 5.03 which gives Landlord the right to
change the parking facilities (and, in connection with any physical changes to
the parking facilities which impact Tenant's reserved parking areas, possibly
change the location of Tenant's reserved parking areas to such substitute
area(s) as the parties may mutually agree), after the location of Tenant's
reserved parking areas shall have been mutually agreed upon by the parties,
Landlord shall not relocate such reserved parking spaces without the consent of
Tenant. Landlord shall use reasonable efforts to prevent any unauthorized
party from parking in any such reserved parking spaces. As of the date of this
Lease, Allstate Insurance Company (together with its successors and assigns,
"Allstate") has ten (10) reserved parking spaces in the parking facilities
which are located in the area(s) shown on EXHIBIT K annexed to this Lease and
made a part hereof (the "Allstate Reserved Parking Spaces"). If during the
Term the rights of Allstate to the Allstate Reserved Parking Spaces or to any
number thereof are terminated (it being acknowledged by Tenant that Landlord is
not obligated to effect any such termination), Landlord shall give Tenant
written notice of the same and Tenant shall have the right of first refusal to
relocate an equal number of Tenant's reserved Parking Spaces (but not increase
the number of Tenant's reserved Parking Spaces) to the area(s) where the
Allstate Reserved Parking Space(s) in question are then available. If Tenant
shall elect to
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exercise its right to relocate its reserved Parking Spaces as aforesaid,
written notice of such election shall be given to Landlord within ten (10) days
after Landlord's notice to Tenant. Upon each exercise of its right to relocate
its reserved Parking Spaces as aforesaid, Landlord and Tenant shall enter into
a written agreement modifying this Lease to reflect the location of Tenant's
reserved Parking Spaces. If a right to relocate its reserved Parking Spaces
pursuant to this Section shall not be exercised within such ten (10) day period
or shall be waived (no notice is deemed to be a waiver of such right with
respect to the available Allstate Reserved Parking Space(s) in question), then
Landlord shall have the right to offer such available Allstate Reserved Parking
Space(s) to any other tenant of the Building and Tenant's rights under this
Section with respect to the available Allstate Reserved Parking Space(s) in
question shall automatically terminate and be of no further force or effect.
The provisions of this Section are subject to the provisions of Section 5.03 of
the Lease.
8. LANDLORD'S AGREEMENT REGARDING HAZARDOUS MATERIALS IN PREMISES ON
COMMENCEMENT DATE. In the event, during the term of this Lease, (i) the
Premises is determined to contain any Hazardous Materials in a manner or
quantity prohibited by federal or State of Georgia laws or regulations, (ii)
the federal government or the State of Georgia requires its removal or
encapsulation during the term of this Lease, (iii) such Hazardous Materials
were in the Premises on the date of the full execution and delivery of this
Lease, and (iv) such Hazardous Materials were not installed by Tenant or its
agents, employees, contractors, subcontractors, suppliers, or invitees,
Landlord agrees that it shall, at its sole cost and expense, cause such
remedial measures to be taken as are necessary either to remove or (if
permitted by applicable law) encapsulate such Hazardous Substances. Landlord
represents to Tenant that, to the best of Landlord's actual knowledge without
investigation, except as may otherwise be disclosed in any environmental
report/audit heretofore delivered to Tenant for its review, (a) the Premises do
not contain any Hazardous Materials in a manner or quantity prohibited by
federal or State of Georgia laws or regulations, and (b) the Building is not in
violation of any applicable laws relating to Hazardous Materials.
9. EXCLUSIONS FROM OPERATING EXPENSES. For purposes of this Lease, and
notwithstanding anything in any other provision of this Lease to the contrary,
"Operating Expenses" shall not include the following (or shall be limited in
the manner specifically set forth below):
(1) the cost of any special work or service performed for any tenant
(including Tenant) at such tenant's cost;
(2) the cost of installing, operating and maintaining any specialty
service, such as an observatory, broadcasting facility, luncheon club,
restaurant, cafeteria, retail store, sundry shop, newsstand, or concession, but
only to the extent such costs exceed those which would normally be expected to
be incurred had such space been general office space;
(3) the cost of correcting defects in construction;
(4) compensation paid to officers and executives of Landlord (but it is
understood that the on-site building manager and other on-site employees below
the grade of building manager may carry a title such as vice president and the
salaries and related benefits of these officers/employees of Landlord would be
allowable Operating Expenses under Article 3 of this Lease);
(5) the cost of any items for which Landlord is reimbursed by insurance,
condemnation or otherwise, except for costs reimbursed pursuant to provisions
similar to Article 3 of this Lease;
(6) the cost of any additions, changes, replacements and other items which
are made in order to prepare for a new tenant's occupancy;
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(7) the cost of repairs incurred by reason of fire or other casualty or by
the exercise of eminent domain;
(8) insurance premiums to the extent Landlord may be directly reimbursed
therefor, except for premiums reimbursed pursuant to provisions similar to
Article 3 of this Lease;
(9) any real estate brokerage commissions or other costs incurred in
procuring tenants or any fee in lieu of such commission;
(10) interest on debt or amortization payments on any mortgage or deed to
secure debt (except to the extent permitted by Article 3 of this Lease or this
Section 9 hereinbelow) and rental under any ground lease or other underlying
lease;
(11) any advertising expenses incurred in connection with the marketing of
any rentable space;
(12) rental payments for base building equipment such as HVAC equipment
and elevators;
(13) any expenses for repairs or maintenance which are covered by
warranties and service contracts, to the extent such maintenance and repairs
are made at no cost to Landlord;
(14) legal expenses arising out of (i) the negotiation or preparation or
termination of leases or other occupancy agreements and any related documents
(including, without limitation, guaranties, surrender agreements, leasing
amendments, and consents to assignment and subletting), (ii) the interpretation
of leases or other occupancy agreements, (iii) the enforcement of the
provisions of any lease or other occupancy agreement affecting the Building,
(iv) any action against a present or former tenant or occupant under a lease or
other occupancy agreement, including without limitation eviction, distraint,
levy and collection actions, and (v) the construction of the improvements on
the Property;
(15) costs of management fees to the extent they exceed comparable fees
incurred in comparable office buildings in the Geographic Area (Tenant agrees
for purposes of this subsection that the management fee which is incurred by
Landlord shall be deemed to be prima facia not in excess of comparable fees
incurred in comparable office buildings in the Geographic Area, and Tenant
shall have the burden to prove the amount of any such fee which is in excess of
comparable fees incurred in comparable office buildings in the metropolitan
Atlanta, Georgia area.);
(16) any costs (including, without limitation, overhead and profit)
representing any amount paid to Landlord, or to any person, firm, or entity
related to Landlord, for services and materials to the extent such amount
exceeds the amount that would be paid for such services or materials at the
then existing market rates to an unrelated person, firm or corporation;
(17) costs and expenses associated with the removal or encapsulation of
asbestos or other Hazardous Materials;
(18) Operating Expenses shall include the cost of all repairs,
alterations, additions, changes, replacements and other items required by any
law imposed after the date of this Lease or any governmental regulation or
other legal requirement imposed after the date of this Lease, including without
limitation structural changes, regardless of whether such costs, when incurred
are classified as capital expenditures; provided, however, to the extent that
any of the foregoing costs should be classified as capital expenditures in
accordance with generally accepted accounting principles, such costs, together
with Interest, shall be amortized over the useful life of the item in question,
but in no event beyond the
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reasonable life of the Building, and, provided, further, Landlord and Tenant
agree that amounts of capital expenditures under this subsection 18 shall be
included in Operating Expenses only after the fifth (5th) anniversary of the
Commencement Date (regardless of whether the capital investment item was
purchased and/or installed before or after such anniversary of the Commencement
Date);
(19) with respect to the cost of acquisition and/or installation of
capital improvement items which are purchased or installed for the purpose of
reducing Maintenance Costs, Operating Expenses shall include only the
amortization, together with Interest, on the costs of acquisition and/or
installation of such capital improvement items in accordance with the terms of
Section 3.04(A)(3)(f) of this Lease (It is understood and agreed that it will
not be necessary for Landlord to demonstrate actual reduction in Maintenance
Costs as a result of the acquisition and/or installation of any such capital
improvement item. All such costs shall be amortized over the reasonable life
of the capital improvement items, with the reasonable life and amortization
schedule being determined in accordance with generally accepted accounting
principles, but in no event to extend beyond the reasonable life of the
Building.);
(20) with respect to cost of acquisition and/or installation of capital
investment items which are purchased and/or installed for the purpose of
improving safety or security, Operating Expenses shall include only the
amortization, together with Interest, of the cost of acquisition and/or
installation of capital investment items which are purchased and/or installed
for the purpose of improving safety or security (All such costs shall be
amortized over the reasonable life of the capital improvement items, with the
reasonable life and amortization schedule being determined in accordance with
generally accepted accounting principles, but in no event to extend beyond the
reasonable life of the Building.); and
(21) the cost of any special work or service performed for any tenant at
such tenant's cost and the amounts by which the cost of any work or service
performed for any tenant (other than Tenant) which shall exceed the greater of
(i) the cost of the standard amount or level of such work or service provided
to tenants of the Building in general, or (ii) the cost of the amount or level
of work or service made available by Landlord to Tenant under this Lease;
(22) any costs, fines or penalties incurred due to violations by Landlord
of any applicable federal, state or local law, code or regulation, to the
extent such costs, fines or penalties exceed the costs which would have been
incurred and included in Operating Expenses if Landlord complied with such
applicable federal, state or local law, code or regulation;
(23) costs in connection with a sale or financing, refinancing or
syndication of the Building or a part thereof, except as specifically permitted
by Article 3 of this Lease;
(24) costs of renovating or otherwise improving or decorating, painting or
redecorating or altering leasable space for tenants or other occupants,
including Tenant, of the Building or made for the purpose of making space in
the Building leasable;
(25) depreciation of the Building or any improvements on the Building
land, except as specifically permitted in Article 3 of this Lease or by this
Section 9;
(26) rental concessions or lease buy-outs granted or made by Landlord;
(27) any compensation paid to clerks, attendants or other persons or
entities in any commercial concessions operated by Landlord;
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(28) estate, inheritance, gift, transfer, net worth, intangibles,
franchise and income taxes of Landlord (but in no event shall this subsection
exclude rent taxes, business license taxes, or any net worth, franchise or
income tax assessment, tax, levy, imposition or charge in lieu of or in
addition to real estate taxes);
(29) any costs of a capital nature except as specifically permitted by
Article 3 of this Lease or by this Section 9 hereinabove.
10. CAP ON CONTROLLABLE OPERATING EXPENSES. For purposes of calculating
Tenant's Additional Rent pursuant to Article 3 of this Lease, Landlord and
Tenant hereby agree that, commencing with the second full calendar year of the
Term, Operating Expenses (except for Uncontrollable Costs, as hereinafter
defined) shall be deemed not to increase by more than six percent (6%) (the
"Operating Expense Cap") from one calendar year to the next calendar year,
regardless of any actual increases in Operating Expenses; provided, however, in
the event that in any calendar year any such increase in Operating Expenses is
in fact greater than the Operating Expense Cap (any such increase in excess of
the Operating Expense Cap being hereinafter collectively referred to as the
"Carryover Percentage"), Landlord shall have the right to add all of the
Carryover Percentage (or such portion thereof as will not produce a total
increase in Operating Expenses in excess of the Operating Expense Cap) to the
increases in Operating Expenses occurring over any of the following years of
the term of this Lease in which such increases in Operating Expenses are less
than the Operating Expense Cap, on a cumulative basis until all such Carryover
Percentages have been used to increase Operating Expenses for purposes of
calculating Tenant's Additional Rental payable pursuant to Article 3 of this
Lease. For example, if the actual increase in Operating Expenses during the
second full calendar year of the Term is eight percent (8%) (thus creating a
Carryover Percentage of two percent (2%), which may be carried forward to
future years by Landlord), and if in the third full calendar year of the Term
the actual increase in the Operating Expenses is four percent (2%), then during
the third full calendar year of the Term the Operating Expenses shall be deemed
to increase by six percent (6%), such six percent (6%) increase arising from
adding the four percent (4%) increase in Operating Expenses which occurred in
the third full calendar year to the two percent (2%) Carryover Percentage from
the second full calendar year. The foregoing provisions of this Section
notwithstanding, Taxes, Insurance, and Utilities (collectively, "Uncontrollable
Costs") shall not be subject to any limitation or cap, and, accordingly, the
total dollar increase in Operating Expenses, and Tenant's Additional Rent
payable pursuant to Article 3 of this Lease, for any and each calendar year
during the term of this Lease shall be calculated without any limitation or cap
on Uncontrollable Costs.
11. TENANT'S RIGHT TO AUDIT OPERATING EXPENSES. Subject to the other terms
and conditions relating to the audit of Landlord's books and records set forth
in Section 3.02 of this Lease, Landlord's books and records pertaining to the
calculation of Operating Expenses for any calendar year during the Term, and
for the calendar year during the Term immediately preceding such calendar year,
may be audited by Tenant or its representatives, at Tenant's expense, at any
time within four (4) months after Tenant's receipt of the Operating Statement;
provided that Tenant shall give Landlord not less than ten (10) days prior
written notice of any such audit. If Tenant's audit proves to Landlord's
reasonable satisfaction that Landlord's calculation of Tenant's Operating
Payment for the audited calendar year(s) (i) resulted in an overpayment by
Tenant of Tenant's Operating Payment for such year(s), then Tenant shall be
entitled to a prompt refund of any overpayment; or (ii) resulted in an
underpayment by Tenant, then Tenant shall promptly pay to Landlord the amount
of any such underpayment. If Tenant's audit proves to Landlord's reasonable
satisfaction that Landlord's calculation of Tenant's Operating Payment for the
audited calendar year(s) resulted in an overpayment by more than four percent
(4%) of the amount of Tenant's Operating Payment for such year(s), Landlord
shall also pay the reasonable fees and expense of Tenant's independent
auditors, if any, conducting such audit. Landlord covenants and agrees to keep
EXHIBIT F
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and maintain its books, records and accounts with respect to Operating Expenses
separate from any other general books, records and accounts of Landlord. Any
such audit shall be performed in a manner so as to not unreasonably disrupt the
business operations at Landlord's offices. Upon Tenant's request, Landlord
shall give Tenant notice of the location of Landlord's books and records
pertaining to the calculation of Operating Expenses (it being agreed that such
books and records shall be transferred by Landlord if necessary to one building
location for purposes of permitting Tenant to conduct its audit in accordance
with the terms hereof).
12. ARBITRATION OF OPERATING EXPENSE DISPUTE. If Tenant timely
conducts an audit of Landlord's books and records pertaining to the calculation
of Operating Expenses pursuant to Section 11 of these Special Stipulations, and
Tenant disputes the calculation of Tenant's Operating Payment or whether any
item is properly included in Operating Expenses pursuant to the applicable
provisions of this Lease, Tenant shall give Landlord written notice of any such
dispute within ten (10) days after the completion of the audit. If the parties
are unable, after good faith negotiations, to resolve such dispute within sixty
(60) days after Landlord's receipt of such notice, the matter shall be submitted
to arbitration pursuant to the provisions of this Section 12. Upon the
resolution of any such dispute, if it is determined that Tenant has made an
overpayment, such overpayment shall be credited or refunded by Landlord to
Tenant within ten (10) days after such resolution. Upon the resolution of any
such dispute, if it is determined that Tenant has made an underpayment, such
underpayment shall be paid by Tenant to Landlord within ten (10) days after such
resolution. In the event such dispute is not resolved through negotiation
within the aforesaid sixty (60) day period, Landlord and Tenant shall promptly
select an independent certified public accountant, and Landlord and Tenant shall
submit such dispute to arbitration by such independent certified public
accountant. The certified public accountant selected as arbitrator shall be a
reputable, disinterested party having at least ten (10) years of experience in
auditing operating expenses for multi-tenant office projects. In the event
Landlord and Tenant fail to agree upon the selection of such arbitrator within
fifteen (15) days after the expiration of such sixty (60) day period, either
Landlord or Tenant, upon notice to the other, may request the appointment of the
aforesaid independent certified public accountant by the Chief Judge of the
Fulton County Superior Court. The arbitration shall be conducted, to the extent
consistent with this Section 12, in accordance with the then prevailing rules of
the American Arbitration Association (or any successor association). The
arbitrator shall render his or her decision and award in writing, and such
decision or award shall be final, conclusive and binding on the parties, and
counterpart copies thereof shall be delivered to each of the parties. It is
understood and agreed that in rendering such decision and award, the arbitrator
shall not add to, subtract from, or otherwise modify the provisions of this
Lease. Judgment may be had on the decision and award of the arbitrator so
rendered in any court of competent jurisdiction. The fees and expenses of the
arbitrator under this Section shall be borne equally by both parties. The
provisions of this Section 12 shall survive the expiration or termination of
this Lease.
13. ASSIGNMENT AND SUBLETTING.
(a) Notwithstanding anything contained in Section 4.02 of this Lease
to the contrary, provided Tenant is not in default under this Lease beyond any
applicable notice and cure or grace period, and subject to the to the other
terms and conditions expressly and specifically set forth in Section 4.02 of
this Lease, Landlord shall not unreasonably withhold its consent to Tenant's
request to assign this Lease or to sublease the Premises or any portion
thereof. In determining the reasonableness of Landlord's approval of or
failure to consent to Tenant's assignment of this Lease or the subleasing of
the Premises, Landlord may take into consideration all relevant factors
surrounding the proposed sublease and assignment, including without limitation,
the following:
(i) the business reputation of the proposed assignee or subtenant
and its partners, officers, directors, and stockholders;
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(ii) the nature of the business and the proposed use of the
Premises by the proposed assignee or subtenant;
(iii) the financial condition of the proposed assignee or
subtenant;
(iv) the effect that the proposed assignee or subtenant would
have on the operations and maintenance of the Building and Landlord's
investment therein;
(v) whether or not the assignee or subtenant is reputable and of
a kind customarily found in a "Class A" office building;
(vi) whether or not the proposed assignee or subtenant is
presently a tenant in the Building (it being agreed that Landlord's refusal
to consent to any assignment of this Lease or sublease of all or any
portion of the Premises shall be deemed reasonable if the proposed
transferee is presently a tenant in the Building);
(vii) restrictions, if any, contained in other leases or
agreements affecting the Building (it being agreed that the purposes for
which any transferee intends to use the Premises may not be in violation of
this Lease or of any such other lease or agreement affecting the Building,
provided that the terms of any such other lease which would be violated by
the transferee's intended use were negotiated in good faith by Landlord and
provided further that upon request of Tenant, Landlord shall advise Tenant
of the relevant provisions of any other leases in the Building which impose
any restrictions on the use or occupancy of the Premises); and
(viii) whether or not Tenant is in default under this Lease
beyond any applicable notice and cure or grace period (it being agreed that
Landlord's refusal to consent to any assignment of this Lease or sublease of
all or any portion of the Premises shall be deemed reasonable if Tenant is in
default under this Lease beyond any applicable notice and cure or grace
period).
(b) Provided Tenant is not in default under this Lease beyond any
applicable notice and cure or grace period, Tenant shall have the right, upon
at least ten (10) days' prior written notice to Landlord and the delivery of a
copy of the proposed assignment agreement or sublease as provided below, to
assign this Lease or to sublet all or any portion of the Premises to an
Affiliate (as hereinafter defined) without Landlord's consent; provided,
however, no such assignment or subletting shall relieve Tenant of any of its
obligations and liabilities to Landlord hereunder and Tenant shall remain fully
liable for the faithful performance of all covenants, terms and conditions of
this Lease on the part of Tenant to be performed. The term "Affiliate" as used
in this Section and elsewhere in this Lease in regard to Tenant shall mean (i)
any parent corporation or subsidiary or other corporation which controls or is
controlled by Tenant or Tenant's parent corporation or any entity that controls
or is controlled by Tenant's parent corporation, or (ii) any corporation which
is under common control with Tenant or Tenant's parent corporation or any
entity that controls or is controlled by Tenant's parent corporation, or (iii)
any corporation or entity in which or with which Tenant or Tenant's parent
corporation or any entity that controls or is controlled by Tenant's parent
corporation is merged or consolidated or to which substantially all of Tenant's
assets or stock (or the assets or stock of Tenant's parent corporation or any
entity that controls or is controlled by Tenant's parent corporation) are
transferred provided that such successor to Tenant is capable of fulfilling the
obligations of Tenant hereunder, and provided further that such successor to
Tenant assumes and agrees in writing to full perform and observe the
obligations and agreements of Tenant under this Lease. The term "control"
shall mean the possession of effective power, directly or indirectly, to direct
or cause the direction of the management and policies of such corporation.
Contemporaneously with any such notice to Landlord, Tenant shall deliver a copy
of such proposed assignment agreement or sublease,
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as the case may be. The assignment agreement or sublease, as the case may be,
shall be subject to Landlord's written consent, which consent shall not be
unreasonably withheld or delayed. Any such assignment agreement shall provide
that the Lease may not be further assigned without the prior written consent of
Landlord, and any such sublease shall specify that such sublease shall not be
assigned or the Premises or any part thereof further sublet without the prior
written consent of Landlord.
(c) Tenant hereby agrees that Tenant's sole remedy against Landlord for
any claim that Landlord has acted unreasonably in withholding or delaying its
consent to Tenant's request to assign this Lease or to sublet the Premises or
any portion thereof shall be a suit for specific performance and Tenant hereby
waives any claim against Landlord for damages, whether actual or consequential
or otherwise.
14. ABANDONMENT OF PREMISES. If all or substantially all of the Premises are
deserted, vacated or not used as regularly or consistently as would normally be
expected for similar premises put to general business office use for longer
than six (6) consecutive months (excluding by reason of casualty), even though
Tenant continues to pay the stipulated rent, and Tenant shall fail to re-occupy
the same within ten (10) days after notice from Landlord, then from and after
the expiration of said ten (10) day notice period, Landlord may, but shall be
under no obligation to, terminate this Lease, without declaring Tenant to be in
default under this Lease, by delivering written notice to Tenant. For purposes
of this Section 14, "substantially all of the Premises" shall be deemed to mean
ninety percent (90%) or more of the rentable square feet of the Premises.
15. LIMITED SERVICES TO STORAGE SPACE. Landlord shall not be required to
provide any janitor service to the Storage Space.
16. LANDLORD'S INSURANCE.
(a) Landlord shall procure at its expense (but with the expense to be
included in Operating Expenses as provided in Article 3 of this Lease) and
shall thereafter maintain throughout the Term a policy or policies of all risks
(including rent loss coverage in amounts reasonable and customary for Class "A"
office building projects in metropolitan Atlanta, Georgia), real and personal
property insurance covering the Office Building in an amount equal to at least
ninety percent (90%) of the full insurable replacement value thereof (excluding
any tenant leasehold improvements in the Office Building which are not paid for
by Landlord and such insurance may provide for a reasonable deductible), and in
an amount sufficient to comply with any co-insurance requirements in such
policy.
(b) Landlord shall also procure at its expense (but with the expense to be
included in Operating Expenses as provided in Article 3 of this Lease) and
shall thereafter maintain throughout the Term, commercial general liability
insurance with the limits of such policy or policies to be in combined single
limits for both damage to property and personal injury and in an amount
determined by Landlord from time to time in its sole discretion, but in no
event in an amount of less than Three Million Dollars ($3,000,000) for each
occurrence subject to the provision for a reasonable deductible and subject to
annual aggregate limits required by the insurance carrier. Tenant acknowledges
that Landlord intends to initially maintain commercial general liability
insurance in an amount in excess of $3,000,000 and that the premium for such
liability insurance shall be included in Operating Expenses regardless of the
liability limits of such policy.
(c) Landlord represents that, as of the date of this Lease, Landlord holds
the insurance policies required under subsections (a) and (b) above. Within a
reasonable time following the written request of Tenant, copies of certificates
of the policies described in subsections (a) and (b) above shall be delivered
by Landlord to Tenant. Landlord may also carry such other types of insurance
in form and amounts
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<PAGE> 67
which Landlord shall determine to be appropriate from time to time. All such
policies procured and maintained by Landlord pursuant to this Section 16 shall
be carried with companies licensed to do business in the State of Georgia. Any
insurance required to be carried by Landlord hereunder may be carried under
blanket policies covering other properties of Landlord and/or its partners
and/or their respective related or affiliated corporations so long as such
blanket policies comply as to terms and amounts with the requirements set forth
in this Lease.
17. FACING SIGNAGE RIGHTS OF TENANT. Landlord hereby grants to Tenant the
right to install and maintain, all at Tenant's sole cost and expense, two (2)
corporate identification signs, one each on the top of the face of the western
and eastern sides of the Office Building, or, at Tenant's option, on the top of
the western and eastern elevations of the roof of the Office Building (the
"Facing Signs"), upon and subject to all of the following terms and conditions:
(a) The precise locations of the Facing Signs shall be subject to the
prior written approval of Landlord (the approved areas are herein referred to
collectively as the "Facing Signage Areas"). Landlord has not made any
representations to Tenant regarding whether or not Legal Requirements permit
the Facing Signs to be located on the roof of the Office Building, it being
acknowledged by Tenant that Landlord has notified Tenant that to the best of
Landlord's knowledge, Legal Requirements prohibit the location of the Facing
Signs on the roof of the Office Building;
(b) The exact design, weight, size, color, lettering, location, and manner
of installation and illumination of the Facing Signs shall be subject to the
prior written approval of Landlord, which approval shall not be unreasonably
withheld. Tenant shall deliver to Landlord Tenant's plans and specifications
for the installation of the Facing Signage for review and approval by Landlord
not less than sixty (60) days prior to commencing installation of the Facing
Signage. The Facing Signage shall be installed in strict compliance with the
plans and specifications approved by Landlord, and the installation shall be
performed by contractors approved by Landlord;
(c) Tenant shall, at its sole cost and expense, obtain all governmental
permits or licenses required for the installation, repair, maintenance,
operation and removal of the Facing Signage and shall provide Landlord with
evidence thereof. Tenant's installation, repair, maintenance, operation and
removal of the Facing Signage shall be subject to and performed in accordance
with the terms and conditions of this Lease and all applicable Legal
Requirements in effect from time to time. Tenant shall, at its sole cost and
expense, and at its sole risk, install and maintain the Facing Signage in a
first-class manner, and in compliance with all applicable Legal Requirements,
including, but not limited to, all building, electric, communications, and
safety codes, ordinances, standards, regulations and requirements of any
Governmental Authority. Tenant shall conduct the installation and maintenance
of the Facing Signage in a good and workmanlike manner so as to not interfere
with any other tenant or occupant of the Building. The operation of the Facing
Signage shall not disturb or interfere with the systems of the Building or with
any other tenant or occupant of the Building. In no event shall the
installation or operation of the Facing Signage damage the Building or existing
structure of the Building, or interfere with the maintenance of the Building,
any system currently serving the Building, any radio or telecommunications
equipment currently being operated from or within the Building or in any manner
invalidate any existing warranties in place on the Building or on any
improvements to the Building;
(d) Tenant shall pay to Landlord, as additional rental, on a monthly
basis, the actual costs incurred by Landlord in furnishing electric power for
the operation and/or illumination of the Facing Signage. Landlord shall have
the right to install, at Tenant's expense, a meter to monitor Tenant's use of
electricity furnished by Landlord in the operation of the Facing Signage;
EXHIBIT F
PAGE 14 OF 15
<PAGE> 68
(e) The Facing Signage installed shall be and remain the property of
Tenant, and Tenant shall, (i) prior to the expiration or termination of this
Lease, or (ii) within ten (10) days after the termination of Tenant's rights
under this Section 17 in accordance with the provisions set forth below,
whichever occurs first, remove the Facing Signage (including all installation
and anchoring hardware) installed in the Facing Signage Areas and elsewhere in
or upon the Office Building, and surrender the Facing Signage Areas in
substantially the same condition existing prior to the installation of the
Facing Signage. Tenant shall be liable for, and shall promptly reimburse
Landlord for, the cost of repairing all damage done to the Facing Signage Areas
or to the any other portion of the Office Building by such removal, including
filling and sealing any holes or cavities left by the removal of installation
or anchoring hardware;
(f) Landlord shall not be liable to Tenant for any stoppages or shortages
of electrical power furnished to the Facing Signage or to the Facing Signage
Areas because of any act, omission or requirement of the public utility serving
the Office Building, or the act or omission of any other tenant, licensee or
contractor of the Office Building, or for any other cause beyond the control of
Landlord, and Tenant shall not be entitled to any rental abatement for any such
stoppage or shortage of electric power;
(g) Tenant shall operate the Facing Signage in strict compliance with
Landlord's rules and regulations, now or hereafter promulgated, and all
applicable Legal Requirements. Tenant shall, at Tenant's expense, be solely
responsible throughout the Term for maintaining, servicing and repairing the
Facing Signage and for repairing any damage to the Building or any systems or
equipment serving the Building caused by the Facing Signage or by any act,
negligence or misconduct of Tenant, Tenant's employees, agents or contractors,
while installing, using, servicing, repairing, maintaining or removing the
Facing Signage. Tenant shall protect, defend, indemnify and save Landlord and
its trustees, agents, employees, other tenants, licensees and invitees harmless
from and against any and all obligations, costs (including costs of litigation
and attorneys' fees), expenses, claims, damages and liabilities of any nature
whatsoever arising out of or in connection with the existence, installation,
construction, operation, repair, maintenance and/or removal of the Facing
Signage;
(h) Notwithstanding anything to the contrary contained herein, the rights
granted to Tenant in this Section 17 shall be personal to the Tenant named
herein and shall be deemed null and void in the event of any assignment of this
Lease or sublease of all or any portion of the Premises; and
(i) Tenant's rights under this Section 17 shall automatically terminate
upon the occurrence of either: (i) Tenant no longer occupies and does business
from at least 65,637 rentable square feet of office space in the Office
Building, or (ii) an Event of Default.
(j) For so long as Tenant's rights under this Section 17 are in effect,
(a) Landlord shall not permit any other tenant of the Office Building to place
any sign on the face of the exterior of the Office Building or on the roof of
the Office Building, and (b) Landlord shall not place any sign on the face of
the exterior of the Office Building or on the roof of the Office Building,
except for (x) directional signage, (y) signs identifying the name of the
Office Building located on the face of the exterior of the Office Building near
entrance doors, and (z) any sign required by applicable Legal Requirements.
(k) Tenant shall reimburse Landlord within thirty (30) days after written
demand from Landlord for all reasonable, actual costs incurred by Landlord to
remove the two (2) existing exterior signs located near the top of the Office
Building. In addition, in consideration of the granting of the rights under
this Section 17, Tenant shall pay to Landlord as Additional Rent the sum of
Thirty-Seven Thousand Five Hundred Dollars ($37,500.00) within thirty (30) days
after the full execution and delivery of this Lease.
EXHIBIT F
PAGE 15 OF 15
<PAGE> 1
EXHIBIT 10.14
ADOPTED BY COMPENSATION
COMMITTEE FEBRUARY 24, 1995
AMENDMENT TO FFMC 1988
INCENTIVE STOCK PLAN
Add new subparagraph 9(g) as follows:
(g) The terms of a specific Option, Stock Appreciation Right or Restricted
Stock Award may, in the discretion of the Committee, contain a mandatory tax
withholding provision requiring the Corporation to withhold from and not
deliver to the recipient of such Option, Stock Appreciation Right or Restricted
Stock Award a number of shares of Stock (valued at current fair market at the
date of withholding) otherwise deliverable to the recipient upon the exercise
of the Option or Stock Appreciation Right or expiration of restrictions with
respect to the Restricted Stock Award equal to the amount sufficient to
satisfy any federal, state and local withholding tax requirements. If a
specific Option, Stock Appreciation Right or Restricted Stock Award Agreement
contains a mandatory tax withholding provision under this subparagraph 9(g),
the recipient's right to make a Stock Surrender Withholding Election under
subparagraph 9(f) shall be limited to the amount of withholding tax obligations
in excess of the amount of tax withholding covered by such mandatory
withholding.
<PAGE> 1
EXHIBIT 10.33
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (this "Amendment") is made as
of the 21st day of December, 1994, between FIRST FINANCIAL MANAGEMENT
CORPORATION, a Georgia corporation ("FFMC"), and PATRICK H. THOMAS (the
"Executive"), to amend the Employment Agreement, dated March 22, 1994, between
FFMC and the Executive (the "Employment Agreement").
W I T N E S S E T H:
WHEREAS, pursuant to the Employment Agreement, as part of the
compensation for the Executive's services during the term of the Employment
Agreement, the Executive received from FFMC a Restricted Stock Award of 472,500
shares of FFMC Common Stock and a Restricted Stock Award of 500,000 shares of
FFMC Common Stock pursuant to Restricted Stock Award Agreements dated March 22,
1994; and
WHEREAS, the parties desire to amend the Employment Agreement and to
take other necessary and appropriate actions to cancel the Restricted Stock
Awards granted pursuant to the Employment Agreement and the Restricted Stock
Award Agreements;
NOW, THEREFORE, in consideration of the mutual promises herein, the
parties hereto agree as follows:
A G R E E M E N T
1. All capitalized terms used herein shall have the same meanings
ascribed to them in the Employment Agreement.
2. The Employment Agreement is hereby amended to delete
subsections (b) and (g) of Section 3 in their entirety, thereby eliminating
FFMC's obligations to make the Restricted Stock Award of 472,500 shares of FFMC
Common Stock and the Restricted Stock Award of 500,000 shares of FFMC Common
Stock referred to therein.
3. The Restricted Stock Awards granted under the Employment
Agreement are hereby rescinded and cancelled by agreement of FFMC and the
Executive, and the Restricted Stock Award Agreement, dated as of March 22,
1994, between FFMC and the Executive (governing the Restricted Stock Award of
472,500 shares of FFMC Common Stock) and the Restricted Stock Award Agreement,
dated as of March 22, 1994, between FFMC and the Executive (governing the
Restricted Stock Award of 500,000 shares of FFMC Common Stock) are hereby
rescinded and cancelled by agreement of FFMC and
<PAGE> 2
the Executive, and all rights of the Executive thereunder are hereby
terminated. All shares previously issued to the Executive pursuant to either
Restricted Stock Award Agreement, as well as any dividends accrued and payable
on such shares, shall be immediately forfeited to FFMC pursuant to the
restrictions on such shares, and the Executive shall have no further rights
with respect to such shares or dividends. The Secretary of FFMC shall take
appropriate action to cancel any certificates for shares previously issued to
the Executive pursuant to either Restricted Stock Award Agreement and to
restore such shares to authorized but unissued shares of FFMC Common Stock.
4. FFMC and the Executive agree to use their best efforts to
negotiate a mutually satisfactory incentive compensation arrangement for the
Executive covering the 1995-1999 term of the Employment Agreement in lieu of
the cancelled Restricted Stock Awards. FFMC and the Executive shall use their
best efforts to execute documents necessary or appropriate to implement such
incentive compensation arrangement no later than March 31, 1995.
5. Except as expressly modified by this Amendment, the Employment
Agreement shall remain in full force and effect pursuant to its terms.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first above written.
FIRST FINANCIAL MANAGEMENT
CORPORATION
By: Robert E. Coleman
----------------------------------
Robert E. Coleman, Chairman of the
Compensation Committee
EXECUTIVE
Patrick H. Thomas
--------------------------------------
Patrick H. Thomas
* * * * *
2
<PAGE> 1
EXHIBIT 10.34
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (this "Amendment") is made as
of the 13th day of March 1995, between FIRST FINANCIAL MANAGEMENT CORPORATION,
a Georgia corporation ("FFMC"), and PATRICK H. THOMAS (the "Executive"), to
further amend the Employment Agreement, dated March 22, 1994, between FFMC and
the Executive (the "Employment Agreement").
W I T N E S S E T H:
WHEREAS, pursuant to the Amendment to Employment Agreement, dated
December 21, 1994, between FFMC and the Executive (the "First Amendment"), the
Employment Agreement was amended deleting subsections (b) and (g) of Section 3
in their entirety, thereby eliminating FFMC's obligations to make the
Restricted Stock Award of 472,500 shares of the Common Stock and a Restricted
Stock Award of 500,000 shares of FFMC Common Stock pursuant to Restricted Award
Agreements, dated March 22, 1994);
WHEREAS, the Restricted Stock Awards granted under the Employment
Agreement were in fact rescinded and cancelled by agreement of FFMC and the
Executive and the Restricted Stock Award Agreement, dated as of March 22, 1994,
between FFMC and the Executive (governing the Restricted Stock Award of 472,500
shares of FFMC Common Stock) and the Restricted Stock Award Agreement, dated as
of March 22, 1994, between FFMC and the Executive (governing the Restricted
Stock Award of 500,000 shares of FFMC Common Stock) were in fact rescinded and
cancelled by agreement of FFMC and the Executive, and all rights of the
Executive thereunder were in fact terminated;
WHEREAS, FFMC and the Executive have negotiated a mutually
satisfactory incentive compensation arrangement for the Executive covering the
1995-1999 term of the Employment Agreement;
WHEREAS, the parties desire to further amend the Employment Agreement
and to take other necessary and appropriate actions to implement such incentive
compensation arrangements;
NOW, THEREFORE, in consideration of the mutual promises herein, the
parties hereto agree as follows:
A G R E E M E N T
1. All capitalized terms used herein shall have the same meanings
ascribed to them in the Employment Agreement and the First Amendment.
2. As an incentive compensation arrangement for the Executive for
the 1995-1999 term of the Employment Agreement, as amended:
<PAGE> 2
(a) As an incentive bonus for services during 1995, the
Compensation Committee of the FFMC Board of Directors (the
"Committee") shall make an award to the Executive of 94,500 restricted
shares under the 1988 Incentive Stock Plan (the "Plan") pursuant to a
Restricted Stock Award Agreement in the form attached hereto as
Exhibit A.
(b) As additional incentive compensation for the term of
the Employment Agreement, the Committee shall make an award to the
Executive of 500,000 restricted shares under the Plan pursuant to a
Restricted Stock Award Agreement in the form attached hereto as
Exhibit B;
(c) The Compensation Committee shall consider granting or
awarding to the Executive an annual incentive bonus for each of the
years 1996 through 1999 in the form of cash, restricted shares or
other forms of incentives, subject to achievement by FFMC of a
performance goal for the respective year, all as determined by the
Committee in its discretion. The amount payable to the Executive
pursuant to any such award (including the award referred to in
paragraph 2(a) above) or its value at the time of vesting shall be
included as part of the Executive's Current Total Annual Compensation
for purposes of the Employment Agreement, including but not limited to
Section 5 thereof.
3. Section 5(f)(iv)(B) is hereby changed to read as follows:
(B) A reduction in the overall level of the Executive's
compensation (consisting of salary and annual bonus, whether in the
form of cash or stock incentives) or benefits, including any failure
by FFMC during the first three months of any year to agree to pay an
annual incentive bonus or to make an annual incentive bonus award in
the form of cash, restricted shares or other incentives which will
afford the Executive a reasonable opportunity to earn incentive bonus
compensation for such year, based on one or more reasonable
performance goals relating to financial performance of FFMC or the
value of its common stock, reasonably expected to have a value equal
to the Executive's annual incentive bonus for the preceding year,
assuming for purposes of valuing any bonus whose amount or value is
based on the fair market value of FFMC Common Stock that the Fair
Market Value of such stock for the year of the award is at least as
great as such Fair Market Value for the preceding year. As used
herein, Fair Market Value for a year shall be the average closing
price for FFMC Common Stock on the New York Stock Exchange for the
last ten business days of the year.
4. Except as expressly modified by this Amendment and the First
Amendment, the Employment Agreement shall remain in full force and effect
pursuant to its terms.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first above written.
FIRST FINANCIAL MANAGEMENT
CORPORATION
By: Robert E. Coleman
----------------------------------
Robert E. Coleman, Chairman of the
Compensation Committee
EXECUTIVE
Patrick H. Thomas
--------------------------------------
Patrick H. Thomas
-3-
<PAGE> 4
EXHIBIT A
FIRST FINANCIAL MANAGEMENT CORPORATION
RESTRICTED STOCK AWARD AGREEMENT
This is an Agreement dated as of March 13, 1995, between First
Financial Management Corporation ("FFMC") and Patrick H. Thomas (the
"Participant").
BACKGROUND:
The Participant is currently serving as Chairman of the Board, President and
Chief Executive Officer of FFMC. FFMC currently has in effect the First
Financial Management Corporation 1988 Incentive Stock Plan (the "Plan") which
provides for the grant of Restricted Stock Awards of shares of Common Stock,
$.10 par value, of FFMC (the "Common Stock") subject to certain restrictions as
an incentive for valued employees of FFMC and its subsidiaries. FFMC desires
to grant a Restricted Stock Award to the Participant as an incentive bonus for
his services during 1995, subject to a performance goal relating to the results
of operations of FFMC for 1995, pursuant to the Employment Agreement dated as
of March 22, 1994 (the "Employment Agreement") and the Amendments to Employment
Agreement dated as of December 21, 1994 and as of March 13, 1995 (the
"Amendments to Employment Agreement"), and as an inducement to the continuation
by the Participant of his services to FFMC in the future.
AGREEMENT:
Pursuant to the Plan the parties hereto do hereby agree as follows:
1. FFMC hereby grants to the Participant a Restricted Stock Award of
Ninety-Four Thousand Five Hundred (94,500) shares of Common Stock (the
"Shares") subject to the terms of the Plan and this Agreement.
2. The Shares are subject to the following restrictions:
a. None of the Shares may be sold, assigned, transferred,
exchanged, pledged, hypothecated, or otherwise encumbered by
the Participant, until such restrictions have expired with
respect to such Shares as provided in paragraphs 3, 4 and 5.
<PAGE> 5
b. If at any time the Participant's employment by FFMC terminates
prior to expiration of these restrictions pursuant to
paragraph 3 or 4 as to any of the Shares for any reason which
does not cause these restrictions to expire as provided in
paragraph 4, such Shares shall immediately be forfeited to
FFMC, and the Participant shall have no further rights with
respect thereto.
c. All dividends payable by FFMC on the Shares shall be held by
FFMC and paid to the Participant at such time as the
restrictions on such Shares expire.
3. Subject to the provisions of paragraph 5, the expiration of the
restrictions contained in paragraph 2 shall expire as to a number of
the Shares earned by the Participant for 1995, which shall be
determined as follows:
a. The number of the Shares earned for 1995 shall be equal to
2.5% of FFMC's Pretax Income for 1995 divided by the Fair
Market Value of FFMC Common Stock, but in no event shall total
more than 94,500 shares. The Fair Market Value of FFMC Common
Stock shall be the average closing price for FFMC Common Stock
on the New York Stock Exchange for the last 10 business days
of 1995.
b. A number of the Shares equal to the difference between 94,500
and the number of the Shares which are earned for 1995 shall
be forfeited to FFMC as of the end of such year.
c. For purposes of this Agreement, Pretax Income shall be FFMC's
income before deduction or provision for income taxes for 1995
computed by FFMC in accordance with generally accepted
accounting principles consistently applied, with the following
qualifications or adjustments:
(i) all gain or loss on the sale of business units
or subsidiaries by FFMC shall be excluded;
(ii) all restructuring charges incurred by FFMC
shall be excluded;
(iii) all costs incurred in connection with
pooling-of-interest combinations entered into by FFMC shall be
excluded;
-2-
<PAGE> 6
(iv) all writedowns of goodwill or intangible assets
shall be excluded;
(v) all expenses incurred in connection with the
grant of restricted stock awards to the Participant or the
payment of any incentive bonus to the Participant shall be
excluded; and
(vi) pretax income (loss) from the operations of a
discontinued operation prior to the sale of such discontinued
operation shall be included. Any disputes about the
computation of Pretax Income will be resolved by an
independent accounting firm satisfactory to FFMC and the
Participant.
4. The restrictions contained in paragraph 2 with respect to the Shares
shall expire on the earliest to occur during 1995 of any of the
following:
a. Upon termination of the Participant's employment by FFMC by
reason of death or permanent disability, or
b. The acquisition (other than from FFMC) by any person, entity
or "group," within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act (excluding, for this purpose, any employee
benefit plan of FFMC or its subsidiaries which acquires
beneficial ownership of voting securities of FFMC) of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of either
the then outstanding shares of FFMC Common Stock or the
combined voting power of FFMC's then outstanding voting
securities entitled to vote generally in the election of
directors, or
c. The failure for any reason of individuals who constitute the
Incumbent Board to continue to constitute at least a majority
of the Board of Directors of FFMC, or
d. Approval by the stockholders of FFMC of a reorganization,
merger or consolidation, in each case, with respect to which
the shares of FFMC voting stock outstanding immediately prior
to such reorganization, merger or consolidation do not
constitute or become exchanged for or converted into more than
50% of the combined voting power entitled to vote generally in
the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities, or
a liquidation or dissolution of FFMC or of the sale of all or
substantially all of the assets of FFMC, or
-3-
<PAGE> 7
e. Receipt by the Participant of written notice from the
Compensation Committee of the Board of Directors of FFMC (the
"Compensation Committee") that such restrictions have been
terminated.
For purposes of the Agreement, the "Incumbent Board" at any time shall
mean the persons who are then members of the Board of Directors of
FFMC and who (a) are members of the Board of Directors of FFMC as of
the date hereof, or (b) become members of the Board of Directors of
FFMC hereafter upon election, or nomination for election by FFMC's
shareholders, by a vote of at least a majority of the Incumbent Board
(other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the elections of the directors of FFMC,
as such terms are used in Rule 14(a)-11 of Regulation 14A promulgated
under the Exchange Act).
5. Notwithstanding any other provision in this Agreement, the
restrictions contained in paragraph 2 with respect to any Shares shall
not lapse until such time as the Compensation Committee of FFMC has
certified in writing that the performance criteria established
pursuant to paragraph 3 has been satisfied. The Compensation
Committee shall not unreasonably withhold any such certification.
6. For purposes of this Agreement, the Participant's employment by FFMC
shall be deemed to terminate at any time when he is no longer employed
by FFMC, a subsidiary of FFMC or any corporation or other entity which
owns 50% or more of the outstanding common stock of FFMC.
7. As authorized by the Plan, upon the expiration of the restrictions
contained in paragraph 2 as to any of the Shares, it shall be
mandatory for FFMC to withhold from and not deliver to the Participant
an amount of such Shares sufficient to satisfy any federal, state, and
local withholding tax requirements, including FICA taxes to the extent
applicable, with respect to the expiration of such restrictions,
valuing such Shares at current fair market value on the date of
withholding. The Compensation Committee hereby consents to any Stock
Surrender Withholding Election (as defined in the Plan) hereafter made
by the Participant in accordance with the requirements of Section 9 of
the Plan with respect to an amount of Shares, valued at current fair
market value on the date of surrender of such Shares, equal to the
excess of (i) the Participant's estimated federal, state and local tax
obligations associated with the expiration of such restrictions,
including FICA taxes to the extent applicable, over (ii) the amount of
withholding taxes covered by the mandatory Shares withholding provided
in this paragraph, subject to the limitation contained in paragraph 8
of this Agreement.
-4-
<PAGE> 8
8. The Participant shall be entitled to satisfy estimated tax liabilities
in excess of actual federal, state and local withholding requirements
pursuant to a Stock Surrender Withholding Election only by the
surrender of Shares of FFMC Common Stock held by the Participant for
at least six months prior to delivery to FFMC.
9. The Participant agrees that a legend reflecting the restrictions
contained in this Agreement shall be placed on any certificate for
shares of FFMC stock subject to such restrictions.
10. All certificates issued for the Shares shall be held by the Secretary
of FFMC so long as the restrictions set forth in paragraph 2 have not
expired. Upon the expiration of such restrictions, the certificates
for such amount of the Shares as to which the restrictions have
expired, net of the number of Shares withheld to satisfy mandatory tax
withholding requirements, shall be delivered to the Participant. If
this Agreement requires forfeiture of any of the Shares to FFMC, the
Secretary shall take appropriate action to cancel the certificates
for the forfeited Shares and restore the forfeited Shares to
authorized but unissued shares of Common Stock.
11. Any shares of FFMC Common Stock or other securities of FFMC or any
other entity which are issued as a distribution on, or in exchange
for, the Shares or into which the Shares are converted as a result of
a recapitalization, stock dividend, distribution or securities, stock
split or combination of shares or a merger, consolidation of sale of
substantially all of the assets of FFMC shall be subject to the
restrictions set forth herein, which shall inure to the benefit of any
surviving or successor corporation which is the issuer of such
securities, unless such restrictions have expired in accordance with
the terms of this Agreement.
12. The Participant agrees not to file an election under Section 83(b) of
the Internal Revenue Code of 1986 with respect to the Shares.
13. This Agreement shall bind and inure to the benefit of the parties,
their heirs, personal representatives, successors in interest and
assigns.
-5-
<PAGE> 9
Executed as of the day and year first above written.
FIRST FINANCIAL MANAGEMENT CORPORATION
By: Robert E. Coleman
-------------------------------------
Robert E. Coleman
Chairman of the Compensation Committee
PARTICIPANT
Patrick H. Thomas
----------------------------
Patrick H. Thomas
-6-
<PAGE> 10
EXHIBIT B
FIRST FINANCIAL MANAGEMENT CORPORATION
RESTRICTED STOCK AWARD AGREEMENT
This is an Agreement dated as of March 13, 1995, between First
Financial Management Corporation ("FFMC") and Patrick H. Thomas (the
"Participant").
BACKGROUND:
The Participant is currently serving as Chairman of the Board, President and
Chief Executive Officer of FFMC. FFMC currently has in effect the First
Financial Management Corporation 1988 Incentive Stock Plan (the "Plan") which
provides for the grant of Restricted Stock Awards of shares of Common Stock,
$.10 par value, of FFMC (the "Common Stock") subject to certain restrictions as
an incentive for valued employees of FFMC and its subsidiaries. FFMC desires
to grant a Restricted Stock Award to the Participant as additional incentive
compensation pursuant to the Employment Agreement dated as of March 22, 1994
(the "Employment Agreement") and the Amendments to Employment Agreement dated
as of December 21, 1994 and as of March 13, 1995 (the "Amendments to Employment
Agreement"), and as an inducement to the continuation by the Participant of his
services to FFMC in the future.
AGREEMENT:
Pursuant to the Plan the parties hereto do hereby agree as follows:
1. FFMC hereby grants to the Participant a Restricted Stock Award of Five
Hundred Thousand (500,000) shares of Common Stock (the "Shares")
subject to the terms of the Plan and this Agreement.
2. The Shares are subject to the following restrictions:
a. None of the Shares may be sold, assigned, transferred,
exchanged, pledged, hypothecated, or otherwise encumbered by
the Participant until such restrictions have expired with
respect to such Shares as provided in paragraphs 3, 4 and 5.
b. If at any time the Participant's employment by FFMC terminates
prior to the expiration of these restrictions pursuant to
paragraph 3 or 4 as to any of the Shares for any reason that
does not cause these restrictions to expire as provided in
paragraph 4, such Shares shall immediately be forfeited to
FFMC, and the Participant shall have no further rights with
respect thereto.
<PAGE> 11
c. All dividends payable by FFMC on the Shares shall be held by
FFMC and paid to the Participant at such time as the
restrictions for such Shares expire.
3. Subject to the provisions of paragraph 5, the restrictions contained
in paragraph 2 shall expire as to the total shares subject to this
award on December 31, 1999 if:
a. FFMC's Pretax Income, as defined in paragraph 9, for 1995 is
greater than or equal to $300 million; and
b. The Participant's employment by FFMC continues until December
31, 1999.
If the condition specified in subparagraph a of this paragraph is not
satisfied, all the Shares shall be forfeited to FFMC as of December
31, 1995.
4. The restrictions contained in paragraph 2 with respect to any of the
Shares that have not been previously forfeited as provided herein
shall expire on the earliest to occur of any of the following:
a. Upon termination of the Participant's employment by FFMC by
reason of death or permanent disability, or
b. The acquisition (other than from FFMC) by any person, entity
or "group," within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act (excluding, for this purpose, any employee
benefit plan of FFMC or its subsidiaries which acquires
beneficial ownership of voting securities of FFMC) of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of either
the then outstanding shares of FFMC Common Stock or the
combined voting power of FFMC's then outstanding voting
securities entitled to vote generally in the election of
directors, or
c. The failure for any reason of individuals who constitute the
Incumbent Board to continue to constitute at least a majority
of the Board of Directors of FFMC, or
d. Approval by the stockholders of FFMC of a reorganization,
merger or consolidation, in each case, with respect to which
the shares of FFMC voting stock outstanding immediately prior
to such reorganization, merger or consolidation do not
constitute or become exchanged for or converted into more than
50% of the combined voting power entitled to vote generally in
the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities, or
a liquidation
-2-
<PAGE> 12
or dissolution of FFMC or of the sale of all or substantially
all of the assets of FFMC, or
e. Termination of Participant's employment under the Employment
Agreement as described in Section 5(b)(i) or (ii) of the
Employment Agreement; provided, however, that in the event of
such termination, the restrictions contained in paragraph 2
shall expire only with respect to a number of Shares
determined as follows:
(1) 100,000, if such termination occurs during 1996;
(2) 200,000, if such termination occurs during 1997;
(3) 300,000, if such termination occurs during 1998; or
(4) 400,000, if such termination occurs during 1999.
f. Receipt by the Participant of written notice from the
Compensation Committee of the Board of Directors of FFMC (the
"Compensation Committee") that the restrictions have been
terminated.
For purposes of this Agreement, the "Incumbent Board" at any time
shall mean the persons who are then members of the Board of Directors
of FFMC and who (a) are members of the Board of Directors of FFMC as
of the date hereof, or (b) become members of the Board of Directors of
FFMC hereafter upon election, or nomination for election by FFMC's
shareholders, by a vote of at least a majority of the Incumbent Board
(other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the elections of the directors of FFMC,
as such terms are used in Rule 14(a)-11 of Regulation 14A promulgated
under the Exchange Act).
5. Notwithstanding any other provision in this Agreement, the
restrictions contained in paragraph 2 shall not lapse until such time
as the Compensation Committee of FFMC has certified in writing that
the performance goal established in paragraph 3(a) has been satisfied.
The Compensation Committee shall not unreasonably withhold any such
certification.
6. For purposes of this Agreement, the Participant's employment by FFMC
shall be deemed to terminate at any time when he is no longer employed
by FFMC, a subsidiary of FFMC or any corporation or other entity which
owns 50% or more of the outstanding common stock of FFMC.
7. As authorized by the Plan, upon the expiration of the restrictions
contained in paragraph 2 as to any of the Shares, it shall be
mandatory for FFMC to withhold
-3-
<PAGE> 13
from and not deliver to the Participant an amount of such Shares
sufficient to satisfy any federal, state, and local withholding tax
requirements, including FICA taxes to the extent applicable, with
respect to the expiration of such restrictions, valuing such Shares at
current fair market value on the date of withholding. The
Compensation Committee hereby consents to any Stock Surrender
Withholding Election (as defined in the Plan) hereafter made by the
Participant in accordance with the requirements of Section 9 of the
Plan with respect to an amount of Shares, valued at current fair
market value on the date of surrender of such Shares, equal to the
excess of (i) the Participant's estimated federal, state and local tax
obligations associated with the expiration of such restrictions,
including FICA taxes to the extent applicable, over (ii) the amount of
withholding taxes covered by the mandatory Shares withholding provided
in this paragraph, subject to the limitation contained in paragraph 8
of this Agreement.
8. The Participant shall be entitled to satisfy estimated tax liabilities
in excess of actual federal, state and local withholding tax
requirements through a Stock Surrender Withholding Election only by
the surrender of Shares of FFMC Common Stock held by the Participant
for at least six months prior to delivery to FFMC.
9. For purposes of this Agreement, Pretax Income shall be FFMC's pretax
income for the applicable calendar year computed by FFMC in accordance
with generally accepted accounting principles consistently applied,
with the following qualifications or adjustments:
(i) all gain or loss on the sale of business units or
subsidiaries by FFMC shall be excluded;
(ii) all restructuring charges incurred by FFMC shall be
excluded;
(iii) all costs incurred in connection with
pooling-of-interest combinations entered into by FFMC shall be
excluded;
(iv) all writedowns of goodwill or intangible assets shall be
excluded;
(v) all expenses incurred in connection with the grant of
restricted stock awards to the Participant or the payment of any
incentive bonus to the Participant shall be excluded; and
(vi) pretax income (loss) from the operations of a
discontinued operation prior to the sale of such discontinued
operation shall be included.
-4-
<PAGE> 14
Any disputes about the computation of Pretax Income will be resolved
by an independent accounting firm satisfactory to FFMC and the
Participant.
10. The Participant agrees that a legend reflecting the restrictions
contained in this Agreement shall be placed on any certificate for
shares of FFMC stock subject to such restrictions.
11. All certificates issued for the Shares shall be held by the Secretary
of FFMC so long as the restrictions set forth in paragraph 2 have not
expired. Upon the expiration of such restrictions, the certificates
for such amount of the Shares as to which the restrictions have
expired, net of the number of Shares withheld to satisfy mandatory tax
withholding requirements, shall be delivered to the Participant. If
this Agreement requires forfeiture of any of the Shares to FFMC, the
Secretary shall take appropriate action to cancel the certificates for
the forfeited Shares and restore the forfeited Shares to authorized
but unissued shares of Common Stock.
12. Any shares of FFMC Common Stock or other securities of FFMC or any
other entity which are issued as a distribution on, or in exchange
for, the Shares or into which the Shares are converted as a result of
a recapitalization, stock dividend, distribution of securities, stock
split or combination of shares or a merger, consolidation or sale of
substantially all of the assets of FFMC shall be subject to the
restrictions set forth herein, which shall inure to the benefit of any
surviving or successor corporation which is the issuer of such
securities, unless such restrictions have expired in accordance with
the terms of this Agreement.
13. The Participant agrees not to file an election under Section 83(b) of
the Internal Revenue Code of 1986 with respect to the Shares.
14. This Agreement shall bind and inure to the benefit of the parties,
their heirs, personal representatives, successors in interest and
assigns.
-5-
<PAGE> 15
Executed as of the day and year first above written.
FIRST FINANCIAL MANAGEMENT CORPORATION
By: Robert E. Coleman
-------------------------------------
Robert E. Coleman
Chairman of the Compensation Committee
PARTICIPANT
Patrick H. Thomas
------------------------------------
Patrick H. Thomas
-6-
<PAGE> 1
EXHIBIT 10.39
EMPLOYMENT AGREEMENT dated as of the 20th day of April 1990 between
WESTERN UNION CORPORATION, a New York corporation ("Corporation"), and ROBERT
J. AMMAN ("Executive").
WITNESSETH:
WHEREAS, Executive is one of the key executives of the Corporation and
the Corporation desires to assure the continued availability to it of
Executive's services, and Executive is willing to make his services available
to the Corporation, in both instances on the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the agreements hereinafter set
forth, it is agreed as follows:
1. TERM OF EMPLOYMENT. The Corporation hereby employs Executive and
Executive hereby agrees to serve the Corporation on the terms and conditions
set out herein as President and Chief Executive Officer for the period
commencing on the date of this Agreement and terminating on the date specified
in Section 5 of this Agreement.
2. DUTIES. Executive agrees to perform overall management and
supervision of all of the operations and activities of the Corporation and any
subsidiaries as may be established from time to time, and agrees to perform
such other services of a senior
<PAGE> 2
executive nature concomitant with his positions and offices described in
Section 1 hereof as shall from time to time be assigned to him by or pursuant
to authorization of the Board of Directors of the Corporation. If requested by
the Corporation, Executive agrees to serve as an officer and/or a director of
the Corporation and/or its subsidiaries or Affiliates. In consideration of
continued employment by the Corporation, Executive agrees to discharge
faithfully, diligently and to the best of his ability, the responsibilities of
his position. Executive will devote his full time and effort to his assigned
duties, will use his best efforts to promote the interest of the Corporation
and its subsidiaries and Affiliates and will not engage in any other business
or activity which, in the opinion of the Corporation, would hinder or interfere
with the performance of his duties. Unless otherwise agreed, Executive's
principal place of employment shall be at or within a 100 mile radius of the
Corporation location at which he was principally employed on the date of this
Agreement, and he shall not be required to render any services under this
Agreement which would require him to change his residence to another
geographical region.
3. Salary. (A) As compensation for Executive's services during his
employment hereunder, the Corporation will pay (subject to the provisions of
Section 5 hereof) salary at a rate fixed from time to time by the Board of
Directors of the Corporation but which shall not be less than his current
salary
2
<PAGE> 3
on the date hereof ("Minimum Salary"). If the Board increases the salary of
Executive after the date of this Agreement, such increased salary shall
thereafter be the Minimum Salary under this Agreement. Executive's salary
shall be payable in installments at such regular intervals as the Corporation
uses for the payment of executive salaries.
(B) In the event of the Executive's death, in addition to any
other employee benefits payable to key executives of the Corporation, the
Corporation shall pay to the widow of the Executive, if she shall survive the
Executive, the Minimum Salary for a period of twelve (12) months, such amount
to be payable in installments at such regular intervals as the Corporation uses
for the payment of executive salaries.
4. Benefits. Executive shall be eligible for all employee benefits
that key executives of the Corporation are eligible for, whether now in effect
or hereafter adopted. Executive shall also be eligible under any stock option
plan, executive bonus plan, incentive compensation plan or other arrangements
available to key executives of the Corporation during the term of his
employment hereunder, and any other perquisites approved by the Board of
Directors of the Corporation.
3
<PAGE> 4
5. Termination of Employment.
(A) Executive's employment under this Agreement shall
terminate as follows:
(i) Death. Executive's employment under this Agreement shall
terminate automatically if he should die.
(ii) Disability. If executive becomes incapacitated as a result of
physical or mental illness, the Corporation may terminate Executive's
employment on a date specified in notice to Executive, which date shall not
be less than 36 months after such notice is given to Executive. During the
period between the date such notice is given and the date of termination of
employment, subject to the provisions of Section 5(B) hereof, (a)
Executive's salary shall continue to be payable, subject to reduction by an
amount equal to any long term disability benefits payable to Executive
under any disability benefit plan maintained by the Corporation, and (b)
Executive shall continue to be eligible for benefits on the applicable
terms and conditions of the respective employee benefit plans.
(iii) Discharge by Corporation. (a) The Corporation may terminate
Executive's employment without cause at any time by giving notice of
termination to Executive specifying
4
<PAGE> 5
an outside termination date which is not less than 36 months after such
notice is given to Executive. Executive's employment shall thereafter
terminate upon the earlier of the date specified in the notice of
termination or the date on which Executive commences employment with
another employer (such earlier date being sometimes referred to herein as
the "Actual Termination Date").
(b) During the period between the date such notice of
termination is given and the Actual Termination Date, subject to the
provision of Sections 5(A)(i) and 5(B) hereof, Executive's salary
shall continue to be payable and Executive shall continue to be
eligible for benefits on the applicable terms and conditions of the
respective employee benefits plans.
(c) Subject to the remaining provisions of this Section
5(A)(iii), during the period, if any, between the Actual Termination
Date and the termination date specified in the notice of termination,
the Corporation shall pay to Executive, at such regular intervals as
the Corporation pays executive salaries, an amount equal the salary to
which Executive would have been entitled for such interval had his
employment continued hereunder, but Executive shall not be deemed to
be an employee of the Corporation nor entitled to benefits during such
period. The Corporation may, in its
5
<PAGE> 6
sole and absolute discretion, pay to executive in a lump sum at
any time the total amount to which Executive could become entitled
under the preceding sentence. As a condition to receiving such
payments, Executive shall notify the Corporation no less than ten (10)
days after Executive commences employment with another employer.
Executive specifically affirms and agrees that TIME IS OF THE ESSENCE
in giving this notice to the Corporation and that failure to do so by
the deadline will result in forfeiture of any and all payments
thereafter. Such payments to Executive shall terminate in any event
upon Executive's death. Notwithstanding anything herein to the
contrary, the payment provided pursuant to the provisions of Section
3(B) hereof shall continue to be made to the widow of Executive for a
period of twelve (12) months.
(iv) Resignation by Executive. Executive may resign on a date
specified on notice to the Corporation and, unless the provisions of
Section 5(C) hereof shall be applicable, the Corporation shall have no
severance payment or salary or benefit continuation obligations to
Executive hereunder.
(v) Discharge for Cause. The Corporation may terminate Executive's
employment under this Agreement forthwith by giving notice to him stating
that such determination has been made for cause, in which event the
6
<PAGE> 7
Corporation shall have no severance payment or salary continuation
obligations to Executive hereunder. As used herein, "cause" shall mean
only the following:
(1) theft or embezzlement by Executive from, or common law
fraud committed by Executive against, the Corporation;
(2) conviction by Executive of any crime under state or
federal law involving moral turpitude (for the purpose hereof, traffic
violations and other offenses and misdemeanors shall not be deemed to
be a crime);
(3) material breach by Executive of any of his obligations
under Section 6; or
(4) material breach by Executive of any other obligation as an
executive of the Corporation not cured within ten (10) days after
written notice thereof from the Corporation to Executive.
The Corporation shall give Executive prompt written notice of the
reasons or cause for termination. If Executive does not notify the
Corporation in writing within thirty (30) days after receipt of said notice
that Executive disputes the Corporation's determination of such reason or
cause, the
7
<PAGE> 8
Corporation's determination shall be final and binding on Executive.
(B) Salary Continuation. The salary continuation provided
for in Sections 5(A)(ii) and 5(A)(iii) above shall be in lieu of (i)
any and all other severance payments to which the Executive may otherwise have
been entitled whether under the corporation's salary continuation or severance
pay plan then in effect or otherwise and (ii) any and all rights to receive
vacation pay whether or not accrued at the time such notice is given or
thereafter.
(C) Change in Control. If Executive shall resign following
a "Change in Control" (as defined in Section 5(C)(v) below), the Corporation
shall:
(i) pay to Executive, in one installment on the date of termination
(the "Termination Date"), an amount equal to his accrued and unpaid Minimum
Salary and accrued vacation, if any, through the Termination Date;
(ii) pay to Executive, in one installment on the Termination Date, as a
severance or termination payment and not as a penalty and in lieu of all
other rights, remedies and claims against the Corporation, except as
otherwise provided herein, an amount (less appropriate payroll
8
<PAGE> 9
deductions, if any) equal to thirty-six (36) months salary at the
Minimum Salary rate.
(iii) if the payment provided in Section 5(C)(ii) shall give rise to a
tax (an "Excise Tax") upon the Executive pursuant to Section 4999(a) of the
Internal Revenue Code of 1986 or any similar provision of state or local
tax law, the Corporation shall indemnify and hold harmless the Executive
from and against all such Excise Taxes so imposed, including any taxes
arising from such indemnification payment, it being intended that the
Executive be held harmless on an after-tax basis from the amount of the
Excise Taxes imposed upon payments made pursuant to Section 5(C)(ii) and
all taxes (including Excise Taxes) imposed upon payments made pursuant to
this Section 5(C)(iii).
(iv) continue to provide to Executive all benefits referred to in
Section 4 above (a) at no cost to Executive until the earlier of thirty-six
(36) months after the Termination Date or until Executive obtains
comparable benefits and (b) if at the end of such thirty-six (36) month
period Executive has not obtained comparable benefits thereafter, at a cost
to Executive (or his spouse) equal to the Corporations's actual cost until
the earlier of the death
9
<PAGE> 10
of Executive or until Executive obtains comparable benefits from a
future employer.
Notwithstanding anything herein to the contrary, if following a Change
in Control Executive wishes to resign from the Corporation with effect
prior to one (1) year after the date on which the Change in Control occurs,
Executive shall first ask the then Board of Directors of the Corporation
whether it wishes Executive to remain employed by the Corporation in his
current position. If the Corporation responds affirmatively to Executive's
question and the Corporation responds affirmatively to Executive's question
and the Corporation fulfills all of its obligations under this Agreement,
Executive shall continue as an executive of the Corporation and dutifully
execute his responsibilities for at least one (1) year after the date on
which the Change in Control occurred and shall be entitled, upon (A) the
release of Executive by the Corporation prior to the expiration of such one
(1) year period, (B) the effectiveness of his resignation after such one
(1) year period, (B) the effectiveness of his resignation after such one
(1) year period or (C) the termination of his employment by the Corporation
for a reason or cause not mentioned in Section 5(A)(v), to receive the
payments and benefits contemplated by Sections 5(C)(i), (ii), (iii) and
(iv); provided, however, if Executive fails to continue to execute his
responsibilities for such one (1) year period, then the thirty-six (36)
month periods referred to in Sections
10
<PAGE> 11
5(C)(i), (ii), (iii) and (iv) shall be reduced to twelve (12) months.
(v) a "Change in Control" shall be deemed to occur upon (x) the
election of one or more individuals to the Corporation's Board of Directors
which election results in a majority of the directors of the Corporation
consisting of individuals (I) who have not been directors of the
Corporation for at least two years and/or (II) who have not been employed
by Brooke Partners L.P. or its Affiliates prior to such election, or (y)
the sale by the Corporation of all or substantially all of its assets to
any Person, the consolidation of the Corporation with any Person, the
merger of the Corporation with any Person as a result of which merger the
Corporation is not the surviving entity, or the sale or transfer of shares
of the Corporation by the Corporation and/or one or more of its
shareholders, in one or more transactions, related or unrelated, to one or
more Persons under circumstances whereby any Person and its Affiliates
shall own, after such sales and transfers, more than one-fourth of the
shares of the Corporation with the effect that Bennett S. LeBow and/or his
Affiliates are no longer in control of the Corporation. (Nothing contained
in this definition shall limit or restrict the right of any director from
participating in any discussions or voting on
11
<PAGE> 12
any matter referred to in this definition at any meeting of the Board.)
(vi) a "Person" shall mean any individual, partnership, firm, trust,
corporation or other similar entity. When two or more Persons act as a
partnership, limited partnership, syndicate or other group for the purpose
of acquiring, holding or disposing of securities of the Corporation, such
syndicate or group shall be deemed a "Person" for the purposes of this
Agreement.
(vii) "Affiliate" shall mean any person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is
under common control with, any other Person.
6. Confidentiality. All confidential information relating to the
business, products and services of the Corporation or any subsidiary or
Affiliate of the Corporation, whether developed prior or subsequent to the date
hereof (the "Information"), shall be and remain the sole property and
confidential business information of the Corporation or any such subsidiary or
Affiliate, free of any rights of Executive, and Executive agrees not to make
any use of the Information except in the performance of his duties hereunder,
nor to disclose the Information to third parties, without the written consent
of the Corporation.
12
<PAGE> 13
This Section 6 shall survive the termination of Executive's employment under
this Agreement and shall not limit or otherwise affect the terms of any
agreement containing provisions similar to this Section 6 and entered into by
Executive prior or subsequent to the date hereof.
7. Notices. All notices and other communications hereunder shall be
in writing and shall be delivered personally or sent by registered or certified
mail (return receipt requested). Any such notice shall be deemed received when
so delivered or, if mailed, two business days after the date of deposit in the
United States mails addressed to the parties at the following address (or at
such other address as shall be specified by like notice):
(A) If to the Corporation, at One Lake Street, Upper Saddle
River, New Jersey 07458, Attention: Secretary; and
(B) If to Executive, either at the address of the Corporation
location at which he is employed or his current home address as reflected on
the Corporation's records.
8. Arbitration. The parties will use their best efforts to resolve
by negotiation any dispute, controversy or claim which may arise in connection
with, or relate to, this Agreement. If the parties cannot resolve directly any
such dispute, then any such dispute, controversy or claim will be finally
settled by
13
<PAGE> 14
arbitration to be held in the City of New York, State of New York, in
accordance with the rules of the American Arbitration Association. The
arbitration decision will be final and binding on the parties and judgment on
any arbitration award may be entered and enforced in any court of competent
jurisdiction. Except as otherwise specifically provided herein, no party will
institute any legal or equitable action against any other party in any court
with respect to any dispute, controversy or claim arising in connection with,
or relating to, this Agreement, except to obtain or enforce judgment on an
arbitration award. Each party shall pay its own costs and expenses in
connection with the arbitration, except that (a) the Corporation shall pay the
costs of the arbitrator and the arbitration forum and (b) if the executive
shall prevail in whole or in part, the Corporation shall reimburse the
Executive for all costs and expenses incurred by him, including reasonable
attorney's fees and disbursements.
9. General. This agreement constitutes the entire agreement between
the parties and supersedes all prior and contemporaneous agreements and
understandings, both written and oral, with respect to the subject matter
hereof. This Agreement may not be changed or terminated orally. The headings
contained in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement. This Agreement shall be binding upon and
inure to the benefit of the personal representatives of Executive and the
successors and assigns of
-14-
<PAGE> 15
the Corporation. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
WESTERN UNION CORPORATION
By: John C. Walters
--------------------------------------
John C. Walters,
Senior Vice President
Robert J. Amman
--------------------------------------
Robert J. Amman
-15-
<PAGE> 16
Amendment dated as of December 7, 1990 (the "Amendment") to
the Employment Agreement dated as of the 20th day of April, 1990 (the
"Agreement") between Western Union Corporation, a New York corporation (the
"Corporation"), and Robert J. Amman (the "Executive").
1. Amendment of Section 5(A) of the Agreement. Subsection
(iv) of Section 5(A) of the Agreement is hereby amended by deleting the
reference to the provisions of Section 5(C) and shall read in its entirety as
follows:
"(iv) Resignation by Executive. Executive may resign on a
date specified on notice to the Corporation and the Corporation shall
have no severance payment or salary or benefit continuation
obligations to Executive hereunder."
2. Amendment of Section 5(C) of the Agreement. The Agreement
is hereby amended by eliminating Section 5(C) thereof in its entirety.
3. The undersigned hereby agree that, so long as the
Corporation's 19 1/2% Senior Secured Notes due December 15, 1992 remain
outstanding, they will not enter into any arrangements providing for the
payment of severance to the Executive upon a change in control of the
Corporation.
This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties have duly executed this
Amendment as of the date first above written.
WESTERN UNION CORPORATION
By: John C. Walters
-------------------------------------
John C. Walters
Senior Vice President
Robert J. Amman
-------------------------------------
Robert J. Amman
<PAGE> 17
AMENDMENT TO EMPLOYMENT AGREEMENT
Amendment, dated as of January 30, 1991, to the Employment Agreement
dated as of the 20th day of April, 1990, as previously amended (the
"Agreement"), between Western Union Corporation, a New York corporation (the
"Corporation"), and Robert J. Amman (the "Executive").
WHEREAS, Executive currently serves as President and Chief Executive
Officer of the Corporation pursuant to and in accordance with the terms of the
Agreement; and
WHEREAS, as a result of the changes in, and reduction in the scope of,
the Corporation's business, the Corporation recognizes that it is no longer
necessary for Executive to devote his full time and efforts in order to perform
his services under the Agreement; and
WHEREAS, Executive and the Corporation wish to modify the provisions
of the Agreement to permit Executive to engage in businesses and activities
outside of the Corporation; and
WHEREAS, the Corporation desires that Executive remain as President
and Chief Executive Officer of the Corporation, and that he devote such time as
is reasonable appropriate to serve in such position.
NOW, THEREFORE, in consideration of the agreements hereinafter set
forth, it is agreed as follows:
1. The fourth sentence of Section 2 of the Agreement is hereby
amended in its entirety to read as follows:
"Executive will devote such time and effort as may be reasonable
appropriate to enable him to perform his assigned duties and will
use his best efforts to promote the interest of the Corporation
and its subsidiaries and Affiliates; provided, however, that
Executive may engage in other employment or business activities,
as long as such employment or activities do not compete with the
business currently conducted by the Corporation and its
subsidiaries."
<PAGE> 18
2. Section 3(A) of the Agreement is hereby amended in its entirely to
read as follows:
"(A) As compensation for Executive's services during his
employment hereunder, the Corporation will pay (subject to the
provisions of Section 5 hereof) salary at a rate fixed from time
to time by the Board of Directors of the Corporation, which may be
more or less than his current salary on the date hereof ("Minimum
Salary"), depending on the nature and magnitude of the services
furnished by Executive hereunder. If the Board modifies the
salary of Executive after the date of this Agreement, such
modified salary shall thereafter be the Minimum Salary under this
Agreement; provided, however, that such modified Minimum Salary
may not be reduced without Executive's written consent.
Executive's salary shall be payable in installments at such
regular intervals as the Corporation uses for the payment of
executive salaries."
Except as set forth herein the Agreement, as previously amended, shall
continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
WESTERN UNION CORPORATION
By: John C. Walters
----------------------------------
Senior Vice President
Robert J. Amman
----------------------------------
Robert J. Amman
2
<PAGE> 1
EXHIBIT 21.1
Page 1 of 3
FIRST FINANCIAL MANAGEMENT CORPORATION
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
State or Other
Jurisdiction of
Name of Subsidiary (1) (2) Incorporation
- --------------------------- ---------------
<S> <C>
Appalachian Computer Services, Inc. Kentucky
Data Preparation, Inc. Georgia
FFHC, Inc. Georgia
FFMC Canada Inc. Ontario
Gamma Micro-Systemes LTEE Quebec
Gamma Terminals Inc. Quebec
Gamma Technik Inc. Quebec
FFMC Mexico H.C., Inc. Georgia
FFMC Mexico, S.A. de C.V. (2a) Mexico
FIRST HEALTH Services Corporation Virginia
First Mental Health, Inc. Tennessee
Psych Review Associates of Tennessee, Inc. (2b) Tennessee
Midwest Benefits Corporation Michigan
VIPS, INC. Maryland
FIRST HEALTH Strategies, Inc. Delaware
ALTA Reinsurance Company Arizona
FIRST HEALTH Realty, Inc. Utah
FIRST HEALTH Strategies (TPA), Inc. Delaware
FIRST HEALTH Strategies of Utah, Inc. Utah
FIRST HEALTH Insurance Agency, Inc. Massachusetts
FIRST HEALTH Review, Inc. Utah
FIRST HEALTH Strategies of New Mexico, Inc. New Mexico
FIRST HEALTH Strategies of Ohio, Inc. Ohio
FIRST HEALTH Strategies of Pennsylvania, Inc. Pennsylvania
FIRST HEALTH Strategies of Texas, Inc. Texas
U.S. Administrators, Inc. California
First Image Management Corporation Georgia
GENEX Services of Canada, Ltd. Pennsylvania
GENEX Services, Inc. Pennsylvania
PRIMECOR, INC. Pennsylvania
International Banking Technologies, Inc. Georgia
MicroBilt Corporation Georgia
COIN Banking Systems, Inc. Georgia
Hospital Cost Consultants, Inc. California
Master Hospital Systems, Inc. Texas
MicroBilt Leasing, Inc. Georgia
MicroBilt Products, Inc. Georgia
Retail Interact, Inc. California
TechPoint, Inc. Michigan
</TABLE>
<PAGE> 2
EXHIBIT 21.1
Page 2 of 3
FIRST FINANCIAL MANAGEMENT CORPORATION
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
State or Other
Jurisdiction of
Name of Subsidiary (1) (2) Incorporation
- --------------------------- ---------------
<S> <C>
National Bancard Corporation Florida
First Financial Bank Georgia
NaBANCO Merchant Services Corporation Delaware
Nationwide Credit, Inc. Georgia
Master Ventures, Inc. Georgia
The Master Collectors of Colorado, Inc. (2c) Colorado
Master Collectors of Dallas, Inc. (2d) Texas
The Master Collectors of Maryland, Inc. (2e) Maryland
Texas Master Collectors, Inc. (2f) Texas
OnLine Financial Communications Systems, Inc. Georgia
Prime Consulting Group, Inc. Georgia
TeleCheck International, Inc. Georgia
Shared Global Systems, Inc. Texas
TeleCheck Services, Inc. Delaware
TeleCheck Payment Systems Limited (2g) New Zealand
TeleCheck (Australia) Pty Limited (2g) Australia
Tele-Check New Zealand Limited (2g) New Zealand
TeleCheck Pittsburgh/West Virginia, Inc. Pennsylvania
TeleCheck Recovery Services, Inc. Colorado
TeleCheck Services of Puerto Rico, Inc. Georgia
Western Union Financial Services, Inc. Delaware
American Rapid Corporation Delaware
Grupo Dinamico Empresarial, S.A. de C.V. (2h) Mexico
Servicio Internacional de Envios, S.A. de C.V. (2i) Mexico
Servicio Mexicano de Entregas, S.A. de C.V (2j) Mexico
Servicio Mexicano de Apoyo, S.C. (2k) Mexico
Western Union Communications, Inc. Delaware
Western Union Financial Services (Canada), Inc. Ontario
Western Union Financial Services Eastern Europe Limited Delaware
Western Union National Payments Network, Inc. Delaware
Goldome Payments, Inc. New York
National Payments Network, Inc. New York
National Payment Centers, Inc. New York
</TABLE>
<PAGE> 3
EXHIBIT 21.1
Page 3 of 3
FIRST FINANCIAL MANAGEMENT CORPORATION
LIST OF SUBSIDIARIES
Footnote Explanations
(1) This list includes subsidiaries owned directly by FFMC and those owned
indirectly through another subsidiary; each indentation denotes a tier of
indirect ownership through wholly-owned subsidiaries.
(2) The Registrant owns 100% of the voting securities of all listed subsidiary
companies, with the following exceptions:
(a) One share of FFMC Mexico, S.A. de C.V. is held by Nationwide Credit,
Inc., a wholly-owned subsidiary of the Registrant, to satisfy a
Mexican requirement of at least two shareholders.
(b) 50% of Psych Review Associates of Tennessee, Inc. is owned by
Behavioral Health Management, Inc., which is not affiliated with
FFMC.
(c) 30% of The Master Collectors of Colorado, Inc. is owned by American
Medical (Central), Inc., which is not affiliated with FFMC.
(d) 33.4% of Master Collectors of Dallas, Inc. is owned by World Book
Finance, Inc., which is not affiliated with FFMC.
(e) 30% of The Master Collectors of Maryland, Inc. is owned by Providence
Hospital, Inc., which is not affiliated with FFMC.
(f) 30% of Texas Master Collectors, Inc. is owned by American Medical
(Central), Inc., which is not affiliated with FFMC.
(g) One Share of TeleCheck Payment Systems Limited, TeleCheck (Australia)
Pty Limited and Tele-Check New Zealand Limited is held by TeleCheck
Services, Inc. to satisfy a New Zealand requirement of at least two
shareholders.
(h) 2% (or one share) of Grupo Dinamico Empresarial, S.A. de C.V. is held
by John C. Walters to satisfy a Mexican requirement of at least two
shareholders.
(i) 55% of Sericio Internacional de Envios, S.A. de C.V. is owned by
Elektra, S.A. de C.V., which is not affiliated with FFMC.
(j) 45% of Servicio Mexicano de Entregas, S.A. de C.V. is owned by
Elektra, S.A. de C.V., which is not affiliated with FFMC.
(k) 51% of Servicio Mexicano de Apoyo, S.C. is held by Grupo Dinamico
Empresarial, S.A. de C.V. (2%) and Servicio Internacional de Envios,
S.A. de C.V. (49%).
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in First Financial Management
Corporation's Registration Statement No. 33-29267 on Form S-3 filed June 19,
1989, Registration Statement No. 33-56327 on Form S-3 filed November 4, 1994
and the following Registration Statements on Form S-8:
<TABLE>
<CAPTION>
Registration Statement
------------------------------------
No. Filed
-------- -----------------
<S> <C>
2-84870 June 30, 1983
2-96064 February 26, 1985
33-10711 December 10, 1986
33-17834 October 9, 1987
33-18541 November 17, 1987
33-21675 May 5, 1988
33-25340 (a) December 28, 1988
33-32555 December 18, 1989
33-31915 (a) January 17, 1990
33-37532 November 5, 1990
33-40891 June 3, 1991
33-46669 March 25, 1992
33-48619 June 17, 1992
</TABLE>
(a) Post-Effective Amendment No. 1
of our reports dated January 27, 1995 on the consolidated financial statements
and financial statement schedule appearing in the Annual Report on Form 10-K
of First Financial Management Corporation for the year ended December 31, 1994.
Deloitte & Touche LLP
- ---------------------
DELOITTE & TOUCHE LLP
Atlanta, Georgia
March 17, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FIRST FINANCIAL MANAGEMENT CORPORATION FOR THE YEAR
ENDED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-1-1994
<PERIOD-END> DEC-31-1994
<CASH> 326
<SECURITIES> 0
<RECEIVABLES> 482
<ALLOWANCES> 8
<INVENTORY> 0
<CURRENT-ASSETS> 903
<PP&E> 314
<DEPRECIATION> 150
<TOTAL-ASSETS> 3,136
<CURRENT-LIABILITIES> 694
<BONDS> 500
<COMMON> 6
0
0
<OTHER-SE> 1,424
<TOTAL-LIABILITY-AND-EQUITY> 3,136
<SALES> 73
<TOTAL-REVENUES> 2,208
<CGS> 47
<TOTAL-COSTS> 1,768
<OTHER-EXPENSES> 98
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1)<F1>
<INCOME-PRETAX> 268
<INCOME-TAX> 108
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 160
<EPS-PRIMARY> 2.56
<EPS-DILUTED> 2.56
<FN>
<F1>Amount shown above is a net interest income amount, after deducting
interest expense from interest income, consistent with FFMC's income statement
presentation.
</FN>
</TABLE>
