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, 1999
OR/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to Commission file number 0-13754
NOONEY REALTY TRUST, INC.
(Exact name of Registrant as specified in its charter)
Missouri 43-1339136
(State or other jurisdiction of (I.R.S. Employer incorporation or
organization) Identification No.)
1100 Main, Suite 2100 Kansas City, Missouri 64105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (816) 421-4670
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Common Stock - $1.00 Par Value
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
__ Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of 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.
<PAGE>
As of February 1, 2000, there were 866,624 shares of the Registrant's common
stock, par value $1 per share, issued and outstanding.
Documents incorporated by reference:
(1) Portions of the Registrant's 1999 Annual Report to Shareholders are
incorporated by reference in Parts I & II of this Annual Report on Form 10-K.
(2) Portions of the Registrant's 2000 Proxy Statement for the Annual Meeting to
be held on May 9, 2000, are incorporated into Part III, as described herein.
Such proxy statement will be filed within 120 days after the end of the fiscal
year covered by this Annual Report on Form 10-K.
This 10-K contains forward-looking information (as defined in the Private
Securities Litigation Reform Act of 1995) that involves risk and uncertainty,
including trends in the real estate investment market, projected leasing and
sales, and the future prospects for the Registrant. Actual results could differ
materially from those contemplated by such statements. Also, statements
including the words "expects," "anticipates," "intends," "plans," "believes,"
"seeks," or variations of such words and similar expressions are forward-looking
statements. The Registrant notes that a variety of factors could cause its
actual results and experience to differ materially from the anticipated results
or other expectations expressed in these forward-looking statements. The risks
and uncertainties that may affect the operation, performance, development and
results of the Registrant's business include, but are not limited to, the
following: competition, inflation, the ability to retain key tenants and general
economic, business and social conditions.
PART I
ITEM 1: BUSINESS
Nooney Realty Trust, Inc. (the "Registrant" or "Trust") is a corporation formed
under The General and Business Corporation Law of Missouri on June 14, 1984, to
make equity investments in income-producing real properties, primarily
commercial and light industrial properties. The Registrant originally acquired
three real property investments as set forth in Item 2 below. Information
respecting revenues, net income, capital expenditures and depreciation and
amortization for each property is set forth in Note 10 to the Trust's Notes to
Financial Statements and incorporated by reference from the Registrant's 1999
Annual Report to Shareholders under the heading "Financial Statements and
Notes".
The Registrant's primary investment objectives are to preserve and protect
Shareholders' capital, provide the maximum possible cash distributions to
Shareholders and provide for capital growth through appreciation in property
values. Since 1985 the Registrant has qualified as a real estate investment
trust ("REIT") under the Internal Revenue Code. It was management's original
objective to sell or refinance the Registrant's properties approximately eight
to twelve years after their acquisition. However, because of the depression of
real estate values experienced nationwide from 1988 to 1993, this time frame was
extended in order to achieve the goal of capital appreciation.
The real estate investment market began to improve in 1994 and is expected to
further continue its improvement over the next several years. Management
believes this trend should increase the value of the Trust's properties in the
future. The status of the Trust's individual properties and opportunities to
increase their value is carefully reviewed by management and the Board of
Trustees on a quarterly basis along with any proposals or opportunities that are
presented to expand or merge the Trust.
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The Registrant's current Articles of Incorporation and Bylaws provide that it is
intended to be self-liquidating and the proceeds from the sale or refinancing of
the Registrant's real property investments will not be invested in new
properties but will be distributed to the Shareholders or, at the discretion of
management, applied to capital improvements to, or the payment of indebtedness
with respect to, existing properties, other expenses or the establishment of
cash reserves.
Management is considering seeking shareholder approval of amendments to the
self-liquidating and related provisions of the Articles of Incorporation and
Bylaws.
The business in which the Registrant is engaged is highly competitive. The
Registrant's investment properties are located in or near major urban areas and
are subject to competition from other similar types of properties in such areas.
The Registrant competes for tenants for its properties with numerous other real
estate investment trusts, as well as with individuals, corporations, real estate
limited partnerships and other entities engaged in real estate investment
activities. Such competition is based on such factors as location, rent
schedules and services and amenities provided. A substantial portion of the
Trust's revenues are derived from a single tenant. (See Note 4 to the
accompanying financial statements)
On October 19, 1999, the Trust entered into a Settlement Agreement (the
"Settlement Agreement") relating to a lawsuit filed in the Circuit Court of
Jackson County, Missouri on August 18, 1997 entitled Nooney Realty Trust, Inc.
v. David Johnson, et al. The closing under the Settlement Agreement occurred on
November 9, 1999. As a result of the Settlement Agreement, there was a change in
control of the Registrant. See "Item 3: Legal Proceedings".
Effective November 10, 1999, the Registrant engaged Maxus Properties, Inc., a
Missouri corporation ("Maxus"), to provide property management services for the
Registrant. David L. Johnson, Chairman, Chief Executive Officer and a trustee of
the Registrant, is the Chief Executive Officer and the majority shareholder of
Maxus. Daniel W. Pishny, President and a trustee of the Registrant, is President
and Chief Operating Officer of Maxus. John W. Alvey, Vice President and Chief
Financial and Accounting officer is Executive Vice President and Chief Financial
Officer of Maxus. Maxus employs more than 250 people to manage 49 commercial
properties, including over 8,000 apartment units and 700,000 square feet of
retail and office space.
As of December 31, 1999, the Registrant has no employees.
ITEM 1A: EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with respect to the executive
officers of the Registrant as of March 1, 2000.
Has served in
Name Position Age position since
- -----------------------------------------------------------------------------
David L. Johnson* Chairman and Trustee 43 November 10, 1999
Daniel W. Pishny* President and Trustee 37 November 10, 1999
John W. Alvey Vice President 41 November 10, 1999
* First served as Trustee November 27, 1999.
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DAVID L. JOHNSON
Mr. Johnson, age 43, is Chairman, Chief Executive Officer and majority
shareholder of Maxus , whose offices are located at 1100 Main, Suite 2100,
Kansas City, Missouri 64105. He has served in this capacity since its inception
in 1988. Mr. Johnson is also Vice President of KelCor, Inc. ("KelCor"), a
Missouri corporation that specializes in the acquisition of commercial real
estate.
DANIEL W. PISHNY
Mr. Pishny, age 37, is President and Chief Operating Officer of Maxus. He has
served in this capacity since 1995. Mr. Pishny is responsible for the day-to-day
operations of Maxus and its managed properties.
JOHN W. ALVEY
Mr. Alvey, age 41, is Executive Vice President and Chief Financial Officer of
Maxus and President of KelCor. He has served in these capacities since 1988.
ITEM 2: PROPERTIES
On March 28, 1985, the Registrant purchased The Atrium at Alpha Business Center
("The Atrium"), a multi-tenant office building located at 2626 East 82nd Street
in Bloomington, Minnesota, a suburb of Minneapolis. The Atrium contains
approximately 89,000 net rentable square feet and is located, along with a
parking lot that will accommodate 336 cars, on a 4.2 acre site. The purchase
price of The Atrium was $8,393,716. The Atrium was 86% leased by 27 tenants at
Dec. 31, 1999.
The Atrium has been classified in the Minneapolis Airport Committee's (the
"MAC") Safety Zone A in the future expansion of the Minneapolis Airport. The
expansion runway is anticipated to be completed in 2003. The MAC will begin
buying out impacted buildings during 1999. Safety Zone A is adjacent to the
Federal Aviation Authority's noise buy out zone. The MAC has not indicated
whether or not it will buy out the Trust's building. The Trust is monitoring
whether the increased noise from the new runway will have an impact on future
leasing of the building. If the Trust determines there is a negative impact, the
Trust will petition the MAC to buy the building. If the building continues to be
classified in Safety Zone A, it will be classified as nonconforming use. Given
the preliminary state of the future expansion, management is unable at this time
to determine what impact, if any, this matter will have on the Trust.
On January 22, 1986, the Registrant purchased the Applied Communications, Inc.
Building (the "ACI Building"), an office building located at 330 South 108th
Avenue in Omaha, Nebraska. The ACI Building contains approximately 70,000 net
rentable square feet and is located on a 7.59 acre site which provides paved
parking for 400 cars. The purchase price of the ACI Building was $6,401,008. The
building is 100% leased by a single tenant, Applied Communications, Inc. During
the quarter ended September 30, 1999, the status of the ACI Building was changed
from held for investment to held for sale. During the quarter ended December 31,
1999, the status returned to held for investment. At this time, there are no
plans for the sale of this property.
On December 16, 1986, the Registrant purchased the Franklin Park Distribution
Center ("Franklin Park"), a warehouse and distribution facility located at 3431
N. Powell Avenue in Franklin Park, Illinois, a suburb west of Chicago. Franklin
Park contains approximately 162,000 net rentable square feet and is located on a
five-acre site which provides parking for 100 cars. The purchase price of
Franklin Park was $4,301,494. Franklin Park was 57% leased by one tenant at Dec.
31, 1999.
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All of the Registrant's properties are subject to deeds of trust and assignments
of rents securing a $4.6 million mortgage note. The note bears interest at 8.4%
per annum and is payable in monthly installments of principal and interest
aggregating $40,976 until November 2001, at which time the balance of the note
($4.5 million) becomes due. Reference is made to Note 2 of Notes to Financial
Statements incorporated by reference to the Registrant's 1999 Annual Report to
Shareholders under the heading "Financial Statements and Notes" for a
description of the mortgage indebtedness secured by the Registrant's real
property investments. Reference is also made to Note 4 of Notes to Financial
Statements for a discussion of revenues derived from major tenants.
The following table sets forth certain information as of December 31, 1999,
relating to the properties owned by the Registrant.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Average
Annualized Principal Tenants
Effective Over 10% of
Total Base Rent Property Lease
Square Annualized Per Square Percent Square
Property Feet Base Rent Foot Leased Footage Exp.
Atrium At Alpha
Business Center 89,000 $1,228,831 $13.81 86% Synertech 2003
Health Systems
Solutions, Inc.
(15.7%)
Applied
Communications Inc.
Building 70,000 $987,000 $14.10 100% Applied 2008
Communications
Inc. (100%)
Franklin Park
Distribution Center 162,000 $280,152 $3.05 57% Household 2004
Finance (57%)
</TABLE>
ITEM 3: LEGAL PROCEEDINGS
On October 19, 1999, the Trust entered into the Settlement Agreement relating to
a lawsuit filed in the Circuit Court of Jackson County, Missouri on August 18,
1997 entitled Nooney Realty Trust, Inc. v. David Johnson, et al. (the
"Lawsuit"). The closing under the Settlement Agreement occurred on November 9,
1999 (the "Closing").
The Lawsuit was filed by the Trust. Among other claims, the Trust had asked for
a declaratory judgment against certain individuals and entities who hold shares
of the Trust. The Trust initiated the suit to obtain a judicial determination of
the validity and status of some of the Trust's shares (referred to as "Excess
Shares"). On April 27, 1999, the Court entered summary judgment for the
defendants on the Trust's declaratory judgment count and designated its decision
for appeal without awaiting resolution of the Trust's remaining claims. The
Trust appealed the judgment, but on October 19, 1999, the Lawsuit was settled.
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Pursuant to the Settlement Agreement, (i) CGS Real Estate Company, Inc. ("CGS")
and certain of its affiliates sold all of their shares of common stock in the
Trust owned beneficially or of record by CGS or its affiliates (75,763 shares)
to NKC Associates, L.L.C. (37,881) and Chris Garlich (37,882) at a price of
$10.00 per share, (ii) Lawrence E. Fiedler, and James P. Ingram resigned as
members of the Board of Trustees, and each of William J. Carden, Thomas N.
Thurber, Gregory J. Nooney, Jr., Glenda F. White and Patricia A. Nooney resigned
as officers of the Trust effective as of the Closing, (iii) Robert B. Thomson
and Monte McDowell were elected by the Board of Trustees to fill the vacancies
created by the resignations of Messrs. Fielder and Ingram, (iv) CGS and its
affiliates terminated each of the management and other services agreements
between CGS and its affiliates and the Trust, (v) the Lawsuit was dismissed
pursuant to stipulations of dismissal with prejudice signed by each of the
parties to the Lawsuit and (vi) William J. Carden and Thomas N. Thurber
terminated their employment agreements with the Trust. In connection with the
Settlement Agreement, the Trust paid $50,000 to an affiliate of Mr. Carden and
$25,000 to Mr. Thurber to settle its deferred compensation obligation to Messrs.
Carden and Thurber aggregating $408,334.
Effective November 9, 1999, the Board of Trustees elected the following
officers: David L. Johnson, Chairman; Daniel W. Pishny, President; John W.
Alvey, Vice-President; Christine A. Robinson, Secretary; and Amy Kennedy,
Treasurer.
The Settlement Agreement also required that William J. Carden, Gregory J.
Nooney, Jr. and William W. Geary, Jr. resign as members of the Baord. However,
Rule 14f-1 of the Securities Exchange Act of 1934 required, the Trust, at least
ten days prior to a change in a majority of the trustees, to file certain
information regarding the new management with the Securities and Exchange
Commission and to transmit this information to all shareholders of the Trust.
Messrs. Carden, Nooney and Geary resigned effective as of November 27, 1999, the
expiration of the ten day period. The remaining members of the Board appointed
David L. Johnson Daniel W. Pishny and Chris Garlich to fill the vacancies on the
Board created by these resignations at that time.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of Shareholders during the fourth
quarter of fiscal 1999.
PART II
ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information required by Item 201 of Regulation S-K is incorporated by
reference from the Registrant's 1999 Annual Report to Shareholders under the
headings "Market Information" and "Dividends".
ITEM 6: SELECTED FINANCIAL DATA
The information required by Item 301 of Regulation S-K is incorporated by
reference from the Registrant's 1999 Annual Report to Shareholders under the
heading "Financial Highlights".
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ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by Item 303 of Regulation S-K is incorporated by
reference from the Registrant's 1999 Annual Report to Shareholders under the
heading "Management's Discussion and Analysis of Financial Condition and Results
of Operations".
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by Item 305 of Regulation S-K is incorporated by
reference from the Registrant's 1999 Annual Report to Shareholders under the
heading "Market Risk."
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of the Registrant are incorporated by reference from
the Registrant's 1999 Annual Report to Shareholders. Financial Statement
Schedules are filed herewith as Exhibit 99.1 and are incorporated herein by
reference. The supplementary financial information specified by Item 302 of
Regulation S-K is not applicable.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The information required by Item 304 of Regulation S-K is incorporated by
reference from the Registrant's 1999 Annual Report to Shareholders under the
heading "Change in Independent Auditors."
PART III
ITEM 10: TRUSTEES AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Trustees- the information set forth in the Registrant's definitive proxy
statement to be filed in connection with its Annual Meeting to be held on May 9,
2000 under the captions "Election of Trustees" and "Other Matters - Section
16(a) Beneficial Ownership Reporting Compliance" is incorporated herein by
reference.
(b)Executive Officers-Information regarding the Executive Officers of the
Registrant is as set forth in Item 1A of this report under the caption
"Executive Officers of the Registrant."
ITEM 11: EXECUTIVE COMPENSATION
The information set forth in the Registrant's definitive proxy statement to be
filed in connection with its Annual Meeting to be held on May 9, 2000 under the
captions "Election of Trustees-Trustee's Compensation," "Election of
Trustees-Executive Compensation," "Election of Trustees-Related Transactions,"
and "Election of Trustees-Report of the Independent Trustees" is incorporated
herein by reference.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth in the Registrant's definitive proxy statement to be
filed in connection with its
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<PAGE>
Annual Meeting to be held on May 9, 2000 under the caption "Election of
Trustees" is incorporated herein by reference.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth in the Registrant's definitive proxy statement to be
filed in connection with its Annual Meeting to be held May 9, 2000 under the
caption "Election of Trustees-Related Transactions" is incorporated herein by
reference.
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
1. Financial Statements:
The following financial statements of the Registrant are incorporated by
reference to the Registrant's 1999 Annual Report to Shareholders:
Balance Sheets (December 31, 1999 and 1998)
Statements of Operations (For the years ended December 31, 1999, 1998 and 1997)
Statements of Shareholders' Equity (For the years ended December 31, 1999, 1998
and 1997)
Statements of Cash Flows (For the years ended December 31, 1999, 1998 and 1997)
Notes to Financial Statements (December 31, 1999, 1998 and 1997)
2. Financial Statement Schedules (filed herewith as Exhibit 99.1):
Schedule 1 (Schedule III) - Real Estate and Accumulated Depreciation.
All other schedules are omitted because they are inapplicable or not required
under the instructions.
(b) Reports on Form 8-K
The following reports on Form 8-K were filed by the Registrant since the end of
the third quarter of 1999:
On November 10, 1999, the Registrant filed a Form 8-K (File No. 000-13754)
reporting a change in control of the Registrant.
On November 17, 1999, the Registrant filed a Form 8-K (File No. 000-13754)
reporting information regarding the new board members in connection with the
change in control of the Registrant.
On January 25, 2000, the Registrant filed a Form 8-K (File No. 000-13754)
reporting the dismissal of Deloitte and Touche LLP as its certifying accountant.
On February 14, 2000, the Registrant filed Amendment No. 1 to this Form 8-K.
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<PAGE>
On February 11, 2000, the Registrant filed a report on Form 8-K (File No.
000-13754) which reported the appointment of KPMG LLP as its certifying
accountant.
(c) Exhibits:
A list of exhibits required to be filed as part of this report on Form 10-K is
set forth in the Exhibit Index, which immediately precedes such exhibits, and is
incorporated herein by reference.
(d) Not Applicable.
(Remainder of this page left blank intentionally)
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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, there unto duly authorized.
NOONEY REALTY TRUST, INC.
Date: March 15, 2000 By: /s/ David L. Johnson
David L. Johnson
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on March 15, 2000, by the following persons on behalf of
the Registrant and in the capacities indicated.
/s/ David L. Johnson
David L. Johnson
Chairman, Chief Executive
Officer and Trustee
/s/ Daniel W. Pishny
Daniel W. Pishny
President and Trustee
/s/ Christopher Garlich
Christopher Garlich
Trustee
/s/ Monte McDowell
Monte McDowell
Trustee
/s/ Robert B. Thomson
Robert B. Thomson
Trustee
/s/ John W. Alvey
John W. Alvey
Vice President
Chief Financial and Accounting
Officer
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EXHIBIT INDEX
Exhibit
Number Description
3.1 Articles of Incorporation dated June 12, 1984, are incorporated by
reference to Exhibit 3(a) to the Registration Statement on Form S-11
under the Securities Act of 1933 (File No. 2-91851).
3.2 Bylaws of the Registrant, as amended, are incorporated by reference to
Exhibit 3.2 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987, as filed pursuant to Rule 13a-1
under The Securities Exchange Act of 1934 (File No. 0-13754).
10.1 Dividend Reinvestment Agreement between Mellon Bank, N.A. and the
Registrant is incorporated by reference to Exhibit 10(d) to Amendment
No. 1 to the Registration Statement on Form S-11 under the Securities
Act of 1933 (File No. 2-91851).
10.2 Dividend Reinvestment Plan is incorporated by reference to pages A-1 -
A-3 of the Prospectus of the Registrant dated September 25, 1984, as
supplemented and filed pursuant to Rule 424(c) under the Securities Act
of 1933 (File No. 2-91851).
10.3 Stock Option Agreement for William J. Carden, dated as of March 1, 1998,
is incorporated by reference to Exhibit 10.6 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997, as
filed pursuant to Rule 13a-1 under The Securities Exchange Act of 1934
(File No. 0-13754).
10.4 Stock Option Agreement for Thomas N. Thurber, dated as of March 1, 1998,
is incorporated by reference to Exhibit 10.8 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997, as
filed pursuant to Rule 13a-1 under The Securities Exchange Act of 1934
(File No. 0-13754).
10.5 Amendment No. 1, to Non qualified Stock Option Agreement for William J.
Carden, dated as of May 28, 1998 is incorporated by reference to Exhibit
10.7 to the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, as filed pursuant to Rule 13a-1 under the
Securities Exchange Act of 1934 (File No. 0-1375).
10.6 Amendment No. 1, to Non qualified Stock Option Agreement for Thomas N.
Thurber dated as of May 28, 1998 is incorporated by reference to Exhibit
10.8 to the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, as filed pursuant to Rule 13a-1 under the
Securities Exchange Act of 1934 (File No. 0-1375).
10.7 Filed herewith. Management Agreement dated November 10, 1999 by and
between Nooney Realty Trust, Inc. and Maxus Properties, Inc. regarding
the Franklin Park Distribution Center.
10.8 Filed herewith. Management Agreement dated November 10, 1999 by and
between Nooney Realty Trust, Inc. and Maxus Properties, Inc. regarding
the ACI Building.
10.9 Filed herewith. Management Agreement dated November 10, 1999 by and
between Nooney Realty Trust, Inc. and Maxus Properties, Inc. regarding
the Atrium at Alpha Business Center.
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10.10 Filed herewith. Settlement Agreement dated as of October 19, 1999 by
and among Bond Purchase, L.L.C., et al., and CGS Real Estate Company,
Inc., et al. (without exhibits).
10.11 Filed herewith. Office/Warehouse Lease Agreement dated June 2, 1989, as
further amended by First Amendment to Lease dated July 6, 1994, and
Second Amendment to Lease dated March 30, 1999 by and between Nooney,
Inc., agent for Nooney Realty Trust, Inc., as Landlord, and Household
Finance Corporation III, as tenant.
10.12 Filed herewith. ACI Building Lease dated December 28, 1992, as further
amended by First Amendment to Lease dated September 9, 1998 by and
between Nooney Realty Trust, Inc., through its agent, Nooney Krombach
Company, and Applied Communications, Inc.
13 Filed herewith. 1999 Annual Report to Shareholders. Except for those
portions expressly incorporated by reference in this Form 10-K, the
1999 Annual Report to Shareholders is furnished for the information of
the Commission and is not to be deemed "filed" as part of this Form
10-K.
27 Financial Data Schedule (provided for the information of the Securities
and Exchange Commission only)
99.1 Financial Statement Schedules.
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M A N A G E M E N T A G R E E M E N T
---------------------------------------
OWNER: Nooney Realty Trust, Inc.
AGENT: Maxus Properties, Inc.
PREMISES: Franklin Park Distribution Center
3465 N. Powell Ave.
Powell, Illinois 60131
BEGINNING: November 10, 1999
ENDING: November 10, 2004
<PAGE>
IN CONSIDERATION of the covenants herein contained, Nooney Realty Trust, Inc.
(hereinafter called "Owner"), and Maxus Properties, Inc. (hereinafter called
"Agent"), agree as follows:
1. The Owner hereby employs the Agent exclusively to rent and manage the
property known as Franklin Park Distribution Center (hereinafter the "Premises")
upon the terms and conditions hereinafter set forth, for a term of five (5)
years beginning on November 10, 1999, and ending on November 10, 2004, and
thereafter for yearly periods from time to time, unless on or before 60 days
prior to the date last above mentioned or on or before 60 days prior to the
expiration of any such renewal period, either party hereto shall notify the
other in writing that it elects to terminate this Agreement, in which case this
Agreement shall be thereby terminated on said last mentioned date. (See also
Paragraph 6.3 below.)
2. THE AGENT AGREES:
2.1 To accept the management of the Premises, to the extent, for the period,
and upon the terms herein provided and agrees to furnish the services of its
organization for the rental operation and management of the Premises.
2.2 To prepare a monthly statement of receipts and disbursements and to
remit, on a monthly basis, the net cash flow generated by the Premises after
payment of all operating expenses, debt service and escrow payments if
applicable, to the following party:
Nooney Realty Trust, Inc.
c/o David L. Johnson
P.O. Box 26730
Kansas City, Missouri 64196
In the event total monthly disbursements are in excess of total monthly
receipts, the Owner shall promptly provide funds to cover such shortfalls.
Nothing contained herein shall obligate the Agent to advance its own funds on
behalf of the Owner to cover any shortfalls.
2.3 To cause all employees of the Agent who handle or are responsible for the
safekeeping of any monies of the Owner to be covered by a fidelity bond in an
amount and with a company determined by the Agent.
3. THE OWNER AGREES:
To give the Agent the following authority and powers (all or any of which may
be exercised in the name of the Owner) and agrees to assume all expenses in
connection therewith.
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3.1 To advertise the Premises or any part thereof; to display signs thereon
and to rent the same; to cause references of prospective tenants to be
investigated; to sign leases for terms not in excess of one year and to renew
and/or cancel the existing leases and prepare and execute the new leases without
additional charge to the Owner; provided; however, that the Agent may collect
from tenant all or any of the following: a late rent administrative charge, a
non-negotiable check charge, credit report fee, a subleasing administrative
charge and/or broker's commission and need not account for such charges and/or
commission to the Owner; to terminate tenancies and to sign and serve such
notices as are deemed needful by the Agent; to institute and prosecute actions
to oust tenants and to recover possession of the Premises; to sue for and
recover rent; and, when expedient, to settle, compromise, and release such
actions or suits, or reinstate such tenancies. Owner shall reimburse Agent for
all expenses of litigation including attorneys' fees, filing fees, and court
costs which Agent does not recover from tenants. Agent may select the attorney
of its choice to handle such litigation.
3.2 To hire, discharge, and pay all managers, engineers, janitors and other
employees; to make or cause to be made all ordinary repairs and replacements
necessary to preserve the Premises in its present condition and for the
operating efficiency thereof and all alterations required to comply with lease
requirements, and to do decorating on the Premises; to negotiate contracts for
nonrecurring items not exceeding $5,000 and to enter into agreements for all
necessary repairs, maintenance, minor alterations and utility services; and to
purchase supplies and pay bills. Agent shall secure the approval of the Owner
for items, except monthly or recurring operating charges and emergency repairs
in excess of the maximum, if, in the opinion of the Agent, such repairs are
necessary to protect the property from damage or to maintain services to the
tenants as called for by their tenancy.
3.3 To collect rents and/or assessments and other items due or to become due
and give receipts therefor and to deposit all funds collected hereunder in the
Agent's custodial account.
3.4 Agent agrees to collect all tenant security deposits. Owner instructs
Agent to deposit all security deposits in the general operating accounts of the
property. Agent is not to segregate the security deposits into a separate
account or into an escrow account.
3.5 To execute and file all returns and other instruments and do and perform
all acts required of the Owner as an employer with respect to the Premises under
the Federal Insurance Contributions Acts, the Federal Unemployment Tax Act and
Subtitle C of the Internal Revenue Code of 1954 with respect to wages paid by
the Agent on behalf of the Owner and under any similar federal and state law now
or hereafter in force (and in connection therewith the Owner agrees upon request
to promptly execute and deliver to the Agent all necessary powers of attorney,
notices of appointment, and the like).
3.6 The Agent shall not be required to advance any monies for the care or
management of said property, and the Owner agrees to advance all monies
necessary therefor. If the Agent shall elect to advance any money in connection
with the property, the Owner agrees to reimburse the Agent forthwith and hereby
authorizes the Agent to deduct such advances from any monies due the Owner. The
Agent, shall, upon instruction from the Owner, impound reserves each month for
the payment of real estate taxes, insurance, or any other special expenditure.
3
<PAGE>
4. THE OWNER FURTHER AGREES:
4.1 To indemnify, defend and save the Agent harmless from all suits in
connection with the Premises and from liability for damage to property and
injuries to or death of any employee or other person whomsoever, and to carry at
his (its) own expense public liability, elevator liability (if elevators are
part of the equipment of the Premises), and workmen's compensation insurance
naming the Owner and Agent, adequate to protect their interests in form,
substance, and amounts reasonably satisfactory to the Agent, and to furnish to
the Agent certificates evidencing the existence of such insurance. Unless the
Owner shall provide such insurance and furnish such certificate within 30 days
from the date of this Agreement, the Agent may, but shall not be obligated to,
place said insurance and charge the cost thereof to the account of the Owner.
All such insurance policies shall provide that the Agent shall receive thirty
(30) days' written notice prior to cancellation of the policy.
4.2 To pay all expenses incurred by the Agent, including, but not limited to,
reasonable attorneys' fees and Agent's costs and time in connection with any
claim, proceeding, or suit involving an alleged violation by the Agent or the
Owner, or both, of any law pertaining to fair employment, fair credit reporting,
environmental protection, rent control, taxes, or fair housing, including, but
not limited to, any law prohibiting, or making illegal, discrimination on the
basis of race, sex, creed, color, religion, national origin, or mental or
physical handicap; provided, however, that the Owner shall not be responsible to
the Agent for any such expenses in the event the Agent is finally adjudicated to
have personally, and not in a representative capacity, violated any such law.
Nothing contained herein shall obligate the Agent to employ counsel to represent
the Owner in any such proceeding or suit, and the Owner may elect to employ
counsel to represent the Owner in any such proceeding or suit. The Owner also
agrees to pay reasonable expenses (or an apportioned amount of such expenses
where other employers of Agent also benefit from the expenditure) incurred by
the Agent in obtaining legal advice regarding compliance with any law affecting
the premises or activities related thereto.
4.3 To indemnify, defend, and save the Agent harmless from all claims,
investigations, and suits, or from actions or failures to act of the Owner, with
respect to any alleged or actual violation of state or federal labor laws, it
being expressly agreed and understood that as between the Owner and the Agent,
all persons employed in connection with the Premises are employees of the Owner,
not the Agent. However, it shall be the responsibility of the Agent to comply
with all applicable state or federal labor laws. The Owner's obligation under
this paragraph 4.3 shall include the payment of all settlements, judgements,
damages, liquidated damages, penalties, forfeitures, back pay awards, court
costs, litigation expense, and attorneys' fees.
4.4 To give adequate advance written notice to the Agent if the Owner desires
that the Agent make payment, out of the proceeds from the premises, or mortgage
indebtedness, general taxes, special assessments, or fire, steam boiler, or any
other insurance premiums. In no event shall the Agent be required to advance its
own money in payment of any such indebtedness, taxes, assessments, or premiums.
4
<PAGE>
5. THE OWNER AGREES TO PAY THE AGENT EACH MONTH:
5.1 MANAGEMENT: Owner agrees to pay Agent for the ordinary management of the
Premises Two and Seven Tenths Percent (2.7%) of the monthly gross receipts from
the operation of the Premises during the period this Agreement remains in full
force and effect. Gross receipts are all amounts received from the operation of
the Premises including, but not limited to, rents, parking fees, deposits,
laundry income and fees.
5.2 OTHER ITEMS OF MUTUAL AGREEMENT: In the event Owner requests and Agent
agrees to perform services outside the scope of ordinary management of the
Premises, the parties will agree to a fee and payment structure for these
services prior to commencement of the work.
6. IT IS MUTUALLY AGREED THAT:
6.1 The Owner expressly withholds from the Agent any power or authority to
make any structural changes in any building or to make any other major
alterations or additions in or to any such building or equipment therein, or to
incur any expense chargeable to Owner other than expenses related to exercising
the express powers above vested in Agent without the prior written direction of
an authorized representative of Owner. Agent is granted the authority to make
structural changes or major alterations if such actions are required because of
danger to life or which are immediately necessary for the preservation and
safety of the Premises or the safety of the occupants thereof or are required to
avoid the suspension of any necessary service to the Premises.
6.2 The Agent does not assume and is given no responsibility for compliance
of any building on the Premises or any equipment therein with the requirements
of any statute, ordinance, law or regulation of any governmental body or of any
public authority or official thereof having jurisdiction, except to notify the
Owner promptly or forward to the Owner promptly any complaints, warnings,
notices, or summonses received by it relating to such matters. The Owner
represents that to the best of his (its) knowledge the Premises and such
equipment comply with all such requirements and authorizes the Agent, its
representatives, servants, and employees, of and from all loss, cost, expense,
and liability whatsoever which may be imposed on them or any of them by reason
of any present or future violation or alleged violation of such laws,
ordinances, statutes, or regulations.
6.3 In the event it is alleged or charged that any building on the Premises
or any equipment therein or any act or failure to act by the Owner with respect
to the Premises or the sale, rental or other disposition thereof fails to comply
with, or is in violation of, any of the requirements of a constitutional
provision, statute, ordinance, law or regulation of any governmental body or any
order or ruling of any public authority or official thereof having or claiming
to have jurisdiction thereover, and the Agent, in its sole and absolute
discretion, considers that the action or position of the Owner or registered
managing Agent with respect thereto may result in damage or liability to the
Agent, the Agent shall have the right to cancel this Agreement at any time by
written notice to the Owner of its election so to do, which cancellation shall
be effective upon the service of such notice. Such notice may be served
personally or by registered mail, on or to the person named to receive the
Agent's monthly statement at the address designated for such person as provided
in Paragraph 2.2 above, and if service by mail shall be deemed to have been
served when deposited in the U.S. Mail. Such
5
<PAGE>
cancellation shall not release the
indemnities of the Owner set forth in Paragraph 4 and 6.2 above and shall not
terminate any liability or obligation of the Owner to the Agent for any payment,
reimbursement, or other sum of money then due and payable to the Agent
hereunder.
7. This Agreement may be canceled by Owner before the termination date
specified in Paragraph 1 on not less than 60 days' prior written notice to the
Agent.
8. The Owner shall pay or reimburse the Agent for any sums of money due it
under this Agreement for service for actions prior to termination,
notwithstanding any termination of this Agreement. All provisions of this
Agreement that require the Owner to have insured or to defend, reimburse, or
indemnify the Agent (including, but not limited to, Paragraphs 4.1, 4.2, and
4.3) shall survive any termination and, if Agent is or becomes involved in any
proceeding or litigation by reason of having been the Owner's agent, such
provisions shall apply as if this Agreement were still in effect. The parties
understand and agree that the Agent may withhold funds for thirty (30) days
after the end of the month in which the Agreement is terminated to pay bills
previously incurred but not yet invoiced and to close accounts.
This Agreement shall be binding upon the successors and assigns of the Agent
and their heirs, administrators, executors, successors, and assigns of the
Owner.
IN WITNESS THEREOF, the parties hereto have affixed or caused to be affixed
their respective signatures effective this 10th day of November, 1999.
OWNER: Nooney Realty Trust, Inc.
By:/s/ Daniel W. Pishny
Daniel W. Pishny
President and Trustee
AGENT: Maxus Properties, Inc.
By:/s/ John W. Alvey
John W. Alvey
Vice President and Chief
Financial Officer
6
<PAGE>
M A N A G E M E N T A G R E E M E N T
---------------------------------------
OWNER: Nooney Realty Trust, Inc.
AGENT: Maxus Properties, Inc.
PREMISES: ACI Building
300 South 108th
Omaha, Nebraska, 68154
BEGINNING: November 10, 1999
ENDING: November 10, 2004
<PAGE>
IN CONSIDERATION of the covenants herein contained, Nooney Realty Trust, Inc.
(hereinafter called "Owner"), and Maxus Properties, Inc. (hereinafter called
"Agent"), agree as follows:
1. The Owner hereby employs the Agent exclusively to rent and manage the
property known as ACI Building (hereinafter the "Premises") upon the terms and
conditions hereinafter set forth, for a term of five (5) years beginning on
November 10, 1999, and ending on November 10, 2004, and thereafter for yearly
periods from time to time, unless on or before 60 days prior to the date last
above mentioned or on or before 60 days prior to the expiration of any such
renewal period, either party hereto shall notify the other in writing that it
elects to terminate this Agreement, in which case this Agreement shall be
thereby terminated on said last mentioned date. (See also Paragraph 6.3 below.)
2. THE AGENT AGREES:
2.1 To accept the management of the Premises, to the extent, for the period,
and upon the terms herein provided and agrees to furnish the services of its
organization for the rental operation and management of the Premises.
2.2 To prepare a monthly statement of receipts and disbursements and to
remit, on a monthly basis, the net cash flow generated by the Premises after
payment of all operating expenses, debt service and escrow payments if
applicable, to the following party:
Nooney Realty Trust, Inc.
c/o David L. Johnson
P.O. Box 26730
Kansas City, Missouri 64196
In the event total monthly disbursements are in excess of total monthly
receipts, the Owner shall promptly provide funds to cover such shortfalls.
Nothing contained herein shall obligate the Agent to advance its own funds on
behalf of the Owner to cover any shortfalls.
2.3 To cause all employees of the Agent who handle or are responsible for the
safekeeping of any monies of the Owner to be covered by a fidelity bond in an
amount and with a company determined by the Agent.
3. THE OWNER AGREES:
To give the Agent the following authority and powers (all or any of which may
be exercised in the name of the Owner) and agrees to assume all expenses in
connection therewith:
2
<PAGE>
3.1 To advertise the Premises or any part thereof; to display signs thereon
and to rent the same; to cause references of prospective tenants to be
investigated; to sign leases for terms not in excess of one year and to renew
and/or cancel the existing leases and prepare and execute the new leases without
additional charge to the Owner; provided; however, that the Agent may collect
from tenant all or any of the following: a late rent administrative charge, a
non-negotiable check charge, credit report fee, a subleasing administrative
charge and/or broker's commission and need not account for such charges and/or
commission to the Owner; to terminate tenancies and to sign and serve such
notices as are deemed needful by the Agent; to institute and prosecute actions
to oust tenants and to recover possession of the Premises; to sue for and
recover rent; and, when expedient, to settle, compromise, and release such
actions or suits, or reinstate such tenancies. Owner shall reimburse Agent for
all expenses of litigation including attorneys' fees, filing fees, and court
costs which Agent does not recover from tenants. Agent may select the attorney
of its choice to handle such litigation.
3.2 To hire, discharge, and pay all managers, engineers, janitors and other
employees; to make or cause to be made all ordinary repairs and replacements
necessary to preserve the Premises in its present condition and for the
operating efficiency thereof and all alterations required to comply with lease
requirements, and to do decorating on the Premises; to negotiate contracts for
nonrecurring items not exceeding $5,000 and to enter into agreements for all
necessary repairs, maintenance, minor alterations and utility services; and to
purchase supplies and pay bills. Agent shall secure the approval of the Owner
for items, except monthly or recurring operating charges and emergency repairs
in excess of the maximum, if, in the opinion of the Agent, such repairs are
necessary to protect the property from damage or to maintain services to the
tenants as called for by their tenancy.
3.3 To collect rents and/or assessments and other items due or to become due
and give receipts therefor and to deposit all funds collected hereunder in the
Agent's custodial account.
3.4 Agent agrees to collect all tenant security deposits. Owner instructs
Agent to deposit all security deposits in the general operating accounts of the
property. Agent is not to segregate the security deposits into a separate
account or into an escrow account.
3.5 To execute and file all returns and other instruments and do and perform
all acts required of the Owner as an employer with respect to the Premises under
the Federal Insurance Contributions Acts, the Federal Unemployment Tax Act and
Subtitle C of the Internal Revenue Code of 1954 with respect to wages paid by
the Agent on behalf of the Owner and under any similar federal and state law now
or hereafter in force (and in connection therewith the Owner agrees upon request
to promptly execute and deliver to the Agent all necessary powers of attorney,
notices of appointment, and the like).
3.6 The Agent shall not be required to advance any monies for the care or
management of said property, and the Owner agrees to advance all monies
necessary therefor. If the Agent shall elect to advance any money in connection
with the property, the Owner agrees to reimburse the Agent forthwith and hereby
authorizes the Agent to deduct such advances from any monies due the Owner. The
Agent, shall, upon instruction from the Owner, impound reserves each month for
the payment of real estate taxes, insurance, or any other special expenditure.
3
<PAGE>
4. THE OWNER FURTHER AGREES:
4.1 To indemnify, defend and save the Agent harmless from all suits in
connection with the Premises and from liability for damage to property and
injuries to or death of any employee or other person whomsoever, and to carry at
his (its) own expense public liability, elevator liability (if elevators are
part of the equipment of the Premises), and workmen's compensation insurance
naming the Owner and Agent, adequate to protect their interests in form,
substance, and amounts reasonably satisfactory to the Agent, and to furnish to
the Agent certificates evidencing the existence of such insurance. Unless the
Owner shall provide such insurance and furnish such certificate within 30 days
from the date of this Agreement, the Agent may, but shall not be obligated to,
place said insurance and charge the cost thereof to the account of the Owner.
All such insurance policies shall provide that the Agent shall receive thirty
(30) days' written notice prior to cancellation of the policy.
4.2 To pay all expenses incurred by the Agent, including, but not limited to,
reasonable attorneys' fees and Agent's costs and time in connection with any
claim, proceeding, or suit involving an alleged violation by the Agent or the
Owner, or both, of any law pertaining to fair employment, fair credit reporting,
environmental protection, rent control, taxes, or fair housing, including, but
not limited to, any law prohibiting, or making illegal, discrimination on the
basis of race, sex, creed, color, religion, national origin, or mental or
physical handicap; provided, however, that the Owner shall not be responsible to
the Agent for any such expenses in the event the Agent is finally adjudicated to
have personally, and not in a representative capacity, violated any such law.
Nothing contained herein shall obligate the Agent to employ counsel to represent
the Owner in any such proceeding or suit, and the Owner may elect to employ
counsel to represent the Owner in any such proceeding or suit. The Owner also
agrees to pay reasonable expenses (or an apportioned amount of such expenses
where other employers of Agent also benefit from the expenditure) incurred by
the Agent in obtaining legal advice regarding compliance with any law affecting
the premises or activities related thereto.
4.3 To indemnify, defend, and save the Agent harmless from all claims,
investigations, and suits, or from actions or failures to act of the Owner, with
respect to any alleged or actual violation of state or federal labor laws, it
being expressly agreed and understood that as between the Owner and the Agent,
all persons employed in connection with the Premises are employees of the Owner,
not the Agent. However, it shall be the responsibility of the Agent to comply
with all applicable state or federal labor laws. The Owner's obligation under
this paragraph 4.3 shall include the payment of all settlements, judgements,
damages, liquidated damages, penalties, forfeitures, back pay awards, court
costs, litigation expense, and attorneys' fees.
4.4 To give adequate advance written notice to the Agent if the Owner desires
that the Agent make payment, out of the proceeds from the premises, or mortgage
indebtedness, general taxes, special assessments, or fire, steam boiler, or any
other insurance premiums. In no event shall the Agent be required to advance its
own money in payment of any such indebtedness, taxes, assessments, or premiums.
5. THE OWNER AGREES TO PAY THE AGENT EACH MONTH:
4
<PAGE>
5.1 MANAGEMENT: Owner agrees to pay Agent for the ordinary management of the
Premises Three and Six Tenths Percent (3.6%) of the monthly gross receipts from
the operation of the Premises during the period this Agreement remains in full
force and effect. Gross receipts are all amounts received from the operation of
the Premises including, but not limited to, rents, parking fees, deposits,
laundry income and fees.
5.2 OTHER ITEMS OF MUTUAL AGREEMENT: In the event Owner requests and Agent
agrees to perform services outside the scope of ordinary management of the
Premises, the parties will agree to a fee and payment structure for these
services prior to commencement of the work.
6. IT IS MUTUALLY AGREED THAT:
6.1 The Owner expressly withholds from the Agent any power or authority to
make any structural changes in any building or to make any other major
alterations or additions in or to any such building or equipment therein, or to
incur any expense chargeable to Owner other than expenses related to exercising
the express powers above vested in Agent without the prior written direction of
an authorized representative of Owner. Agent is granted the authority to make
structural changes or major alterations if such actions are required because of
danger to life or which are immediately necessary for the preservation and
safety of the Premises or the safety of the occupants thereof or are required to
avoid the suspension of any necessary service to the Premises.
6.2 The Agent does not assume and is given no responsibility for compliance
of any building on the Premises or any equipment therein with the requirements
of any statute, ordinance, law or regulation of any governmental body or of any
public authority or official thereof having jurisdiction, except to notify the
Owner promptly or forward to the Owner promptly any complaints, warnings,
notices, or summonses received by it relating to such matters. The Owner
represents that to the best of his (its) knowledge the Premises and such
equipment comply with all such requirements and authorizes the Agent, its
representatives, servants, and employees, of and from all loss, cost, expense,
and liability whatsoever which may be imposed on them or any of them by reason
of any present or future violation or alleged violation of such laws,
ordinances, statutes, or regulations.
6.3 In the event it is alleged or charged that any building on the Premises
or any equipment therein or any act or failure to act by the Owner with respect
to the Premises or the sale, rental or other disposition thereof fails to comply
with, or is in violation of, any of the requirements of a constitutional
provision, statute, ordinance, law or regulation of any governmental body or any
order or ruling of any public authority or official thereof having or claiming
to have jurisdiction thereover, and the Agent, in its sole and absolute
discretion, considers that the action or position of the Owner or registered
managing Agent with respect thereto may result in damage or liability to the
Agent, the Agent shall have the right to cancel this Agreement at any time by
written notice to the Owner of its election so to do, which cancellation shall
be effective upon the service of such notice. Such notice may be served
personally or by registered mail, on or to the person named to receive the
Agent's monthly statement at the address designated for such person as provided
in Paragraph 2.2 above, and if service by mail shall be deemed to have been
served when deposited in the U.S. Mail. Such cancellation shall not release the
indemnities of the Owner set forth in Paragraph 4 and 6.2 above and
5
<PAGE>
shall not terminate any liability or obligation of the Owner to the Agent for
any payment, reimbursement, or other sum of money then due and payable
hereunder.
7. This Agreement may be canceled by Owner before the termination date
specified in Paragraph 1 on not less than 60 days' prior written notice to the
Agent.
8. The Owner shall pay or reimburse the Agent for any sums of money due it
under this Agreement for service for actions prior to termination,
notwithstanding any termination of this Agreement. All provisions of this
Agreement that require the Owner to have insured or to defend, reimburse, or
indemnify the Agent (including, but not limited to, Paragraphs 4.1, 4.2, and
4.3) shall survive any termination and, if Agent is or becomes involved in any
proceeding or litigation by reason of having been the Owner's agent, such
provisions shall apply as if this Agreement were still in effect. The parties
understand and agree that the Agent may withhold funds for thirty (30) days
after the end of the month in which the Agreement is terminated to pay bills
previously incurred but not yet invoiced and to close accounts.
This Agreement shall be binding upon the successors and assigns of the Agent
and their heirs, administrators, executors, successors, and assigns of the
Owner.
IN WITNESS THEREOF, the parties hereto have affixed or caused to be affixed
their respective signatures effective this 10th day of November, 1999.
OWNER: Nooney Realty Trust, Inc.
By:/s/ Daniel W. Pishny
Daniel W. Pishny
President and Trustee
AGENT: Maxus Properties, Inc.
By:/s/ John W. Alvey
John W. Alvey
Vice President and Chief
Financial Officer
6
<PAGE>
M A N A G E M E N T A G R E E M E N T
--------------------------------------
OWNER: Nooney Realty Trust, Inc.
AGENT: Maxus Properties, Inc.
PREMISES: The Atrium at Alpha Business Center
2626 East 82nd Street
Bloomington, Minnesota 55425
BEGINNING: November 10, 1999
ENDING: November 10, 2004
<PAGE>
IN CONSIDERATION of the covenants herein contained, Nooney Realty Trust, Inc.
(hereinafter called "Owner"), and Maxus Properties, Inc. (hereinafter called
"Agent"), agree as follows:
1. The Owner hereby employs the Agent exclusively to rent and manage
the property known as The Atrium at Alpha Business Center (hereinafter the
"Premises") upon the terms and conditions hereinafter set forth, for a term of
five (5) years beginning on November 10, 1999, and ending on November 10, 2004,
and thereafter for yearly periods from time to time, unless on or before 60 days
prior to the date last above mentioned or on or before 60 days prior to the
expiration of any such renewal period, either party hereto shall notify the
other in writing that it elects to terminate this Agreement, in which case this
Agreement shall be thereby terminated on said last mentioned date. (See also
Paragraph 6.3 below.)
2. THE AGENT AGREES:
2.1 To accept the management of the Premises, to the extent, for the period,
and upon the terms herein provided and agrees to furnish the services of its
organization for the rental operation and management of the Premises.
2.2 To prepare a monthly statement of receipts and disbursements and to
remit, on a monthly basis, the net cash flow generated by the Premises after
payment of all operating expenses, debt service and escrow payments if
applicable, to the following party:
Nooney Realty Trust, Inc.
c/o David L. Johnson
P.O. Box 26730
Kansas City, Missouri 64196
In the event total monthly disbursements are in excess of total monthly
receipts, the Owner shall promptly provide funds to cover such shortfalls.
Nothing contained herein shall obligate the Agent to advance its own funds on
behalf of the Owner to cover any shortfalls.
2.3 To cause all employees of the Agent who handle or are responsible for the
safekeeping of any monies of the Owner to be covered by a fidelity bond in an
amount and with a company determined by the Agent.
3. THE OWNER AGREES:
To give the Agent the following authority and powers (all or any of which may
be exercised in the name of the Owner) and agrees to assume all expenses in
connection therewith:
2
<PAGE>
3.1 To advertise the Premises or any part thereof; to display signs thereon
and to rent the same; to cause references of prospective tenants to be
investigated; to sign leases for terms not in excess of one year and to renew
and/or cancel the existing leases and prepare and execute the new leases without
additional charge to the Owner; provided; however, that the Agent may collect
from tenant all or any of the following: a late rent administrative charge, a
non-negotiable check charge, credit report fee, a subleasing administrative
charge and/or broker's commission and need not account for such charges and/or
commission to the Owner; to terminate tenancies and to sign and serve such
notices as are deemed needful by the Agent; to institute and prosecute actions
to oust tenants and to recover possession of the Premises; to sue for and
recover rent; and, when expedient, to settle, compromise, and release such
actions or suits, or reinstate such tenancies. Owner shall reimburse Agent for
all expenses of litigation including attorneys' fees, filing fees, and court
costs which Agent does not recover from tenants. Agent may select the attorney
of its choice to handle such litigation.
3.2 To hire, discharge, and pay all managers, engineers, janitors and other
employees; to make or cause to be made all ordinary repairs and replacements
necessary to preserve the Premises in its present condition and for the
operating efficiency thereof and all alterations required to comply with lease
requirements, and to do decorating on the Premises; to negotiate contracts for
nonrecurring items not exceeding $5,000 and to enter into agreements for all
necessary repairs, maintenance, minor alterations and utility services; and to
purchase supplies and pay bills. Agent shall secure the approval of the Owner
for items, except monthly or recurring operating charges and emergency repairs
in excess of the maximum, if, in the opinion of the Agent, such repairs are
necessary to protect the property from damage or to maintain services to the
tenants as called for by their tenancy.
3.3 To collect rents and/or assessments and other items due or to become due
and give receipts therefor and to deposit all funds collected hereunder in the
Agent's custodial account.
3.4 Agent agrees to collect all tenant security deposits. Owner instructs
Agent to deposit all security deposits in the general operating accounts of the
property. Agent is not to segregate the security deposits into a separate
account or into an escrow account.
3.5 To execute and file all returns and other instruments and do and perform
all acts required of the Owner as an employer with respect to the Premises under
the Federal Insurance Contributions Acts, the Federal Unemployment Tax Act and
Subtitle C of the Internal Revenue Code of 1954 with respect to wages paid by
the Agent on behalf of the Owner and under any similar federal and state law now
or hereafter in force (and in connection therewith the Owner agrees upon request
to promptly execute and deliver to the Agent all necessary powers of attorney,
notices of appointment, and the like).
3.6 The Agent shall not be required to advance any monies for the care
or management of said property, and the Owner agrees to advance all monies
necessary therefor. If the Agent shall elect to advance any money in connection
with the property, the Owner agrees to reimburse the Agent forthwith and hereby
authorizes the Agent to deduct such advances from any monies due the Owner. The
Agent, shall, upon instruction from the Owner, impound reserves each month for
the payment of real estate taxes, insurance, or any other special expenditure.
3
<PAGE>
4. THE OWNER FURTHER AGREES:
4.1 To indemnify, defend and save the Agent harmless from all suits in
connection with the Premises and from liability for damage to property and
injuries to or death of any employee or other person whomsoever, and to carry at
his (its) own expense public liability, elevator liability (if elevators are
part of the equipment of the Premises), and workmen's compensation insurance
naming the Owner and Agent, adequate to protect their interests in form,
substance, and amounts reasonably satisfactory to the Agent, and to furnish to
the Agent certificates evidencing the existence of such insurance. Unless the
Owner shall provide such insurance and furnish such certificate within 30 days
from the date of this Agreement, the Agent may, but shall not be obligated to,
place said insurance and charge the cost thereof to the account of the Owner.
All such insurance policies shall provide that the Agent shall receive thirty
(30) days' written notice prior to cancellation of the policy.
4.2 To pay all expenses incurred by the Agent, including, but not limited to,
reasonable attorneys' fees and Agent's costs and time in connection with any
claim, proceeding, or suit involving an alleged violation by the Agent or the
Owner, or both, of any law pertaining to fair employment, fair credit reporting,
environmental protection, rent control, taxes, or fair housing, including, but
not limited to, any law prohibiting, or making illegal, discrimination on the
basis of race, sex, creed, color, religion, national origin, or mental or
physical handicap; provided, however, that the Owner shall not be responsible to
the Agent for any such expenses in the event the Agent is finally adjudicated to
have personally, and not in a representative capacity, violated any such law.
Nothing contained herein shall obligate the Agent to employ counsel to represent
the Owner in any such proceeding or suit, and the Owner may elect to employ
counsel to represent the Owner in any such proceeding or suit. The Owner also
agrees to pay reasonable expenses (or an apportioned amount of such expenses
where other employers of Agent also benefit from the expenditure) incurred by
the Agent in obtaining legal advice regarding compliance with any law affecting
the premises or activities related thereto.
4.3 To indemnify, defend, and save the Agent harmless from all claims,
investigations, and suits, or from actions or failures to act of the Owner, with
respect to any alleged or actual violation of state or federal labor laws, it
being expressly agreed and understood that as between the Owner and the Agent,
all persons employed in connection with the Premises are employees of the Owner,
not the Agent. However, it shall be the responsibility of the Agent to comply
with all applicable state or federal labor laws. The Owner's obligation under
this paragraph 4.3 shall include the payment of all settlements, judgements,
damages, liquidated damages, penalties, forfeitures, back pay awards, court
costs, litigation expense, and attorneys' fees.
4.4 To give adequate advance written notice to the Agent if the Owner desires
that the Agent make payment, out of the proceeds from the premises, or mortgage
indebtedness, general taxes, special assessments, or fire, steam boiler, or any
other insurance premiums. In no event shall the Agent be required to advance its
own money in payment of any such indebtedness, taxes, assessments, or premiums.
4
<PAGE>
5. THE OWNER AGREES TO PAY THE AGENT EACH MONTH:
5.1 MANAGEMENT: Owner agrees to pay Agent for the ordinary management of the
Premises Three and Six Tenths Percent (3.6%) of the monthly gross receipts from
the operation of the Premises during the period this Agreement remains in full
force and effect. Gross receipts are all amounts received from the operation of
the Premises including, but not limited to, rents, parking fees, deposits,
laundry income and fees.
5.2 OTHER ITEMS OF MUTUAL AGREEMENT: In the event Owner requests and Agent
agrees to perform services outside the scope of ordinary management of the
Premises, the parties will agree to a fee and payment structure for these
services prior to commencement of the work.
6. IT IS MUTUALLY AGREED THAT:
6.1 The Owner expressly withholds from the Agent any power or authority to
make any structural changes in any building or to make any other major
alterations or additions in or to any such building or equipment therein, or to
incur any expense chargeable to Owner other than expenses related to exercising
the express powers above vested in Agent without the prior written direction of
an authorized representative of Owner. Agent is granted the authority to make
structural changes or major alterations if such actions are required because of
danger to life or which are immediately necessary for the preservation and
safety of the Premises or the safety of the occupants thereof or are required to
avoid the suspension of any necessary service to the Premises.
6.2 The Agent does not assume and is given no responsibility for compliance
of any building on the Premises or any equipment therein with the requirements
of any statute, ordinance, law or regulation of any governmental body or of any
public authority or official thereof having jurisdiction, except to notify the
Owner promptly or forward to the Owner promptly any complaints, warnings,
notices, or summonses received by it relating to such matters. The Owner
represents that to the best of his (its) knowledge the Premises and such
equipment comply with all such requirements and authorizes the Agent, its
representatives, servants, and employees, of and from all loss, cost, expense,
and liability whatsoever which may be imposed on them or any of them by reason
of any present or future violation or alleged violation of such laws,
ordinances, statutes, or regulations.
6.3 In the event it is alleged or charged that any building on the Premises
or any equipment therein or any act or failure to act by the Owner with respect
to the Premises or the sale, rental or other disposition thereof fails to comply
with, or is in violation of, any of the requirements of a constitutional
provision, statute, ordinance, law or regulation of any governmental body or any
order or ruling of any public authority or official thereof having or claiming
to have jurisdiction thereover, and the Agent, in its sole and absolute
discretion, considers that the action or position of the Owner or registered
managing Agent with respect thereto may result in damage or liability to the
Agent, the Agent shall have the right to cancel this Agreement at any time by
written notice to the Owner of its election so to do, which cancellation shall
be effective upon the service of such notice. Such notice may be served
personally or by registered mail, on or to the person named to receive the
Agent's monthly statement at the address designated for such person as provided
in Paragraph 2.2 above, and if service by mail shall be deemed to have been
served when deposited in the U.S. Mail. Such
5
<PAGE>
cancellation shall not release the indemnities of the Owner set forth in
Paragraph 4 and 6.2 above and shall not terminate any liability or obligation of
the Owner to the Agent for any payment, reimbursement, or other sum of money
then due and payable to the Agent hereunder.
7. This Agreement may be canceled by Owner before the termination date
specified in Paragraph 1 on not less than 60 days' prior written notice to the
Agent.
8. The Owner shall pay or reimburse the Agent for any sums of money due it
under this Agreement for service for actions prior to termination,
notwithstanding any termination of this Agreement. All provisions of this
Agreement that require the Owner to have insured or to defend, reimburse, or
indemnify the Agent (including, but not limited to, Paragraphs 4.1, 4.2, and
4.3) shall survive any termination and, if Agent is or becomes involved in any
proceeding or litigation by reason of having been the Owner's agent, such
provisions shall apply as if this Agreement were still in effect. The parties
understand and agree that the Agent may withhold funds for thirty (30) days
after the end of the month in which the Agreement is terminated to pay bills
previously incurred but not yet invoiced and to close accounts.
This Agreement shall be binding upon the successors and assigns of the Agent
and their heirs, administrators, executors, successors, and assigns of the
Owner.
IN WITNESS THEREOF, the parties hereto have affixed or caused to be affixed
their respective signatures effective this 10th day of November, 1999.
OWNER: Nooney Realty Trust, Inc.
By:/s/ Daniel W. Pishny
Daniel W. Pishny
President and Trustee
AGENT: Maxus Properties, Inc.
By:/s/ John W. Alvey
John W. Alvey
Vice President and Chief
Financial Officer
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<PAGE>
SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT made as of the 19th day of October, 1999 by and among
Bond Purchase, L.L.C. ("Bond Purchase") and the persons and entities listed on
Exhibit A hereto (collectively, with Bond Purchase, the "Bond Purchase Parties")
and CGS Real Estate Company, Inc. ("CGS") and the persons and entities listed on
Exhibit B hereto (collectively, with CGS, the "CGS Parties").
WITNESSETH:
WHEREAS, certain of the Bond Purchase Parties and certain of the CGS Parties
have been engaged in protracted and expensive litigation relating to certain of
the entities listed on Exhibit C hereto (the "Nooney/Sierra Partnership
Parties"); and
WHEREAS, Bond Purchase has filed proxy material with the Securities and
Exchange Commission ("SEC") seeking to solicit consents from limited partners of
certain of the Nooney/Sierra Partnership Parties; and
WHEREAS, there are currently pending five separate litigations, as listed on
Exhibit D hereto, which the parties wish to resolve, settle and dismiss with
prejudice; and
WHEREAS, none of the parties hereto admits any liability or obligation to any
of the other parties and is entering into this Settlement Agreement solely for
the purpose of minimizing the expense of these litigations and to put to rest
forever and resolve with finality all issues pertaining to the management and
ownership of certain of the Nooney/Sierra Partnership Parties; and
WHEREAS, it is the express intention of the parties in entering into this
Settlement Agreement that all disputes, past, present and future, between the
Bond Purchase Parties and the CGS Parties pertaining in any way to the
Nooney/Sierra Partnership Parties shall be released and resolved forever and
that none of the parties hereto shall hereafter sue or assert any claims
relating in any way to
<PAGE>
forever and that none of the parties hereto shall hereafter sue or assert any
claims relating in any way to the Nooney/Sierra Partnership Parties against any
other party to this Settlement Agreement except for claims arising out of this
Settlement Agreement; and
WHEREAS, it is the intention of the parties that the Bond Purchase Parties
withdraw all of their proxy material currently on file with the SEC and that the
parties agree to (a) certain standstill agreements with respect to the
Nooney/Sierra Partnership Parties; and (b) not disparage any other party to this
Settlement Agreement; and
WHEREAS, it is the intent of the parties that all of the terms and conditions
(and all of the obligations of the parties) set forth in this Settlement
Agreement shall be concluded and exchanged simultaneously. To that end, the
parties are establishing an escrow agreement of even date herewith (the "Escrow
Agreement") in the form of Exhibit E hereto;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. Shares Of Nooney Realty Trust, Inc. (the "REIT").
-------------------------------------------------
(a) Delivery of Shares. On or before the Closing Date (as defined in
Paragraph 11 hereof), the parties which are designated as selling parties on
Exhibit 1 (a) hereto shall deliver to the Escrow Agent (as defined in the Escrow
Agreement) (i) certificates representing 75,763 shares of Common Stock in the
REIT (the "REIT Shares"), and (ii) signature guaranteed stock powers, executed
in blank, transferring all of the REIT Shares; and
2
<PAGE>
(b) Payment For Shares. On or before the Closing Date, Bond Purchase or its
assigns shall deliver to the Escrow Agent by check or wire transfer the sum of
$10.00 per share for each of the REIT Shares reflected on Exhibit l(a) hereto;
and
(c) Closing. Payment to the persons listed on Exhibit 1(a) and delivery of
the stock certificates and stock powers to Bond Purchase shall be made pursuant
to the terms of the Escrow Agreement.
(d) Representations Of CGS Parties. The CGS Parties hereby represent and
warrant to the Bond Purchase Parties that on the date hereof and on the Closing
Date (i) each of the parties listed on Exhibit l(a) is the sole owner of the
REIT Shares listed next to their name on Exhibit 1(a) free and clear of any
liens, claims or encumbrances; (ii) each of the parties listed on Exhibit 1(a)
has not assigned, pledged, transferred, hypothecated, margined or otherwise
encumbered the REIT Shares listed next to their name on Exhibit 1(a); (iii) each
of the parties listed on Exhibit l(a) has full power and authority to transfer
title to the REIT Shares and perform its other obligations under this Settlement
Agreement without the consent or approval of any other person or entity; (iv)
the transfer of the REIT Shares and the capital stock of Nooney-4 G.P. (as
hereinafter defined) and the execution of the agreements entered into in
connection herewith have been duly authorized by all necessary action on its
part; (v) this agreement and each agreement to be entered into in connection
herewith constitutes or will constitute the legal, valid and binding obligation
of such person, enforceable in accordance with its terms; (vi) the execution and
delivery of this Settlement Agreement and all other agreements to be executed
and delivered by each of the parties listed on Exhibit l(a), and the
consummation of the transactions contemplated hereby and thereby by such
parties, will not violate any provision of, or constitute a default under, any
law, regulation, order or judgment or any contract or other agreement to which
any of such parties is a party or by which any of such parties is bound or
result in the creation or imposition of any lien, claim, charge
3
<PAGE>
or encumbrance of any nature whatsoever upon any of the REIT Shares; (vii) upon
delivery to Bond Purchase and/or its assignees by the Escrow Agent of the duly
endorsed certificates representing the REIT Shares set forth on Exhibit1(a)
pursuant to this Settlement Agreement and the Escrow Agreement, and for the
consideration provided herein, Bond Purchase and/or its assignees will be vested
with full right and title, free of all liens, claims, charges and encumbrances
of others of every character, to the REIT Shares represented thereby, and
subject to no restrictions as to transferability other than compliance with
state and federal securities laws and the REIT's articles of incorporation and
bylaws; (viii) the persons listed on Exhibit l(d) hereto constitute all of the
directors and officers of the REIT, and (ix) set forth on Exhibit 1(a) hereto is
a schedule showing all of the REIT Shares owned beneficially or of record by the
CGS Parties or their Affiliates (as defined in the Securities Act of 1933, as
amended (the "Securities Act")), or any person acting in concert with or as part
of a "Group" (within the meaning of Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) with them or any officer or
director or any of the foregoing, and all of the REIT Shares which any of the
foregoing has an option, warrant or right to acquire or has entered into an
agreement or understanding with respect to the acquisition thereof.
2. Resignations From The Board Of Directors Of The REIT.
-----------------------------------------------------
On or before the Closing Date, each of the persons listed on Exhibit 1(d)
hereto shall deliver to the Escrow Agent (a) resignations from all corporate
officers and from the board of directors of the REIT in the form of Exhibit 2-1
hereto; and (b) a unanimous written consent of the Board of Directors, in the
form of Exhibit 2-2 hereto, executed by all of the members of the board of
directors of the REIT, which will have the effect, if and when the Closing
occurs, of appointing the initial new member of the board of directors of the
REIT (who shall be one of the persons listed on Exhibit 2-3), who will then
appoint the other persons listed on Exhibit 2-3 hereto as the new board of
directors of the REIT.
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<PAGE>
3. Termination of Management Agreements.
-------------------------------------
On or before the Closing Date, CGS shall cause to be delivered to the Escrow
Agent a termination of each of the management and other service agreements
between CGS or its "Affiliates" (as defined in Section 405 of the Securities
Act) and the REIT or Nooney-4 in the form of Exhibit 3 hereto. No termination or
other unearned fee shall be payable in connection therewith, but subject to the
provisions of Section 14 hereof, CGS or such Affiliates shall be entitled to
fees and expenses accrued in the ordinary course of business in accordance with
past practice pursuant to such agreements.
4. Form 8-K For The REIT.
----------------------
Each of the parties hereto hereby agrees that a Form 8-K, in the form
attached hereto as Exhibit 4, shall be filed with the SEC by the REIT as soon as
possible after the Closing (as defined in paragraph 11 hereof) takes place (but
only if the Closing in fact takes place).
5. Future REIT Management/D&O Insurance/Indemnity. From and after the Closing
-----------------------------------------------
Date:
(a) the CGS Parties hereby agree that they shall not, directly or indirectly,
be involved in the management of the REIT;
(b) Bond Purchase hereby covenants and agrees, on its own behalf, and on
behalf of the REIT (such covenants to be effective only if the Closing takes
place) that (i) prior to the Closing the REIT may purchase D&O tail coverage
pursuant to which the present D&O insurance shall be maintained in force with
respect to transactions occurring prior to the Closing Date covering the parties
listed on Exhibit 1(d) hereto and each of the CGS Parties at the present limits
until December 31, 2004, at no cost or expense to any of them, and (ii)
subsequent to the Closing, it will not take any action to terminate or limit
such coverage; and
5
<PAGE>
(c) Bond Purchase covenants that (i) at the Closing, indemnities, in the form
attached hereto as Exhibit 5(c)-1, will be delivered by Bond Purchase to the CGS
Parties, their control persons and each of the persons listed on Exhibit 1(d)
hereto with respect to claims, liabilities, losses, suits, damages and costs
arising in connection with actions by the past, present and future limited
partners of Nooney-4 or the past, present and future shareholders of the REIT
relating to the transactions pursuant to Sections 1(a), 2 and 8(a) of this
Settlement Agreement, and (ii) Bond Purchase, the REIT and Nooney-4 shall
deliver, at the Closing, agreements in the form of Exhibit 5(c)-2, committing to
continue in effect indemnification of the persons listed on Exhibit l(d) under
existing agreements or arrangements, copies of which are attached hereto as
Exhibit 5(c)-3.
6. Representations And Warranties Of Bond Purchase Concerning
The Change Of Control of the REIT.
----------------------------------------------------------
(a) Bond Purchase hereby represents and warrants to the CGS Parties and each
of the persons listed on Exhibit 1(d) hereto:
(i) that neither it nor any of its controlling persons nor any of the persons
listed on Exhibit 2-3 has ever been convicted of a crime (including felonies and
misdemeanors, but excluding violations and offenses);
(ii) that neither it nor any of its controlling persons nor any of the
parties listed on Exhibit 2-3 has ever been the subject or target of an
investigation by the SEC, or any federal or state law enforcement agency, the
NASD or any self-regulatory organization in the securities business;
(iii) that neither it nor any of its controlling persons nor any of the
parties listed on Exhibit 2-3 has ever been found to have breached his, its or
her fiduciary duty to another person; and
6
<PAGE>
(iv) that neither it nor any of its controlling persons nor any of the
parties listed on Exhibit 2-3 has any present intention of committing a breach
of his, her or its fiduciary duty to the REIT or the shareholders of the REIT
once such person becomes a director of the REIT.
(b) On or before the Closing Date, each person listed on Exhibit 2-3 shall
deliver to the Escrow Agent a certificate, in the form of Exhibit 6(b) hereto,
confirming and certifying that the representations set forth in (a) (i) through
(a) (iv) are true and correct as to such person.
7. Sale By The Bond Purchase Parties Of Their Limited Partnership Interests
In the Nooney/Sierra Partnership Parties Other Than Nooney Real Property
Investors-Four, L.P. ("Nooney-4").
-------------------------------------------------------------------------
(a) Delivery of Units. On or before the Closing Date, each of the parties
listed on Exhibit 7(a)-1 hereto shall deliver to the Escrow Agent duly executed
assignments, in the form of Exhibit 7(a)-2, of the number of limited partnership
interests reflected on Exhibit 7(a)-1 hereto, with signature guaranteed, as
provided in Exhibit 7(a)-2.
(b) Payment For The-Nooney/Sierra Limited Partnership Interests. On or before
the Closing Date, CGS shall deliver to the Escrow Agent by check or by wire
transfer, the total sum indicated on Exhibit 7(a)-1 as the purchase price for
the aggregate number of limited partnership interests identified therein.
(c) Representations Of The Selling Limited Partners. Each of the parties
listed on Exhibit 7(a)-1 hereby represents and warrants to the CGS Parties that
on the date hereof and on the Closing Date (i) he, she or it is the sole owner
of the limited partnership interests listed next to their name on Exhibit 7(a)-1
free and clear of any liens, claims or encumbrances; (ii) he, she or it has not
assigned, pledged, transferred, hypothecated, margined or otherwise encumbered
the limited partnership interests listed next to their name on Exhibit 7(a)-1;
(iii) he, she or it has full power and authority to transfer title to the
limited partnership interests and perform its other obligations hereunder
without the consent or
7
<PAGE>
approval of any other person or entity; (iv) the transfer of the limited
partnership interests and the execution of the agreements entered into in
connection herewith have been duly authorized by all necessary action on its
part; (v) this Settlement Agreement and each agreement to be entered into in
connection herewith constitutes or will constitute the legal, valid and binding
obligation of such person, enforceable in accordance with its terms; (vi) no
promises concerning the future conduct or business of the Nooney/Sierra
Partnership Parties has been made by any of the CGS Parties; (vii) no reliance
has been placed on any statement by the CGS Parties, and that no statement of
future intentions has been made by, or asked of, any of the CGS Parties in
connection with the sale of the limited partnership interests contemplated in
this Settlement Agreement or about the future business activities of the
Nooney/Sierra Partnership Parties; (viii) set forth on Exhibit 7(a)-1 hereto is
a schedule showing all of the limited partnership interests in the Nooney/Sierra
Partnership Parties (other than Nooney-4 and the REIT) owned beneficially or of
record by Bond Purchase or its Affiliates or any person acting in concert with
or as part of a "Group" (within the meaning of Section 13(d)(3) of the Exchange
Act) with Bond Purchase or any of the officers or directors of any of the
foregoing and all of the limited partnership interests in any of the
Nooney/Sierra Partnership Parties (other than Nooney-4 and the REIT) which any
of the foregoing persons has an option or right to acquire or has entered into
any agreement or understanding with respect to the acquisition thereof; (ix) the
execution and delivery of this Settlement Agreement and all other agreements to
be executed and delivered by each of the parties listed on Exhibit 7(a)-1 and
the consummation of the transactions contemplated hereby and thereby by such
parties, will not violate any provision of, or constitute a default under, any
law, regulation, order or judgment or any contract or other agreement to which
any of such parties is a party or by which any of such parties is bound or
result in the creation or imposition of any lien, claim, charge or encumbrance
of any nature whatsoever upon any of the limited partnership interests listed
next to their name on Exhibit 7(a)-l; and (x) upon delivery to CGS of the
8
<PAGE>
assignment by the Escrow Agent pursuant to this Settlement Agreement and the
Escrow Agreement, and for the consideration provided herein, CGS will be vested
with full right and title, free of all liens, claims, charges and encumbrances
of others of every character, to such limited partnership interests, and subject
to no restrictions as to transferability other than compliance with state and
federal securities laws and the limited partnership agreements with respect to
such partnerships.
(d) Closing. Payment to the persons listed on Exhibit 7(a)-1 and delivery of
the assignments to the CGS Parties shall be made pursuant to the terms of the
Escrow Agreement.
8. Sale Of the Capital Stock Of Nooney Capital Corp., a Missouri corporation
("Nooney-4 G.P.").
-------------------------------------------------------------------------
(a) On or before the Closing, the CGS Parties shall deliver to the Escrow
Agent stock certificates, accompanied by executed stock powers, signatures
guaranteed, in favor of Bond Purchase transferring 750 shares of Class A Common
Stock of Nooney-4 G.P. (representing 75% of the issued and outstanding shares of
Common Stock of Nooney-4 G.P.), free and clear of all liens, claims and
encumbrances.
(b) On or before the Closing Date, Bond Purchase shall deliver to the Escrow
Agent by check or wire transfer, the sum of $175,000, as payment in full for all
of the shares of the capital stock of Nooney-4 G.P.
(c) In addition to the representations and warranties set forth above in
Paragraph 6(a), Bond Purchase hereby represents and warrants that neither it nor
any of its Affiliates nor any of its or their officers or directors has any
intention of breaching or causing the Nooney-4 G.P. to breach its fiduciary duty
to the limited partners of Nooney-4.
(d) The parties hereby agree that a Form 8-K, in the form of Exhibit 8(d)
hereto, shall be filed with the SEC by Nooney-4 as soon as possible after the
Closing (but only if the Closing in fact takes place).
9
<PAGE>
(e) Closing. Payment by Bond Purchase and delivery of the stock certificates
and stock powers to Bond Purchase shall be made pursuant to the terms of the
Escrow Agreement.
(f) Officers and Directors. CGS represents that set forth on Exhibit 8(f)- 1
is a list of all of the officers and directors of Nooney-4 G.P. On or before the
Closing Date, each of the persons listed on Exhibit 8(f)-1 hereto shall deliver
to the Escrow Agent (a) resignations from all corporate officers and from the
board of directors of Nooney-4 G.P. in the form of Exhibit 8(f)-2 hereto; and
(b) a unanimous written consent of the Board of Directors, in the form of
Exhibit 8(f)-3 hereto, executed by all of the members of the board of directors
of Nooney-4 G.P., which will have the effect, if and when the Closing occurs, of
appointing the initial new member of the board of directors of Nooney-4 G.P.
(g) Representations and Warranties of CGS Parties.
(i) In connection with the sale of the capital stock of Nooney-4 G.P., the
CGS Parties represent and warrant as follows:
A. Corporate Status; Outstanding Stock. Nooney-4 G.P. is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Missouri, has the corporate power and authority to own its properties and to
carry on its business as it is now being conducted, and is duly qualified to do
business as a foreign corporation in the jurisdictions specified in Exhibit
8(g)(i)A., which constitute all the jurisdictions in which such qualification is
required, except where the failure to so qualify would not have a material
adverse effect on its business or financial condition. Nooney-4 G.P. has an
authorized capital consisting of 30,000 shares of Common Stock, $1 par value per
share, of which 1,000 shares are outstanding (comprised of 750 shares of Class A
Common Stock and 250 shares of Class B Common Stock) and the 750 shares of Class
A Common Stock are owned by the CGS Parties, all of which outstanding shares are
validly issued, fully paid and non-assessable. The remaining outstanding shares
of Common Stock are owned by Edward D. Jones & Co. and Stiefel
10
<PAGE>
Financial Corp. There are no shares of Nooney-4 G. P.'s capital stock held in
its treasury. There are no options, warrants, rights, shareholder agreements or
other instruments or agreements outstanding giving any person the right to
acquire any shares of capital stock of Nooney-4 G.P., nor are there any
commitments to issue or execute any such options, warrants, rights, shareholder
agreements or other instruments or agreements. There are no outstanding stock
appreciation rights or similar rights measured with respect to any of Nooney-4
G.P.'s capital stock, nor are there any instruments or agreements giving anyone
the right to acquire any such rights. True, correct and complete copies of
Nooney-4 G. P.'s minute books, stock records, Articles of Incorporation and
By-Laws and all amendments to both have been delivered to Bond Purchase Parties.
Nooney-4 G. P. is not in default under or in violation of any provision of its
Articles of Incorporation or its By-Laws.
B. Officers, Directors, Bank Accounts, etc. Exhibit 8(f)- 1 discloses all
directors and officers of Nooney-4 G.P.
C. Subsidiaries and Joint Ventures. Except as disclosed on Exhibit 8(g)(i)C.,
there is no corporation or other entity in which Nooney-4 G.P. owns, directly or
indirectly, a controlling interest or a majority of the outstanding shares or
other equity interest issued by such corporation or entity (a "Subsidiary"), nor
does Nooney-4 G.P. own any other capital stock, security, partnership, interest
of any kind, either direct or indirect, in any corporation, partnership, joint
venture, association or other entity.
D. Financial Statements. The balance sheets of Nooney- 4 G.P. as at November
30, 1998 and the related statements of income (loss) and cash flow, as the case
may be, ended on the dates of such balance sheets, and all related schedules and
notes to the foregoing, copies of all of which constitute Exhibit 8(g)(i)D.,
were prepared in accordance with generally accepted accounting principles and
practices consistently applied throughout the periods and with past periods, and
11
<PAGE>
fairly and accurately present the financial position of Nooney-4 G. P. as at the
dates of such balance sheets, and the results of the operations and cash flows
of Nooney-4.G.P. for the periods ended on such dates.
(ii) Nooney-4 G.P. is not party to any leases, subleases or other agreements
for the use and occupancy of any premises. Nooney-4 G.P. has no right, title and
interest in, or any obligation or duty relating to, any real property, except as
general partner of Nooney-4.
(iii) At Closing, Nooney-4 G. P. will have no liabilities, whether related to
tax or non-tax matters, known or unknown, due or not yet due, liquidated,
contingent or otherwise, of a type required to be disclosed in financial
statements under generally accepted accounting principles, except (i) as
disclosed in its financial statements, or arising in the ordinary course of
business subsequent to December 31, 1998 and (ii) liabilities arising out of its
serving as a general partner of Nooney-4.
(iv) At Closing, Nooney-4 G.P. will have no employees, or any obligations for
compensation or benefits relating to past employees.
(v) From July 20, 1999 until Closing, Nooney-4 G.P. will operate in the
normal course of business, will not enter into any contracts or agreements
without the consent of Bond Purchase Parties, which shall not be unreasonably
withheld or delayed, and will make no distributions, dividends, stock options or
similar payments of any kind.
(vi) At Closing, Nooney-4 G.P. will not be a party to any litigation, either
pending or, to the knowledge of CGS, threatened, other than the litigations
being released pursuant to this Settlement Agreement.
(vii) Nooney-4 G.P. has filed all tax returns required to be filed, paid all
taxes due, and no taxing authority has given notice of assessment, audit,
adjustment or deficiency.
(viii) The sole and only business of Nooney-4 G.P. is to act as general
partner of Nooney-4.
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<PAGE>
(ix) No checking accounts are maintained by any of the CGS Parties on behalf
of Nooney-4 G.P. and no monies are held in any bank accounts on behalf of
Nooney-4 G.P.
9. Litigation Settlement Documents.
--------------------------------
(a) By The Bond Purchase Parties. On or before the Closing Date, Bond
Purchase shall cause to be delivered to the Escrow Agent the following
documents:
(i) fully executed stipulations of dismissal with prejudice of each of the
litigations listed on Exhibit D hereto, executed by all counsel of record for
any and all of the Bond Purchase Parties in each such actions, in the form of
Exhibits 9(a)(i)-l, 9(a)(i)-2, 9(a)(i)-3, 9(a)(i)-4 and 9(a)(i)-5 hereto; and
(ii) General Release and Covenant Not to Sue, in the form of Exhibit 9(a)(ii)
attached hereto executed by each of the Bond Purchase Parties (signatures
notarized).
(b) By the CGS Parties. On or before the Closing Date, CGS shall cause to be
delivered to the Escrow Agent the following documents:
(i) fully executed stipulations of dismissal of the appeal in the litigation
involving the REIT and dismissal with prejudice of each of the other litigations
and the remaining claims in the litigation involving the REIT listed on Exhibit
D hereto, executed by all counsel of record for any and all of the CGS Parties
in each such action, in the form of Exhibits 9(a)(i)-l, 9(a)(i)-2, 9(a)(i)-3,
9(a)(i)-4 and 9(a)(i)-5 hereto;
(ii) General Release and Covenant Not To Sue, in the form of Exhibit 9(a)(ii)
attached hereto, executed by each of the CGS Parties (signatures notarized).
10. Settlement Amount.
-----------------
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In exchange for the releases by William J. Carden and Thomas N. Thurber of
all rights that might otherwise exist by virtue of their employment agreements
with the REIT, Bond Purchase shall deliver to the Escrow Agent, on or before the
Closing Date, the sum of $450,000, payable by check or wire transfer. Such
amount shall be paid to certain senior executive officers of CGS in settlement
of all claims under their respective employment agreements (except as otherwise
provided herein) pursuant to the terms of the Escrow Agreement.
11. Closing; Closing Date.
---------------------
The "Closing" shall mean the occurrence of all of the conditions to the
release of documents set forth in the Escrow Agreement which shall result in the
consummation of the transactions contemplated herein. The Closing shall take
place on such date (the "Closing Date") as all of the following items have been
delivered to the Escrow Agent:
(a) the stock certificates and stock powers identified in paragraph 1(a) and
8(a);
(b) the resignations from the directors and officers of the REIT identified
in paragraph 2(a);
(c) the unanimous written consents executed by the outgoing board of the
REIT, as identified in paragraph 2(b);
(d) the termination of the management agreements identified in paragraph 3;
(e) the Forms 8-K for the REIT and Nooney-4 identified in paragraphs 4 and
8(d);
(f) the indemnity and the agreement confirming indemnification obligation
identified in paragraph 5(c);
(g) the certification identified in paragraph 6(b);
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(h) the executed assignment identified in paragraph 7(a);
(i) the payments identified in paragraphs l(b), 7(b), 8(b) and 10;
(j) the resignations of the officers and directors of Nooney-4 G.P.
identified in Section 8(f);
(k) the stipulations of dismissal identified in paragraphs 9(a)(i) and
9(b)(i);
(l) the Releases and Covenants Not to Sue identified in paragraphs 9(a)(ii)
and 9(b)(ii);
(m) the Agreements and Payments identified in paragraph 12;
(n) the certification identified in paragraph 14(d)(iii); and
(o) the balance of any fees or costs due to the Escrow Agent.
If fewer than all of the foregoing documents and payments have been
received by the Escrow Agent by 5 P.M. C. S. T. on November 2, 1999, then this
Settlement Agreement shall be null and void and of no further force or effect.
As provided in the Escrow Agreement, if fewer than all such documents have been
received by the Escrow Agent by 5 P.M. C.S.T. November 2, 1999, all documents
and payments previously received shall be returned to the delivering party. If
all such documents and payments have been received by the Escrow Agent prior to
5:00 P.M. C.S.T. on November 2, 1999, then the Escrow Agent shall distribute the
documents and payments in accordance with the terms and conditions of the Escrow
Agreement.
12. Everest Indemnity/Assumption. On or prior to the Closing, CGS or an
----------------------------
affiliate thereof shall have purchased all of the limited partnership interests
owned by Everest or its affiliates (collectively, "Everest") in Nooney Income
Fund Ltd., Nooney Income Fund Ltd. II, L.P. and Nooney Real Property
Investors-Two, L.P. and shall have delivered a certificate to the Escrow Agent,
executed by a senior executive officer of CGS, indicating that such purchase has
been completed. Consummation
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of this transaction, and Closing of this transaction, is expressly contingent
upon the completion of the transaction described herein between CGS and Everest
(the "Everest Transaction") and the delivery of the certificate to the Escrow
Agent indicating that the Everest Transaction has been consummated. In the event
the Everest Transaction has not been consummated by November 2, 1999, either
party may terminate this Settlement Agreement without any liability or
obligation hereunder.
13. Withdrawal of Proxy Solicitation and Standstill.
-----------------------------------------------
(a) Effective on the Closing Date, each of the parties hereby agrees to
terminate any pending proxy solicitations and withdraw all pending proxy
materials, preliminary or otherwise, from the SEC which have been filed with
respect to any of the Nooney/Sierra Partnership Parties and any requests for
information or inspection of the books and records made with respect to the
Nooney/Sierra Partnership Parties.
(b) The Bond Purchase Parties agree that, if the Closing occurs, prior to the
fifth anniversary of the Closing of the transactions contemplated by this
Settlement Agreement, neither they nor any person who is their Affiliate (as
defined under Rule 405 of the Securities Act) will, without the prior written
consent of the general partner of any of the Nooney/Sierra Partnership Parties
(other than Nooney-4 and the REIT), which consent may be withheld for any
reason, directly or indirectly, (i) in any manner including, without limitation,
by tender offer (whether or not pursuant to a filing made with the SEC),
acquire, attempt to acquire or make a proposal to acquire, directly or
indirectly, any of the outstanding partnership interests in any of the
Nooney/Sierra Partnership Parties (other than Nooney-4 and the REIT) from the
holders of limited partnership interests therein or otherwise, (ii) seek or
propose to enter into, directly or indirectly, any merger, consolidation,
business combination, sale or acquisition of assets, liquidation, dissolution or
other similar transaction involving any of the Nooney/Sierra Partnership Parties
(other then Nooney-4 and the REIT), (iii) make, or in any way participate,
directly or indirectly,
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in any "solicitation" of "proxies" or "consents" (as such terms are used in the
proxy rules of the SEC) to vote any voting securities of any of the
Nooney/Sierra Partnership Parties (other than Nooney-4 and the REIT, (iv) form,
join or otherwise participate in a "group" (within the meaning of Section
13(d)(3) of the Exchange Act) with respect to any voting securities of any of
the Nooney/Sierra Partnership Parties (other than Nooney-4 and the REIT), (v)
make any request for information from or inspection of the books and records of
any of the Nooney/Sierra Partnership Parties (other than Nooney-4 and the REIT),
(vi) disclose in writing to any third party any intention, plan or arrangement
inconsistent with the terms of this Settlement Agreement, (vii) loan money to,
advise, assist or encourage any person in connection with any action
inconsistent with the terms of this Settlement Agreement or (viii) make any
statements disparaging any of the Nooney/Sierra Partnership Parties (other than
Nooney-4 and the REIT), the CGS Parties or their Affiliates in connection with
the Nooney/Sierra Partnership Parties, or any proposal or offer made by any of
the CGS Parties or their Affiliates to the Nooney/Sierra Partnership Parties
(other than Nooney-4 and the REIT) or the limited partners thereof.
(c) The CGS Parties agree that, if the Closing occurs, prior to the fifth
anniversary of the Closing of the transactions contemplated by this Settlement
Agreement, neither they nor any person who is their Affiliate (as defined under
Rule 405 of the Securities Act) will, without the prior written consent of the
Board of Directors of the REIT or the general partner of Nooney-4, which consent
may be withheld for any reason, directly or indirectly, (i) in any manner
including, without limitation, by tender offer (whether or not pursuant to a
filing made with the SEC), acquire, attempt to acquire or make a proposal to
acquire, directly or indirectly, any of the securities of Nooney-4 or the REIT
from the holders of securities therein or otherwise, (ii) seek or propose to
enter into, directly or indirectly, any merger, consolidation, business
combination, sale or acquisition of assets, liquidation, dissolution or other
similar transaction involving Nooney-4 or the REIT, (iii) make, or in any way
participate, directly or
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<PAGE>
indirectly, in any "solicitation" of "proxies" or "consents" (as such terms are
used in the proxy rules of the SEC) to vote any voting securities of Nooney-4 or
the REIT, (iv) form, join or otherwise participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any voting
securities of Nooney-4 or the REIT, (v) make any request for information from or
inspection of the books and records of Nooney-4 or the REIT, (vi) disclose in
writing to any third party any intention, plan or arrangement inconsistent with
the terms of this Settlement Agreement, (vii) loan money to, advise, assist or
encourage any person in connection with any action inconsistent with the terms
of this Settlement Agreement or (viii) make any statements disparaging Nooney-4
or the REIT, any of the Bond Purchase Parties or their Affiliates in connection
with Nooney-4 or the REIT, or any proposal or offer made by any of the Bond
Purchase Parties or their Affiliates to Nooney-4 or the REIT or the limited
partners or shareholders thereof.
14. Other Covenants and Agreements.
------------------------------
(a) William J. Carden and Thomas Thurber shall resign as officers and
employees of the REIT effective on the Closing Date (subject to the Closing
actually taking place) and the term of their employment agreements shall
terminate on such date and the REIT shall have no further obligations to them
thereunder or otherwise, except as set forth in this Settlement Agreement.
(b) CGS agrees that, effective upon the Closing, it will cause all options
and incentive awards issued by the REIT to officers or directors of CGS or its
Affiliates to be cancelled without exercise.
(c) As soon as reasonably practicable after the Closing, Bond Purchase shall
change the organizational names of the REIT, Nooney-4 and Nooney-4 G. P. and
shall not thereafter use "Nooney" or any derivation thereof in their
organizational names.
(d) The CGS Parties agree as follows:
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(i) All of the contracts, commitments, leases, files, books (including
corporate seals if any, minute books and stock ledgers), records, financial
statements, bank accounts and other data relating to the business of the REIT
and/or Nooney- 4 shall be delivered or made available to the Bond Purchase
Parties promptly following Closing, and simultaneously, the CGS Parties will
take such other steps as may be reasonably requested by Nooney-4 G.P. or the new
officers of and directors of the REIT to enable them to continue the control of
the business and assets of the REIT and Nooney-4 as conducted prior to the
Closing.
(ii) Since July 20, 1999 the REIT or Nooney-4 have not, and pending Closing,
CGS Parties shall not permit the REIT or Nooney-4, without the prior written
consent of Bond Purchase except to the extent the Board of Directors of the REIT
or Nooney-4 G. P. determines that such action is required by its fiduciary duty
in which event the CGS Parties will provide Bond Purchase with prior written
notice of the action to be taken:
A. to discharge or satisfy any lien or encumbrance, or pay or satisfy any
obligation or liability (absolute, accrued, contingent or otherwise) outside of
the ordinary course of business;
B. to mortgage, pledge or grant a lien, charge or other encumbrance on any of
its assets, tangible or intangible;
C. to sell or transfer any of its assets, other than in the ordinary course
of business, or cancel any debts or claims, or waive any rights of value;
D. to increase the compensation payable to or to become payable to any
officer or employee;
E. to pay or otherwise grant any bonuses or special remuneration to any
officer or employee except for bonuses payable to on-site employees in
accordance
19
<PAGE>
with existing policies and the payment in the aggregate of $100,000 to Mr.
Carden and Mr. Thurber in satisfaction of the deferred compensation payable to
them pursuant to their respective employment agreements;
F. to make, or make any commitment for, any expenditure in excess of $50,000
except for expenditures in the ordinary course of business pursuant to the
existing commitments;
G. to make any declaration or payment to its shareholders, or limited
partners respectively, of any dividend or other distribution in respect of its
stock or partnership interest or redeem or purchase or otherwise acquire any of
its stock or partnership interest or agree to take any such action;
H. to make any material changes in its mode of operation, including its
leasing, service, credit or collection policies;
I. to enter into any transaction other than in the ordinary course of
business;
J. to issue any stock, bonds, convertible securities or other securities, or
become obligated on or in respect of any such securities or grant stock options,
warrants or rights;
K. to borrow or agree to borrow any funds;
L. to make any loans or advances to any person; or
M. to alter, amend, terminate or discharge any written or oral contract,
lease, plan, commitment or agreement to which it is currently a party, or permit
or consent to any such alteration, amendment, termination or discharge, or
commit a breach or default in any of the provisions thereof, except as
contemplated by this Settlement Agreement.
20
<PAGE>
(iii) At Closing, the applicable CGS Parties shall deliver to the Escrow
Agent a certificate, in the form of Exhibit 14(d)(iii) hereto, representing and
warranting to the Bond Purchase Parties that the respective CGS Parties have
complied in all material respects with the covenants set forth in paragraph
14(d)(ii).
(iv) At Closing, all investment advisory agreements, commercial listing
agreements and property management agreements with CGS or its Affiliates for the
REIT and Nooney-4 will be terminated with no contingent liability or obligation
remaining thereunder, except for fees and expenses accrued in the ordinary
course of business consistent with past practice under such agreements.
(v) The benefits owed to Mr. Carden or Mr. Thurber (other than the $100,000
of deferred compensation payable in the aggregate to Mr. Carden and Mr. Thurber
pursuant to paragraph 14(d)(ii)E. of this Settlement Agreement) shall be
released, forgiven and written off and the REIT shall have no liability for any
payments therefore.
(vi) At or prior to the Closing, the CGS Parties will cause Nooney, Inc. to
assign to the REIT and Nooney-4 all vendor and service contracts which Nooney
Inc. is a party to for purpose of providing goods or, services to the REIT or
Nooney-4, and the REIT or Nooney-4, as the case may be, shall assume all
liabilities under such agreements.
(vii) As soon as practicable after the Bond Purchase Parties have executed
this Settlement Agreement and have delivered to the Escrow Agent all of the
items which they are required to deliver under paragraph 11 hereof, the CGS
Parties shall provide the Bond Purchase Parties with reasonable access to the
books and records of the REIT, Nooney-4 and Nooney-4 G.P. so that the Bond
Purchase Parties may perform a due diligence review thereof. If, based on their
due diligence review, the Bond Purchase Parties reasonably determine that there
has been a material adverse change from the information currently set forth in
the public filings of either the REIT or Nooney-4 or the
21
<PAGE>
representations set forth in this Settlement Agreement, the Bond Purchase
Parties shall have the right to terminate this Settlement Agreement and the
respective rights and obligations of the parties hereunder by providing written
notice of their election to terminate to CGS in accordance with paragraph 15(a)
hereof no later than 10 days after the Bond Purchase Parties have been granted
access to the books and records of the REIT, Nooney-4 and Nooney-4 G.P.
15. Miscellaneous.
-------------
(a) Notices. At the time of execution of this Settlement Agreement, each
party shall designate an address next to its name on Exhibits A and B hereto at
which it shall be entitled to receive notice in accordance with this Settlement
Agreement or Exhibits A and B hereto. Notices shall be deemed given when
personally delivered, or when sent by telephonic facsimile, with a facsimile
confirmation, or prepaid registered mail to any party at the address or
telephone number selected herein in Exhibits A and B. Any other method of
delivery of notice shall be deemed given when actually received. Any party may
change its address for the purposes of this Settlement Agreement by notice to
all other parties at the addresses or telephone numbers selected in Exhibits A
and B hereto.
(b) Entire Agreement. This Settlement Agreement, together with the exhibits
annexed hereto, constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and all earlier drafts of this Settlement
Agreement or any exhibit hereto and all negotiations, conversations,
correspondence or other communications relating to the settlement contemplated
by this Settlement Agreement are hereby merged with and into this Settlement
Agreement in such a way as to prevent any party to this Settlement Agreement
from referring to such drafts, negotiations, conversations, correspondence or
other communications in any subsequent dispute between any of the parties
hereto. The representations and warranties herein provided shall survive Closing
for a period of twelve months
22
<PAGE>
and in no event shall the CGS Parties' liabilities for breaches of
representations, warranties or covenants exceed One Million ($1,000,000)
Dollars.
(c) Confidentiality. If for any reason the Closing does not occur, no party
to this Settlement Agreement may refer to this Settlement Agreement, to any term
or provision of this Settlement Agreement, or to the existence of this
Settlement Agreement, under any circumstances or for any purpose and, in such
event, the parties expressly agree that this Settlement Agreement constitutes an
offer of compromise within the meaning of F.R.E. 408 and may not be referred to
in any litigation, arbitration, mediation or other proceeding involving any of
the parties hereto. If the transactions contemplated by this Settlement
Agreement are closed, each of the parties agrees to keep the terms of this
Settlement Agreement strictly confidential and not disclose the terms of this
Settlement Agreement to any person, except to the extent either party determines
in good faith that disclosure is required by law, including in connection with
any filing with the SEC.
(d) No Amendment/ Waiver Except in Writing. This Settlement Agreement may not
be amended, modified or abridged, and no provision set forth in this Settlement
Agreement may be waived, by any party to this Settlement Agreement, except by an
instrument in writing executed by the party against whom such amendment,
modification, abridgement or waiver is sought to be enforced.
(e) Governing Law. This Settlement Agreement shall be governed in all
respects by the internal laws of the State of Missouri without regard to any
conflicts of law principles, or the choice of law principles of any jurisdiction
(including Missouri) and without the need on the part of any party to establish
the reasonableness of the relationship between the laws of the State of Missouri
and the subject matter of this Settlement Agreement.
(f) Arbitration. Any dispute arising under, relating to, or having any
connection with, this Settlement Agreement, the Escrow Agreement or any of the
exhibits attached hereto
23
<PAGE>
shall be submitted to binding arbitration before the American Arbitration
Association ("AAA") in St. Louis, Missouri in accordance with the rules of the
AAA in effect at the time the arbitration takes place. The arbitrator is
instructed to award the prevailing party in any such arbitration its reasonable
attorney's fees and arbitration costs and expenses. Any award in any such
arbitration may be entered in any court of competent jurisdiction in the United
States of America.
(g) Each Party Bears Own Costs. Each party hereby agrees that it will bear
all of its, his or her expenses in connection with negotiating, executing and
performing under this Settlement Agreement and all of the exhibits hereto, and
each party shall also bear its own costs in connection with the litigations
referred to in Exhibit D hereto.
(h) Counterparts. This Settlement Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Settlement Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement.
24
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Settlement
Agreement effective on the day and year first above written.
BOND PURCHASE PARTIES:
BOND PURCHASE, L.L.C.
By: /s/ David L. Johnson
David L. Johnson,
Member
BOND G.P., L.L.C.
By:/s/ David L. Johnson
David L. Johnson,
Member
MAXUS PROPERTIES, INC.
By: /s/ David L. Johnson
David L. Johnson
Chairman
KELCOR, INC.
By: /s/ David L. Johnson
David L. Johnson
Vice President
MCDOWELL FOODS, INC.
By: /s/ Melanie McKellar
Melanie McKellar
Secretary/Treasurer
25
<PAGE>
/s/David L. Johnson
David L. Johnson
/s/Sandra L. Casterrer
Sandra L. Casterrer
/s/John W. Alvey
John W. Alvey
/s/ Daniel W. Pishny
Daniel W. Pishny
/s/ Christine Robinson
Christine Robinson
CGS PARTIES:
CGS REAL ESTATE COMPANY, INC.
By: /s/ William J. Carden
William J. Carden
President
NOONEY REALTY TRUST
By: /s/ William J. Carden
William J. Carden
Chief Executive Officer
NOONEY CAPITAL CORP.
By: /s/ William J. Carden
William J. Carden
Chief Executive Officer
26
<PAGE>
NOONEY INVESTORS, INC.
By: /s/ Patricia A. Nooney
Patricia A. Nooney
President
NOONEY INCOME INVESTMENTS, INC.
By: /s/ Patricia A. Nooney
Patricia A. Nooney
President
NOONEY INCOME INVESTMENTS TWO, INC.
By: /s/ Patricia A. Nooney
Patricia A. Nooney
President
NOONEY INCOME FUND LTD., L.P.
By: Nooney Income Investments, Inc.
its general partner
By: /s/ Patricia A. Nooney
Patricia A. Nooney
President
NOONEY INCOME FUND LTD, II, L.P.
By: Nooney Income Investments Two,
Inc., its general partner
By: /s/ Patricia A. Nooney
Patricia A. Nooney
President
27
<PAGE>
NOONEY REAL PROPERTY INVESTORS-TWO,
L.P.
By: Nooney Investors, Inc.,
its general partner
By: /s/ Patricia A. Nooney
Patricia A. Nooney
President
NOONEY REAL PROPERTY INVESTORS-FOUR
L.P.
By: Nooney Capital Corp.,
its general partner
By: /s/ Patricia A. Nooney
Patricia A. Nooney
President
NOONEY LTD.
By: /s/ Gregory J. Nooney, Jr.
General Partner
/s/ Thomas Thurber
Thomas Thurber
/s/ William J. Carden
William J. Carden
28
<PAGE>
[EXHIBITS OMITTED]
<PAGE>
OFFICE/WAREHOUSE LEASE AGREEMENT
THIS LEASE, made this 2nd day of June, 1989, by and between the Owner of the
leased premises through its Agent, Nooney Management Company, a Missouri
corporation, (hereinafter referred to as "Landlord"), and Household Finance
Corporation III, a Delaware corporation (hereinafter referred to as "Tenant");
WITNESSETH:
1. LEASED PREMISES. Landlord hereby demises and leases to Tenant that certain
space known and numbered as 3465 North Powell Avenue, Franklin Park, Cook
County, Illinois, more fully described on Exhibit "A", attached hereto and made
a part hereof, containing approximately 91,855 square feet of space,
(hereinafter referred to as the "Premises"), plus the use of all common areas in
and around Landlord's building (which building, common areas and the real estate
thereunder, is more fully described on Exhibit "B", attached hereto and made a
part hereof, and is hereinafter referred to as the "Property"). Tenant
acknowledges that it has inspected the Premises and the common areas of the
Property, and accepts same in their present "AS IS" condition excluding latent
defects, and as suitable for the purposes for which they are leased. However,
Landlord warrants that all mechanical, electrial [sp] and plumbing system shall
be in good working condition on the commencement date of this Lease. Tenant
further acknowledges that Landlord has made no representations with respect to
any alterations, repairs or improvements to be constructed within the Premises,
unless otherwise set forth in this Lease.
2. USE. The Premises shall be used only for the purpose of general office
and/or receiving, warehousing and shipping products distributed by Tenant.
Tenant shall obtain, at Tenant's sole cost and expense, any and all licenses and
permits necessary for Tenant's contemplated use of the Premises. Tenant shall
comply with all existing and future governmental laws, ordinances and
regulations applicable to the use of the Premises, as well as all requirements
of Landlord's insurance carrier, excluding the making of structural changes.
Tenant shall not permit any objectionable or unpleasant odors, smoke, dust, gas,
noise or vibrations to emanate from the Premises, nor take any other action
which would constitute a nuisance or which would disturb or endanger any
third-party tenants of the Property, or unreasonably interfere with such
third-party tenant's use of their respective space. Tenant shall not receive,
store or otherwise handle any product, material or merchandise which is
explosive or highly inflammable. Tenant shall comply with all statutes,
ordinances, rules, orders, regulations and requirements of the Federal, State or
municipal governments for any activities involving, directly or indirectly, the
use, generation, treatment, storage, or disposal of any hazardous or toxic
chemicals, materials, substances or wastes used within the Premises. At
Landlord's request, Tenant shall furnish evidence, reasonably satisfactory to
Landlord, that Tenant is in compliance with such environmental requirements.
Tenant agrees to indemnify, defend and hold Landlord harmless from and against
any and all liabilities or claims by reason of any injury to persons or damage
to property arising out of the discharge, disbursement, release, or escape of
smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, hazardous wastes,
liquid or gasses, waste materials, or other irritants, contaminants or
pollutants into or about the Premises or Property, which originate from any
products stored, produced, manufactured, treated, or disposed of by Tenant
within the Premises. The aforesaid indemnification and defenses shall survive
the term of this Lease.
Tenant shall not permit the Premises to be used for any purpose or in any
manner (including, without limitation, any method of storage) which would render
Landlord's insurance thereon void, or the insurance risk more hazardous, or
cause the State Board of Insurance or other insurance authority to disallow any
sprinkler credits.
3. TERM. The term of this Lease shall commence on the 1st day of July, 1989,
and shall expire on the 31st day of December, 1994, both inclusive. Tenant's
responsibilities and liabilities apply from the date of Tenant's possession if
sooner than July 1, 1989, except for payment of rent. See Additional Provisions,
Paragraph 30.
1
<PAGE>
4. BASE RENT. Tenant shall pay to Landlord as Base Rent for said Premises the
sum of Two Hundred Fifty-two Thousand, Six Hundred and 00/100 ($252,600.00)
Dollars, per year, payable in equal monthly installments of Twenty-one Thousand,
Fifty and 00/100 ($21,050.00) Dollars each, on the first day of each calendar
month, in advance, without setoff or deduction, at the office of Landlord. See
Additional Provisions, Paragraph 31.
5. ADDITIONAL RENT.
(a) Taxes. Landlord shall be initially responsible for the payment of all
general and special taxes, including any assessments for local improvements and
any other governmental charges ("Tax"), which may lawfully be charged, assessed,
or imposed upon the Property, or any part thereof. Tenant shall pay to Landlord,
as Additional Rent, Tenant's proportionate share of such Taxes paid by Landlord
in each calendar year during the term of this Lease. The parties acknowledge
that certain real estate Taxes payable in Illinois are paid one (1) year in
arrears; notwithstanding such fact, Tenant shall pay to Landlord Tenant's
proportionate share of such Taxes paid by Landlord in the calendar year when
such Taxes were actually paid. In addition thereto, Tenant shall pay all taxes
which may lawfully be charged, assessed or imposed upon Tenant's fixtures,
equipment and inventory of every type, and also upon all of Tenant's personal
property within the Premises.
In the event Landlord is assessed with a Tax which Landlord or Tenant deems
excessive, Landlord or Tenant may challenge such Tax to the extent legally
permitted, so long as the validity or amount thereof is contested by Landlord or
Tenant in good faith, and so long as Tenant's occupancy of the Premises is not
disturbed. Prior to Landlord or Tenant challenging such tax, Landlord or Tenant
shall provide the other party written notice of its intention to do so. In the
event Landlord or Tenant is successful in its challenge, resulting in an
abatement and/or refund, Tenant's proportionate share of such Taxes shall be
adjusted to reflect such abatement and/or refund, less Landlord's reasonable
costs in securing same. In the event Landlord or Tenant is unsuccessful in its
challenge, Tenant shall pay its proportionate share of Landlord's costs to
reduce or abate the contested Tax. Landlord shall provide Tenant written notice
setting forth the amount due. Landlord's costs shall include, but shall not be
limited to, reasonable fees of counsel and experts reasonably incurred by
Landlord in connection with any such challenge, or any judicial review thereof.
In the event Landlord is assessed with a Tax which Landlord has the option to
pay in installments over a period of time, and Landlord solely elects to pay
such Tax in installments, the Taxes allocable to Tenant shall only include the
then current installment and any applicable interest due thereon; and should
Landlord elect not to pay such Tax in installments, the Taxes allocable to
Tenant shall only include an amount equal to the installment that would have
come due had Landlord elected the installment method of payment.
The foregoing provisions are predicated on the present system of taxation in
the state where the Property is located. However, if due to a future change in
the method of taxation any franchise, income, profit or other tax shall be
levied against the Landlord in substitution, whole or in part, for or in lieu of
any tax which would otherwise constitute a "real estate tax", such franchise,
income, profit or other tax shall be deemed to be a Tax for the purposes hereof.
(b) Insurance. Landlord shall be initially responsible for the payment of all
premiums for liability, property damage, fire, worker's compensation, rent and
any other insurance ("Insurance") which Landlord deems necessary to carry on or
for the protection of the Property. Tenant shall pay to Landlord, as Additional
Rent, Tenant's proportionate share of such Insurance paid by Landlord in each
calendar year during the term of this Lease. In addition thereto, in the event
Tenant's use of the Premises shall result in an increase of any of Landlord's
insurance premiums, Tenant shall pay to Landlord, upon written notice, and, and
as Additional Rent, an amount equal to such increase in insurance. Such payments
of insurance shall be in addition to all premiums of insurance which Tenant is
required to carry pursuant to Paragraph 19 of this Lease.
(c) Common Area Maintenance. Tenant shall be responsible for the operation and
maintenance of the following: the maintenance, and repair within Exhibit A of
the paving of all parking facilities, access roads, driveways, sidewalks and
passageways, trunk-line plumbing (as opposed to branch-line plumbing),
landscaping, snow removal,
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interior and exterior painting, and rail spur maintenance, if applicable.
Notwithstanding the aforesaid, Tenant shall not be responsible for the payment
of any expense chargeable to a capital account or capital improvement under
generally accepted accounting principles; nor shall Tenant be responsible for
the payment of any expense for which Landlord is otherwise reimbursed.
(d) Payment of Additional Rent. Landlord shall have the right to bill Tenant
monthly for all Taxes, Insurance, and Common Area Maintenance expenses which
Tenant is obligated to pay Landlord under this Lease; and, in the event Landlord
so elects, Tenant shall pay to Landlord, in addition to payments of Base Rent,
an amount equal to one-twelfth (1/12) of Tenant's total proportionate share of
such Taxes, Insurance and/or Common Area Maintenance expense. All monies paid in
advance to Landlord by Tenant shall not accrue interest thereon. Such amounts
for the first year of the lease term shall be reasonably estimated by Landlord;
thereafter, such amounts shall be estimated upon the basis of the preceding
year. At the end of each calendar year, Landlord shall deliver a statement to
Tenant setting forth Tenant's actual proportionate share of Taxes, Insurance
and/or Common Area Maintenance expenses along with a copy of the tax bill and
the total amount of monthly payments, if any, paid by Tenant to Landlord. Tenant
shall thereafter pay to Landlord the full amount of any difference between
Tenant's proportionate share and Tenant's estimated payments within thirty (30)
days after receipt of Landlord's statement. Conversely, in the event Tenant's
estimated payments exceed the actual amount of Tenant's proportionate share,
Landlord shall refund the overpayment to Tenant. In the event any bills or
computations are not available prior to the end of the lease term, Tenant shall
pay an amount reasonably estimated by Landlord, which amount shall be equitably
adjusted for any partial month or year of the term of this Lease. For purposes
of this Lease, Tenant's proportionate share shall be defined as a fraction, the
numerator of which shall be the square footage of the Premises, and the
denominator of which shall be the square footage of the rentable area of the
Property, which proportionate share is hereby agreed to be equal to 56.55% at
the time the lease was executed.
Within ninety (90) days after receipt of each year-end statement, Tenant or
its authorized agent shall have the right, at Tenant's sole cost and expense, to
inspect and audit Landlord's records with respect to Tenant's proportionate
share of expenses, which audit shall be at Landlord's office during Landlord's
normal business hours, and upon five (5) days prior written notice. Except as
aforesaid, Landlord shall not be obligated to provide Tenant with detailed
summaries and receipts for all expenses incurred by the Property; but Landlord
shall provide Tenant with a statement setting forth such, expenses, categorized
by class and amount. Unless Tenant asserts specific errors within said ninety
(90) days, said year-end statement shall be deemed to be correct.
6. LATE CHARGE. In the event Tenant is late by more than ten (10) days in the
payment of any Base Rent or Additional Rent, Tenant shall be assessed a late
charge for Landlord's increased administrative expenses, which late charge shall
be equal to five (5%) percent, per month, of all outstanding rent owed Landlord.
Landlord, shall provide Tenant written notice setting forth the amount due.
7. UTILITIES. Landlord agrees to supply water, gas, electricity, sewer and
telephone connections to the Premises; but Tenant shall pay for the use of all
such water, gas, electricity, sewer, and telephone services, and any other
utilities and/or services used by Tenant within the Premises, together with any
taxes, penalties, surcharges or the like pertaining thereto. Tenant shall be
liable for all maintenance and equipment with respect to the continued operation
of such utilities which are located within the Premises including, without
limitation, all electric light bulbs, tubes and starters. In the event any such
utilities are not separately metered, Tenant shall pay to Landlord a portion of
the cost of such utilities determined by Landlord's independent engineer.
Landlord shall not be liable for any interruption or failure of any utility
servicing the Property, unless such interruption or failure is directly due to
Landlord's negligence.
8. LANDLORD'S REPAIRS AND MAINTENANCE. Landlord shall, at Landlord's sole
cost and expense, maintain, repair and replace, if necessary, the structural
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portions of the roof, the foundation and the exterior walls, as well as the
maintenance and repair of all subfloors (but not floor coverings) and the
utility supply lines leading to the outside of the demising walls of the
Premises. Notwithstanding the aforesaid, in the event any such maintenance or
repairs are caused by the negligence of Tenant or Tenant's employees, agents or
invitees, Tenant shall reimburse to Landlord, as Additional Rent, the reasonable
cost of all such maintenance and repairs within thirty (30) days after receipt
of Landlord's invoice for same. For purposes of this Paragraph, the term
"exterior walls" shall not include windows, plate glass, doors, office entries,
dock doors, or any exterior improvement made by Tenant. Landlord reserves the
right to designate all sources of services in connection with Landlord's
obligations under this Lease. Tenant hereby grants to Landlord the right to
enter upon the Premises, at reasonable times, and upon reasonable notice, except
in emergencies reasonably determined by Landlord, for the purpose of making
inspections and/or repairs. Tenant shall have the duty to periodically inspect
the Premises and notify Landlord should Tenant observe a need for repairs or
maintenance of any obligation of Landlord under this Lease. Upon receipt of
Tenant's notice, Landlord shall have a reasonable period of time to make such
repairs or maintenance; however, it is expressly understood that Landlord's
liability with respect to such maintenance and repair shall be limited to the
cost of such repairs or maintenance. If Landlord enters in an emergency and no
employee of Tenant is available, Landlord prior to leaving the Premises shall
secure same free from entry by others. Landlord shall notify Tenant as soon as
possible in each such emergency situation.
9. TENANT'S REPAIRS AND MAINTENANCE. Tenant, at Tenant's sole cost and
expense, shall have the affirmative duty to periodically inspect, maintain,
service, repair and replace, if necessary, all non-structural portions of the
Premises which are not expressly the responsibility of Landlord including, but
not limited to, any windows, plate glass, doors, office entries, interior walls
and finish work, floor coverings, heating and air conditioning systems, hot
water heaters, dock bumpers, truck doors, branch plumbing, all of which are
located within and exclusively serve the Premises per Exhibit A and termite and
pest extermination. In the event the Property has available to its rail spur
access, Tenant agrees to sign a Joint Maintenance Agreement with the railroad
company servicing the Property for the use of all tenants within the Property.
Notwithstanding the aforesaid, Tenant shall not be liable for any repairs or
maintenance which are directly caused by the negligence of Landlord or
Landlord's employees, agents or invitees. Upon the expiration or earlier
termination of this Lease, Tenant shall return the Premises to Landlord in
substantially the same condition as when received, reasonable wear and tear
excepted. Tenant shall perform all repairs and maintenance in a good and
workmanlike manner, and in compliance with all governmental and
quasi-governmental laws, ordinances and regulations, as well as all requirements
of Landlord's insurance carrier. In the event such repair or maintenance is not
of the type which Landlord has elected to perform pursuant to Paragraph 5(c) of
this Lease, and in the event Tenant fails to properly perform such repairs or
maintenance within a reasonable period of time but not less than 15 days after
Landlord's written notice, Landlord shall have the option to perform such
repairs on behalf of Tenant, in which event Tenant shall reimburse to Landlord,
as Additional Rent, the reasonable costs thereof within thirty (30) days after
receipt of Landlord's invoice for same.
10. ALTERATIONS. Tenant shall not make any structural alterations, additions
or improvements to the Premises or Property without the prior written consent of
Landlord. Notwithstanding the aforesaid, Tenant, at Tenant's sole cost and
expense, may construct interior non-structural alterations, additions or
improvements to the Premises, or install such trade fixtures as Tenant may deem
necessary, so long as such improvements and trade fixtures do not penetrate or
disturb the structural integrity and support provided by the roof, exterior
walls or subfloors. All such improvements and trade fixtures shall be
constructed and/or installed in a good and workmanlike manner, and in compliance
with all applicable governmental and quasi-governmental laws, ordinances and
regulations, as well as all requirements of Landlord's insurance carrier.
Tenant may remove all alterations, additions, improvements and trade fixtures
installed by Tenant from the Premises upon the expiration or earlier termination
of this Lease; and, upon such removal, Tenant shall repair the Premises to a
condition substantially similar to that condition when received by Tenant,
except for normal wear and tear and damage due to casualty. Notwithstanding the
aforesaid, all such alterations, additions, or improvements left by Tenant after
lease termination shall remain within the Premises upon the termination of this
Lease, and shall be delivered up to Landlord along with the Premises. Landlord
shall have no right to any of Tenant's trade fixtures; and, except as otherwise
set forth in this Lease, Tenant may remove such trade fixtures upon the
termination of this Lease, provided Tenant repairs any damage caused by such
removal.
Upon termination of this lease, Tenant shall restore the premises to its
prior condition for any alterations, additions or improvements made without
Landlord's approval.
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11. DESTRUCTION. If the Premises or the Property are damaged in whole or in
part by casualty so as to render the Premises untenantable, and if the damages
cannot be repaired within 180 days from the date of said casualty, this Lease
shall terminate as of the date of such casualty. If the damages can be repaired
within said 180 days, and Landlord does not elect within sixty (60) days after
the date of such casualty to repair same, then either party may terminate this
Lease by written notice served upon the other. In the event of any such
termination, the parties shall have any no further obligations to the other,
except for those obligations accrued through the effective date of such
termination; and upon such termination, Tenant shall immediately surrender
possession of the Premises to Landlord. Should Landlord elect to make such
repairs, this Lease shall remain in full force and effect, and Landlord shall
proceed with all due diligence to repair and restore the Premises to a condition
substantially similar to that condition which existed prior to such casualty. In
the event the repair and restoration of the Premises extends beyond one hundred
eighty (180) days after the date of such casualty due to causes beyond the
control of Landlord, this Lease shall remain in full force and effect, and
Landlord shall not be liable therefor; but Landlord shall continue to complete
such repairs and restoration with all due diligence. Tenant shall not be
required to pay any rent for any period in which the Premises are untenantable.
In the event only a portion of the Premises are untenantable, Tenant's rent
shall be equitably abated in proportion to that portion of the Premises which
are so unfit, and not used by Tenant as a result thereof. However, there shall
be no rent abatement if said casualty is due to the fault or negligence of
Tenant or Tenant's agents, employees or invitees.
12. INSPECTION. Landlord shall have the right to enter and inspect the
Premises at any reasonable time, and upon reasonable notice, for the purpose of
ascertaining the condition of the Premises, or in order to make such repairs as
may be required or permitted to be made by Landlord under the terms of this
Lease. In addition thereto, during the last nine (9) months of the lease term,
Landlord shall have the right to enter the Premises at any reasonable time, and
upon reasonable notice, for the purpose of showing the Premises to prospective
third-party tenants; unless Tenant has exercised its option to renew and, during
said nine (9) months, Tenant shall have the right to erect on the Property
and/or Premises a suitable sign indicating that the Premises are available for
lease unless Tenant has exercised its option to renew.
Tenant shall give Landlord thirty (30) days written notice prior to vacating
the Premises, for the purpose of arranging a joint inspection of the Premises
with respect to any obligation to be performed by Tenant pursuant to this Lease
including, without limitation, the repair of the Premises. In the event Tenant
fails to notify Landlord of such inspection, Landlord's inspection after Tenant
vacates shall be deemed correct for purposes of reasonably determining Tenant's
responsibility for repairs.
13. SIGNS. Tenant shall not install any signs upon the Premises or Property
without Landlord's prior written consent. Any such approval by Landlord for any
signs shall be subject to any applicable governmental or quasi-governmental
laws, ordinances, regulations and other requirements. Upon the expiration or
earlier termination of this Lease, Tenant shall remove all such signs and repair
the Premises and/or Property to the condition which existed prior to the
installation of such signs including, without limitation, any discoloration
caused by such installation and/or removal. Landlord hereby approves Tenant's
signs at entrance doors identifying the Tenant. Said signs shall be tasteful.
14. SUBLETTING AND ASSIGNING. Tenant shall not assign or sublet the Premises,
nor allow the same to be used or occupied by any other person or for any other
use than herein specified, without the prior written consent of Landlord. In the
event Landlord grants its consent to any sublease or assignment, same shall not
constitute a release of Tenant from the full performance of Tenant's obligations
under this Lease. Further, in the event of any such sublease or assignment,
Tenant shall reimburse Landlord for all reasonable attorneys' fees in connection
with reviewing and/or drafting any appropriate documents to effect such transfer
of Tenant's interests. See Rider 2.
15. DEFAULT AND HOLDING OVER. If Tenant shall default in the payment of any
rent, breach any covenant or agreement of this Lease, (hereinafter singularly or
collectively referred to as "Default"), and if such Default shall continue for
fifteen (15) days after notice thereof from Landlord, or if Tenant makes an
assignment for the benefit of creditors, files or has filed against it a
petition in bankruptcy, or is adjudicated insolvent, Landlord may terminate this
Lease, with or without
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process of law, and expel and remove Tenant, or any other person in occupancy,
together with their property, using such force as may be necessary in the
judgment of Landlord, and repossess the Premises; and thereupon all rent up
through the expiration date of this Lease shall become payable when due.
Landlord may relet the Premises after taking possession thereof upon terms
reasonably satisfactory to Landlord. However, in the event the rent payable
under any reletting is less than the rent payable under this Lease, Tenant shall
be liable for the difference thereof.
If this Lease is terminated, Tenant shall, without demand therefor,
immediately surrender the Premises peaceably to Landlord in as good condition as
when delivered to Tenant, reasonable wear and tear excepted. If Tenant shall
remain in possession of the Premises after the termination of this Lease, and
hold over for any reason, Tenant shall be a Tenant from month to month (either
party may cancel on thirty (30) days written notice); and Tenant shall pay to
Landlord monthly rent per Illinois statute of the Base Rent which was payable
hereunder during the last month prior to Default. Should any of Tenant's
property remain within the Premises after the termination of this Lease, it
shall be deemed abandoned; and Landlord shall have the right to store or dispose
of same. All of the aforesaid rights of Landlord shall be in addition to any
remedies which Landlord may have at law or in equity.
No payment of money by Tenant after the termination of this Lease, after
service of any notice, after commencement of any suit, or after final judgment
for possession of the Premises, shall reinstate this Lease or affect any such
notice, demand or suit, or imply consent for any action for which Landlord's
consent is required. Tenant shall pay all reasonable costs and attorney's fees
incurred by Landlord from enforcing the covenants of this Lease. Forbearance by
Landlord of Landlord's remedies under this Lease, or at law, shall not be deemed
to be a waiver of Landlord's right to enforce any such remedies with respect to
that same Default or any subsequent Default.
17. HOLD HARMLESS. Neither Landlord nor Tenant shall not be liable to the
other party for any damages to the Premises or Property, nor for any damages to
the other party on or about the Property, nor for any other damages arising from
the action or negligence of the other party, third-party tenants or other
occupants of the Property; and Tenant or Landlord hereby releases, discharges
and shall indemnify, hold harmless and defend the other party, at Tenant's or
Landlord's sole cost and expense, from all losses, claims, liability, damages,
and expenses (including attorney's fees) and for any damage or injury to person
or
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property of the parties hereto or of third persons, caused by Tenant's use or
occupancy of the Premises, the other party's breach of any covenant under this
Lease, or use of any equipment, facilities or property in, on, or adjacent to
the Property.
In the event any suit shall be instituted against Landlord by any third
person for which Tenant is hereby indemnifying and holding Landlord harmless,
Tenant shall defend such suit at Tenant's sole cost and expense with counsel
reasonably satisfactory to Landlord or, in Landlord's discretion, Landlord may
elect to defend such suit, in which event Tenant shall pay Landlord, as
Additional Rent, Landlord's cost of such defense.
18. CONDEMNATION. If the whole or any part of the Property or the Premises
shall be taken in condemnation, either Landlord or Tenant may elect to terminate
this Lease by giving written notice of same to the other party, effective as of
the taking date. However, Tenant may only elect to terminate this Lease if the
remaining portion of the Premises and/or Property may no longer be adequately
used for the purpose set forth in Paragraph 2 of this Lease. In the event only a
portion of the Premises and/or Property is taken in condemnation, and Tenant
elects to terminate this Lease, such taking shall be deemed a "casualty"
pursuant to Paragraph 11 of this Lease; and Landlord shall be afforded all of
the rights set forth in said Paragraph 11 to restore the Premises. If neither
Landlord nor Tenant makes such election, then this Lease shall terminate on the
taking date only as to that portion of the Premises and/or Property so taken;
and the rent and other charges payable by Tenant shall be reduced
proportionally. Landlord shall be entitled to the entire condemnation award for
all realty and improvements. Tenant shall have the right to file for a separate
award, but shall have no claim to any portion of Landlord's award.
Notwithstanding the aforesaid, if any condemnation takes a portion of the
parking area and same does not result in a reduction of the minimum required
parking ratio below that established by local Code or Ordinance, this Lease
shall continue in full force and effect without modification.
19. INSURANCE. Landlord shall maintain in full force and effect policies of
insurance covering the Property in an amount not less than eighty (80%) percent
of the "replacement cost" thereof as such term is defined in the Replacement
Cost Endorsement attached to such policy, insuring against physical loss or
damage generally included in the classification of "all risk" coverage. Except
as set forth below, such insurance shall be for the sole benefit of Landlord,
and under Landlord's sole control. Landlord's general liability policy shall
name Tenant as an additional insured though Landlord's insurer shall not insure
Tenant beyond the limit of liability Landlord requires of Tenant. Tenant shall
be provided a certificate evidencing said additional insured status.
Tenant, at Tenant's sole cost and expense, shall maintain in full force and
effect policies providing "all risk" insurance coverage protecting against
physical damage (including, but not limited to, fire, lightning, extended
coverage perils, vandalism, sprinkler leakage, water damage, collapse, and other
special extended perils) to the extent of 100% of the replacement cost of
Tenant's property and improvements during the term of this Lease, as well as
broad form comprehensive general liability insurance insuring Tenant against any
liability (including bodily injury, property damage and contractural [sp]
liability) arising out of Tenant's use or occupancy of the Premises, with a
combined single limit of not less than $1,000,000, or for a greater amount as
may be reasonably required from time to time, and in policy form and content
satisfactory to Landlord. Landlord shall be named as an additional insured, and
all such policies shall be primary and non-contributing with or in excess of any
insurance carried by Landlord. All policies shall be with companies licensed to
do business in the state where the Property is located, and rated B+:X in the
most current issue of Best's Key Rating Guide (1986 guidelines). Tenant shall
furnish Landlord with certificates of all such policies at least thirty (30)
days prior to occupancy, or otherwise upon Landlord's request; and, further,
such insurance shall provide that not less than thirty (30) days written notice
be given to Landlord before any such policies be cancelled or substantially
changed to reduce the insurance provided thereby. Tenant may self-insure for
fire and personal property.
Landlord and Tenant hereby mutually waive any and all right of recovery
against one another, directly or by way of subrogration or otherwise, due to the
negligence of either party, their agents or employees, for real or personal
property damage occurring to the Premises, the Property, or any personal
property located therein, from perils agreed to be insured against in the
aforesaid policies (whether or not such insurance is actually carried). Each
party shall have the
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affirmative duty to inform their respective insurance carriers of this Paragraph
and the mutual waiver of subrogation contained herein.
20. MORTGAGES. This Lease shall be subordinated to any first mortgages, deeds
of trust or underlying leases (hereinafter referred to as "Mortgages"), now of
record or, at the option of Landlord, hereafter placed of record; however, at
Landlord's election, Tenant's interests in this Lease shall be superior to any
Mortgage, whether or not this Lease was executed before or after said Mortgage.
In the event Landlord exercises its option to further subordinate this Lease,
Tenant shall at the option of the holder of said Mortgage attorn to said holder.
Any subordination shall be self- executing, but at the written request of
Landlord, Tenant shall execute such further assurances as Landlord deems
desirable to confirm such subordination. See Riders 3 and 4.
21. LIENS. Tenant shall not mortgage or otherwise encumber its interests
herein. Any consent by Landlord to allow any construction by Tenant within the
Premises shall not be construed as a waiver of any prohibition in this
Paragraph. Should Tenant cause any mortgage, lien or other encumbrance
(hereinafter referred to as "Encumbrance") to be filed, against the Premises or
the Property, Tenant shall dismiss, bond against or bond over same within
fifteen (15) days after the filing of any such Encumbrance. If Tenant fails to
remove said Encumbrance within said fifteen (15) days, Landlord shall have the
absolute right to cause same to be cured by whatever measures Landlord shall
deem convenient including, without limitation, payment of such Encumbrance; in
which event Tenant shall reimburse Landlord for same as Additional Rent; and
Landlord shall be afforded all remedies at law or in equity available to either
Landlord or Tenant. Landlord shall provide Tenant written notice setting forth
the amount due.
22. GOVERNMENT REGULATIONS. Tenant, at Tenant's sole cost and expense, shall
conform with all laws and requirements of any Municipal, State or Federal
authorities now in force, or which may hereafter be in force, pertaining to the
use of the Premises and excluding the making of structural changes. The judgment
of any court, or an admission of Tenant in any action or proceeding at law,
whether Landlord be a party thereto or not, shall be conclusive of the fact as
between Landlord and Tenant.
23. NOTICES. All rents which are required to be paid by Tenant shall be
delivered by the United States mail, postage prepaid, addressed to Landlord at
its address below; and all notices that are required to be given hereunder shall
be in writing and delivered by United States registered or certified mail,
postage prepaid, addressed to the parties hereto at their respective addresses
below:
LANDLORD: TENANT:
Nooney Management Company Household Finance Corporation
7701 Forsyth Blvd., Suite 1100 2700 Sanders Road
Clayton, MO 63105 Prospect Heights, IL 60070
ATTN: Property Management Department -
Leasing
Either party may designate a different address by giving notice to the other
party of same at the address set forth above. All notices shall be deemed given
when actually deposited in a United States general or branch post office
addressed as hereinbefore provided.
24. PARKING. Tenant shall be liable for all vehicles owned, rented or used by
Tenant or Tenant's agents and invitees in the operation of Tenant's business.
Tenant will not store any equipment or inventory in any trucks, nor shall Tenant
store any trucks, on the parking lot of the Property. Tenant shall abide by all
parking restrictions now or hereafter placed upon the parking lot; and Tenant
shall only park its vehicles in those areas designated for Tenant's use. Tenant
shall not park any trucks or other vehicles in any driveways, streets or other
areas not specifically designated for parking; and, upon request by Landlord,
Tenant shall move its trucks and vehicles if in Landlord's reasonable opinion
said vehicles are in violation of any of the above restrictions. Unless
otherwise set forth in this Lease, parking shall be provided on an unallocated
basis. See Additional Provisions, Paragraph 32. Landlord shall provide Tenant
written notice of Landlord's parking restrictions and any subsequent changes
thereto.
25. OWNERSHIP. Notwithstanding anything in this Lease to the contrary, the
term "Landlord" as used in this Lease, shall be defined as the current owner(s)
of the Property. In the event of any transfer of the Property, the party
conveying same shall thereafter be automatically relieved of all personal
liability with respect to Landlord's performance of any obligations thereafter
occurring or covenants thereafter to be performed, it being intended hereby that
all obligations
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under this Lease shall be binding upon the owner(s) of the Property only during
that owner(s)' respective period(s) of ownership of said Property.
27. ESTOPPEL CERTIFICATES. Tenant agrees upon written request by Landlord, to
execute and return to Landlord, within fifteen (15) days, a statement in writing
certifying that this Lease is unmodified and in full force and effect, that
Tenant has no defenses, offsets or counterclaims against its obligations to pay
the rent and to perform its other covenants under this Lease, that there are no
uncured Defaults of Landlord or Tenant, and setting forth the dates to which the
rent and other charges have been paid, as well as any other information
reasonably requested by Landlord. In the event Tenant fails to return such
statement within said fifteen (15) days, setting forth the above or,
alternatively, setting forth those modifications, defenses and/or uncured
Defaults, Landlord may execute such statement as Tenant's attorney-in-fact. Any
such statement delivered pursuant to this Paragraph may be relied upon by any
prospective purchaser, mortgagee, or assignee of any mortgagee of the Premises.
See Riders 3 and 4.
29. BROKERAGE. The parties warrant that they have dealt with no other broker
or person in connection with this transaction other than Corporate Realty
Advisors, Inc. and Arthur J. Rogers & Co. This provision shall survive the
termination of this Lease.
30. MISCELLANEOUS.
(a) All of the covenants of Tenant hereunder shall be deemed and construed to
be "conditions" as well as "covenants" as though both words were used in each
separate instance.
(b) Should any provision of this Lease be unenforceable, it shall be
severable from this Lease; and this Lease shall remain in full force and effect
and be binding upon the parties hereto as though said provision had not been
included.
(c) This Lease shall not be recorded by Tenant without the prior written
consent of Landlord.
(d) In addition to the terms and conditions herein contained, Landlord
reserves the right to establish and enforce reasonable rules and regulations for
all tenants of the Property. Landlord shall provide Tenant written notice
setting forth Landlord's reasonable rules and regulations.
(e) The paragraph headings appearing in this Lease are inserted only as a
matter of convenience, and in no way define or limit the scope of any paragraph.
(f) This offer to lease shall be valid for ten (10) business days from the
date atop page 1, and if not executed and delivered to both parties within said
ten business days, this offer to lease shall be null and void.
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(g) This Lease demises real estate located in the State of Illinois, and
shall be governed by the laws of such State.
(h) All of the terms of this Lease shall extend to and be binding upon the
parties hereto and their respective heirs, executors, administrators, successors
and assigns.
IN WITNESS WHEREOF, Landlord and Tenant have respectively signed and sealed
this Lease the day and year first above written.
WITNESS/ATTEST: LANDLORD:
NOONEY MANAGEMENT COMPANY,
Agent for the Owner
By: /s/ Patrick A. Byrne
President
WITNESS/ATTEST: TENANT:
HOUSEHOLD FINANCE CORPORATION
III, a Delaware corporation
By: /s/ K.M. Ebner
K. M. Ebner
Title: Vice President
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ADDITIONAL PROVISIONS TO LEASE OF EVEN DATE
HEREWITH BY AND BETWEEN NOONEY MANAGEMENT
COMPANY, AS LANDLORD, AND HOUSEHOLD FINANCE
CORPORATION III, A DELAWARE CORPORATION
30. Notwithstanding anything to the contrary in Paragraph 3 of this Lease,
Tenant shall have the right and option to take early possession of the Premises.
Upon taking occupancy, Tenant shall place all utilities servicing such space in
Tenant's name, and Tenant shall be bound by all of the terms and conditions of
this Lease, except for the payment of Base Rent; however, nothing herein shall
be construed to abate or diminish Tenant's obligation with respect to any
Additional Rent payable under this Lease during such period of early occupancy.
Any such early occupancy by Tenant shall not affect the stated expiration date
of this Lease, nor the periods for any abated Base Rent, set forth in Paragraph
31, below.
31. Notwithstanding anything to the contrary in Paragraph 4 of this Lease,
Landlord agrees to waive the Base Rent that is due and payable for the first six
(6) months of the lease term, that is from July 1, 1989 through and including
December 31, 1989; however, nothing herein shall be construed to abate or
diminish Tenant's obligation with respect to any Additional Rent payable under
this Lease during the period of any abated Base Rent.
32. Notwithstanding anything to the contrary in Paragraph 24 of this Lease,
Tenant acknowledges that Landlord has herebefore leased on an exclusive basis
that certain parking area adjacent to the Property, more fully set forth on
Exhibit "A". Tenant shall have an easement of access over all portions of the
Property cross-hatched on said Exhibit "A".
Landlord states that the parking lots on the Property are of a quality and
construction similar to other parking lots in the general Franklin Park,
Illinois area, and that such parking lots are capable of handling normal truck
traffic, subject to periodic maintenance repair. The parties hereby acknowledge
that Tenant uses in its business a considerable number of tractor trailers
trucks, and that said trucks cause undue wear and tear on said parking areas.
Notwithstanding anything contained in this Lease to the contrary, Tenant agrees
to keep and maintain those parking areas designated for the parking of trucks in
good condition and repair; and, upon termination of this Lease, Tenant shall
return said parking areas to Landlord in the same condition as that condition
which existed at the time of the commencement of this Lease. Periodically
throughout the term of this Lease and upon the termination of this Lease,
Landlord shall inspect said parking area for needed repairs. During the term of
this Lease, Landlord shall have the right to make repairs to said parking areas
whenever, in Landlord's opinion, Landlord believes such repairs are warranted.
In the event of any such repairs, Tenant shall reimburse Landlord within thirty
(30) after receipt of Landlord's invoice. Failure of Tenant to reimburse
Landlord within said thirty (30) days shall constitute a breach of this Lease.
Upon the termination of this Lease, Landlord shall inspect said parking areas
and, in the event Landlord believes that said parking areas are in need of
repair, Landlord shall make such repairs and Tenant shall reimburse Landlord
within thirty (30) days after receipt of Landlord's invoice.
33. Tenant shall have the right and option to extend the term of this Lease
for one renewal period of five (5) years, upon the following additional terms
and conditions:
a. Tenant shall not have received a Notice of Default from Landlord which has
not yet been cured by Tenant or waived by Landlord at the time Tenant exercises
its option or at the time the primary term expires.
b. Tenant shall give to Landlord written notice exercising Tenant's option to
extend the term of this Lease not less than nine (9) months days prior to the
expiration of the primary term.
c. During the first three (3) years of such option period the Base Rent shall
be equal to Two Hundred Ninety-eight Thousand, Five Hundred, Twenty-four and
00/100 ($298,524.00) Dollars, per year, payable in equal monthly installments of
Twenty-four Thousand, Eight Hundred, Seventy-seven and 00/100 ($24,877.00)
Dollars each. During the remaining two (2) years, the Base Rent shall be at the
rate prevailing in the neighborhood for comparable space. See Rider 5.
d. All other terms and conditions of this Lease shall be binding upon
Landlord and Tenant and in full force and effect, as if such terms and
conditions were again fully recited herein. In the event Tenant does not
exercise its option
11
<PAGE>
to extend this Lease as herein provided, Landlord shall have the right, during
the nine (9) months prior to the end of the primary term, to show the Premises
during normal business hours to other prospective tenants.
IN WITNESS WHEREOF, the parties hereto have executed these Additional
Provisions to Lease the day and year first above-written.
LANDLORD:
NOONEY MANAGEMENT COMPANY,
Agent for the Owner
By: /s/ Patrick A. Byrne
President
TENANT:
HOUSEHOLD FINANCE CORPORATION III,
a Delaware corporation
By: /s/ K.M. Ebner
K. M. Ebner
Title: Vice President
12
<PAGE>
RIDER
Lease
Dated May, 26, 1989
Between The Owner of the lease premises through its Agent, Nooney Management
Company
And HOUSEHOLD FINANCE CORPORATION III
1. Landlord and Tenant hereby agree wherever Landlord's consent or approval is
required, such consent or approval will not be unreasonably withheld or
delayed.
2. Notwithstanding anything to the contrary contained in the Lease, Tenant may
sublet all or a portion of the demised premises or assign this lease to
Household Finance Corporation, a Delaware corporation, or to any other
corporation which is a subsidiary or affiliate of, or more than 51% of
whose shares are owned by Household Finance Corporation.
3. Notwithstanding anything to the contrary contained in the Lease, as long as
Tenant pays the rent and is not in default of any of the terms, conditions
or covenants of the Lease, its possession of the premises shall not be
disturbed by Landlord, any Mortgagee or anyone claiming by, through or
under Landlord.
4. Notwithstanding anything to the contrary contained in the Lease, Tenant
shall execute all subordination instruments, non-disturbance agreements,
estoppel certificates or offset statements within 15 days after receipt of
Landlord's written request.
The third and each subsequent such request for Tenant to execute a
subordination, nondisturbance or attornment agreement, estoppel certificate
or similar document shall be accompanied by a $150 processing fee.
5. Notwithstanding anything to the contrary contained in the Lease, if the
parties are unable to agree on the rent for the last two years of the
option period on or before the commencement of the fourth year, the issue
as to rent (based as aforesaid on the prevailing rate) shall be settled in
accordance with the rules of the American Arbitration Association and
judgment upon the award may be entered in any court having jurisdiction
thereof. While such arbitration is pending, Tenant shall continue paying
rent at the last rental rate payable during the third year of the option
period. Once a decision is reached in arbitration, the parties shall
execute and deliver to each other an acknowledgment reflecting the new rent
and Tenant (Landlord) shall promptly pay to Landlord (Tenant) a sum equal
to the increase (decrease) in the monthly rent multiplied by the number of
months in the last two years of the option period during which Tenant
continued paying rent at the last rental rate payable during the third year
of the option period.
Approved:
Landlord: Tenant:
NOONEY MANAGEMENT COMPANY, HOUSEHOLD FINANCE
Agent for the Owner CORPORATION III
/s/ Patrick A. Byrne By /s/ K. M. Ebner
K. M. Ebner, Vice President
<PAGE>
EXHIBIT A
[MAP OF LEASED PREMISES]
<PAGE>
EXHIBIT B - LEGAL DESCRIPTION
That part of the South East Quarter of Section 19, Township 40 North, Range 12,
East of the Third Principal Meridian, described as follows:
Commencing at a point in the East line of said South East Quarter which is
1849.19 feet North of the South East corner thereof; thence South 89 Degrees 59
Minutes 13 Seconds West, in a line drawn at right angles to said East line, for
a distance of 2299.41 feet to a point, said point being the place of beginning
of the following described tract of land, to-wit: Thence North 00 Degrees 00
Minutes 47 Seconds West on a line 2299.41 feet West of and parallel with the
East line of said South East Quarter for a distance of 137.41 feet to an
intersection with the South line of the right-of-way of a tract of the Chicago,
Milwaukee, St. Paul and Pacific Railroad; thence South 73 Degrees 56 Minutes 40
Seconds East for a distance of 80.13 feet, to its intersection with a curved
line, convex to the North East and having a radius of 394.28 feet; thence
Southeasterly along said curved line for a distance of 518.97 feet to a point of
tangency; thence South 00 Degrees 00 Minutes 47 Seconds East on a line tangent
to the last described curved line and being 1927.41 feet West of and parallel
with the East line of said South East Quarter for a distance of 184.99 feet;
thence South 9 Degrees 26 Minutes 57 Seconds West 121.66 feet; thence South 00
Degrees 00 Minutes 47 Seconds East 30.0 feet; thence South 89 Degrees 59 Minutes
13 Seconds West 322.0 feet; thence North 00 Degrees 00 Minutes 47 Seconds West
601.26 feet; thence South 89 Degrees 59 Minutes 13 Seconds West 30.0 feet to the
point of beginning; in Cook County, Illinois.
<PAGE>
FIRST AMENDMENT TO LEASE
------------------------
THIS FIRST AMENDMENT TO LEASE, made and entered into this 6th day of July,
1994, by and between Nooney Krombach Company, Agent for the Owner (hereinafter
referred to as "Landlord") and Household Finance Corporation III, a Delaware
corporation (hereinafter referred to as "Tenant");
WITNESSETH:
WHEREAS, Landlord and Tenant entered into that certain Office/Warehouse Lease
Agreement, dated June 2, 1989 (hereinafter referred to as "Lease"), for certain
space located at 3465 North Powell Avenue, Franklin Park, Cook County, Illinois,
containing approximately 91,855 square feet of space (hereinafter referred to as
the "Premises"); and
WHEREAS, the primary term of said Lease commenced on July 1, 1989 and shall
expire on December 31, 1994; and
WHEREAS, both Landlord and Tenant are desirous of further amending said
Lease;
NOW THEREFORE, for and in consideration of the foregoing, and the mutual
covenants set forth below, it is agreed that said Lease is hereby modified and
amended as follows:
1. The term of said Lease is hereby extended for a period of five (5) years,
that is from January 1, 1995 through and including December 31, 1999, upon the
same terms and conditions as said Lease, except as set forth below.
2. Paragraph 4 of said Lease is hereby amended such that, Tenant shall pay
to Landlord the following Base Rent, on the first day of each calendar month, in
advance, without setoff or deduction, at the office of Landlord:
a. For the period January 1, 1995 through and including December 31, 1997,
Tenant shall pay to Landlord, as Base Rent, an amount equal to Two Hundred
Seventy Thousand, Nine Hundred Seventy-two and 00/100 ($270,972.00) Dollars, per
year, payable in equal monthly installments of Twenty-two Thousand, Five Hundred
Eighty-one and 00/100 ($22,581.00) Dollars each.
b. For the period January 1, 1998 through and including December 31, 1999,
Tenant shall pay to Landlord, as Base Rent, an amount equal to Two Hundred
Eighty Thousand, One Hundred Fifty-seven and 76/100 ($280,157.76) Dollars, per
year, payable in equal monthly installments of Twenty-three Thousand, Three
Hundred Forty-six and 48/100 ($23,346.48) Dollars each.
<PAGE>
3. Tenant shall have the right to perform certain interior finish within the
Premises, in accordance, provided all such construction is pursuant to drawings
and specifications prepared by Tenant and approved by Landlord prior to the
commencement of any such construction. Any plans prepared by Tenant shall
incorporate all requirements of the Americans with Disabilities Act of 1990, and
Tenant shall be solely responsible for compliance with such Act, notwithstanding
Landlord's approval of any said plans or Tenant's construction. Any changes,
alterations, or additions made to any approved plans shall be in writing and
shall also be approved by Landlord prior to construction. All construction
undertaken by Tenant shall be in compliance with state, federal, and local
codes, and shall be built in a good and workmanlike manner, and shall be subject
to Landlord's inspection from time to time. Tenant shall indemnify and hold
Landlord harmless from any and all claims and damages (including reasonable
attorneys' fees), to persons or property of Landlord or third persons, caused by
Tenant's construction. Tenant shall also indemnify Landlord against any
mechanic's liens or other liens arising out of any construction performed by or
on behalf of Tenant; and Tenant, shall within thirty (30) days after any
construction furnish to Landlord lien waivers for all work performed and
materials furnished. Upon the termination of this Lease, all such improvements
shall be delivered to Landlord with the Premises.
4. On January 1, 1995, Landlord shall pay to Tenant an amount equal to
Seventy-five Thousand and 00/100 ($75,000.00) Dollars, which Tenant may apply
toward the costs of construction of its interior finish.
5. Tenant shall have the right and option to extend the term of said Lease
for one renewal period of five (5) years, upon the following additional terms
and conditions:
a. Tenant shall not have received a notice of Default from Landlord which has
not been cured by Tenant or waived by Landlord at the time Tenant exercises its
option or at the time the then current term expires.
b. Tenant shall give to Landlord written notice exercising Tenant's option to
extend the term of this Lease not less than nine (9) months prior to the
expiration of the then current term.
c. During such option period the Base Rent shall be at an agreed upon rate or
at market rate, determined by Landlord in Landlord's sole judgment, reasonably
exercised, based upon the rate for comparable space in the Property as of the
commencement date of the intended renewal term.
d. All other terms and conditions of this Lease shall be binding upon
Landlord and Tenant and in full force and effect, as if such terms and
conditions were again fully recited herein.
e. In the event Tenant does not exercise its option to extend said Lease as
herein provided, Landlord shall have the right, during the nine (9) months prior
to the end of the then current term, to show the Premises during normal business
hours to other prospective tenants.
<PAGE>
6. Paragraph 33 of said Lease is hereby deleted in its entirety.
7. Landlord and Tenant each warrant that they have dealt with no broker or
other person claiming a commission for or in connection with this First
Amendment to Lease, other than Nooney Krombach Company, Stein & Company
Industrial Services, and CB Commercial Real Estate Group, Inc.; and each party
shall hold the other party harmless for any breach of such warranty. Landlord
shall be liable for any commissions payable to the aforesaid brokers.
8. Tenant acknowledges that Landlord has to date complied with all
alterations, additions, replacements and services under said Lease, and that the
Premises are not in need of repair or maintenance; and Tenant hereby ratifies
acceptance of the Premises in its present "AS IS" condition.
Except as hereby amended, all other terms and conditions of said Lease shall
remain unchanged, and shall be in full force and effect as if again recited
herein.
WHEREFORE, the parties have executed this First Amendment to Lease the day
and year first above written.
LANDLORD: TENANT:
NOONEY KROMBACH COMPANY, HOUSEHOLD FINANCE CORPORATION III,
Agent for the Owner a Delaware corporation
By: /s Patricia A. Nooney By: /s/ K. M. Ebner
Print Name: Patricia A. Nooney Print Name: K. M. Ebner
Title: Senior Vice President Title: Vice President
<PAGE>
SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE, made and entered into this 30th day of March,
1999, by and between Nooney, Inc., Agent for the Owner (said Owner being
hereinafter referred to as "Landlord") and Household Finance Corporation III, a
Delaware corporation (hereinafter referred to as "Tenant");
WITNESSETH:
WHEREAS, Landlord and Tenant entered into that certain Office/Warehouse Lease
Agreement, dated June 2, 1989 (hereinafter referred to as "Lease"), for certain
space known and numbered as 3465 North Powell Avenue, Franklin Park, Cook
County, Illinois 60131 containing approximately 91,855 square feet of space
(hereinafter referred to as the "Premises"); and
WHEREAS, the primary term of said Lease commenced on July 1, 1989 and expired
on December 31, 1994; and
WHEREAS, Landlord and Tenant entered into that certain First Amendment to
Lease, dated July 6, 1994, wherein the term of said Lease was extended for a
period of five (5) years, that is from January 1, 1995 through and including
December 31, 1999; and
WHEREAS, both Landlord and Tenant are desirous of further amending said
Lease;
NOW THEREFORE, for and in consideration of the foregoing, and the mutual
covenants set forth below, it is agreed that said Lease is hereby modified and
amended as follows:
1. Term. The term of said Lease is hereby extended for a period of five (5)
years (hereinafter referred to as the "Extended Term"), that is from January 1,
2000 through and including December 31, 2004, upon the same terms and conditions
as said Lease, except as set forth below.
2. Construction. Tenant shall have the right to perform certain interior
finish work within the Premises to configure the interior of Tenant's space;
however, all such work must be performed in accordance with a work letter to be
prepared by Tenant and approved by Landlord prior to the commencement of such
work. It is expressly understood that any plans prepared by or on behalf of
Tenant shall incorporate all requirements of the Americans with Disabilities Act
of 1990, and Tenant shall be solely responsible for compliance with such Act,
and hold Landlord harmless therefrom, notwithstanding Landlord's approval of any
such plans or any construction. Tenant shall select and contract directly with
the general contractor performing such interior finish work; however, such
contractor shall be subject to Landlord's prior approval, which approval shall
not be unreasonably withheld. Any changes, alterations, or additions made to the
original approved work letter shall be in writing and also approved by Landlord
prior to construction.
Landlord shall contribute an allowance toward the actual cost of Tenant's
interior finish work in an amount not to exceed Two Hundred Thousand and 00/100
Dollars ($200,000.00), which amount shall be paid to Tenant upon Landlord's
approval of said work letter, even if such work letter is delivered to Tenant
prior to the commencement of the Extended Term.
All construction undertaken by Tenant shall be in compliance with state,
federal, and local codes, and shall be built in a good and workmanlike manner,
and shall be subject to Landlord's inspection from time to time. Tenant shall
indemnify and hold Landlord harmless from any and all claims and damages
(including reasonable attorneys' fees), to persons or property of Landlord or
third persons, caused by Tenant's construction. Tenant shall also indemnify
Landlord against any mechanic's liens or other liens arising out of any
construction performed by or on behalf of Tenant. In the event a lien is filed
against the Property for any reason as a result of any construction performed or
alleged to have been performed by or on behalf of Tenant, Tenant shall remove or
bond over such lien within thirty (30) days. Should Tenant fail to remove or
bond over any such lien within said thirty (30) days, Landlord shall have the
absolute right to cause such lien to be removed by whatever measures as
Landlord, in Landlord's sole discretion, shall deem convenient or necessary
including, without limitation, payment to any contractor, subcontractor,
laborer, supplier or materialman (and any relating attorney's fees) to
extinguish such lien; and, in such event, Tenant shall pay to Landlord, as
Additional Rent, all of Landlord's reasonable costs and expenses including,
without limitation, any payment made by Landlord to any contractor,
subcontractor, laborer, supplier or materialman, the payment of any attorneys'
fees of any lien holder, as well as the payment of Landlord's attorneys' fees to
extinguish such lien.
Upon the termination of this Lease, all improvements made to the Premises by
Tenant and which are pre-approved in writing by Landlord shall be delivered to
Landlord with the Premises. All improvements made to the Premises by Tenant
which are not pre-approved in writing by Landlord shall, at the option of
Landlord, be either delivered to Landlord with the Premises or removed from the
Premises prior to the lease termination date. In the event Landlord elects for
Tenant to remove any such
<PAGE>
improvements, Tenant shall repair and restore the Premises to a condition
substantially similar to the condition of the Premises immediately prior to the
installation of such improvements; and, in the event Tenant fails to so repair
and restore the Premises, Tenant shall be liable for the reasonable costs
thereof, which liability shall survive the termination of this Lease.
3. Option to Terminate. Notwithstanding anything to the contrary in Section
1 of this Amendment, provided said Lease is in full force and effect and Tenant
is not in Default thereunder, Tenant shall have the right and option to
terminate said Lease at any time during the Extended Term, upon the following
terms and conditions. In order to exercise such option, Tenant must give
Landlord written notice at least three (3) months prior to the effective date of
termination (which date of termination is hereinafter referred to as the
"Termination Date"). In the event Tenant elects to terminate said Lease as
aforesaid, Tenant shall pay to Landlord the following amounts on or before said
Termination Date.
a. If the Termination Date is within the first twenty-four (24) months of the
Extended Term (on or before December 31, 2001), Tenant shall pay to Landlord a
termination fee equal to the sum of (a) the Base Rent which, but for the Lease
termination, would have been payable to Tenant for the twenty-four (24) months
next following the Termination Date, plus (b) the product of (i) Tenant's pro
rata share of those charges of the Property for real estate taxes, insurance,
and fire and crime prevention, which are payable by Landlord for the full
calendar year in which Tenant exercises its termination option (and in the event
such amounts are not known at that time, an amount reasonably estimated by
Landlord to reflect Tenant's obligation for such amounts under said Lease for
that same full calendar year); times (ii) two (2); plus (c) an amount equal to
the unamortized portion of Landlord's construction allowance payable to Tenant
pursuant to Section 2 above, it being understood and agreed that the
amortization period for such construction allowance shall be the five (5) year
period constituting the Extended Term, and interest shall be calculated on the
unamortized portion at a rate per annum equal to two percent (2%) over and above
the interest rate announced by CitiBank as its "prime rate" on commercial loans,
as of the date of Landlord's receipt of Tenant's notice of termination.
b. If the Termination Date is after the first twenty-four (24) months of the
Extended Term, Tenant shall pay to Landlord a termination fee equal to the sum
of (a) the Base Rent which, but for the Lease termination, would have been
payable to Tenant for the twelve (12) months next following the Termination
Date, plus (b) Tenant's pro rata share of those charges of the Property for real
estate taxes, insurance, and fire and crime prevention, which are payable by
Landlord for the full calendar year in which Tenant exercises its termination
option (and in the event such amounts are not known at that time, an amount
reasonably estimated by Landlord to reflect Tenant's obligation for such amounts
under said Lease for that same full calendar year); plus (c) an amount equal to
the unamortized portion of Landlord's construction allowance payable to Tenant
pursuant to Section 2 above, it being understood and agreed that the
amortization period for such construction allowance shall be the five (5) year
period constituting the Extended Term, and interest shall be calculated on the
unamortized portion at a rate per annum equal to two percent (2%) over and above
the interest rate announced by CitiBank as its "prime rate" on commercial loans,
as of the date of Landlord's receipt of Tenant's notice of termination.
4. Option to Renew. Except as specifically set forth below, all prior
options of Tenant to renew the term of said Lease have been or are now hereby
made null and void and of no force and effect. Tenant shall have the right and
option to further extend the term of said Lease for one (l) renewal period of
five (5) years, upon the following additional terms and conditions:
a. Tenant shall not have received a notice of Default from Landlord which has
not been cured by Tenant or waived by Landlord at the time Tenant exercises its
option or at the time the Extended Term expires.
b. Tenant shall give to Landlord written notice exercising Tenant's option to
further extend the term of said Lease, not less than twelve (12) months prior to
the expiration of the Extended Term.
c. During the renewal term the Base Rent shall be at market rate, as
determined by Landlord in Landlord's reasonable judgment, based upon the market
rate for comparable space in the market as of the commencement date of such
renewal term. Within fifteen (15) days after receipt of Tenant's notice,
Landlord shall notify Tenant in writing of Landlord's determination of Base
Rent. In the event Tenant disagrees with Landlord's determination, Tenant shall
notify Landlord in writing within five (5) days after receipt of Landlord's
notice, setting forth Tenant's written proposal of Base Rent. If the parties
cannot agree upon the Base Rent for the renewal term, within five (5) days after
Landlord's receipt of Tenant's notice, Tenant's right to extend the term of this
Lease shall be null and void, unless Tenant elects in writing, within fifteen
(15) days after Tenant's receipt of Landlord's original determination of market
rate, to have the Base Rent determined by the arbitration procedure set forth in
Subsection (d), below.
2
<PAGE>
d. In the event Tenant elects to have Base Rent determined by arbitration,
such election shall also constitute Tenant's non-rescindable election to
exercise its option to extend the lease term. Therefore, after such election,
both parties shall be bound by Tenant's election even though the Base Rent will
thereafter be determined. Within ten (10) days after the date of Tenant's notice
to arbitrate, the parties shall agree upon a single commercial real estate
broker, who has been practicing his or her profession in Franklin Park, Illinois
and the surrounding municipalities for at least ten (10) years immediately
preceding Tenant's notice of election, and who has substantial experience with
the leasing of office/warehouse buildings in Franklin Park, Illinois and the
surrounding municipalities. If the parties agree upon such arbitrator within
said ten (10) days, said arbitrator shall determine the Base Rent for the
renewal term based upon comparable space in the market as of the commencement
date of such renewal term.
In the event Landlord and Tenant cannot agree upon such an arbitrator within
said ten (10) day period, Landlord and Tenant shall each appoint a separate
arbitrator within five (5) days thereafter, said arbitrators both to have the
aforesaid qualifications. Each arbitrator shall then independently determine the
Base Rent within ten (10) days thereafter. In the event the Base Rent as
determined by Landlord's arbitrator is within five percent (5%) of the Base Rent
as determined by Tenant's arbitrator, the two (2) Base Rents shall be combined
and blended for a single composite Rent. However, in the event the Base Rents as
determined by the parties' respective arbitrators are in excess of five percent
(5%) of one another, the two arbitrators shall appoint a third arbitrator within
five (5) days after both arbitrators receive notice of each other's respective
determination. Said third arbitrator shall have similar qualifications as the
other arbitrators, and he/she, alone, shall then determine the Base Rent by
selecting either the Base Rent determined by Landlord's arbitrator or the Base
Rent determined by Tenant's arbitrator.
Each party shall pay the fees and expenses of its arbitrator and one-half
(1/2) of the fees and, not needed expenses of a single or third arbitrator.
However, in the event the arbitrator('s) determination of Base Rent is within
five percent (5%) of that Base Rent originally determined by Landlord, Tenant
shall pay all costs of arbitration. Notwithstanding anything to the contrary in
this Section, in no event shall the monthly Base Rent payable by Tenant for such
renewal term be less than the monthly Base Rent payable by Tenant during the
last year of the Extended Term.
e. All other terms and conditions of said Lease shall be binding upon
Landlord and Tenant and in full force and effect, as if such terms and
conditions were again fully recited herein.
f. In the event Tenant does not exercise its option to extend said Lease as
herein provided, Landlord shall have the right, during the twelve (12) months
prior to the end of the Extended Term, to show the Premises during normal
business hours to other prospective tenants.
5. Rent. Tenant shall pay to Landlord the following Base Rent, during the
Extended Term, on the first day of each calendar month, prior to demand, in
advance, without setoff or deduction, at the office of Landlord, pursuant to the
terms and conditions of said Lease:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MONTHLY ANNUAL
PERIOD BASE RENT BASE RENT
- --------------------------------------------------------------------------------------------
January 1, 2000 - December 31, 2000 $23,346.48 $280,157.76
January 1, 2001 - December 31, 2001 $24,035.39 $288,424.68
January 1, 2002 - December 31, 2002 $24,724.30 $296,691.60
January 1, 2003 - December 31, 2003 $25,489.76 $305,877.12
January 1, 2004 - December 31, 2004 $26,255.22 $315,062.64
</TABLE>
6. Insurance. The second and third paragraphs of Section 19 of said Lease
(INSURANCE) are hereby deleted in their entirety and replaced with the
following:
"Tenant shall maintain in full force and effect throughout the term of
this Lease the following insurance policies: (a) occurrence commercial
liability insurance in amounts of not less than a per occurrence limit of
$1,000,000, with not less than a $2,000,000 general aggregate applying to
the Property, or such other amounts as Landlord may from time to time
reasonably require (but in no event more than a $3,000,000 per occurrence
and general aggregate limit), insuring Tenant, and as additional insureds,
Landlord, Landlord's managing agent, and their respective affiliates,
against all liability or injury to or death of persons, or damage to
property, arising from the use and/or occupancy of the Premises by Tenant
or any of Tenant's agents, employees, contractors or invitees; (b)
contractual liability insurance coverage sufficient
3
<PAGE>
to cover Tenant's indemnity obligations hereunder; and (d) all-risk
property insurance covering the full value of all property within the
Premises including, without limitation, Tenant's equipment, inventory,
trade fixtures and supplies, all interior finish constructed by either
Landlord or Tenant within the Premises, and all property of any third
persons placed or otherwise located within the Premises, subject to
Tenant's right of self-insurance below. All insurance deductibles under
Tenant's insurance coverages shall be the sole responsibility of Tenant
without right of reimbursement from Landlord for any reason. Tenant's
insurance shall be primary and non-contributing with or in excess of any
insurance coverage carried by Landlord. Tenant acknowledges that Landlord
makes no representations that the aforesaid required insurance coverages
and limits will necessarily be adequate to protect Tenant and, except as
otherwise specifically set forth in this Lease, such coverage and limits
shall not be deemed as a limitation on Tenant's liability under the
indemnities granted to Landlord under this Lease. Prior to taking
occupancy and thirty (30) days prior to the expiration of any insurance
policy, Tenant shall furnish certificates of all insurance required
hereunder to be carried by Tenant, executed by a duly authorized
representative of each insurer, or such other evidence satisfactory to
Landlord of the maintenance of all insurance coverages required hereunder,
and Tenant shall obtain a written obligation on the part of each insurance
company to notify Landlord at least thirty (30) days before cancellation
or a material change of any such insurance. All such insurance policies
shall be in a form, and issued by companies reasonably satisfactory to
Landlord, and with a Best's rating of B+VIII. Failure of Landlord to
demand any insurance certificate or other evidence with these insurance
requirements, or failure of Landlord to identify a deficiency from
evidence that is provided by Tenant to Landlord, shall not be construed as
a waiver of Tenant's obligation to maintain such coverage. For purposes of
this Section, the term, "affiliate", shall mean any person or entity which
directly or indirectly, controls, is controlled by, or is under common
control with the party in question. Tenant shall not do any act which may
make void or voidable any insurance on the Premises or Property. In the
event Tenant's use of the Premises shall result in an increase in
Landlord's insurance premiums, Landlord shall notify Tenant in writing;
and in the event Tenant fails to correct or take such measures as Landlord
reasonably determines to be necessary with respect to Tenant's use of the
Premises to reduce such premiums, Tenant shall pay to Landlord upon
demand, as Additional Rent, an amount equal to such increase in insurance.
Tenant may elect to insure its personal property, equipment, inventory,
trade fixtures, supplies and any property of any third persons at less
than one hundred (100%) percent of such property's replacement cost, or
elect to entirely self-insure such property. However, in the event
Tenant's property is damaged for any reason, including the negligence of
Landlord or Landlord's agents or employees, it shall be deemed that such
property is insured to the extent of one hundred (100%) percent of its
replacement cost. Therefore, as Tenant would otherwise waive all claims
against Landlord for any damage insured by a third party insurer, Tenant
hereby agrees to similarly waive all claims against Landlord for any
damage which is not insured to one hundred (100%) percent of its
replacement cost or which is self-insured by Tenant.
Notwithstanding anything to the contrary in this Lease, it is agreed
that, except for Landlord's right to recover against any liability
policies herein required to be carried by Tenant, Landlord and Tenant
hereby mutually waive any and all right of recovery against one another,
directly, by way of subrogation or otherwise, due to the negligence of
either party, their agents or employees, for real or personal property
damage occurring to the Premises, the Property, or any personal property
located therein, or from loss of income (whether or not such insurance is
actually carried). Each party shall have the affirmative duty to inform
their respective insurance carriers of this Section and the mutual waiver
of subrogation contained herein."
7. Notices. Section 23 of said Lease is hereby deleted in its entirety and
is replaced with the following:
"All Rents which are required to be paid by Tenant shall be delivered
to Landlord by United States mail, postage prepaid, at Landlord's address
below. All notices that are required to be given under said Lease shall be
in writing, and delivered by either (a) United States registered or
certified mail, return receipt requested or (b) an overnight commercial
package courier/delivery service. All notices shall be sent postage
prepaid, addressed to the parties hereto at their respective addresses
below:
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LANDLORD: TENANT:
Nooney, Inc. Household Finance Corporation
500 North Broadway, Suite 1200 2700 Sanders Road
St. Louis, Missouri 63102 Prospect Heights, Illinois 60070
Attention: Property Management
Department - Leasing
Either party may designate a different address by giving notice to the
other party at the address set forth above, or at any other address as the
parties may subsequently designate. Notices shall be deemed received on
the date of the return receipt. If any such notices are refused, or if the
party to whom any such notice is sent has relocated without leaving a
forwarding address, then the notice shall be deemed received on the date
the notice-receipt is returned stating that the same was refused or is
undeliverable at such address."
8. Brokerage. The parties warrant that they have dealt with no broker or
other person claiming a commission in connection with this transaction other
than Nooney, Inc. (representing the Landlord), Tenant is not represented by a
broker in this transaction. Each party shall hold the other party harmless for
any breach of such warranty. Landlord shall be liable for any commissions
payable to the aforesaid broker.
9. Acknowledgment. Tenant acknowledges that, as of the date of this
Amendment, Landlord is not in default of any term or condition of said Lease and
that the Premises are not in need of repair or maintenance; and Tenant hereby
ratifies acceptance of the Premises in its present "AS IS" condition.
Except as hereby amended, all other terms and conditions of said Lease shall
remain unchanged, and shall be in full force and effect as if again recited
herein.
WHEREFORE, the parties have executed this Second Amendment to Lease the day
and year first above written.
TENANT: LANDLORD:
HOUSEHOLD FINANCE CORPORATION III, NOONEY, INC.,
a Delaware corporation Agent for the Owner
By: /s/ R. K. Patenaude By: /s/ Patricia A. Nooney
Print Name: R. K. Patenaude Print Name: Patricia A. Nooney
Vice President - Leasing
Title: and Licensing Division Title: President
5
ACI BUILDING LEASE
THIS LEASE, made this 28 day of December, 1992, by and between Nooney Realty
Trust, Inc., a Missouri corporation, through its Agent, Nooney Krombach Company,
a Missouri corporation (hereinafter referred to as "Landlord") and Applied
Communication, Inc., a Nebraska corporation (hereinafter referred to as
"Tenant");
WITNESSETH:
1. LEASED PREMISES. Landlord hereby demises and leases to Tenant the entire
building known as the ACI Building, located at 330 S. 108th Avenue, Omaha,
Nebraska 68154, containing approximately 70,000 square feet of space
(hereinafter referred to as the "Premises"). Tenant shall use and occupy the
Premises for general office purposes, demonstrations, education and any other
use applicable to Tenant's business, and for no other use. See Additional
Provisions, Section 28.
Tenant has inspected the Premises and accepts the same in its present "AS IS"
condition, acknowledging that the Premises are in good order and satisfactory
condition and suitable for the purposes for which they are leased. Tenant
further acknowledges that Landlord has made no representations to Tenant with
respect to any alterations, repairs or improvements to be constructed within the
Premises. See Additional Provisions, Section 29.
2. TERM. The term of this Lease shall be six (6) years and eight (8) months,
commencing on the 1st day of January, 1993, and expiring on the 31st day of
August, 1999, both inclusive.
3. RENT. Tenant shall pay the following Base Rent and Additional Rent
(hereinafter collectively referred to as "Rent") during the term of this Lease,
in advance, on the first day of each calendar month, or as otherwise set forth
in this Lease, without setoff or deduction, at the office of Landlord. In the
event any Rent is payable for a partial calendar month or year, such Rent shall
be prorated to reflect only that portion of the lease term within such month or
year. All accrued unpaid Rent shall survive the lease term.
(a) Base. See Additional Provisions, Section 30.
(b) Additional Rent. Tenant shall pay to Landlord, as Additional Rent, an
amount equal to Tenant's proportionate share of any increase in Taxes and
Operating Expenses over the Taxes and Operating Expenses for the1993 calendar
year. Tenant's proportionate share shall be payable to Landlord monthly, in
advance, without interest accruing thereon, in an amount estimated from time to
time by Landlord. After each calendar year, Landlord shall deliver a statement
to Tenant setting forth Tenant's actual obligation for Taxes and Operating
Expenses, and the total amount of monthly payments paid by Tenant to Landlord.
In the event Tenant's actual obligation exceeds Tenant's payments, Tenant shall
pay the difference to Landlord within thirty (30) days after receipt of
Landlord's statement. Conversely, in the event Tenant's total payments exceed
Tenant's actual obligation, Landlord shall either refund the overpayment to
Tenant or credit said overpayment against Tenant's monthly obligation in the
forthcoming year. Tenant's proportionate share is 100% of the Premises.
Taxes (as such term is used herein) shall include, without limitation, any
tax, assessment or similar governmental charge imposed against the Premises, or
against any of Landlord's personal property used in the operation and/or
maintenance of the Premises. Taxes, as herein contemplated, are predicated on
the present system of taxation in the state of Nebraska. Therefore, if due to a
future change in the method of taxation any rent, franchise, use, profit or
other tax shall be levied against Landlord in lieu of any charge which would
otherwise constitute a Tax, such rent, franchise, use, profit or other tax shall
be deemed to be a Tax for the purposes herein. In the event Landlord is assessed
with a Tax which Landlord, in its sole discretion, deems excessive, Landlord may
challenge said Tax or may defer compliance therewith to the extent legally
permitted; and, in the event thereof, Tenant shall be liable for Tenant's
proportionate share of all costs in connection with such challenge. See
Additional Provisions, Section 31.
<PAGE>
Operating Expenses (as such term is used herein) shall include all costs and
expenses incurred by Landlord in operating and maintaining the Premises
including, without limitation: maintaining and repairing all systems therein,
the cost for all service agreements and subcontractor charges; landscaping;
janitorial services; wages/salaries and benefits of all employees engaged in the
operation and management of the Premises, together with any applicable social
security taxes, employment taxes or other taxes levied against such
wages/salaries; premiums for liability, property damage, fire, worker's
compensation and any and all other insurance for the Premises; management fees;
capital improvements which are required by any governmental authority to keep
the Premises in compliance with all applicable statutes, codes and regulations;
any applicable indenture or trustee's fees; and the amortized cost of any
capital improvement which reduces other Operating Expenses, but in an amount not
to exceed the reduction of Operating Expenses for the relevant year. Operating
Expenses shall not include capital improvements (other than aforesaid), ground
leases , principal or interest payments on any mortgage or deed of trust on the
Premises, or brokers' commissions. See Additional Provisions, Section 32.
Within one hundred eighty (180) days after receipt of each year-end
statement, Tenant or its authorized agent shall have the right, at Tenant's sole
cost and expense, to inspect and audit Landlord's records with respect to
Tenant's proportionate share of Operating Expenses, which audit shall be at the
office of Landlord's managing agent, upon five (5) days prior written notice,
during said agent's normal business hours. Except as aforesaid, Landlord shall
not be obligated to provide Tenant with detailed summaries or receipts for any
Operating Expenses incurred by the Premises; but Landlord shall provide Tenant
with a statement setting forth such expenses, categorized by class and amount.
Unless Tenant asserts specific errors within one hundred eighty (180) days after
receipt of each year-end statement, said statement shall be deemed to be
correct. See Additional Provisions, Section 33.
(c) Late Fee. In the event Tenant should fail to pay to Landlord any rent or
other charge within ten (10) days after receipt of written notice of
delinquency, Tenant shall be assessed a late fee for Landlord's increased
administrative expenses, in an amount equal to five (5%) percent, per month, of
the amount owed Landlord.
4. SERVICES. (a) Landlord shall provide electricity, gas sewer and water
(hereinafter referred to as the "utilities") to the Premises throughout the
lease term. Tenant shall pay to Landlord, as Additional Rent, the actual costs
of Tenant's utility charges which are in excess of Three Thousand, Five Hundred
and 00/100 ($3,500.00) Dollars, per calendar month. Payment shall be made within
thirty (30) days after receipt of Landlord's statement. In the event any utility
charge is payable for a partial calendar month or year, such charge shall be
prorated to reflect only that portion of the lease term within such month or
year.
(b) Landlord shall provide heat and air conditioning to the Premises; however
the obligation with respect to the utility costs to operate such heat and air
conditioning systems shall be subject to the provisions of Section 4(a), above.
(c) Landlord shall provide drinking water, restroom supplies and window
washing to the Premises.
(d) Landlord shall provide janitorial services to the Premises, Monday
through Friday, in a manner customarily furnished to comparable first class
office buildings in the area.
(e) Parking shall be provided on the parking lots adjacent to the Premises on
an unallocated basis. See Additional Provisions, Section 34.
(f) Landlord shall maintain and repair the Premises in a good and orderly
condition including, without limitation, lawn and shrub care, snow removal, and
maintenance of all structural, roof, mechanical and electrical equipment, but
excluding those items under Tenant's exclusive control and those items
specifically excepted elsewhere in this Lease.
Landlord shall make reasonable efforts to provide the foregoing services, but
in no event shall Landlord be liable for damages, nor shall the Rent be abated
due to any failure to furnish, or any delay in furnishing, any of the foregoing
services which are caused by Landlord's inability to secure electricity, fuel,
supplies, machinery, equipment or labor, or which are caused by necessary
repairs or improvements; nor shall the temporary failure to furnish any such
services be construed as a constructive eviction of Tenant or relieve Tenant
from the duty of observing and performing any of the provisions of this Lease.
See Additional Provisions, Section 35.
5. DESTRUCTION. If a substantial portion of the Premises are damaged in whole
or in part by casualty, and the Premises are made untenantable as a result
thereof, and if in Landlord's reasonable opinion such damages cannot be
substantially repaired within one hundred eighty (180) days from the date of
said casualty, this Lease may be terminated by either party. If the damages can
be repaired within one hundred eighty (180) days, but Landlord fails within the
first sixty (60) days after such casualty to either commence to make such
repairs or notify Tenant of Landlord's intent to make such repairs, Tenant shall
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<PAGE>
have the right to terminate this Lease. Should Landlord elect to make such
repairs, this Lease shall remain in full force and effect, and Landlord shall
proceed with all due diligence to repair and restore the Premises to a condition
substantially similar to that condition which existed prior to such casualty. In
the event the repair and restoration of the Premises extends beyond one hundred
eighty (180) days after the date of such casualty due to causes beyond the
control of Landlord, this Lease shall remain in full force and effect, and
Landlord shall not be liable therefor; but Landlord shall continue to complete
such repairs and restoration with all due diligence.
In the event either party should elect to terminate this Lease, the party so
electing shall notify the other party in writing. The effective date of such
termination shall be the date of said casualty. In the event this Lease is
terminated, the parties shall have no further obligations to the other, except
for those obligations accrued through the effective date of such termination;
and, upon such termination, Tenant shall immediately surrender possession of the
Premises to Landlord. Tenant shall not be required to pay any Rent for any
period in which the Premises are untenantable. In the event only a portion of
the Premises are untenantable, Tenant's Rent shall be equitably abated in
proportion to that portion of the Premises which are so unfit. However, there
shall be no Rent abatement if the damages are due to the fault or negligence of
Tenant or Tenant's agents, employees or invitees.
6. LANDLORD'S RIGHTS. (a) Landlord may close the Premises, or portions
thereof, in emergency situations determined by Landlord, and during periods of
general construction, upon reasonable verbal notice, except in the event of an
emergency, during which times admittance may be gained only under such
regulations as may be prescribed by Landlord.
(b) Landlord may designate all sources of all services used by Landlord in
the operation, maintenance and repair of the Premises; and Landlord may
designate the source and grade of all materials and all personnel for all
construction, repairs and maintenance which Landlord is obligated to perform
under this Lease.
(c) Landlord may enter the Premises at any time upon reasonable verbal
notice, except in the event of an emergency, to examine or show the same to
existing or prospective fee owners or third party tenants, ground lessors,
mortgagees, Landlord's insurance carriers and by request of any governmental
agency. Additionally, Landlord may decorate, repair or otherwise prepare the
Premises for re-occupancy (without affecting Tenant's obligation to pay Rent)
during the last ninety (90) days of the lease term, if prior to that time Tenant
has vacated the Premises.
(d) Landlord may have pass keys to the Premises and all portions thereof.
(e) Landlord may change the name or street address of the Premises; and may
install, affix and maintain one or more signs within or about the Premises.
However, in the event thereof Landlord shall reimburse Tenant for Tenant's
reasonable costs as a result of such change.
(f) Landlord may enter the Premises upon reasonable verbal notice, except in
the event of an emergency, for inspection purposes, or perform any maintenance,
repairs or alterations for the benefit of the Premises.
(g) Landlord may temporarily close portions of the Premises, the parking lot,
or may temporarily suspend certain building services to facilitate the proper
maintenance and repair of the Premises, upon reasonable verbal notice, except in
the event of an emergency.
(h) Landlord has established certain Rules and Regulations with respect to
the Premises, as more fully set forth on Exhibit "A", attached hereto and made a
part hereof. Landlord reserves the right to establish additional Rules and
Regulations, or make amendments thereto, from time to time if, in Landlord's
reasonable opinion, Landlord determines the same to be necessary for the orderly
operation of the Premises. The non-compliance of any of such Rules and
Regulations by Tenant shall constitute a Default under this Lease. See
Additional Provisions, Section 36.
7. ALTERATIONS AND REPAIRS. Landlord does not warrant either expressly or
impliedly the condition or fitness of the Premises except as herein set forth.
Tenant shall keep those areas of the Premises which are under Tenant's exclusive
control in good repair, without expense to Landlord; and, upon the termination
of this Lease, Tenant shall return such areas to Landlord, together with all of
Tenant's keys, in the same condition as when received, reasonable wear and tear
excepted. Tenant shall make all repairs to those areas of the Premises which are
under Tenant's exclusive control, including the replacement of any broken glass,
unless such repairs shall be caused by the negligence of Landlord. In the event
Tenant should fail to make such repairs promptly and adequately after Landlord's
written demand, Landlord may make such repairs, whereupon Tenant shall
immediately reimburse to Landlord, as Additional Rent, the cost of such repairs.
Tenant shall not allow any waste or misuse of the utilities; and, in the event
thereof, Tenant shall pay for all damages to the Premises caused by any such
waste, misuse or negligence by Tenant.
Tenant shall not make any structural alterations, improvements or additions
to the Premises without the prior written consent of Landlord. Landlord reserves
the right but not the obligation to perform all alterations, improvements or
additions required by Tenant; and, in the event Landlord exercises such right,
Tenant shall reimburse Landlord for all of Landlord's costs within thirty (30)
days after receipt of Landlord's invoice. In the event Tenant undertakes any
alterations, improvements or additions within the Premises,
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<PAGE>
all construction in connection therewith shall be performed by contractors
pre-approved by Landlord. All improvements made to the Premises by or on behalf
of Tenant shall, at the election of Landlord, become the property of Landlord
and shall be surrendered with the Premises upon the termination of this Lease.
However, unless Landlord specifically requests in writing that such improvements
remain within the Premises, Tenant shall remove all such improvements upon the
expiration or earlier termination of this Lease, and restore the Premises to a
condition substantially similar to that condition when delivered to Tenant. See
Additional Provisions, Section 37.
8. SUBLETTING AND ASSIGNING. Tenant shall not assign or sublet the Premises,
or any portion thereof, nor allow the same to be used or occupied by any other
person, without the prior written consent of Landlord which consent shall not be
unreasonably withheld or delayed. For purposes of this Section, the transfer of
any majority interest in any corporation or partnership shall be deemed to be an
assignment of this Lease. In no event shall any subtenant, assignee or other
occupant use the Premises for any purpose other than that specifically set forth
in Section 1 of this Lease. Further, in no event shall Landlord's consent to any
sublease or assignment constitute a release of Tenant from the full performance
of Tenant's obligations under this Lease. Tenant shall reimburse Landlord for
Landlord's reasonable attorney's fees to review and/or draft all documents
Landlord deems necessary in connection with the transfer of Tenant's interests.
See Additional Provisions, Section 38.
9. DEFAULT. If Tenant shall default in the payment of any Rent or breach any
covenant or agreement of this Lease (hereinafter singularly or collectively
referred to as "Default"), and if such Default shall continue for five (5) days
after receipt of written notice from Landlord, or if Tenant makes an assignment
for the benefit of creditors, abandons the Premises for more than thirty (30)
days, files or has filed against it a petition in bankruptcy, or is adjudicated
insolvent, Landlord may either (a) terminate this Lease or (b) terminate
Tenant's right of possession to the Premises without terminating this Lease. In
either event, Landlord shall have the right to expel and remove Tenant, or any
other person in occupancy, together with their property, and repossess the
Premises; and, upon Landlord taking possession of the Premises, Tenant shall be
liable for all expenses incurred by Landlord in recovering the Premises
including, without limitation, clean-up costs, legal fees, removal and storage
of Tenant's property, and restoration costs.
In the event Landlord elects to terminate this Lease, Landlord shall send
written notice to Tenant of such forfeiture, and all Rent through the effective
date of termination shall immediately become due, together with the aforesaid
expenses incurred by Landlord. In the event Landlord elects not to terminate
this Lease, but only to terminate Tenant's right of possession, Landlord may
dispossess Tenant; and, upon Landlord recovering possession, Landlord shall use
reasonable efforts to relet the Premiss upon terms and conditions satisfactory
to Landlord. Landlord shall have no duty to prioritize the reletting of the
Premises over the leasing of other property owned by Landlord; and, until the
Premises are relet, Tenant shall remain liable for all Rent payable under this
Lease. In the event the Premises are relet, Tenant shall be liable for the
aforesaid costs incurred by Landlord in recovering possession of the Premises,
along with all costs of reletting including, without limitation, any broker's
fees, legal fees, and/or tenant finish required to be paid in connection with
any reletting; and, in the event the rent payable under any reletting is less
than the Rent payable under this Lease, Tenant shall be liable for the
difference thereof. See Additional Provisions, Section 39.
No action by Tenant after final judgment for possession of the Premises shall
reinstate this Lease, and Tenant waives any and all rights of redemption in the
event Tenant is judicially dispossessed. Should Landlord elect not to exercise
any of its rights in the event of a Default, it shall not be deemed a waiver of
such rights as to subsequent Defaults. All of the aforesaid rights of Landlord
shall be in addition to any remedies which Landlord may have at law or in
equity. Tenant shall pay all costs and reasonable attorney's fees incurred by
Landlord from enforcing the covenants of this Lease.
10. HOLDOVER. Upon the expiration or earlier termination of this Lease,
Tenant shall surrender the Premises to Landlord, without demand, in as good
condition as when delivered to Tenant, reasonable wear and tear excepted. If
Tenant shall remain in possession of the Premises after the termination of this
Lease, and hold over for any reason, Tenant shall be deemed guilty of unlawful
detainer; or, at Landlord's election, Tenant shall be deemed a holdover tenant
and shall pay to Landlord monthly Rent equal to one hundred twenty-five (125%)
percent (for the first three (3) months of any such holdover) and one hundred
fifty (150%) percent (after the third holdover month) of the total Rent payable
hereunder during the last month prior to any such holdover, as well as any other
damages incurred by Landlord as a result of such holdover. Should any of
Tenant's property remain within the Premises after the termination of this
Lease, it shall be deemed abandoned, and Landlord shall have the right to store
or dispose of it at Tenant's cost and expense.
11. RIGHT TO CURE TENANT'S DEFAULT. If Tenant is in Default under any
provision of this Lease, other than for the payment of Rent, and Tenant has not
cured such Default within five (5) days after receipt of Landlord's written
notice, Landlord may cure such Default on behalf of Tenant, at Tenant's expense.
Landlord may also perform any obligation of Tenant, without notice to Tenant,
should Landlord deem such performance to be an emergency. If Landlord incurs any
expense, including reasonable attorney's fees, in instituting, prosecuting
and/or defending any action or proceeding by reason
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of any emergency or Default, Tenant shall reimburse Landlord for same, as
Additional Rent, with interest calculated thereon at the rate of three (3%)
percent over the prime rate charged by City Bank from time to time (but in no
event greater than thirteen (13%) percent per annum) from the date such payment
is due Landlord.
12. HOLD HARMLESS. Landlord shall not be liable to Tenant for any damages to
the Premises, nor for any damages to Tenant on or about the Premises, nor for
any other damages arising from the action or negligence of Landlord, Tenant, or
third persons; and Tenant hereby releases, discharges and shall indemnify, hold
harmless and defend Landlord, at Tenant's sole cost and expense, from all
losses, claims, liabilities, damages, and expenses (including reasonable
attorney's fees) due to any damage or injury to persons or property of the
parties hereto or of third persons, caused by Tenant's use or occupancy of the
Premises, Tenant's breach of any covenant under this Lease, or Tenant's use of
any equipment, facilities or property in, on, or about the Premises. In the
event any suit shall be instituted against Landlord by any third person for
which Tenant is hereby indemnifying Landlord, Tenant shall defend such suit at
Tenant's sole cost and expense with counsel reasonably satisfactory to Landlord;
or, at Landlord's election, Landlord may defend such suit, in which event Tenant
shall pay Landlord, as Additional Rent, Landlord's costs of such defense.
Notwithstanding the aforesaid, Landlord shall remain liable for its own
negligence, except with respect to liability for damages to real and personal
property for which the parties have waived their right of recovery pursuant to
Section 14.
13. CONDEMNATION. If a substantial portion of the Premises are taken in
condemnation, or transferred by agreement in lieu of condemnation, either Tenant
or Landlord may terminate this Lease by serving the other party with written
notice, effective as of the taking date; provided in the case of termination by
Tenant that the Premises (or the remaining portion thereof) may no longer be
adequately used for the purpose set forth in Section 1, of this Lease. If
neither Tenant nor Landlord elect to terminate this Lease, then this Lease shall
terminate on the taking date only as to that portion of the Premises so taken,
and the Rent and other charges payable by Tenant shall be reduced
proportionally. Landlord shall be entitled to the entire condemnation award for
all realty and improvements. Tenant shall only be entitled to an award for
Tenant's personal property and fixtures, provided Tenant independently petitions
the condemning authority for same. Notwithstanding the aforesaid, if any
condemnation takes a portion of the Premises which does not materially affect
Tenant's use thereof, or if any condemnation takes a portion of the parking area
the result of which does not reduce the minimum required parking ratio below
that established by local code or ordinance. this Lease shall continue in full
force and effect without modification.
14. INSURANCE. Tenant shall maintain in full force and effect throughout the
term of this Lease policies providing "all risk" insurance coverage protecting
against physical damage (including, but not limited to, fire, lightning,
vandalism, sprinkler leakage, water damage, collapse, and other extended
coverage perils) to the extent of 100% of the replacement cost of Tenant's
property and improvements, as well as broad form comprehensive or commercial
general liability insurance, in an occurrence form, insuring Landlord and Tenant
jointly against any liability (including bodily injury, property damage and
contractual liability) arising out of Tenant's use or occupancy of the Premises,
with a combined single limit of not less than $1,000,000, or for a greater
amount as may be reasonably required by Landlord from time to time. All such
policies shall be of a form and content satisfactory to Landlord; and Landlord
shall be named as an additional insured on all such policies. All policies shall
be with companies licensed to do business in the State of Nebraska, and rated A+
:XV in the most current issue of Best's Key Rating Guide. Tenant shall furnish
Landlord with certificates of all policies at least ten (10) days prior to
occupancy; and, further, such policies shall provide that not less than thirty
(30) days written notice be given to Landlord before any such policies are
cancelled or substantially changed to reduce the insurance provided thereby. All
such policies shall be primary and non-contributing with or in excess of any
insurance carried by Landlord. Tenant shall not do any act which may make void
or voidable any insurance on the Premises; and, in the event Tenant's use of the
Premises shall result in an increase in Landlord's insurance premiums, Tenant
shall pay to Landlord upon demands, as Additional Rent, an amount equal to such
increase in insurance. See Additional Provisions, Section 40.
Notwithstanding anything to the contrary in this Lease, it is expressly
agreed that the parties shall each bear the risk of their own property; and each
party hereby waives any and all right of recovery against the other party
directly, by way of subrogation or otherwise, due to the negligence of either
party, their agents or employees, for any real or personal property damage
occurring to the Premises, or to any personal property located therein (whether
or not the parties carry, or are required to carry, insurance for the same). The
parties shall each have the affirmative duty to inform their respective
insurance carriers of this Section and the mutual waiver of subrogation
contained herein.
15. MORTGAGES. This Lease is subject and subordinated to any mortgages, deeds
of trust or underlying leases, as well as to any extensions or modifications
thereof (hereinafter collectively referred to as "Mortgages"), now of record or
hereafter placed of record. In the event Landlord exercises its option to
further subordinate this Lease, Tenant shall at the option of the holder of said
Mortgage attorn to said holder. Any subordination shall be self-executing, but
Tenant shall at the written request of Landlord, execute such further assurances
as Landlord deems desirable to confirm such subordination. In the event Tenant
should fail or refuse to execute any instrument required under this Section,
within fifteen (15) days after Landlord's request, Landlord shall be granted a
limited power of attorney to execute such instrument in the name of Tenant. In
the event any existing or future lender, holding a mortgage, deed of trust or
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other commercial paper, requires a modification of this Lease which does not
increase Tenant's Rent hereunder, or does not materially change any obligation
or right of Tenant hereunder, Tenant agrees to execute appropriate instruments
to reflect such modification, upon request by Landlord.
16. LIENS. Tenant shall not mortgage or otherwise encumber or allow to be
encumbered its interest herein without obtaining the prior written consent of
Landlord. Should Tenant cause any mortgage, lien or other encumbrance
(hereinafter singularly or collectively referred to as "Encumbrance") to be
filed, against the Premises, Tenant shall dismiss or bond against same within
fifteen (15) days after the filing thereof. If Tenant fails to remove said
Encumbrance within said fifteen (15) days, Landlord shall have the absolute
right to remove said Encumbrance by whatever measures Landlord shall deem
convenient including, without limitation, payment of such Encumbrance, in which
event Tenant shall reimburse Landlord, as Additional Rent, all costs expended by
Landlord, including reasonable attorneys fees, in removing said Encumbrance. All
of the aforesaid rights of Landlord shall be in addition to any remedies which
either Landlord or Tenant may have available to them at law or in equity.
17. GOVERNMENT REGULATIONS. In addition, Tenant shall comply with any
reasonable requirements of Landlord's insurance carrier with respect to Tenant's
use of the Premises. The judgment of any court, or an admission of Tenant in any
action or proceeding at law, whether Landlord is a party thereto or not, shall
be conclusive of the fact as between Landlord and Tenant. See Additional
Provisions, Section 41.
18. NOTICES. All Rents which are required to be paid by Tenant shall be
delivered to Landlord by the United States mail, postage prepaid, at Landlord's
address set forth below. All notices which are required to be given hereunder
shall be in writing, and delivered by United States registered or certified
mail, return receipt requested, postage prepaid, addressed to the parties hereto
at their respective addresses below:
LANDLORD: TENANT:
Nooney Krombach Company Applied Communications, Inc.
7701 Forsyth Boulevard 330 South 108th Avenue
Clayton, MO 63105-1877 Omaha, NE 68154
Either party may designate a different address by giving notice to the other
party, at such party's last known address.
19. OWNERSHIP. Notwithstanding anything to the contrary in this Lease, the
term "Landlord", as used herein, shall be defined as the current owners of the
Premises. In the event the Premises are transferred, the party conveying same
shall be released from all liability with respect to any obligations thereafter
occurring or covenants thereafter to be performed by the Landlord or its agents.
It is expressly understood and agreed that none of Landlord's covenants under
this Lease are personal in nature, and that Tenant agrees to look solely to the
Premises for recovery of any damages for the breach or non-performance of any of
the obligations of Landlord hereunder. See Additional Provisions, Section 40.
21. ESTOPPEL CERTIFICATES. Within thirty (30) days after Landlord's request,
Tenant shall execute and return to Landlord or its designee a statement in a
form reasonably requested by Landlord certifying, to the extent true, that this
Lease is unmodified and in full force and effect, that Tenant has no defenses,
offsets or counterclaims against its obligations to pay any Rent or to perform
any other covenants under this Lease, that there are no uncured Defaults of
Landlord or Tenant, the dates to which
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the Rent and other charges have been paid, and any other information reasonably
requested by Landlord. In the event Tenant fails to return such statement within
said thirty (30) days, setting forth the above or, alternatively, setting forth
any lease modifications, defenses and/or uncured Defaults, Tenant shall be in
Default hereunder or, at Landlord's election, it shall be deemed that Landlord's
statement is correct with respect to the information therein contained. Any such
statement delivered pursuant to this Section may be relied upon by any
prospective purchaser, mortgagee, or assignee of any mortgagee of the Premises.
23. BROKERAGE. The parties warrant that they have dealt with no broker or
other person claiming a commission in connection with this transaction other
than Nooney Krombach Company; and each party shall hold the other party harmless
for any breach of such warranty. Landlord shall be liable for any commissions
payable to the aforesaid brokers.
24. SEVERABILITY. In the event any provision of this Lease is found to be
invalid or unenforceable, the same shall not affect or impair the validity or
enforceability of any other provision.
25. PERSONAL PROPERTY TAXES. Tenant shall timely pay all taxes assessed
against Tenant's personal property and those improvements to the Premises which
are in excess of Landlord's standard installations. In the event any of Tenant's
personal property or improvements are assessed with the property of Landlord,
Tenant shall pay to Landlord an amount equal to Tenant's share of such taxes,
within ten (10) days after receipt of Landlord's statement.
26. CONFIDENTIALITY. The parties acknowledge that the terms and conditions
set forth in this Lease are confidential in nature, and that the negotiations
preceding the drafting of this instrument are private as between Landlord and
Tenant. Therefore, neither party or its agents (including their respective
brokers and attorneys) shall disclose any of the terms or conditions herein
contained to any person other than authorized agents.
27. MISCELLANEOUS. (a) All of the covenants of Tenant hereunder shall be
deemed and construed to be "conditions" as well as "covenants", as though both
words were used in each separate instance within this Lease.
(b) This Lease shall not be recorded by Tenant without the prior written
consent of Landlord.
(c) The Section headings appearing in this Lease are inserted only as a
matter of convenience, and in no way define or limit the scope of any Section.
(d) Except with respect to Tenant's obligation for the payment of Rent, in
the event any obligation to be performed by either Landlord or Tenant is
prevented or delayed due to labor disputes, acts of God, inability to obtain
materials, government restrictions, casualty, or other causes beyond the
parties' control, the responsible party shall be excused from performing such
obligation for a period of time equal to any such delay.
(e) The submission of this Lease shall not be deemed to be an offer, an
acceptance, or a reservation of the Premises; and Landlord shall not be bound
hereby until Landlord has delivered to Tenant a fully executed copy of this
Lease, signed by both of the parties on the last page of this Lease in the
spaces herein provided. Until such delivery, Landlord reserves the right to
exhibit and lease the Premises to other prospective tenants.
(f) Landlord may withhold possession of the Premises from Tenant until such
time as Tenant has paid to Landlord the security deposit pursuant to Section 20
of this Lease, and the first month of Base Rent pursuant to Subsection 3(a) of
this Lease.
(g) This Lease and the parties' respective rights hereunder shall be governed
by the laws of the State of Nebraska.
(h) All of the terms of this Lease shall extend to and be binding upon the
parties hereto and their respective heirs, executors, administrators, successors
and assigns.
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(i) This Lease is modified and affected by the following Exhibits which are
attached hereto and made a part hereof.
Exhibit "A": Rules and Regulations
WHEREFORE, Landlord and Tenant have respectively signed and sealed this Lease
the day and year first above written.
TENANT: LANDLORD:
APPLIED COMMUNICATIONS, INC. NOONEY KROMBACH
a Nebraska corporation COMPANY,
Agent for the Owner
By: /s/ Gregory J. Duman By: /s/ Patricia A. Nooney
Print Name:Gregory J. Duman Print Name: Patricia A. Nooney
Title: Chief Financial Officer Title: Senior Vice President
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ADDITIONAL PROVISIONS TO LEASE OF EVEN DATE HEREWITH
BY AND BETWEEN NOONEY KROMBACH COMPANY, AS LANDLORD,
AND APPLIED COMMUNICATIONS, INC., AS TENANT
28. TERMINATION OF EXISTING LEASE. With respect to Section 1 of this Lease,
the parties acknowledge that Tenant is presently occupying the Premises under
that certain Lease, dated July 28, 1983, by and between Nooney Krombach Company,
as successor-in-interest to W. Eljay Co., and Applied Communications, Inc.
(hereinafter referred to as the "1983 Lease"). Said 1983 Lease is hereby
terminated, effective as of the commencement date of this Lease; and, upon such
date, all rights and obligations under said 1983 Lease shall be mutually
extinguished without further liability, except for those obligations (rents, and
other charges) which have accrued, but which may not have been either invoiced
or paid as of such date of termination. It is agreed between the parties that
any outstanding obligation under said 1983 Lease shall become an obligation
under this Lease; and, should Tenant fail to perform or pay any such obligation,
Tenant shall be in Default under this Lease in the same manner and to the same
extent as if the nonperformance or non-payment of such obligation was a Default
of a direct obligation under this Lease.
29. TENANT FINISH. With respect to Section 1 of this Lease, Tenant shall have
the right and option to have certain interior finish work performed within the
Premises. Such work shall be performed by Landlord or Tenant at Tenant's
election; however, all such work shall be subject to Landlord's prior approval,
which approval shall not be unreasonably withheld. Should Landlord undertake
such work, Tenant shall have the affirmative duty to review the plans for the
contemplated work for compliance with the requirements of the Americans with
Disabilities Act of 1990, and Tenant shall hold Landlord harmless with respect
to such compliance so long as Landlord performs the work according to such
plans. Should Tenant undertake such work, Tenant shall be solely responsible for
compliance with such Act, notwithstanding Landlord's approval of any plans. Any
changes, alterations, or additions made to the original approved plans shall be
in writing and also approved by Landlord prior to construction.
Landlord shall contribute toward the actual costs of Tenant's interior finish
in the amount of One Hundred Fifty Thousand and 00/100 ($150,000.00) Dollars.
Should Landlord perform such interior finish, Landlord shall directly pay for
such work; and in the event the actual costs exceed $150,000.00, Tenant shall
reimburse Landlord the actual costs of such interior finish work in excess of
Landlord's aforesaid contribution, within thirty (30) days after receipt of
Landlord's statement. Should Tenant perform such interior finish, Landlord shall
reimburse Tenant for the costs of same upon receipt of copies of paid invoices,
and all applicable lien waiver(s), but in no event more than $150,000.00.
Tenant acknowledges that the aforesaid work shall be performed while Tenant
is in possession of the Premises. In the event Tenant is inconvenienced by such
work, Tenant shall make no claim against Landlord, nor shall any Rent payable to
Landlord be reduced or abated while Landlord is performing such work. However,
Landlord shall remain liable for any personal injuries suffered by Tenant or
Tenant's invitees directly in the event such damage is caused by the negligence
of Landlord.
30. BASE RENT. With respect to Section 3(a) of this Lease, Tenant shall pay
to Landlord the following Base Rent, on the first day of each calendar month, in
advance, without setoff or deduction, at the office of Landlord:
(a) For the period January 1, 1993 through and including December 31, 1993,
Tenant shall pay to Landlord, as Base Rent, an amount equal to Eight Hundred
Thirty-three Thousand, Four and 00/100 ($833,004.00) Dollars, payable in equal
monthly installments of Sixty-nine Thousand, Four Hundred Seventeen and 00/100
($69,417.00) Dollars each.
(b) For the period January 1, 1994 through and including December 31, 1994,
Tenant shall pay to Landlord, as Base Rent, an amount equal to Eight Hundred
Fifty-seven Thousand, Four Hundred Ninety-six and 00/100 ($857,496.00) Dollars,
payable in equal monthly installments of Seventy-one Thousand, Four Hundred
Fifty-eight and 00/100 ($71,458.00) Dollars each.
(c) For the period January 1, 1995 through and including December 31, 1995,
Tenant shall pay to Landlord, as Base Rent, an amount equal to Eight Hundred
Eighty-two Thousand and 00/100 ($882,000.00) Dollars, payable in equal monthly
installments of Seventy-three Thousand, Five Hundred and 00/100 ($73,500.00)
Dollars each.
(d) For the period January 1, 1996 through and including December 31, 1996,
Tenant shall pay to Landlord, as Base Rent, an amount equal Nine Hundred Nine
Thousand, Nine Hundred Ninety-six and 00/100 ($909,996.00) Dollars, payable in
equal monthly installments of Seventy-five Thousand, Eight Hundred Thirty-three
and 00/100 ($75,833.00) Dollars each.
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(e) For the period January 1, 1997 through and including December 31, 1997,
Tenant shall pay to Landlord, as Base Rent, an amount Nine Hundred Thirty-eight
Thousand, Four and 00/100 ($938,004.00) Dollars, payable in equal monthly
installments of Seventy-eight Thousand, One Hundred Sixty-seven and 00/100
($78,167.00) Dollars each.
(f) For the period January 1, 1998 through and including December 31, 1998,
Tenant shall pay to Landlord, as Base Rent, an amount equal to Nine Hundred
Seventy-two Thousand, Nine Hundred Ninety-six and 00/100 ($972,996.00) Dollars,
payable in equal monthly installments of Eighty-one Thousand, Eighty-three and
00/100 ($81,083.00) Dollars each.
(g) For the period January 1, 1999 through August 31, 1999, Tenant shall pay
to Landlord, as Base Rent, an amount equal to Six Hundred Sixty-seven Thousand,
Three Hundred Thirty-eight and 00/100 ($667,338.00) Dollars, payable in equal
monthly installments of Eighty- three Thousand, Four Hundred Seventeen and
25/100 ($83,417.25) Dollars each.
31. TAXES. With respect to Section 3(b) of this Lease, Landlord agrees to use
good faith efforts to timely review all Tax assessments or governmental charges
assessed against the Property, and to challenge any assessment when, in
Landlord's reasonable belief, the same could profitably be challenged. Landlord
agrees to provide Tenant with copies of any notices proposing increases in the
payment of Taxes upon the Property, upon request by Tenant, received by Landlord
no earlier than sixty (60) days prior to the last date established by law to
challenge such Taxes. In the event Landlord elects not to challenge any Tax or
assessment, Tenant shall have the right to independently make such challenge,
and Landlord agrees to cooperate with Tenant in such regard. Any such challenge
undertaken by Tenant shall be at Tenant's sole cost and expense. In the event
Tenant is successful with its challenge, Landlord shall reimburse to Tenant each
year that portion of the cost of such challenge which reflects the actual Tax
savings enjoyed by the Property for that year. However, it is expressly
understood that Landlord shall have no obligation to make any reimbursement
unless and until Landlord has actually received the Tax refund for such
challenge, so that Landlord does not have to come out-of-pocket for any such
challenge. In no event shall Landlord's total reimbursement exceed the total
actual Tax savings enjoyed by the Property. Once Landlord has reimbursed Tenant
for such expense, the same shall become an Operating Expense of the Property,
for which Tenant shall be liable for its proportionate share under the Lease. In
no event shall Landlord be required to challenge any assessment or Tax which
Landlord in good faith believes would not be successful. Tenant shall have no
right to withhold the payment of Tenant's proportionate share of Taxes during
the pendency of any proceeding or contest, whether instituted by either Landlord
or Tenant.
32. EXCLUSIONS FROM OPERATING EXPENSES. Notwithstanding anything to the
contrary in Section 3(b) of this Lease, Operating Expenses shall not include the
following.
(a) Legal fees, brokerage fees, leasing commissions, advertising costs, or
other related expenses incurred by Landlord in connection with the leasing of
the Property.
(b) Repairs, alterations, additions, improvements or replacements of a
capital nature made to rectify or correct any defect in the original design,
materials or workmanship of Landlord's building.
(c) Repairs to the Property as a result of any fire or other casualty
for which Landlord is reimbursed by insurance.
(d) Repairs to the Property as a result of any willful misconduct of Landlord
or Landlord's agents, and repairs to the Property as a result of any negligence
or willful misconduct of Landlord's contractors for which Landlord is
reimbursed.
(e) Charges for any portion of salaries or other benefits of Landlord's
officers or personnel, except those engaged in full-time management or
maintenance and operation of the Property, it being understood that a pro rata
portion of such salaries and other benefits may be charged for personnel working
part-time on the management or maintenance and operation of the Property, who
are also working part-time on other properties or other matters.
(f) Landlord's general overhead expenses which are not related to the
Property; it being understood that a pro rata portion of such overhead expenses
may be charged for such expenses which are incurred both in connection with the
Property and other properties managed by Landlord.
(g) Legal fees, accounting fees, and other expenses incurred in connection
with disputes with tenants or other occupants of the Property, or associated
with the enforcement of the terms of any leases with tenants, or the defense of
Landlord's title to, or interest, in the Property.
(h) Costs incurred due to a willful violation by Landlord of any term or
condition of this Lease or any third party lease within the Property.
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(i) Costs (including permits, licensing and inspection fees) incurred in
renovating or otherwise improving, decorating, painting or altering space for
tenants or other occupants, or vacant space (excluding common areas) in the
Property, which are performed in connection with the leasing or re-leasing of
space, as opposed to the Landlord's repair obligations under any lease with any
tenant.
(j) Any real estate operating expense which, under generally-accepted
accounting principles consistently applied, would not be considered a reasonable
maintenance or operating expense of similar real estate.
(k) Any expense for which Landlord has been reimbursed, it being understood
between the parties that Landlord shall not collect in excess of one hundred
(100%) percent of its actual Operating Expenses, and shall not recover the cost
of any items more than once.
(l) Salaries of building management personnel who perform services solely
connected with the management, operations, repair or maintenance of the
building, which exceeds three (3%) percent of the gross revenues of the Property
per year.
(m) Alterations, additions, improvements or replacements of a capital nature
made to the roof or the heating and air conditioning system servicing the
Property; it being understood, however, that all repairs not of a capital
nature, made to the roof or the heating and air conditioning system. may be
included as an Operating Expense.
(n) Any principal or interest payments on the original purchase or
refinancing of the Property, or in connection with any capital expenditures made
to or with respect to the Property.
(o) Amortization, debt service, or other payments on loans to Landlord.
(p) Depreciation on Landlord's building, or any equipment therein, except as
expressly provided with respect to those items which reduce other Operating
Expenses, as more fully set forth in Section 3(b).
33. TENANT'S AUDIT. In the event Tenant elects to perform an audit of
Landlord's records, pursuant to Section 3(b) of this Lease, and in the further
event said audit discloses a net error in favor of Tenant of five (5%) percent
or greater, Landlord shall reimburse to Tenant the reasonable cost of such audit
within thirty (30) days after receipt of a copy of such audit disclosing
Landlord's error.
34. PARKING. With respect to Section 4(e) of this Lease, Landlord represents
and warrants that, so long as Tenant occupies and leases the entire building
constituting the Premises, Tenant shall have the exclusive right to use the
entire parking lot servicing the Property.
35. INTERRUPTION OF SERVICES. Notwithstanding anything to the contrary in
Section 4 of this Lease, in the event there is an interruption in services which
is not due in part to the negligence of Tenant and, as a direct result of such
interruption, Tenant is unable to conduct its business in the Premises, Landlord
shall not be liable to Tenant, but the Base Rent payable to Landlord shall be
abated from the fourth (4th) day after such interruption until such time as such
services are reinstated or Tenant again occupies the Premises.
36. RULES AND REGULATIONS. With respect to Section 6(h) of this Lease, Tenant
shall not be obligated to comply with any newly established Rule or Regulation
until such time as Tenant has received written notice thereof; and Tenant shall
not be in Default of any Rule or Regulation unless Tenant has failed to comply
with the same within thirty (30) days after receipt of written notice from
Landlord.
37. TENANT'S ALTERATIONS. Landlord agrees not to unreasonably withhold its
consent to any non-structural alterations, improvements or additions made to the
Premises; however, Landlord's consent shall not be deemed to be unreasonably
withheld if, as a condition to such consent, Landlord requires Tenant to restore
the Premises upon the termination of this Lease to substantially the same
condition which existed prior to Tenant making such alterations. In the event
Landlord elects to perform any alterations, improvements or additions to the
Premises on behalf of Tenant, and in the event the estimated cost thereof is
Twenty Thousand and 00/100 ($20,000.00) Dollars or more, Landlord agrees to
first secure bids from at least three (3) qualified contractors before
commencing such work.
Notwithstanding anything to the contrary in said Section 7, Tenant shall have
the absolute right upon the termination of this Lease to remove from the
Premises all of its trade fixtures including, without limitation, any
specially-installed computer floors, dedicated HVAC equipment, and other easily
removable improvements. Should Tenant elect to remove any such trade fixtures,
Tenant shall repair any damage caused to the Premises as a result thereof.
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38. SUBLEASING AND ASSIGNING. Notwithstanding anything to the contrary in
Section 8 of this Lease, Tenant shall not require Landlord's prior written
consent to assign or sublease any portion of the Premises to any parent,
subsidiary or controlled affiliate company of Tenant. However, Tenant shall
nevertheless be obligated to inform Landlord of such assignment/sublease,
identify the name of all assignees/subtenants, provide Landlord with a copy of
the applicable assignment/sublease documents, and provide Landlord with any
other reasonable information in connection with such assignment/sublease.
39. TENANT'S DEFAULT. Notwithstanding anything to the contrary in Sections 9
and 11 of this Lease, Landlord agrees that, except for a Default in the payment
of any Rent or other charge, Landlord shall not enforce any of its rights under
said Sections so long as Tenant commences to cure said Default within fifteen
(15) days after receipt of written notice from Landlord, and thereafter proceeds
with all due diligence to continue to cure such Default through completion.
Notwithstanding anything to the contrary in this Lease, in the event any term
or condition of this Lease conflicts with any rights afforded Tenant under the
laws of the State of Nebraska, it is agreed that such term or condition shall be
modified to the extent necessary to comply with said laws.
40. LANDLORD'S INSURANCE. With respect to Section 14 of this Lease, Landlord
agrees to maintain in full force and effect throughout the term of this Lease a
general liability policy covering the Property with limits of not less than Five
Million Dollars.
41. GOVERNMENT REGULATIONS/ADA. With respect to Section 17 of this Lease,
Landlord shall use good faith efforts to comply with all laws and regulations of
any municipal, state, or federal authorities, including all requirements of the
Americans with Disabilities Act of 1990 (hereinafter collectively referred to as
"Laws"), as the same relate to the common areas of the Property, and those
portions of the Property and/or Premises under Landlord's primary control.
Landlord shall also comply with said Laws as they relate to Landlord's
obligation in connection with the construction of Tenant's interior finish.
Tenant shall comply with all said Laws as they relate to the areas of the
Premises under Tenant's primary control and Tenant's use of the Premises. Should
Tenant subsequently elect to undertake any alterations, additions or
construction within the Premises, Tenant shall be solely responsible for, and
Tenant shall hold Landlord harmless from, any liability as a result of any
non-compliance with said Laws in connection with Tenant's work; further,
Landlord's approval of any of Tenant's plans or specifications shall not relieve
Tenant of any such responsibility, or cause Landlord to incur any liability.
42. CONSULTANT FEES. The parties acknowledge that the Stuart Cott Company
(hereinafter referred to as "Cott") has acted as a consultant on behalf of
Tenant pursuant to a separate agreement between such parties. Landlord agrees to
directly pay Cott its consulting fees in an amount not to exceed the amount set
forth in that certain letter agreement between Landlord and Cott, dated October
26, 1992. In the event Landlord does not pay Cott such fees within sixty (60)
days after the execution of this Lease, Tenant shall have the right to pay such
fees to Cott, in which event Tenant shall have the right to offset the amount
thereof from any Rent due Landlord under this Lease.
WHEREFORE, Landlord and Tenant have executed these Additional Provisions to
Lease the day and year first above written.
TENANT: LANDLORD:
APPLIED COMMUNICATIONS, INC. NOONEY KROMBACH COMPANY,
a Nebraska corporation Agent for the Owner
By: /s/ Gregory J. Duncan By: /s/ Patricia A. Nooney
Gregory J. Duncan Patricia A. Nooney
Chief Financial Officer Senior Vice President
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EXHIBIT "A"
RULES AND REGULATIONS
Tenant agrees to comply with the following rules and regulations which
Landlord may reasonably modify from time to time. Landlord shall not be liable
for the non-observance of said rules and regulations by any other tenant.
(1) No sign or advertisement shall be displayed by Tenant on the outside or
the inside (and visible from the outside) of the Premises without the prior
written consent of Landlord. Notwithstanding the aforesaid, so long as Tenant
occupies and leases seventy-five (75%) percent or more of the Premises, Tenant
shall have the right to install whatever signage Tenant deems necessary upon or
about the Property, so long as such signage is in compliance with municipal code
and (in the event Tenant is no longer the exclusive user of the Property) the
placement of such signage does not unreasonably interfere with any other
tenant's use or enjoyment of the Property. Tenant shall not use any picture or
likeness of the Premises in any notices or advertisements, without Landlord's
prior written consent, which consent shall not be unreasonably withheld.
(2) No additional locks shall be placed upon any door of the Premises,
without the prior consent of Landlord.
(3) Landlord retains the power to prescribe the weight and proper position of
any bulky or excessively weighty objects which Tenant elects to place upon the
roof of the Property. All such objects shall be installed under the prior
written consent and supervision of Landlord and at such times and according to
such reasonable regulations as may be designated from time to time by Landlord.
Notwithstanding such supervision or the waiver of liability set forth in Section
14, Tenant shall be responsible for all damage to the Premises and to persons
caused by the placement, existence, maintenance and removal of such objects.
(4) Tenant shall not use any other fuel source other than electricity to
heat, cool or light the Premises.
(5) Tenant shall not store in the Premises any waste paper, sweepings, rags,
rubbish or other combustible matter, nor shall Tenant bring into the Premises
any hazardous wastes, kerosene, oil or other highly combustible material, except
as disclosed to Landlord for normal business operations.
<PAGE>
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE, made and entered into this 9th day of
September, 1998, by and between Nooney Realty Trust, Inc., a Missouri
corporation, through its agent, Nooney, Inc., a Missouri corporation
(hereinafter referred to as "Landlord") and Applied Communication, Inc., a
Nebraska corporation (hereinafter referred to as "Tenant");
WITNESSETH:
WHEREAS, Landlord and Tenant entered into that certain ACI Building Lease,
dated December 28, 1992 (hereinafter referred to as "Lease"), for certain space
known and numbered as 330 S. 108th Avenue, Omaha, Nebraska 68154, containing
approximately 70,000 square feet of space (hereinafter referred to as the
"Premises"); and
WHEREAS, the primary term of said Lease commenced on January 1, 1993 and
shall expire on August 31, 1999; and
WHEREAS, both Landlord and Tenant are desirous of amending said Lease;
NOW THEREFORE, for and in consideration of the foregoing, and the mutual
covenants set forth below, it is agreed that said Lease is hereby modified and
amended as follows:
1. Term. Notwithstanding the stated expiration date set forth in said Lease,
the current lease term shall terminate on August 31, 1998, but shall thereafter
be extended and re-established for a new ten (10) year term, commencing
September 1, 1998 through and including August 31, 2008, upon the same terms and
conditions as said Lease, except as set forth below.
2. Construction. Tenant hereby ratifies acceptance of the Premises in its
present "AS IS" condition; and, except as set forth below, Tenant acknowledges
that Landlord has made no representations to Tenant with respect to any other
alterations, repairs or improvements to be performed by Landlord within the
Premises.
Tenant shall have the right and option to perform certain interior finish
work within the Premises, on the condition that all such work is performed in
accordance with plans and specifications prepared by Tenant and approved in
writing by Landlord, which approval shall not be unreasonably withheld. It is
expressly understood that any plans prepared by or on behalf of Tenant shall
incorporate all requirements of the Americans with Disabilities Act of 1990, and
Tenant shall be solely responsible for compliance with such Act, and hold
Landlord harmless therefrom, notwithstanding Landlord's approval of any plans or
construction. Additionally, in the event said Act is later modified or
interpreted differently by applicable governmental authorities, Tenant shall
conform with all such modifications and/or interpretations at Tenant's sole
cost.
Tenant shall select and contract directly with the general contractor
performing such interior finish work; however, such contractor shall be subject
to Landlord's prior approval, which approval shall not be unreasonably withheld.
Any changes, alterations, or additions made to the original approved plans shall
be in writing and also approved by Landlord prior to construction.
Landlord shall contribute an allowance toward the actual cost of Tenant's
interior finish work in an amount not to exceed Three Hundred Fifty Thousand and
00/100 Dollars ($350,000.00), upon the following terms and conditions. Tenant
must complete all interior finish work for which Tenant may apply the aforesaid
allowance, as well as submit to Landlord all paid invoices and lien waivers for
all such work, no later than August 31, 2001; and, to the extent any portion of
the aforesaid allowance is not supported by paid invoices and lien waivers as of
such date, such unsupported portion shall be forfeited. On or before October 1
of each year of the first three years of the re-established lease term (October
1, 1998, 1999 and 2000), Tenant shall submit to Landlord in writing a budget
estimate of the interior finish costs Tenant anticipates spending in the
following twelve (12) months. Such estimate shall be reasonably detailed,
identifying the general work to be performed and the associated costs thereof.
To the extent the actual interior finish costs are less than the budgeted costs
for the applicable year, the excess unused funds shall be made available to
Tenant in the subsequent year(s) (but not beyond August 31, 2001). To the extent
the actual interior finish costs exceed the budgeted cost by fifteen percent
(15%) or more for the applicable year, Landlord reserves the right to withhold
reimbursement to Tenant for that portion of the actual costs in excess of said
fifteen percent (15%) until the following year (but not beyond August 31, 2001).
In the event the total cost of Tenant's interior finish exceed the aforesaid
cash allowance, Tenant shall be solely liable for all such excess costs.
<PAGE>
All construction undertaken by Tenant shall be in compliance with state,
federal, and local codes, and shall be built in a good and workmanlike manner,
and shall be subject to Landlord's inspection from time to time. Tenant shall
indemnify and hold Landlord harmless from any and all claims and damages
(including reasonable attorneys' fees), to persons or property of Landlord or
third persons, caused by Tenant's construction. Tenant shall also indemnify
Landlord against any mechanic's liens or other liens arising out of any
construction performed by or on behalf of Tenant; and Tenant, shall within
thirty (30) days after any construction furnish to Landlord lien waivers for all
work performed and materials furnished. In the event a lien is filed against the
Property for any reason as a result of any construction performed or alleged to
have been performed by or on behalf of Tenant, Tenant shall remove such lien
within fifteen (15) days. Should Tenant fail to remove any such lien within said
fifteen (15) days, Landlord shall have the absolute right to cause such lien to
be removed by whatever measures as Landlord, in Landlord's sole discretion,
shall deem convenient or necessary including, without limitation, payment to any
contractor, subcontractor, laborer, supplier or materialman (and any relating
attorney's fees) to extinguish such lien; and, in such event, Tenant shall pay
to Landlord, as Additional Rent, all of Landlord's costs and expenses including,
without limitation, any payment made by Landlord to any contractor,
subcontractor, laborer, supplier or materialman, the payment of any attorneys'
fees of any lienholder, as well as the payment of Landlord's attorneys' fees to
extinguish such lien.
Upon the termination of said Lease, all improvements made by Tenant to the
Premises which are pre-approved in writing by Landlord shall be delivered to
Landlord with the Premises. All improvements made by Tenant to the Premises
which are not pre-approved in writing by Landlord shall, at the option of
Landlord, be either delivered to Landlord with the Premises or removed by Tenant
prior to the lease termination date. In the event Landlord elects for Tenant to
remove any such improvements, Tenant shall repair and restore the Premises to a
condition substantially similar to the condition of such space immediately prior
to the installation of such improvements; and, in the event Tenant fails to make
such repairs and restoration, Tenant shall be liable for the costs thereof,
which liability shall survive the termination of said Lease.
Tenant acknowledges that the aforesaid work shall be performed while Tenant
is in possession of the Premises. In the event Tenant is inconvenienced by such
work, there shall be no Rent abatement or reduction of Rent payable to Landlord,
it being agreed that Tenant shall bear all responsibility and risk of
inconvenience associated with any construction.
3. Rent. Effective September 1, 1998, Tenant shall pay to Landlord the
following Base Rent, during the lease term, on the first day of each calendar
month, prior to demand, in advance, without setoff or deduction, at the office
of Landlord, pursuant to the terms and conditions of said Lease:
MONTHLY ANNUAL
PERIOD BASE RENT BASE RENT
===================================== ============== ===============
September 1, 1998 - December 31, 1998 $82,250.00 N/A
January 1, 1999 - December 31, 1999 $82,250.00 $987,000.00
January 1, 2000 - December 31, 2000 $84,717.50 $1,016,610.00
January 1, 2001 - December 31, 2001 $87,259.03 $1,047,108.00
January 1, 2002 - December 31, 2002 $89,876.80 $1,078,522.00
January 1, 2003 - December 31, 2003 $92,573.17 $1,110,878.00
January 1, 2004 - December 31, 2004 $95,350.33 $1,144,204.00
January 1, 2005 - December 31, 2005 $98,210.83 $1,178,530.00
January 1, 2006 - December 31, 2006 $101,157.17 $1,213,886.00
January 1, 2007 - December 31, 2007 $104,191.92 $1,250,303.00
January 1, 2008 - August 31, 2008 $107,317.64 N/A
4. Additional Rent. Effective September 1, 1998, Tenant's obligations with
respect to Additional Rent shall be adjusted such that Tenant shall pay to
Landlord, as Additional Rent, an amount equal to Tenant's proportionate share of
any increase in Taxes and Operating Expenses (as all such terms are used from
time to time in said Lease) over the Taxes and Operating Expenses for the 1999
calendar year.
2
<PAGE>
5. Roof. Landlord agrees to have the roof inspected by an independent third
party roof consultant. Landlord acknowledges that roof replacement may be
necessary during the term of this Lease, and the replacement of the roof is a
capital item and is the responsibility of Landlord.
6. Brokerage. Landlord and Tenant each warrant that they have dealt with no
broker or other person claiming a commission for or in connection with this
First Amendment to Lease, other than Nooney, Inc.; and each party shall hold the
other party harmless for any breach of such warranty. Landlord shall be liable
for any commissions payable to the aforesaid broker.
7. Consultant Fees. The parties acknowledge that Tishman Real Estate Services
(hereinafter referred to as "Tishman") has acted as a consultant on behalf of
Tenant pursuant to a separate agreement between such parties. Landlord agrees to
directly pay Tishman its consulting fees in an amount not to exceed the amount
set forth in that certain letter agreement between Landlord and Tishman, dated
July 8, 1998. In addition, Landlord agrees to pay directly to Tenant the sum of
Fifty-one Thousand, One Hundred Fourteen and 56/100 Dollars ($51,114.56). In the
event Landlord does not pay Tishman such fees within sixty (60) days after the
execution of this Amendment, Tenant shall have the right to pay the applicable
unpaid (portion) of such fees to Tishman, and offset the amount thereof,
together with an amount equal to any consulting fees from any Rent due Landlord
under said Lease. In the event Landlord timely pays Tishman and Tenant the
aforesaid consulting fees, Tenant shall indemnify and hold Landlord harmless
from any claims by Tishman for any additional fees payable to Tishman in
connection to the consummation of this Amendment.
8. Acknowledgment. Tenant acknowledges that, as of the date of this
Amendment, Landlord is not in default of any term or condition of said Lease and
that the Premises are not in need of repair or maintenance; and, except as
specifically set forth in Section 2 above, Tenant hereby ratifies acceptance of
the Premises in its present "AS IS" condition.
Except as hereby amended, all other terms and conditions of said Lease shall
remain unchanged, and shall be in full force and effect as if again recited
herein.
WHEREFORE, the parties have executed this First Amendment to Lease the day
and year first above written.
LANDLORD: TENANT:
NOONEY, INC., APPLIED COMMUNICATIONS, INC.,
Agent for the Owner a Nebraska corporation
By: /s/ Patricia a. Nooney By: /s/ Dwight Hanson
Patricia A. Nooney Dwight Hanson
President Vice President-Finance
3
<PAGE>
NOONEY REALTY TRUST, INC.
1999 ANNUAL REPORT
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
FOR THE YEAR: 1999 1998 1997 1996 1995
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
Rental and other income $ 2,928,850 $ 3,161,030 $ 3,101,871 $ 3,017,982 $ 2,861,293
Net income(loss) (279,695) (490,059) (125,363) 216,538 185,597
Per share (.32) (0.57) (0.14) 0.25 0.21
Funds from operations (1) 469,595 250,146 604,961 974,476 906,637
Distributions declared -- -- 381,314 693,299 563,307
Per share -- -- 0.44 0.80 0.65
Paid in current year:
Taxable to shareholders -- -- 0.09 0.40 0.31
Return of capital -- -- 0.35 0.40 0.34
AT YEAR END:
Total assets $ 14,308,555 $ 14,557,537 $ 14,926,763 $ 15,481,638 $ 16,009,017
Investment property - net 13,266,986 13,355,053 13,769,633 14,214,620 14,811,351
Mortgage note payable 4,538,066 4,643,712 4,740,875 4,830,236 4,912,421
Shareholders' equity 8,968,024 9,247,719 9,737,778 10,244,455 10,721,216
Number of shares outstanding 866,624 866,624 866,624 866,624 866,624
</TABLE>
(1) Represents net income adjusted for depreciation and amortization. Funds from
operations does not represent cash flows from operations as defined by generally
accepted accounting principles (GAAP).
See Management's Discussion and Analysis for discussion of comparability of
items.
THE TRUST
Nooney Realty Trust, Inc. (the "Trust") is a corporation formed on June 14,
1984, to make equity investments in income-producing real properties, primarily
commercial and light industrial properties. The Trust originally acquired three
properties: The Atrium at Alpha Business Center, an office building in
Bloomington, Minnesota; the Applied Communications, Inc. Building, an office
building in Omaha, Nebraska; and the Franklin Park Distribution Center, a
warehouse and distribution facility in suburban Chicago, Illinois. Since 1985
the Trust has qualified as a real estate investment trust ("REIT") under the
Internal Revenue Code.
<PAGE>
MARKET INFORMATION
The Company's common stock trades on The Nasdaq National Market under the symbol
NRTI. The Nasdaq high and low prices for the shares during 1999 and 1998 were as
follows:
1999 HIGH LOW
First Quarter $8.875 $7.2812
Second Quarter $8.9375 $7.4062
Third Quarter $9.50 $6.00
Fourth Quarter $9.50 $6.00
1998
First Quarter $11.00 $9.00
Second Quarter $11.00 $8.375
Third Quarter $9.875 $8.00
Fourth Quarter $8.750 $7.25
The Trust is aware of an offer that has been made to shareholders of the Trust
by an outside, unaffiliated party to purchase up to 20,000 shares of the Trust's
common stock (approximately 2.3% of the Trust's outstanding shares) at a price
of $6.50 per share.
As of February 1, 2000, there were 455 shareholders of record.
NASDAQ
Presently the Trust's common stock is listed on The Nasdaq National Market.
Continued listing on the Nasdaq National Market is subject to the Trust's
ability to satisfy various Nasdaq criteria, including that (i) the Trust has in
excess of 750,000 shares that are publicly held and (ii) the market value of the
Trust's public float exceeds $5,000,000. Presently the Trust does not meet these
requirements and the Nasdaq Stock Market has given the Trust until May 11, 2000
to address these deficiencies.
To address these deficiencies, the Trust is considering issuing approximately
173,000 shares of common stock by means of a private placement. These shares
will not be registered under the Securities Act of 1933, as amended, and may not
be offered or sold in the United States absent registration or an applicable
exemption from registration. The Trust is also considering taking other steps to
address these deficiencies as well.
There can be no assurance that the Trust will be able to satisfactorily address
these deficiencies. If the Trust fails to address the deficiencies, Nasdaq would
determine whether it is appropriate to transfer the Trust's common stock to the
Nasdaq SmallCap Market or delist it, either of which could adversely affect the
price at which shares are sold.
DIVIDENDS
No cash dividends were paid to shareholders during 1998 or 1999.
1
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash on hand as of December 31, 1999, was $207,543, a decrease of $297,822 from
the year ended December 31, 1998. The decrease in cash is attributable mainly to
capital expenditures of $531,505, which is partially offset by an increase in
accounts payable and other liabilities. Management believes the Trust's current
cash position and the properties' ability to provide operating cash flow should
enable the Trust to fund anticipated capital expenditures in 2000. Expenditures
for leasing capital are dependent on the timing and actual dollars negotiated
for leases. The anticipated capital expenditures by property for 2000 are as
follows:
OTHER LEASING
CAPITAL CAPITAL TOTAL
Atrium at Alpha $ 18,000 $282,000 $300,000
Franklin Park Dist. Center -- 225,000 225,000
Applied Communications Inc. Bldg -- 350,000 350,000
-------- -------- --------
$ 18,000 $857,000 $875,000
The leasing capital expenditures at Atrium at Alpha Business Center include
tenant alterations and lease commissions for new and renewal tenants. In
addition, the Registrant anticipates spending capital funds for HVAC and minor
roof replacements. Leasing capital for tenant alterations and lease commissions
upon the leasing of the vacant space is budgeted. At the Applied Communications,
Inc. Building, the single occupant in the building renewed their lease in 1998.
The funds to reimburse the tenant for certain tenant alterations up to a maximum
of $350,000 may be paid during 2000 or deferred until 2001 depending on when the
tenant elects to perform the work.
The Trust's multi-tenant office building located in Bloomington, Minnesota has
been classified in the Minneapolis Airport Committee's (the "MAC") Safety Zone A
in the future expansion of the Minneapolis Airport. The expansion runway is
anticipated to be completed in 2003. The MAC began buying out impacted
buildings during 1999. Safety Zone A is adjacent to the Federal Aviation
Authority's noise buy out zone. The MAC has not indicated whether or not it will
buy out the Trust's building. The Trust is monitoring whether the increased
noise from the new runway will have an impact on future leasing of the building.
If the Trust determines there is a negative impact, the Trust will petition the
MAC to buy the building. If the building continues to be classified in Safety
Zone A, it will be classified as nonconforming use. Given the preliminary state
of the future expansion, management is unable at this time to determine what
impact, if any, this matter will have on the Trust.
The debt on the Trust's properties matures in the year 2001. Management believes
that the Trust will be able to refinance the debt on similar terms at that time.
RESULTS OF OPERATIONS
The results of operations for the Trust's properties for the years ended
December 31, 1999, 1998 and 1997 are detailed in the schedule below.
Administrative expenses of the Trust are excluded.
3
<PAGE>
FUNDS FROM OPERATIONS
The white paper on Funds from Operations approved by the board of governors of
NAREIT in March 1999 defines funds from operations as net income (loss)(computed
in accordance with GAAP), excluding gains (or losses) from sales of property,
plus real estate related depreciation and amortization, and after adjustments
for unconsolidated partnerships and joint ventures. Adjustment for
unconsolidated partnerships and joint ventures are calculated to reflect funds
from operations on the same basis. In 1999, NAREIT clarified the definition of
Funds from Operations to include non-recurring events, except for those that are
defined as "extraordinary items" under GAAP and gains and losses from sales of
depreciable operating property.
The Trust computes Funds from Operations in accordance with the guidelines
established by the white paper which may differ from the methodology for
calculating Funds from Operations utilized by other equity REITs, and,
accordingly, may not be comparable to such other REITs. Funds from Operations do
not represent amounts available for management's discretionary use because of
needed capital replacement or expansion, debt service obligations, distributions
or other commitments and uncertainties. Funds from Operations should not be
considered as an alternative to net income (determined in accordance with GAAP)
as an indication of the Trust's financial performance or to cash flows from
operating activities (determined in accordance with GAAP) as a measure of the
Trust's liquidity, nor is it indicative of funds available to fund the Trust's
cash needs including its ability to make distributions. The Trust believes Funds
from Operations is helpful to investors as a measure of the performance of the
Trust because, along with cash flows from operating activities, financing
activities and investing activities, it provides investors with an understanding
of the ability of the Trust to incur and service debt and make capital
expenditures.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ATRIUM AT FRANKLIN PARK APPLIED COMM.
ALPHA DIST. CENTER INC. BLDG.
(in thousands)
1999 Revenues $ 1,307.0 $ 414.4 $ 1,207.5
Expenses 1,093.5 586.8 867.8
------- ----- -----
Net Income (loss) 213.5 (172.4) 339.7
Depreciation and Amortization 378.5 145.5 208.8
------- ----- -----
Funds from Operations 592.0 (26.9) 548.5
1998 Revenues $ 1,341.8 $ 781.0 $ 1,111.7
Expenses 1,110.7 648.1 924.9
------- ----- -----
Net Income 231.1 132.9 186.8
Depreciation and Amortization 352.3 163.2 208.1
------- ----- -----
Funds from Operations 583.4 296.1 394.9
1997 Revenues $ 1,289.1 $ 755.7 $ 1,081.3
Expenses 1,051.1 582.5 897.8
------- ----- -----
Net Income 238.0 173.2 183.5
Depreciation and Amortization 352.2 178.2 183.2
------- ----- -----
Funds from Operations 590.2 351.4 366.7
</TABLE>
4
<PAGE>
1999 COMPARISONS BY PROPERTY
Operating results at The Atrium at Alpha Business Center declined during 1999.
Revenues decreased by $34,800, primarily due to a decrease in miscellaneous
income of $27,000. The decrease in miscellaneous income from 1998 was primarily
due to cancellation fees that were received in 1998 and not in 1999. Operating
expense decreased by $17,200 due primarily to a decrease in professional
services.
At Franklin Park Distribution Center, revenues decreased $366,600 primarily due
to a decrease in base rental revenue and common area maintenance reimbursements,
caused by lower average occupancy in 1999 compared to 1998. In October 1998, the
tenant occupying 43% of the building vacated. Operating expenses decreased by
$61,300 in connection with the lower occupancy.
Operating results increased when compared to 1998 at the Applied Communications,
Inc. Building. The increase was primarily due to an increase in miscellaneous
income from $16,000 in 1998 to $80,000 in 1999. Operating expenses decreased
slightly, due to declines in a number of expense categories, none of which was
significant.
The occupancy levels at December 31 were as follows:
OCCUPANCY LEVELS AT DECEMBER 31,
1999 1998 1997
Atrium at Alpha 86% 76% 98%
Franklin Park Dist. Center 57% 57% 100%
Applied Communications Inc. Bldg 100% 100% 100%
During 1999, the occupancy level at Atrium at Alpha increased to 86%. During
1999, new leases were signed with four tenants occupying 19,935 square feet.
Renewal leases were signed in 1999 and 2000 with six tenants occupying 20,952
square feet and one tenant vacated, which occupied 1,420 square feet. One
tenant's lease expired which occupied 3,451 square feet. The tenant agreed to a
month to month extension and vacated March 5, 2000. The property has one major
tenant occupying 16% of the building. The lease for this tenant expires in
December 2003.
Franklin Park Distribution Center has one tenant occupying 57% of the building.
During 1999, the Registrant renegotiated a five year renewal of the tenant's
lease. The lease now expires in December 2004.
The Applied Communications, Inc. building has a single tenant which has occupied
the building throughout 1999. The lease expires in August 2008.
The Trust reviews long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of a property may not be
recoverable. The Trust considers a history of operating losses or a change in
occupancy to be primary indicators of potential impairment. The Registrant deems
the property to be impaired if a forecast of undiscounted future operating cash
flows directly related to a property, including disposal value, if any, is less
than its carrying amount. If the property is determined to be impaired, the loss
is measured as the amount by which the carrying amount of the property exceeds
its fair value. Fair value is based on quoted market prices in active markets,
if
5
<PAGE>
available. If quoted market prices are not available, an estimate of fair
value is based on the best information available, including prices for similar
properties or the results of valuation techniques such as discounting estimated
future cash flows. Considerable management judgment is necessary to estimate
fair value. Accordingly, actual results could vary significantly from such
estimates.
1999 COMPARISONS
For the year ended December 31, 1999, the Trust's consolidated revenues were
$2,928,850 compared to $3,161,030 for the year ended December 31, 1998. Revenues
decreased $232,180 (7.3%). The decrease in consolidated revenues relates
primarily to a decrease in rental revenue and common area maintenance
reimbursement at the Franklin Park Distribution Center of $367,000. This
decrease was partially offset by an increase at the Applied Communications, Inc.
building of $95,800, which was primarily made up of miscellaneous income.
For the year ended December 31, 1999, the Trust's consolidated expenses were
$3,208,545 compared to $3,651,089 for the year ended December 31, 1998. The
decrease in expense of $442,544 (12.1%) is due primarily to a decrease in
general and administrative expenses of $315,000, repairs and maintenance of
$73,000, other operating expenses of $35,000 and a decrease in real estate taxes
of $81,000. The decreases were partially offset by an increase in professional
fees of $39,000. The decrease in general and administrative expenses is due
primarily to a reduction in compensation payable, as discussed below, to the
former employees of the trust of $333,000.
Effective March 1, 1998, the Trust entered into two five-year employment
agreements (the Employment Agreements) that were cancelable after three years
subject to certain performance criteria as defined in the Employee Agreements.
Annual compensation recognizable under the agreements totaled $300,000 of which
$245,000 was deferred compensation. At December 31, 1998, the Trust had recorded
deferred compensation aggregating $204,167. In connection with a settlement
agreement entered into in October, 1999 (the "Settlement Agreement"), the
Employment Agreements were terminated and the Trust paid $75,000 in complete
settlement of the Trust's deferred compensation. As a result, the remaining
liability of $129,167 was reversed and recorded as a reduction of general and
administrative expense in 1999.
The Employment Agreements included options to purchase an aggregate of 75,000
shares of the Trust's common stock at $10.00 per share. The options were
canceled in conjunction with the Settlement Agreement.
During 1999 and 1998, the Trust granted stock appreciation rights to the three
previous outside trustees and two previous officers. The stock appreciation
rights were also canceled in conjunction with the Settlement Agreement.
The net loss for the year ended December 31, 1999 was $279,695 or $.32 per
share. The net loss for the year ended December 31, 1998 was $490,059 or $.57
per share. The lawsuits described in Item 3, Legal Proceedings, negatively
impacted the operations of the Trust in both years. The lawsuits were settled in
1999 as described in Item 3, Legal Proceedings.
6
<PAGE>
Cash flow provided by operating activities was $339,329 for 1999 compared to
$168,949 for 1998. The increase in cash flow provided by operating activities
was due primarily to increases in accounts payable and other liabilities. Cash
flow used in investing activities was $531,505 in 1999 compared to $223,891 in
1998. The increase in cash flow used in investing activities was due primarily
to an increase in capital expenditures. Cash flow used in financing activities
was $105,646 for 1999 compared to $97,163 in 1998. Reduction of the principal
balance on the mortgage note was the sole use of cash flow for financing
activities in 1999 and 1998.
1998 COMPARISONS
For the year ended December 31, 1998, the Trust's consolidated revenues were
$3,161,030 compared to $3,101,871 for the year ended December 31, 1997. Revenues
increased $59,159 (1.9%). The increase in consolidated revenues relates
primarily to an increase in early termination fees of $60,000.
For the year ended December 31, 1998, the Trust's consolidated expenses were
$3,651,089 compared to $3,227,234 for the year ended December 31, 1997. The
increase in expense of $423,855 (13.1%) is due primarily to an increase in
general and administrative expense of $243,000. The increase was caused
primarily by an increase in salary expense for two of the Trust's officers of
$250,000, related to employment agreements with the officers as described in
Item 3, Legal Proceedings. Professional fees expense increased $89,000 and
repairs and maintenance, including common area maintenance expense increased
$98,000.
The net loss for the year ended December 31, 1998 was $490,059 or $.57 per
share. The net loss for the year ended December 31, 1997 was $125,363 or $.14
per share. Litigation in which the Trust was involved negatively impacted
operations in both years. The lawsuits were settled in 1999.
Cash flow provided by operating activities was $168,949 for 1998 compared to
$669,835 for 1997. The Trust paid capital expenditures of $223,891 in 1998
compared to $182,817 in 1997. The trust reduced principal on the mortgage note
by $97,163 during 1998.
MARKET RISK
The Trust has considered the provision of Financial Reporting Release No. 48
"Disclosure of Accounting Policies for Derivative Financial Instruments and
Derivative Commodity Instruments, and Disclosure of Quantitative and Qualitative
Information about Market Risk Inherent in Derivative Financial Instruments,
Other Financial Instruments and Derivative Commodity Instruments". The Trust had
no holdings of derivative financial or commodity instruments at December 31,
1999.
The Trust does not believe that it has any material exposure to interest rate
risk. The Debt on the Trust's properties matures in the year 2001. Management
believes that the Trust will be able to refinance the debt on similar terms at
that time.
INFLATION
The effects of inflation did not have a material impact upon the Trust's
operations in fiscal 1999, 1998 or 1997.
7
<PAGE>
YEAR 2000 ISSUES
Information Technology Systems
Subsequent to December 31, 1999, the Registrant has not experienced any material
information technology ("IT") or embedded ("non-IT") systems disruptions or
failures and anticipates no material systems problems at any of the properties.
Material Third Parties' Systems Failures
Evaluation of material third parties' Year 2000 readiness status was essentially
complete as of December 31, 1999. The Registrant continues to monitor for any
additional information pertaining to these parties' Year 2000 readiness. The
Company has not experienced and does not anticipate any Year 2000 performance
issues related to its material third parties.
CHANGE IN INDEPENDENT AUDITORS
On January 18, 2000, the Trust dismissed Deloitte & Touche LLP as its
independent auditors. Deloitte & Touche LLP's reports on the financial
statements of the Trust for the past two fiscal years did not contain an adverse
opinion or a disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope, or accounting principles. The decision to dismiss
Deloitte & Touche LLP as the Trust's independent auditors was recommended by the
Trust's audit committee.
During the Trust's fiscal years ending December 31, 1997 and December 31, 1998
and the subsequent interim period preceding the dismissal, there were no
disagreements with Deloitte & Touche LLP on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure
which, if not resolved to the satisfaction of Deloitte & Touche LLP, would have
caused Deloitte & Touche LLP to make reference to the subject matter of the
disagreement(s) in connection with their report.
The Trust provided Deloitte & Touche LLP with a copy of the disclosure described
above, which was filed by the Trust on a Form 8-K on January 25, 2000, as
amended February 14, 2000, and Deloitte & Touche LLP furnished the Trust a
letter addressed to the Securities and Exchange Commission stating that it
agreed with the above statements.
On February 4, 2000, the Trust engaged KPMG LLP as independent auditors for the
fiscal year ending December 31, 1999. The decision to engage KPMG LLP as
independent auditors was recommended by the Trust's audit committee. Prior to
the appointment of KPMG LLP, the Trust did not engage or consult with KPMG LLP
regarding the application of accounting principles to a specified transaction,
either completed or proposed; or the type of audit opinion that might be
rendered on the Trust's financial statements.
8
<PAGE>
NOONEY REALTY TRUST, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1999 1998, AND 1997
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
<PAGE>
NOONEY REALTY TRUST, INC.
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORTS:
KPMG LLP 1
DELOITTE AND TOUCHE LLP 2
BALANCE SHEETS 3
STATEMENTS OF OPERATIONS 4
STATEMENTS OF SHAREHOLDERS' EQUITY 5
STATEMENTS OF CASH FLOWS 6
NOTES TO FINANCIAL STATEMENTS 7
<PAGE>
Independent Auditors' Report
To the Shareholders of
Nooney Realty Trust, Inc.:
We have audited the accompanying balance sheet of Nooney Realty Trust, Inc.
(the Trust) as of December 31, 1999 and the related statements of operations,
shareholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these 1999 financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 1999 financial statements referred to above present
fairly, in all material respects, the financial position of Nooney Realty Trust,
Inc. as of December 31, 1999 and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
February 14, 2000
1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Nooney Realty Trust, Inc.:
We have audited the accompanying balance sheet of Nooney Realty Trust, Inc.
(the "Trust") as of December 31, 1998, and the related statements of operations,
shareholders' equity, and cash flows for each of the two years then ended. These
financial statements are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules 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 financial statements present fairly, in all material
respects, the financial position of Nooney Realty Trust, Inc. as of December 31,
1998, and the results of its operations and its cash flows for each of the two
years in the period ended December 31, 1998 in conformity with generally
accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
St. Louis, Missouri
January 22, 1999
2
<PAGE>
NOONEY REALTY TRUST, INC.
Balance Sheets
December 31, 1999 and 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Assets 1999 1998
------------ ------------
Investment property, (note 2)
Land $ 2,568,955 2,568,955
Buildings and improvements 18,082,664 17,616,281
------------ ------------
20,651,619 20,185,236
Less accumulated depreciation (7,384,633) (6,830,183)
------------ ------------
13,266,986 13,355,053
------------ ------------
Cash 207,543 505,365
Accounts receivable 250,097 174,231
Prepaid expenses and other assets 169,062 31,908
Deferred expenses, less accumulated amortization 414,867 490,980
------------ ------------
$ 14,308,555 14,557,537
============ ============
Liabilities and Shareholders' Equity
Liabilities:
Mortgage note payable (note 2) $ 4,538,066 4,643,712
Accounts payable and accrued expenses 240,262 184,120
Real estate taxes payable 501,026 220,866
Refundable tenant deposits 61,177 56,953
Deferred compensation (note 7) -- 204,167
------------ ------------
Total liabilities 5,340,531 5,309,818
------------ ------------
Shareholders' equity:
Common stock, $1 par value; authorized 5,000,000 shares,
866,624 shares issued and outstanding (note 5) 866,624 866,624
Additional paid-in capital 14,252,532 14,252,532
Distributions in excess of accumulated earnings (6,151,132) (5,871,437)
------------ ------------
Total shareholders' equity 8,968,024 9,247,719
------------ ------------
$ 14,308,555 14,557,537
============ ============
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
NOONEY REALTY TRUST, INC.
Statements of Operations
For the years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
----------- ----------- -----------
Revenues:
Rental (note 3) $ 2,624,865 $ 2,622,996 $ 2,623,539
Other 303,985 538,034 478,332
----------- ----------- -----------
Total revenues 2,928,850 3,161,030 3,101,871
----------- ----------- -----------
Expenses:
Depreciation and amortization 749,290 740,205 730,324
Professional fees 606,048 566,815 477,485
Real estate taxes 556,859 637,630 564,132
Interest, net 375,248 366,069 394,102
Repairs and maintenance, including
common area maintenance 305,956 378,787 280,469
Utilities 249,571 256,428 304,935
Property management and advisory fees and
general and administrative reimbursements -
related parties (note 6) 221,920 211,627 237,175
General and administrative (note 7) 71,010 385,896 142,973
Other operating expenses 72,643 107,632 95,639
----------- ----------- -----------
Total expenses 3,208,545 3,651,089 3,227,234
----------- ----------- -----------
Net loss $ (279,695) (490,059) (125,363)
=========== =========== ===========
Per share data (basic and diluted):
Net loss $ (0.32) (0.57) (0.14)
=========== =========== ===========
Distributions:
Paid in current year:
Taxable to shareholders $ -- -- 0.09
Return of capital -- -- 0.35
----------- ----------- -----------
Total paid in current year $ -- -- 0.44
=========== =========== ===========
Weighted average shares outstanding (note 5) 866,624 866,624 866,624
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
NOONEY REALTY TRUST, INC.
Statements of Shareholders' Equity
For the years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Distributions
Common Stock Additional in excess of
Number paid-in accumulated
of shares Amount capital earnings
------------ ------------- ---------------- -----------------
Balance, December 31, 1996 866,624 $ 866,624 14,252,532 (4,874,701)
Net loss ---- ---- ---- (125,363)
Dividends paid ---- ---- ---- (381,314)
------------ ------------- ---------------- -----------------
Balance, December 31, 1997 866,624 866,624 14,252,532 (5,381,378)
Net loss ---- ---- ---- (490,059)
------------ ------------- ---------------- -----------------
Balance, December 31, 1998 866,624 866,624 14,252,532 (5,871,437)
Net loss ---- ---- ---- (279,695)
------------ ------------- ---------------- -----------------
Balance, December 31, 1999 866,624 $ 866,624 14,252,532 (6,151,132)
============ ============= ================ =================
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
NOONEY REALTY TRUST, INC.
Statements of Cash Flows
For the years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
-------------- ------------- --------------
Cash flows from operating activities:
Net loss $ (279,695) (490,059) (125,363)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 749,290 740,205 730,324
Changes in accounts affecting operations:
Accounts receivable (75,866) 85,854 93,534
Prepaid expenses and other assets (137,154) (3,348) 706
Deferred expenses (53,605) (381,699) (70,529)
Accounts payable and other liabilities 340,526 13,829 41,163
Deferred compensation (204,167) 204,167 ----
-------------- ------------- --------------
Net cash provided by operating
activities 339,329 168,949 669,835
-------------- ------------- --------------
Cash flows from investing activities - capital
expenditures (531,505) (223,891) (182,817)
-------------- ------------- --------------
Cash flows from financing activities:
Dividends paid to shareholders ---- ---- (381,314)
Principal payments on mortgage note payable (105,646) (97,163) (89,361)
-------------- ------------- --------------
Net cash used in financing activities (105,646) (97,163) (470,675)
-------------- ------------- --------------
Net increase (decrease) in cash (297,822) (152,105) 16,343
Cash, beginning of year 505,365 657,470 641,127
-------------- ------------- --------------
Cash, end of year $ 207,543 505,365 657,470
============== ============= ==============
Supplemental disclosure of cash flow information -
cash paid during the year for interest $ 386,066 394,549 402,351
============== ============= ==============
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
NOONEY REALTY TRUST, INC.
Notes to Financial Statements
December 31, 1999, 1998, and 1997
(1) Summary of Significant Accounting Policies
(a) Description of Business
Nooney Realty Trust, Inc. (the Trust), a Missouri corporation, was
formed on June 14, 1984 for the purpose of making equity investments
in income-producing real properties, primarily commercial and light
industrial properties. The Trust's portfolio is comprised of Atrium at
Alpha Business Center, a multitenant office building located in
Bloomington, Minnesota (Atrium at Alpha); Applied Communications, Inc.
Office Building, a single-tenant office building located in Omaha,
Nebraska (ACI Building); and Franklin Park Distribution Center, a
warehouse and distribution facility in Franklin Park, Illinois
(Franklin Park). These properties generated 45%, 41%, and 14% of total
revenues, respectively, for the year ended December 31, 1999.
(b) Investment Property
Investment property is carried at cost less accumulated depreciation.
The Trust applies Statement of Financial Accounting Standards (SFAS)
No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of, for the recognition and
measurement of impairment of long-lived assets to be held and used and
assets to be disposed of. Management reviews each property for
impairment whenever events or changes in circumstances indicate that
the carrying value of a property may not be recoverable. The review of
recoverability is based on an estimate of undiscounted future cash
flows expected to result from its use and eventual disposition. If
impairment exists due to the inability to recover the carrying value
of a property, an impairment loss is recorded to the extent that the
carrying value of the property exceeds its estimated fair value.
Buildings and improvements are depreciated over their estimated useful
lives of thirty-five years using the straight-line method. Tenant
improvements are depreciated over the term of the lease on a
straight-line basis.
(c) Deferred Expenses
Deferred expenses consist of lease fees and financing costs and are
amortized over the terms of the respective lease or note.
(d) Revenues
Lease agreements are accounted for as operating leases and rentals
from such leases are reported as revenues ratably over the terms of
the leases.
Included in other revenue are amounts received from tenants under
provisions of lease agreements which require the tenants to pay
additional rent equal to specified portions of certain expenses such
as real estate taxes, insurance, utilities and common area
maintenance. The income is recorded in the same period that the
related expense is incurred.
7
<PAGE>
NOONEY REALTY TRUST, INC.
Notes to Financial Statements
December 31, 1999, 1998, and 1997
(e) Taxes
The Trust has elected to be taxed as a real estate investment trust
(REIT) under the Internal Revenue Code. The Trust intends to continue
to qualify as a REIT and to distribute substantially all of its
taxable income to its shareholders. Accordingly, no provision for
income taxes is reflected in the financial statements. At December 31,
1999, the Trust has federal net operating loss carryforwards of
approximately $1,630,000 for tax purposes which expire in various
amounts from 2000 through 2019.
(f) Earnings Per Share and Distributions Per Share
Net loss per share was computed based upon the weighted average number
of shares of common stock outstanding during each year. Basic and
diluted weighted average shares outstanding are the same because the
impact of the options outstanding in 1998 was antidilutive.
Distributions per share are stated at the amount per share declared by
the directors. The taxability of all distributions paid is based upon
earnings and profits as defined by the Internal Revenue Code. The
taxability of distributions declared but unpaid is determined in the
year the dividend is paid.
(g) Use of Estimates
Management of the Trust has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure
of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(h) Reclassifications
Certain reclassifications have been made to the prior year amounts to
conform to the current year presentation.
(2) Mortgage Note Payable
Mortgage note payable at December 31, 1999 and 1998 consists of a note
payable in monthly installments of $40,976, including interest at 8.4%,
with final principal payment of $4,330,508 due November 2001. The note is
collateralized by deeds of trust and assignments of rents on all
investment properties. The aggregate annual maturities of the mortgage
note payable subsequent to December 31, 1999 are as follows: 2000,
$114,870 and 2001, $4,423,196. The Trust intends to refinance the note in
2001.
8
<PAGE>
NOONEY REALTY TRUST, INC.
Notes to Financial Statements
December 31, 1999, 1998, and 1997
(3) Rental Revenues Under Operating Leases
Minimum future rental revenues under noncancelable operating leases in
effect as of December 31, 1999 are as follows:
2000 $2,023,068
2001 1,854,790
2002 1,850,499
2003 1,790,942
2004 1,526,087
Thereafter 4,501,264
----------
Total $ 13,546,650
============
In addition, certain lease agreements require tenant participation in
certain operating expenses. Tenant participation in expenses included in
revenues approximated $284,000, $391,000, and $403,000 for the years
ended December 31, 1999, 1998, and 1997, respectively.
(4) Major Tenants
A substantial amount of the Trust's revenue in 1999 was derived from
three major tenants, whose rentals amounted to 41%, 16%, and 9%,
respectively, of total revenues. A substantial amount of the Trust's
revenue in 1998 was derived from three major tenants, whose rentals
amounted to 34%, 14%, and 10%, respectively, of total revenues. A
substantial amount of the Trust's revenue in 1997 was derived from three
major tenants whose rentals amounted to 35%, 14%, and 11%, respectively,
of total revenues. These tenants' leases expire in 2008, 2004, and 2003,
respectively.
(5) Legal Proceedings
On October 19, 1999, the Trust entered into a settlement agreement (the
Settlement Agreement) relating to a lawsuit filed in the Circuit Court of
Jackson County, Missouri entitled Nooney Realty Trust, Inc. v. David L.
Johnson, et al. The closing under the Settlement Agreement occurred on
November 9, 1999. Pursuant to the Settlement Agreement, (i) CGS Real
Estate Company, Inc. (CGS) and certain of its affiliates sold all their
shares of common stock in the Trust (75,763 shares) to NKC Associates,
L.L.C. (37,881), an affiliate of Bond Purchase, L.L.C., and Chris Garlich
(37,882) at a price of $10.00 per share; (ii) the Trust's existing
officers and Board of Trustees resigned and were replaced; (iii) CGS and
its affiliates terminated each of the management and other services
agreements between CGS and its affiliates and the Trust; and (iv) the
lawsuit was dismissed pursuant to stipulations of dismissal with
prejudice signed by each of the parties to the lawsuit.
(6) Related Party Transactions
Prior to February 10, 1998, the Trust was party to an agreement with
Nooney Advisors Ltd., L.P. (the Advisor) to advise the Trust with respect
to the Trust's investments and investment policies and to administer the
operations of the Trust. A former officer and director of the Trust was a
general partner of the Advisor. The Advisor received a fee for its
services based upon net invested assets or net operating income, as
defined in the agreement. The fees were $13,367 and $118,906 for the
years ended December 31, 1998 and 1997, respectively.
9
<PAGE>
NOONEY REALTY TRUST, INC.
Notes to Financial Statements
December 31, 1999, 1998, and 1997
Effective February 10, 1998, the Trust became self-advised. Prior to the
Settlement Agreement described in note 5, the Trust reimbursed an
affiliate, Nooney, Inc., for certain general and administrative fees
totaling $214,000 and $188,100 for the years ended December 31, 1999 and
1998, respectively.
Certain other affiliates of the Advisor received lease commissions and
property management fees in connection with the operation of investment
real estate owned by the Trust. In 1997, lease commissions of $41,330
were paid by the Trust to Nooney Krombach Company, an affiliate of the
Advisor. Additionally, property management fees paid to Nooney Krombach
Company were $98,558 for the period January 1, 1997 through October 31,
1997.
On October 31, 1997, Nooney Company sold its property management business
operated through its wholly owned subsidiary, Nooney Krombach Company, to
Nooney Real Estate Company D/B/A Nooney, Inc., an indirect wholly owned
subsidiary of CGS. Simultaneously Nooney Company, Gregory J. Nooney, Jr.,
and PAN, Inc. sold their general and limited partnership interest in
Nooney Advisors Ltd., L.P., the external advisor to the Trust, to S-P
Properties, Inc., a California corporation, which also is a wholly owned
subsidiary of CGS. Prior to the sale, the independent directors of the
Trust approved the change in control of the Advisor and authorized a new
management contract for the Trust's properties with Nooney, Inc., with
the same terms and expiration dates as the existing advisory and
management contracts. Lease commissions of $33,194 $102,229, and $8,266
were paid by the Trust to Nooney, Inc. for the years ended December 31,
1999, 1998, and 1997, respectively. Additionally, the Trust paid Nooney,
Inc. property management fees of $10,160 and $19,711 for the years ended
December 31, 1998 and 1997, respectively.
In conjunction with the Settlement Agreement described in note 5, Maxus
Properties, Inc., an affiliate of Bond Purchase, L.L.C., entered into an
agreement to manage the Trusts' properties. Management fees of $7,920
have been accrued in the accompanying 1999 financial statements.
(7) Employment Agreement
Effective March 1, 1998, the Trust entered into two five-year employment
agreements (the Employment Agreements) that were cancelable after three
years subject to certain performance criteria, as defined in the
Employment Agreements. Annual compensation recognizable under the
agreements totaled $300,000 of which $245,000 was deferred compensation.
At December 31, 1998, the Trust had recorded deferred compensation
aggregating $204,167. In connection with the Settlement Agreement
described in note 5, the Employment Agreements were terminated and the
Trust paid $75,000 in complete settlement of the Trust's deferred
compensation. As a result, the remaining liability of $129,167 was
reversed and recorded as a reduction of general and administrative
expense in 1999.
The Employment Agreements included options to purchase an aggregate of
75,000 shares of the Trust's common stock at $10.00 per share. The
options were canceled in conjunction with the Settlement Agreement.
During 1999 and 1998, the Trust granted stock appreciation rights to the
three outside directors and two officers. The stock appreciation rights
were canceled in conjunction with the Settlement Agreement.
10
<PAGE>
NOONEY REALTY TRUST, INC.
Notes to Financial Statements
December 31, 1999, 1998, and 1997
(8) Fair Value of Financial Instruments
SFAS No. 107, Disclosures About Fair Value of Financial Instruments,
requires the Trust to disclose fair value information of all financial
instruments, whether or not recognized in the balance sheet, for which it
is practicable to estimate fair value. The Trust's financial instruments,
other than debt, are generally short-term in nature and contain minimal
credit risk. These instruments consist of cash, accounts receivable,
accounts payable, accrued liabilities, real estate taxes payable, and
refundable security deposits. The carrying value of these assets and
liabilities in the balance sheet are assumed to be at fair value.
The estimated fair value of the mortgage note payable is determined based
on rates currently available to the Trust for mortgage notes with similar
terms and remaining maturities. The carrying amount and estimated fair
value of the Trust's mortgage note payable at December 31, 1999 and 1998
are summarized as follows:
<TABLE>
<CAPTION>
1999 1998
---------------------------- ------------------------
<S> <C> <C> <C> <C>
Carrying Estimated Carrying Estimated
amount fair value amount fair value
------ ---------- ------ ----------
Mortgage note payable $4,538,066 4,538,000 4,643,712 4,707,000
========== ========= ========= =========
</TABLE>
Fair value estimates are made at a specific point in time, are subjective
in nature, and involve uncertainties and matters of significant judgment.
Settlement of the Trust's debt obligation at fair value may not be
possible and may not be a prudent management decision.
(9) Contingency
The Atrium at Alpha has been classified in the Minneapolis Airport
Committee's (the "MAC") Safety Zone A in the future expansion of the
Minneapolis Airport. The expansion runway is anticipated to be completed
in 2003. The MAC began buying out impacted buildings in 1999. Safety Zone
A is adjacent to the Federal Aviation Authority's noise buy out zone. The
MAC has not indicated whether or not it will buy out the Trust's
building. The Trust is monitoring whether the increased noise from the
new runway will have an impact on future leasing of the building. If the
Trust determines there is a negative impact, the Trust will petition the
MAC to buy the building. If the building continues to be classified in
Safety Zone A, it will be classified as nonconforming use. Given the
preliminary stage of the future expansion, management is unable at this
time to determine what impact, if any, this matter will have on the
Trust.
(10) Segment Reporting
The Trust has adopted SFAS No. 131, Disclosure About Segments of an
Enterprise and Related Information, which establishes standards for the
way that public business enterprises report information about operating
segments in financial statements, as well as related disclosures about
products and services, geographic areas, and major customers.
The accounting policies of the segments are the same as those described
in note 1.
11
<PAGE>
NOONEY REALTY TRUST, INC.
Notes to Financial Statements
December 31, 12999, 1998, and 1997
The Trust has three reportable operating segments--Atrium at Alpha, Franklin
Park, and ACI Building. The Trust's management evaluates performance of each
segment based on profit or loss from operations before allocation of general and
administrative expenses, unusual and extraordinary items, and interest.
1999 1998 1997
---- ---- ----
(in thousands)
Revenues:
Atrium at Alpha $ 1,307.0 1,341.8 1,289.1
Franklin Park 414.4 781.0 755.7
ACI Building 1,207.5 1,111.7 1.081.3
Reconciling items--
corporate and other -- (73.5) (24.2)
------- ------- -------
$ 2,928.9 3,161.0 3,101.9
========== ======= =======
Net income (loss):
Atrium at Alpha 213.5 231.1 238.0
Franklin Park (172.4) 132.9 173.2
ACI Building 339.7 186.8 183.5
Reconciling items--
corporate and other (660.5) (1,040.9) (720.1)
------ -------- ------
$ (279.7) (490.1) (125.4)
========== ====== ==========
Capital expenditures:
Atrium at Alpha $ 331.5 146.6 182.8
Franklin Park 200.0 11.9 --
ACI Building -- 65.4 --
------ ------ -----
$ 531.5 223.9 182.8
========== ===== =====
Depreciation and amortization:
Atrium at Alpha $ 378.5 352.3 352.2
Franklin Park 145.5 163.2 178.2
ACI Building 208.8 208.1 183.2
Reconciling items--
corporate and other 16.5 16.6 16.7
---- ---- ----
$ 749.3 740.2 730.3
========== ===== =====
12
<PAGE>
NOONEY REALTY TRUST, INC.
Notes to Financial Statements
December 31, 1999, 1998, and 1997
1999 1998
---- ----
(in thousands)
Assets:
Atrium at Alpha $ 5,757.0 5,682.1
Franklin Park 3,429.3 3,320.6
ACI Building 4,735.3 4,912.4
Reconciling items --
corporate and other 387.0 642.4
----- -----
$ 14,308.6 14,557.5
========== ========
(11) Supplementary Quarterly Data (Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1999
------------------------------------------------------------------------
March 31 June 30 September 30 December 31
------------- ------------- ----------------- ---------------
Total revenues $ 751,832 759,997 743,334 673,687
Net income (loss) (203,703) (84,452) (264,819) 273,279 (1)
Net income (loss) per share (0.24) (0.10) (0.31) 0.32
============= ============= ================= ===============
1998
------------------------------------------------------------------------
March 31 June 30 September 30 December 31
------------- ------------- ----------------- ---------------
Total revenues $ 767,824 786,523 840,562 766,121
Net income (loss) (23,749) (86,044) (71,644) (308,622)
Net income (loss) per share (0.03) (0.10) (0.08) (0.36)
============= ============= ================= ===============
</TABLE>
(1) Fourth quarter 1999 net income reflects reversal of $333,334 of
deferred compensation recognized in 1998 and 1999, as further described
in note 7.
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FINANCIAL STATEMENTS FOR NOONEY REALTY TRUST, INC. AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.</LEGEND>
<CIK>0000748580
<NAME> NOONEY REALTY TRUST, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 207,543
<SECURITIES> 0
<RECEIVABLES> 250,097
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 20,651,619
<DEPRECIATION> 7,384,633
<TOTAL-ASSETS> 14,308,555
<CURRENT-LIABILITIES> 0
<BONDS> 4,538,066
<COMMON> 866,624
0
0
<OTHER-SE> 8,968,024
<TOTAL-LIABILITY-AND-EQUITY> 14,308,555
<SALES> 2,624,865
<TOTAL-REVENUES> 2,928,850
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,833,297
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 375,248
<INCOME-PRETAX> (279,695)
<INCOME-TAX> 0
<INCOME-CONTINUING> (279,695)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (279,695)
<EPS-BASIC> (.32)
<EPS-DILUTED> 0
<PAGE>
</TABLE>
Independent Auditors' Report on Financial Statement Schedule
To the Shareholders of
Nooney Realty Trust, Inc.:
We have audited the financial statements of Nooney Realty Trust, Inc. (Trust)
as of December 31, 1999 and for the year then ended, and have issued our report
thereon dated February 14, 2000. Such financial statements are included in the
Trust's 1999 Annual Report to Shareholders. Our audit also included the
financial statement schedule of Nooney Realty Trust, Inc. This financial
statement schedule is the responsibility of the Trust's management. Our
responsibility is to express an opinion on the schedule based on our audit.
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
/s/ KPMG
February 14, 2000
<PAGE>
INDEPENDENT AUDITORS' REPORT ON
FINANCIAL STATEMENT SCHEDULE
To the Shareholders of Nooney Realty Trust, Inc.
St. Louis, Missouri:
We have audited the financial statements of Nooney Realty Trust, Inc. as of
December 31, 1998 and for each of the two years then ended, and have issued our
report thereon dated January 22, 1999. Such financial statements and report are
included in your 1999 Annual Report to Shareholders and are incorporated herein
by reference. Our audits also included the financial statement schedule of
Nooney Realty Trust, Inc., listed in Item 14. This financial statement schedule
is the responsibility of the Trust's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such 1998 and 1997
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.
/s/DELOITTE & TOUCHE LLP
St. Louis, Missouri
January 22, 1999
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Column D
Column C Costs
Initial cost to Trust capitalized
Column B Buildings and subsequent to
Column A Encumbrances Land Improvements Total acquisition
- --------------------------------- ------------ ------- ----------- ------- -------------
Atrium at Alpha Business Center,
Bloomington, Minnesota -- 822,526 7,571,190 8,393,716 843,870
Applied Communications, Inc.
office building, Omaha, Nebraska -- 1,257,655 5,143,353 6,401,008 215,427
Franklin Park Distribution Center,
Franklin Park, Illinois -- 488,774 3,812,720 4,301,494 561,226
All properties 4,538,066 -- -- -- --
---------- --------- ---------- ---------- ---------
Total 4,538,066 2,568,955 16,527,263 19,096,218 1,620,523
========== ========= ========== ========== =========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Column I
Column E Life on which
Gross amount at which depreciation in
carried at close of period Column F Column G Column H latest income
Buildings and Accumulated Date of Date statement is
Land improvements Total depreciation construction acquired computed
---- ------------ ----- ------------ ------------ -------- --------
822,526 8,308,674 9,131,200 3,624,421 1981 03/28/85 35 years
1,257,655 5,400,044 6,657,699 2,209,694 1984 01/22/86 35 years
488,774 4,373,946 4,862,720 1,550,518 1972 12/16/86 35 years
-- -- -- --
- --------- --------- --------- ----------
2,568,955 18,032,664 20,651,619 7,384,633
========= ========== ========== ==========
</TABLE>
<PAGE>
NOONEY REALTY TRUST, INC.
Real Estate and Accumulated Depreciation, continued
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
---- ---- ----
Reconciliation of amounts in Column E:
Balance at beginning of period $ 20,185,236 20,308,876 20,162,786
Add cost of improvements 531,505 223,891 182,817
Less cost of disposals (65,122) (347,531) (36,727)
------- -------- -------
Balance at end of year $ 20,651,619 20,185,236 20,308,876
============ ========== ==========
Reconciliation of amounts in Column F:
Balance at beginning of period $ 6,830,183 6,539,243 5,948,166
Add depreciation expense 619,572 638,471 627,804
Less accumulated depreciation on disposals (65,122) (347,531) (36,727)
------- -------- -------
Balance at end of year $ 7,384,633 6,830,183 6,539,243
============ ========= =========
The aggregate cost of real estate owned for federal
income tax purposes $ 20,651,619 20,185,236 20,308,876
============ ========== ==========
</TABLE>
See accompanying independent auditors' reports
