U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
____
/ X / Quarterly report under Section 13 or 15(d) of the Securities
- - ---- Exchange Act of 1934
For the quarterly period ended September 30, 1995
or
___
/___/ Transition report under Section 13 or 15(d) of the Exchange
Act
For the transition period from __________ to __________
Commission file number 0-13117
MICROFRAME, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
New Jersey 22-2413505
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
21 Meridian Road, Edison, New Jersey 08820
(Address of Principal Executive Offices)
(908) 494-4440
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 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
----- -----
There were 3,714,175 shares of Common Stock outstanding at November 14, 1995.
Transitional Small Business Disclosure Format:
Yes No X
----- -----
<PAGE>
MICROFRAME, INC.
FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 1995
PART I. FINANCIAL INFORMATION Page
ITEM 1. Condensed Financial Information 2
Condensed Balance Sheets as of September 30,
1995 and March 31, 1995 (Unaudited) 3
Condensed Statements of Income for the three
months ended September 30, 1995 and September
30, 1994; six months ended September 30, 1995
and September 30, 1994 (Unaudited) 4
Condensed Statements of Cash Flows for the
six months ended September 30, 1995 and
September 30, 1994 (Unaudited) 5
Notes to Condensed Financial Statements 7-8
ITEM 2. Management's Discussion and Analysis or
Plan of Operation 9-10
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security-Holders
ITEM 5. Other Information 11
ITEM 6. Exhibits and reports on Form 8-K 12
SIGNATURES 13
<PAGE>
PART 1. Financial Information
Item 1. Condensed Financial Information
The condensed financial statements included herein have been
prepared by the registrant without audit pursuant to the rules and regulations
of the Securities and Exchange Commission. Although the registrant believes
that the disclosures are adequate to make the information presented not
misleading, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. It is suggested that these condensed financial statements be read
in conjunction with the financial statements and the notes thereto included in
the registrant's latest Annual Report on Form 10-KSB.
-2- <PAGE>
MicroFrame, Inc. Condensed Balance Sheets
(unaudited)
<TABLE>
<CAPTION>
September 30, March 31,
1995 1995
Assets ---- ----
<S> <C> <C>
Current Assets
Cash and Cash equivalents $19,225 $490,261
Accounts receivable, less allowance
for doubtful accounts of $75,091
and $75,000 respectively 1,300,834 1,912,304
Inventory 1,281,731 775,540
Deferred tax asset -- 400,000
Prepaid expenses and other
current assets 106,337 24,325
--------- ---------
Total current assets 2,708,127 3,602,430
Property and equipment at cost, net 473,830 317,585
Capitalized software, less accumulated
amortization of $460,016 and $370,879 272,283 211,602
Security deposits 38,583 31,412
Excess of cost over fair value of net
assets acquired less accumulated
amortization of $380 and $0,
respectively 90,760 0
Deferred tax asset 574,900 174,900
--------- --------
Total assets $ 4,158,483 $ 4,337,929
Liabilities and Stockholders' Equity
Current liabilities
Short-term borrowings $ 400,000 $ 0
Accounts payable 449,746 354,427
Accrued payroll and related
liabilities 128,473 240,900
Deferred income 214,934 202,478
Other current liabilities 163,396 62,730
--------- ---------
Total current liabilities 1,356,549 860,535
Stockholders' equity
Common stock - par value $.001 per
share authorized 50,000,000 shares,
issued 3,714,575 shares and outstanding
3,714,175 shares at September 30, 1995;
issued 3,687,198 shares and outstanding
3,686,798 shares at March 31, 1995 3,714 3,687
Preferred stock - par value $10 per
share; authorized 200,000 shares,
none issued -- --
Additional paid-in capital 4,851,672 4,769,406
Accumulated deficit (2,049,452) (1,291,699)
--------- ---------
2,805,934 3,481,394
Less - Treasury stock, 400 shares,
at cost (4,000) (4,000)
--------- ---------
Total stockholders' equity 2,801,934 3,477,394
Commitments and contingencies -- --
--------- ---------
Total liabilities and
stockholder' equity $ 4,158,483 $ 4,337,929
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements
-3-<PAGE>
MicroFrame, Inc.
Condensed Statements of Income
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net Sales $2,606,940 $3,080,643 $ 742,598 $1,579,921
---------- ---------- --------- ----------
Costs and Expenses
Costs of Sales 1,165,874 1,320,793 425,027 709,692
Research and 294,050 201,202 165,385 107,990
development expenses
Selling, general and 1,905,757 1,248,653 947,244 650,010
administrative expenses
Amortization of excess
of cost over fair value
of net assets acquired 380 0 380 0
--------- --------- --------- ---------
Total costs and 3,366,061 2,770,648 1,538,036 1,467,692
expenses
Interest Income 3,062 3,676 244 1,825
Interest Expense (1,694) (1,694)
-------- --------- --------- ---------
Income (loss) before
tax provision (757,753) 313,671 (796,888) 114,054
Income tax provision 0 125,500 (14,700) 45,500
--------- --------- --------- ---------
Net Income (loss) $ (757,753) $ 188,171 $(782,188) $ 68,554
========= ========= ========== =========
Per share
Primary
Net Income (loss) per
share (0.21) 0.05 (0.21) $ 0.02
--------- --------- --------- ---------
Shares used in
computation 3,689,773 3,641,798 3,692,321 3,641,798
Full diluted
Net Income (loss) per
share (0.21) 0.05 (0.21) 0.02
-------- --------- -------- ---------
Shares used in
computation 3,689,773 3,964,998 3,692,321 3,964,998
--------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements
-4-<PAGE>
MicroFrame, Inc.
Condensed Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Six months ended
September 30,
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities
Net Income $ (757,753) $ 188,171
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization 150,006 99,508
Deferred tax provision -- 125,500
(Increase) decrease in
Accounts receivable, net 618,373 (208,573)
Inventory (504,731) 244,217
Prepaid expenses and other current assets (35,017) 935
Security deposits (5,521) --
Increase (decrease) in
Accounts payable 65,014 (286,512)
Accrued payroll and related liabilities (116,867) (3,523)
Deferred income 12,456 42,254
Other current liabilities 75,628 (39,422)
--------- ---------
Net cash provided by operating activities (498,412) 162,555
--------- ---------
Cash flows from investing activities
Capital expenditures (337,056) (12,949)
Acquisition of European Business Associates (39,736) --
--------- ---------
Net cash used in investing activities (376,792) (127,949)
--------- ---------
Cash flows from financing activities
Short-term borrowings 400,000 --
Issuance of common stock 4,168 --
--------- ---------
Net cash (used) provided by financing
activities 404,168 0
--------- ---------
Net (decrease) increase in cash and cash
equivalents (471,036) 34,606
Cash and cash equivalents-beginning of period 490,261 505,317
--------- ---------
Cash and cash equivalents-end of period $ 19,225 $ 539,923
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements
-5-<PAGE>
MICROFRAME, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(Unaudited)
Note 1 - Condensed Financial Statements:
The condensed balance sheets as of September 30, 1995 and March 31, 1995, the
condensed statements of operations for the six month periods ended September
30, 1995 and 1994 and the condensed statements of cash flows for the six month
periods then ended have been prepared by the Company without audit. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows at September 30, 1995 and 1994 have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and notes
thereto as of March 31, 1995 and for the year then ended.
Note 2 - Inventory:
Inventory consists of the following:
<TABLE>
<CAPTION>
September 30, 1995 March 31, 1995
<S> <C> <C>
Raw materials $ 560,884 $ 347,962
Work in process 479,696 286,667
Finished goods 241,151 140,911
---------- -----------
Total $1,281,731 $ 775,540
</TABLE>
-6-<PAGE>
MICROFRAME, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(Unaudited)
Note 3 - Stockholders Equity:
During the six months ended September 30, 1995, stockholders equity changed
for the following items:
Net income/(loss) of $(757,753)
Issuance of common stock of $82,293
Note 4 - Net Income Per Share:
The computation of earnings per common and common equivalent share is based
upon the weighted average number of common shares outstanding during the period
plus (in periods in which they have a dilutive effect) the effect of common
stock equivalents, comprised solely of stock options. Fully diluted earnings
per share also reflect additional dilution related to stock options due to the
use of the market price at the end of the period, when higher than the average
price for the period.
Note 5 - Acquisition of European Business Associates:
On September 15, 1995, MicroFrame Europe N.V., a newly formed wholly-owned
subsidiary, acquired all of the issued and outstanding shares of capital stock
of European Business Associates BVBA of Brussels, Belgium, a marketing
organization which specializes in creating and managing distribution networks
and OEM relations for suppliers to the telecommunications industry. MicroFrame
Europe N.V. will serve as the Company's European sales and distribution
coordinator as well as provide technical support services for the Company's
authorized European distributors.
The acquisition was accounted for under the purchase method of accounting. The
results of the operations of MicroFrame Europe N.V. are included with the
Company's results of operations with effect from the date of acquisition. The
Company issued cash and common stock valued at $128,125, assumed liabilities of
-7-<PAGE>
MICROFRAME, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(Unaudited)
$59,783, and incurred $24,605 in additional costs related to the acquisition.
Total consideration as allocated to the assets acquired was as follows:
<TABLE>
<S> <C>
Current assets $ 90,226
Property and equipment 29,497
Other assets 1,650
Goodwill 91,140
--------
$212,153
========
</TABLE>
The portion of the purchase price allocated to goodwill will be amortized over
a 10-year period beginning September 15, 1995. The following unaudited pro
forma condensed statement of operations information has been prepared to give
effect to the acquisition as if such transaction had occurred at the beginning
of the periods presented. The information presented is not necessarily
indicative of the results of future operations of the total Company.
<TABLE>
<CAPTION>
6 Months Ended Sept 30, 1995 Sept 30, 1994
<S> <C> <C>
Net revenues $ 2,654,000 $ 3,160,000
Net income (loss) $ (787,000) $ 188,000
Pro forma earnings per share $ (.21) $ .05
</TABLE>
-8-<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
Results of Operations
Revenues for the quarter ended September 30, 1995 were $742,598 as
compared with revenues of $1,579,921 for the same quarter of the previous
fiscal year, or a decrease of approximately 53.0%. Approximately 90.0% of the
revenue decrease was attributable to the following three factors. First, the
Company's largest customer, MCI, decreased its sales of the Company's products
from approximately $410,000 in the same quarter of the previous year to
approximately $145,000 in the current quarter. This was a result of MCI's
"capital spending freeze" instituted in June 1995, which took place in advance
of a significant downsizing which was effected in August 1995. While this
"freeze" was removed in September 1995, anticipated orders did not resume until
mid-October 1995. Second, the Company's next largest customer, AT&T, found
itself in an "overstocked" position regarding the Company's products, due to a
temporary change in sales strategy. As a result, AT&T effected purchase orders
for approximately $180,000, which was less than one-third of its normal volume,
of approximately $600,000 for the same quarter in the previous year. Lastly,
the Company's international sales decreased from approximately $125,000 to
approximately $75,000 as a result of a slower rate of development of key
international accounts than the Company had anticipated.
The Company's cost of goods decreased from $709,692 during the same
quarter of the previous fiscal year to $425,027 for the current fiscal quarter
as a result of decreased shipment levels. Cost of goods as a percentage of
sales increased from 44.9% for the same quarter of the previous fiscal year to
57.2% for this fiscal quarter, reflecting the overall decrease in shipments of
product. Research and development costs increased from $107,990 in the quarter
ended September 30, 1994 to $165,385 in the current fiscal quarter, reflecting
increased development of a next generation set of products to be introduced in
the fourth fiscal quarter. Selling, general and administrative expenses
increased significantly from $650,010 for the same quarter of the previous
fiscal year as compared with $947,244 for the current fiscal quarter,
reflecting the Company's expansion of its sales and marketing function and
upgrading its administrative support in anticipation of a sales growth which
did not materialize.
-9-<PAGE>
The Company's operating profit before taxes dropped from $114,054 during
the same quarter of the previous fiscal year to an operating loss of $796,888
for the current fiscal quarter, as a result of the factors described above.
First Six Months of Fiscal 1996 Versus First Six Months of Fiscal 1995
Revenues for the six-month period ended September 30, 1995 were
$2,606,940, as compared with revenues of $3,080,643 for the comparable period
ended September 30, 1994, a decrease of 15.4%. The major factor attributable
to this decrease was the significant drop off of products shipped to the
Company's two largest customers as compared to the prior comparable fiscal
period.
The Company's cost of goods decreased from $1,320,793 for the period
ended September 30, 1994 to $1,165,874 for the period ended September 30, 1995.
Cost of goods as a percentage of sales increased from 42.9% for the 1994 period
to 44.7% for the comparable 1995 fiscal period as a result of a lower volume of
product shipments. Selling, general and administrative expenses increased from
$1,248,653 for the 1994 period to $1,905,757 for the comparable 1995 fiscal
period, reflecting a significant expansion of the sales, marketing and
administrative function, in anticipation of continued rapid growth which was
far slower than expected.
Research and development costs increased from $201,202 for the period
ended September 30, 1994 to $294,050 for the period ended September 30, 1995,
an increase of 46.1%, reflecting a substantial emphasis on new product
development for a next generation set of products to be initially delivered
during the fourth fiscal quarter of this year.
The Company's pretax operating profit dropped from $313,671 for the
period ended September 30, 1994 to an operating loss of $757,753 for the
period ended September 30, 1995. This decrease was due to the Company's slow
sales growth and higher operating costs in anticipation of greater sales
growth.
Financial Condition and Capital Resources
During the second quarter of fiscal year 1996, the Company's financial
condition was negatively impacted. The Company's working capital position was
reduced from $2,341,895 at March 31, 1995 to $1,351,578 at September 30, 1995.
-11-<PAGE>
The primary contributor to this reduction in the Company's working capital
position was the Company's net loss of $782,188.
The Company has signed a credit agreement with CoreStates Bank, NA
("CoresStates") which increases its credit line from $600,000 to $1,000,000 to
finance future working capital requirements, secured by accounts receivable.
In addition, the Company also has a $200,000 credit facility from CoreStates to
finance purchases of machinery and equipment, convertible into a three-year
secured term loan when utilized. The Company has $400,000 outstanding on its
credit line and there have been no borrowings against the capital equipment
credit facility.
The Company has taken steps to significantly decrease expenditures
through salary reductions, temporary furloughs and a reduction in discretionary
expenses. As such, the Company believes that it will have sufficient capital
to meet its financial requirements for the remainder of the fiscal year, as a
result of these expense reductions and the availability of its credit
facilities.
-11-<PAGE>
PART II. Other Information
Item 4. Submission of Matters to a Vote of Security-Holders
The Annual Meeting of Shareholders of the Company was held on September
18, 1995. At such meeting, the shareholders approved the following matters:
Proposal 1. Election of the following individuals as directors of the Company
for a term of one year, which constitutes the entire Board of
Directors of the Company:
Stephen M. Deixler, Lonnie L. Sciambi, David I. Gould,
Michael Radomsky, William H. Whitney, Michehl R. Gent,
Stephen P. Roma;
Proposal 2. An amendment to the Company's 1994 Stock Option Plan which (i)
provides for the annual award under the plan to non-employee
directors of the Company of options to purchase up to 10,000 shares
of Common Stock, and (ii) increases by 500,000, from 250,000 to
750,000, the number of shares of Common Stock for which options may
be granted under the plan; and
Proposal 3. Ratification of the Board of Directors' selection of Price
Waterhouse LLP as the Company's independent accountants for the
fiscal year ending March 31, 1996:
Set forth below are the votes for, against and abstaining from each of
the proposals listed above:
<TABLE>
<CAPTION>
Abstentions
Votes Votes and Broker
Proposal For Withheld Against Non-Votes
<S> <C> <C> <C> <C>
1. Stephen M. Deixler 2,595,597 1,200 0 0
Lonnie L. Sciambi 2,595,597 1,200 0 0
David I. Gould 2,593,597 3,200 0 0
Michael Radomsky 2,595,597 3,200 0 0
William H. Whitney 2,593,597 1,200 0 0
Michehl R. Gent 2,595,597 1,200 0 0
Stephen P. Roma 2,594,197 2,600 0 0
2. Amendment to 1994 2,253,632 0 36,825 2,820
Stock Option Plan
-12-<PAGE>
3. Price Waterhouse
LLP 2,590,637 0 5,500 660
Item 5. Other Information
On September 18, 1995, at the Board of Directors' meeting following the
Annual Meeting of Shareholders, the Company's current officers were re-elected
for a one year term commencing as of such date.
On September 15, 1995, MicroFrame Europe N.V., a Belgium corporation and
a newly-formed, wholly-owned subsidiary of the Company, purchased all of the
issued and outstanding shares of capital stock of European Business Associates
BVBA, ("EBA"), a Belgium corporation from Marc Kegelaers, its sole shareholder.
EBA is a marketing organization engaged in the business of creating and
managing distribution networks and original equipment manufacturer relations
for suppliers to the telecommunications industry. MicroFrame Europe N.V. will
serve as the Company's European sales and distribution coordinator and will
provide technical support services for the Company's authorized European
distributors.
As payment in full for the stock so purchased, MicroFrame Europe N.V.
paid at the closing $50,000 (US) and an aggregate of 25,000 shares of Common
Stock of the Company to Marc Kegelaers. In addition, Mr. Kegelaers may earn
additional sums of cash as well as stock of the Company based on the generation
of certain revenues of MicroFrame Europe N.V.
In connection with the stock purchase, MicroFrame Europe N.V. entered
into a consulting agreement with Mr. Kegelaers, the former President of EBA,
pursuant to which Mr. Kegelaers will render consulting services to MicroFrame
Europe N.V. for a period of five years, for an annual consulting fee of $75,000
(US), to be increased on each anniversary date of the date of such agreement by
five percent over the annual fee in effect for the immediately preceding year.
The foregoing description is subject to the actual provisions of the
Share Purchase Agreement by and between MicroFrame Europe N.V. and Marc
Kegelaers and the Consulting Agreement by and between MicroFrame Europe N.V.
and Marc Kegelaers, which are filed as Exhibits 10.30 and 10.31, respectively,
and are incorporated herein by reference.
-13-<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.27 Employment Agreement dated as of July 1, 1995
between the Company and Mark A. Simmons.
10.28 Lease Agreement dated as of July 20, 1995 between
46.25 Associates, L.P. and the Company for
premises at the Middlesex (New Jersey) Business
Center.
10.29 1994 Stock Option Plan (as amended on July 17,
1995).
10.30 Share Purchase Agreement (EBA) dated September
15, 1995 between Marc Kegelaers and MicroFrame
Europe N.V.
10.31 Consulting Agreement dated as of September 15,
1995 between Marc Kegelaers and MicroFrame Europe
N.V.
10.32 Termination Letter dated September 15, 1995 from
European Business Associates BVBA to the Company.
(b) Reports on Form 8-K
During the quarter ended September 30, 1995, the Company did not file any
reports on Form 8-K.
-14-<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: November 14, 1995
MICROFRAME, INC.
/s/Lonnie L. Sciambi
Lonnie L. Sciambi, President and
Chief Executive Officer
/s/ Mark A. Simmons
Mark A. Simmons, Chief Financial
Officer (Principal Financial Officer)
-15-<PAGE>
</TABLE>
<PAGE>
EXHIBIT 10.27
</PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT effective as of this 1st day of July 1995, by
and between MICROFRAME, INC., a New Jersey corporation, having its principal
office at 21 Meridian Road, Edison, New Jersey 08820 (the "Company"), and
MARK A. SIMMONS, residing at 1027 Valley Forge Road #490, Devon, Pennsylvania
19333 ("Executive").
W I T N E S S E T H :
WHEREAS, the Executive has been employed by the Company as
its Vice President - Operations/Chief Financial Officer since January 23, 1995;
and
WHEREAS, the experience, ability and knowledge of the
Executive have been and are valuable to the Company and as a result, the
Company desires to continue to employ the Executive on a full-time basis as its
Vice President - Operations/Chief Financial Officer pursuant to a formal
agreement of employment; and
WHEREAS, the Executive desires to be so employed by the
Company in such capacity and further desires to enter into an agreement with
the Company, the terms of which would govern his employment with the Company.
NOW, THEREFORE, in consideration of such employment and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
as follows:
1. Employment: The Company hereby agrees to employ
Executive and Executive hereby accepts employment with the Company upon the
terms and conditions set forth below, subject to earlier termination as
provided herein. Executive's employment under this Agreement shall be for an
initial period of one (1) year, commencing on the date of this Agreement and it
shall automatically be renewed for a two (2) year period thereafter, unless at
least thirty (30) days prior to the termination of the initial one year term
either party gives written notice to the other of its or his desire to
terminate the Executive's employment as of the end of the one year term (the
"Employment Period"). During the Employment Period, Executive will hold the
position of Vice President - Operations/Chief Financial Officer of the Company
and shall perform such functions as are normally carried out by the Vice
President - Operations/Chief Financial Officer of a business of the type in
which the Company is engaged, including but not limited to, responsibilities
for finance, administration, purchasing and manufacturing, as well as such
other functions, as the Board of Directors of the Company (the "Board") shall
from time to time reasonably determine. Executive will devote his full-time,
energies and abilities exclusively to the business of the Company to accomplish
<PAGE>
the duties assigned by the Board, will perform those duties to the best of
Executive's ability and will devote Executive's best efforts to advance the
interests of the Company.
2. Compensation and Benefits: As compensation for all
services performed by Executive for the Company during the Employment Period,
the Company agrees to pay Executive:
(a) (i) An annual salary at the rate of
eighty-five thousand ($85,000) dollars per annum ("Initial Salary") from the
date of this Agreement through March 31, 1996, to be paid in equal
installments, in accordance with the Company's customary payroll practice for
its executives.
(ii) Commencing April 1, 1996 and at the
beginning of each subsequent fiscal year in which Executive is employed by the
Company, Executive's Initial Salary, with respect to the 1997 fiscal year and
thereafter, Executive's current salary in each subsequent fiscal year during
the Employment Period, shall increase or decrease as set forth in paragraph
2(a)(v) based upon the Company's performance in the prior fiscal year measured
against the Company's achievement of performance goals which had been set by
the Board, in its sole discretion, for that year with respect to certain
weighted performance criteria.
(iii) The performance goals, performance cri-
teria and the percentages used to weigh such criteria shall be determined by
the Board no later than May 31st of the fiscal year in which performance is
measured. The performance goals, and weighted performance criteria for the
1996 fiscal year are set forth on Schedule A attached hereto and made a part
hereof, which shall be amended and updated each fiscal year in accordance with
this subparagraph.
(iv) The performance criteria to be consid-
ered by the Board shall include, but are not limited to revenue, operating
income, earnings per share and share price of the stock of the Company.
(v) As set forth in paragraph 2(a)(ii),
Executive's salary shall increase or decrease as follows:
(A) Where performance of the Company
shall fall below ninety (90%) percent of such year's performance goals, salary
will decrease two and one-half (2.5%) percent for each one (1%) percent
increment of performance below the ninety (90%) percent threshold, up to a
maximum twenty-five (25%) percent reduction.
(B) Where performance of the Company
is greater than one hundred and ten (110%) percent of such year's performance
goals, salary will increase two and one-half (2.5%) percent for each one (1%)
-2- <PAGE>
percent increment of performance above the one hundred and ten (110%) percent
threshold, up to a maximum twenty-five (25%) percent increase.
(b) (i) Concurrently herewith, pursuant to a stock
option contract between the Company and the Executive, Executive is being
granted a five (5) year incentive stock option, under and subject to the terms
of the Company's 1994 Stock Option Plan, to purchase five thousand (5,000)
shares of common stock, par value $.001 per share of the Company ("Common
Stock"), at an exercise price equal to the fair market value of the Common
Stock as of the date hereof, exercisable on and after January 23, 1997 (the
"Option").
(ii) The shares of the Company's Common Stock which
may be purchased by Executive pursuant to the Option granted under paragraph
2(b)(i) (the "Shares"), are to be held by Executive for his own account, for
investment purposes only and not with a view to the resale or distribution
thereof, and no sale, offer to sell or transfer of the Shares, or of any shares
or other securities issued in exchange for or in respect of the Shares shall be
made unless a registration statement under the Securities Act of 1933, as
amended, (the "Act") with respect to the Shares is in effect, or an exemption
from the registration requirements of the Act is then in fact applicable to the
Shares.
(c) Commencing with the date of this Agreement and
during the Employment Period, Executive shall receive an automobile allowance
of five hundred ($500) dollars per month.
(d) Executive shall be entitled to fifteen (15)
days of vacation each year during the Employment Period (prorated for any
partial calendar year), to be taken at such time as is consistent with the
needs of the Company. Any unused vacation time shall be treated in accordance
with Company policy.
(e) During the Employment Period, Executive shall
be entitled, to the extent he qualifies, to participate in any retirement,
incentive bonus, profit-sharing, medical, disability, health or life insurance
and other similar benefit arrangements which may be or become available to
executive officers of the Company, provided Executive shall be required to
comply with and be entitled to benefits only in accordance with the terms and
conditions of such plans.
(f) The Company shall furnish the Executive with
the office space, stenographic assistance and such other facilities and
services as shall be suitable to the Executive's position adequate for the
performance of his duties hereunder.
-3- <PAGE>
(g) The Company shall reimburse Executive for all
reasonable expenses incurred by Executive in connection with the performance of
his duties hereunder, provided that such expenses are incurred and accounted
for in accordance with the reasonable policies and procedures established by
the Company.
3. Death and Disability:
(a) The Employment Period shall terminate on the
date of Executive's death, in which event Executive's salary, if any, payable
through the last day of the month in which his death occurs, shall be paid to
Executive's estate.
(b) If, during the Employment Period, Executive
due to physical or mental illness or incapacity, shall be unable to
substantially perform his duties and services under this Agreement for a period
of six (6) consecutive months or nine (9) months in the aggregate during any
twelve (12) month period ("Disability Period"), the Company may, at any time
after the expiration of such Disability Period, by written notice to Executive,
terminate Executive's employment as well as all benefits which he may be
entitled to hereunder as of the date set forth in the notice. Executive shall
be entitled to receive the salary he is receiving at that time, provided by
paragraph 2(a) up to the end of the Disability Period (less payments from any
disability insurance proceeds received by Executive with respect to the
Disability Period). Disability under this paragraph shall be determined by a
physician who shall be selected by the Company.
4. Discharge for Cause: The Company may terminate the
Executive's employment hereunder for "Cause". For purposes of the Agreement,
the Company shall have "Cause" to terminate the Executive employment hereunder
upon (a) the willful and continued failure by the Executive to substantially
perform his duties hereunder which amounts to a material neglect of his duties
to the Company, (b) the willful engaging by the Executive in misconduct which
is materially injurious to the Company, (c) the conviction of the Executive of
a felony, (d) the failure of the Executive to comply with any material
provision of this Agreement which has not been cured within thirty (30) days
after written notice of such noncompliance has been given by the Company to the
Executive, or (e) the failure to comply with material policies, procedures or
directions of the Company established by its Board of Directors and consistent
with the terms of this Agreement, which failure has not been cured within
thirty (30) days after notice of such noncompliance has been given by the
Company to the Executive. If, during the Employment Period, Executive is
discharged for Cause, this Agreement shall terminate and the Company, without
any limitation on any remedies it may have at law or equity, is without
-4- <PAGE>
liability for salary or any other liability to Executive after the date of such
discharge and the Option granted to Executive under this Agreement shall cease
and terminate immediately.
5. Nondisclosure; Noncompetition:
(a) The Executive agrees not to use or disclose,
either while in the Company's employ or at any time thereafter, except with the
prior written consent of the Company, any trade secrets, proprietary
information, or other information that the Company considers confidential
relating to formulas, designs, processes, suppliers, machines, compositions,
improvements, inventions, operations, manufacturing, processing, marketing,
distributing, selling, cost and pricing data, master files or consumer lists
utilized by the Company, or any confidential information (including but not
limited to salary information) on the employees, and all other similar
confidential information material to the conduct of the business, which is not
presently generally known to the public and which is or was obtained or
acquired by the Executive while in the employ of the Company; provided,
however, that this provision shall not preclude the Executive from (i) the use
of or disclosure of such information which presently is known generally to the
public or which subsequently comes into the public domain, other than by way of
disclosure on violation of this Agreement or in any other unauthorized fashion,
or (ii) disclosure of such information required by law or court order, in which
case the Executive will give the Company three (3) business days written notice
(or, if disclosure is required to be made in less than three (3) business days,
then such notice shall be given as promptly as practicable after determination
that disclosure may be required) of the nature of the law or order requiring
disclosure and the disclosure to be made in accordance therewith.
(b) During the Employment Period of this Agreement
and for a period of two (2) years thereafter, the Executive shall not, within
the United States or Canada without the prior written consent of the Company
directly or indirectly: (i) own, manage, operate, join, control, participate
in, invest in, or otherwise be connected with, in any manner, whether as an
officer, director, employee, partner, investor, consultant, lender or
otherwise, any business entity which is engaged in, or is in any way related
to, the business, or (ii) on the Executive's behalf or on behalf of anyone else
engaged in such line of business (A) persuade or attempt to persuade any
employee of the Company to leave the employ of the Company or to become
employed by any person other than the Company, (B) persuade or attempt to
persuade any current client or former client of the Company to cease doing
business with, or to reduce the amount of business it does or intends or
-5- <PAGE>
anticipates doing with, the Company, or (C) solicit the business of any such
clients or former clients with respect to the business of data securities.
(c) Nothing herein contained shall be deemed to
prohibit the Executive from investing in securities of a business entity if the
securities of such entity are listed for trading on a national securities
exchange or traded in the over-the-counter market and the Executive's holdings
therein represent less than five (5%) percent of the total number of shares or
principal amount of other securities of such entity outstanding.
6. Ownership of Inventions, Discoveries and Improve-
ments: Executive shall promptly disclose in writing to the Board of Directors
of the Company all inventions, discoveries, designs, developments, processes,
software programs, works of authorship, formulas, data, techniques and any
other improvements conceived, devised, created, or developed by Executive
(either alone or with others) while in the employ of the Company (collectively,
"Invention"), and Executive shall transfer and assign to the Company all right,
title and interest in and to such Invention, including any and all domestic and
foreign patent rights, domestic and foreign copyright rights therein, and any
renewal thereof. Such disclosure is to be made promptly after the conception
of each Invention, and each Invention is to become and remain the property of
the Company, whether or not patent or copyright applications are filed thereon
by the Company. On request of the Company, Executive shall execute from time
to time, during or after the termination of employment, such further
instruments including, without limitation, applications for patents and
copyrights and assignments thereof as may be deemed necessary or desirable by
the Company to effectuate the provisions of this paragraph 6.
7. Construction: If the provisions of paragraph 5
should be deemed unenforceable, invalid, or overbroad in whole or in part for
any reason, then any court of competent jurisdiction or any Arbitrator
appointed in accordance with paragraph 8 is hereby authorized, requested, and
instructed to reform such paragraph to provide for the maximum competitive
restraints upon Executive's activities (in time, product, geographic area, and
customer solicitation as may then be legal and valid).
8. Remedies, Damages:
(a) Executive agrees that violation of paragraphs
5 and 6 would cause irreparable injury to the Company for which the remedy at
law would be inadequate, and that the Company shall be entitled in any court of
law or equity or in any arbitration proceeding in accordance with this
paragraph 8, whichever forum is designated by the Company, to preliminary,
permanent or other injunctive relief against any breach of the provisions
contained in paragraphs 5 and 6, and such punitive and compensatory damages as
-6- <PAGE>
shall be awarded. Further, in the event of a violation of the provisions of
paragraph 5, the period of noncompetition referred to therein shall be
extended, but not decreased for a period of time equal to the period that the
violation occurred.
(b) Except as otherwise provided in paragraphs 7
and 8(a) relating to the reformation of the restrictive covenants and obtaining
equitable relief, any controversy or claim arising out of, or relating to this
Agreement, or the breach thereof, shall be settled by arbitration by one
arbitrator in New Jersey, in accordance with the rules of the American Arbi-
tration Association, and judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof.
9. Severability: If any of the provisions of this
Agreement are held to be invalid, illegal, or unenforceable, that determination
will not affect the enforceability of any other provisions of this Agreement,
and the remaining provisions of this Agreement will be valid and enforceable
according to their terms.
10. Amendment; Applicable Law; Binding Effect; Suc-
cessors and Assigns: This Agreement may be modified only in a writing signed
by both parties, is governed by and construed in accordance with the laws of
the State of New Jersey, without regard to the conflicts of law rules thereof,
and will be binding upon and inure to the benefit of Executive and Executive's
personal representatives and to the Company and the Company's successors and
assigns. This Agreement is in the nature of a personal services contract, is
not assignable by Executive and the duties imposed hereby are non-delegable.
11. Waiver: No waiver by either party hereto at any
time of any breach by the other party hereto of, or in compliance with any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, expressed or implied, with respect to the subject matter
hereof have been made by either party which are not set forth expressly in this
Agreement.
12. Counterparts: This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which together will constitute one and the same instrument.
13. Entire Agreement: This Agreement sets forth the
entire agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreements, promises, covenants,
arrangements, communication, representations or warranties, whether oral or
written, by any officer, employee or representative of any part hereto and any
-7- <PAGE>
prior agreement of the parties hereto in respect of the subject matter
contained herein is hereby terminated and cancelled.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
MICROFRAME, INC.
By: /s/ Lonnie L. Sciambi
LONNIE L. SCIAMBI, President
/s/ Mark A. Simmons
MARK A. SIMMONS
-8- <PAGE>
SCHEDULE A
1996 Fiscal Year
Performance Criteria Performance Goal Weight
-------------------- ---------------- ------
Revenue $11,000,000.00 40%
Operating Income $ 1,248,000.00 50%
Price of Common Stock $ 3.75 10%
Per Share -----
TOTAL 100%
<PAGE>
<PAGE>
EXHIBIT 10.28
</PAGE>
THIS LEASE, made as of the 20th day of July, 1995, by and between 46.25
ASSOCIATES, L.P., a Delaware limited partnership having an office and P.0.
Address at c/o National Realty & Development Corp., 3 Manhattanville Road,
Purchase, New York 10577 (hereinafter referred to as "Landlord") and
MICROFRAME, INC., a New Jersey corporation, having its principal office at 21
Meridian Road, Edison, New Jersey 08820 (hereinafter referred to as "Tenant").
W I T N E S S E T H:
WHEREAS, the Landlord has constructed a multi-use building (hereinafter
referred to as "Building") for the purposes of office use and processing
operations for distribution in conjunction with the business being conducted
in the office portions of the Building, commonly known as Building No. 300
located within the area designated as Lot No. 46.25 (hereinafter referred to
as "Lot No. 46.25") on the attached plot plan (hereinafter referred to as
"Plot Plan") which is annexed hereto as Exhibit "A" and made a part hereof;
and
WHEREAS, Landlord has constructed or may construct additional buildings
on Lot Nos. 46.24 and 46.25; and
WHEREAS, Tenant is desirous of leasing from Landlord and Landlord is
desirous of leasing to Tenant certain premises in the MIDDLESEX BUSINESS CENTER
(hereafter referred to as "Center") hereinafter described, upon and subject to
the provisions, agreements, covenants and conditions set forth herein;
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE 1. DEMISED PREMISES AND TERM
Section 1.01.(a) In consideration of the rents and additional rents
hereinafter reserved and all of the provisions, agreements, covenants and
conditions hereinafter contained, Landlord hereby leases and demises to Tenant,
and Tenant hereby hires, leases and takes from Landlord approximately 5,112
square feet of floor space ("Floor Space") in the Building and the loading dock
facilities appurtenant thereto ("Loading Dock"), more particularly indicated
and described by cross-hatching on the Plot Plan (the Floor Space and Loading
Dock being hereinafter collectively referred to as the "Demised Premises")
located on Lot No. 46.25 in the Center located in the BOROUGH of SOUTH
PLAINFIELD, COUNTY OF MIDDLESEX and STATE OF NEW JERSEY, together with all
improvements to be constructed thereon by the Landlord for the use of the
Tenant, and all easements, tenements and appurtenances thereto.
Section 1.01.(b) The parties acknowledge that the Landlord intends to
erect or has erected other buildings on Lot Nos. 46.24 and 46.25 (which may be
different in design and construction from the Building) which buildings may be
constructed at the sole option of Landlord. Landlord shall have sole control
and discretion in connection with the scope, design and aesthetics of any such
additional construction. Landlord shall perform any such additional
construction in a manner so as to minimize interference with Tenant's use of
the Demised Premises for the purposes set forth in Section 2.01 hereof,
provided that in no event shall Landlord be required to use overtime or premium
pay labor. If any such additional construction prevents Tenant from using the
Demised Premises for the purposes set forth in Section 2.01 hereof for three
(3) consecutive days, then all annual minimum rent and all additional rent
payable pursuant to Section 7.03, Article 12 and Article 14 shall abate from
1 <PAGE>
the day such additional construction prevented Tenant from using the Demised
Premises for the purposes set forth in Section 2.01 hereof to the day on which
such additional construction no longer prevents Tenant from using the Demised
Premises for the purposes set forth in Section 2.01 hereof.
Section 1.01.(c) The Demised Premises are demised and let subject to
(i) the existing state of the title thereof; (ii) any state of facts which an
accurate survey or physical inspection thereof might disclose; (iii) all
zoning regulations, restrictions, rules and ordinances now in effect or
hereafter adopted by any governmental authority having jurisdiction; and (iv)
any utility, sewer or drainage easements or agreements and the installations
made pursuant thereto now existing or hereafter granted or installed; all
without representation or warranty by Landlord, except as expressly set forth
herein. Landlord represents that to its knowledge, as of the date hereof, none
of the foregoing will prohibit the use of the Demised Premises for the purposes
set forth in Section 2.01 hereof.
Section 1.02. As long as Tenant occupies the Demised Premises, Tenant,
together with its employees, customers, invitees and business guests, shall
have the right to use, in common with Landlord, its successors, assigns,
tenants, subtenants, designees, concessionaires, licensees and any of their
customers, invitees, and business guests, all of the Common Areas (as such
term is defined in Section 12.01 hereof) at any time and from time to time
existing within Lot Nos. 46.24 and 46.25, except for areas reserved for the
exclusive use of other tenants, occupants, or designees and except for periods
of time during which the Common Areas are being repaired, altered or
reconstructed. Neither Landlord nor Tenant nor anyone holding under or through
either of them shall make any charge for the use of the Common Areas to the
other or to the customers, invitees or business guests of Landlord or Tenant or
of anyone else hereinbefore granted the right to use the Common Areas, except
as provided in Article 12 of this Lease.
Section 1.03. The term ("Term") of this Lease shall be FOUR (4) years
from and after the commencement date ("Commencement Date"), which date shall
be: (a) the date upon which the Demised Premises are first occupied by Tenant
and Tenant is actually conducting business in the Demised Premises, or (b)
thirty (30) days following the date upon which Landlord's Work (as hereinafter
defined) shall be duly certified by Landlord or Landlord's agent as being
substantially complete, except for those items, the completion of which will
not unreasonably or materially interfere with Tenant's use and occupancy of the
Demised Premises as provided herein, whichever date shall first occur, and
shall expire on the date which is the FOUR (4) year anniversary of the last
day of the calendar month in which said Commencement Date shall occur
("Expiration Date").
Section 1.04. The parties shall, within ten (10) days following request
of the other, execute a written document, in recordable form, expressing the
Commencement Date and Expiration Date of the Term hereof, as such have been
determined in accordance with the provisions of this Lease.
Section 1.05. The term "Lease Year" is defined to mean twelve (12)
consecutive calendar months; the first Lease Year to commence on the first day
of the immediately succeeding calendar month following the Commencement Date
and each succeeding Lease Year to commence on the anniversary date of the
commencement of the first Lease Year. The portion of the Term prior to the
first Lease Year shall be deemed a "Partial Lease Year" and any obligations of
Tenant for such Partial Lease Year shall be prorated on a per diem basis.
2 <PAGE>
ARTICLE 2. USE AND OPERATION
Section 2.01. Subject to the other provisions of this Lease, Tenant
shall occupy and use the Demised Premises solely for office purposes and
purposes incidential thereto and processing operations for products for
distribution in conjunction with the business being conducted in the office
portion of the Demised Premises, and for no other use. Tenant hereby covenants
and agrees that it, its successors and assigns, or anyone holding by, through
or under them, shall not use, nor permit the use of the Demised Premises for
any other use or purpose. Immediately following certification under Section
1.03 above, Tenant shall fixture, furnish and equip the Demised Premises for
Tenant's intended business purpose and upon the Commencement Date, Tenant shall
occupy and open for business in the Demised Premises.
ARTICLE 3. RENT
Section 3.01. The annual minimum rental during the Term shall be the
sum of FORTY THOUSAND EIGHT HUNDRED NINETY SIX and 00/100 ($40,896.00)
DOLLARS, which Tenant agrees to pay to Landlord in lawful money of the United
States in equal monthly installments of THREE THOUSAND FOUR HUNDRED EIGHT and
00/100 ($3,408.00) DOLLARS each, in advance, on the first day of each calendar
month during the Term hereof at the office of Landlord or such other place or
to such other person or party as Landlord may designate, without prior demand
therefor and without any setoff or deduction whatsoever, except as herein
provided. Annual minimum rent and additional rent shall be prorated for a
fraction of a month, if any, based on the number of days within such fractional
month.
Section 3.02. All taxes, charges, costs and expenses which Tenant
assumes or agrees to pay under any provision of this Lease, together with any
and all other sums which may become due, by reason of any default of Tenant or
failure on Tenant's part to comply with the provisions, covenants and
conditions of this Lease on Tenant's part to be performed, and each or any of
them, shall be collectible and recoverable as additional rent, and, in the
event of nonpayment thereof, Landlord shall have all the rights and remedies
herein provided as in the case of nonpayment of annual minimum rent.
ARTICLE 4. SUBORDINATION
Section 4.01. This Lease and all rights of Tenant hereunder are, and
shall be, subject and subordinate to any mortgages, deeds of trust (including
blanket mortgages or deeds of trust covering the Demised Premises and/or the
Center and/or other properties) or any other security interest which has been
or which hereinafter may affect the Demised Premises, and to any ground or
underlying leases of all or part of the Center, and to any renewals,
modifications, consolidations, replacements and extensions thereof (hereinafter
collectively referred to as "Landlord's Financing"). Upon request of Tenant,
Landlord shall request a non-disturbance agreement in favor of Tenant from any
of the foregoing parties; provided, Tenant understands that such granting of a
non-disturbance agreement is in the sole discretion of any of such parties and
Landlord shall not be deemed to be in default under this Lease in the event any
such party shall refuse to grant a non-disturbance agreement to Tenant. Tenant
acknowledges that the interest of Landlord under this Lease may be assigned by
Landlord as collateral security to any of the foregoing parties holding
interests to which this Lease is subject and subordinate. In the event of
foreclosure of any such interest, or termination of any such ground or
underlying lease, or in the event of an exercise of the power of sale under any
mortgage or other security interest made by Landlord covering the premises of
which the Demised Premises forms a part, Tenant shall recognize the rights of
3 <PAGE>
any such party under and pursuant to the provisions of such collateral
assignment and Tenant shall be deemed to have automatically attorned to and
acknowledged the purchaser or purchasers upon any foreclosure or sale and
recognized such purchaser or purchasers as the Landlord under this Lease.
Section 4.02. The provisions of Section 4.01 shall be self-operative,
but Tenant covenants and agrees that it shall, within fifteen (15) days
following request, at any time or times, execute, acknowledge and deliver to
Landlord any instruments in order to subordinate this Lease and Tenant's rights
hereunder, as aforesaid, said instruments to be in the form reasonably required
by any mortgagee, ground lessor or other secured party.
Section 4.03. There is no Section 4.03 to this Lease.
Section 4.04. Landlord and Tenant shall, at any time and from time to
time, upon not less than fifteen (15) days prior notice from the other party
hereto, execute, acknowledge and deliver to such other party a statement in
writing certifying that this Lease is unmodified and in full force and effect
(or, if there have been modifications, that the same is in full force and
effect, as modified, and stating the modifications) and the dates to which the
rent and other charges have been paid in advance, if any, and stating whether
or not Landlord is in default in the performance of any provision, covenant or
condition contained in this Lease, and if so, specifying each such default, and
containing any other statements or certifications reasonably required by a
mortgagee, and/or ground lessor and/or other secured party, it being intended
that any statement or certification delivered pursuant to this Section may be
relied upon by any party to whom it may be delivered by Landlord or Tenant, as
the case may be.
ARTICLE 5. AS IS
Section 5.01. Tenant has examined the Demised Premises and has made a
complete inspection of same and is familiar with the physical condition
thereof. Landlord has not made and does not make any representation as to the
physical condition or any other matter affecting or relating to the Demised
Premises, except as is in this Lease specifically set forth, and Tenant
specifically acknowledges that no such representation has been made. Tenant
further acknowledges that Landlord has afforded Tenant the opportunity for a
full and complete investigation, examination, and inspection of the Demised
Premises and Tenant agrees to accept the Demised Premises "as is".
Notwithstanding the foregoing, Landlord shall, at Landlord's cost and expense,
perform the work set forth on Exhibit B annexed hereto and made a part hereof
(such work is herein referred to as "Landlord's Work").
Section 5.02. Landlord or Landlord's contractor may give Tenant notice
that Landlord's Work is substantially complete and that it is practicable for
Tenant to enter the Demised Premises for the performance of work by Tenant
necessary to occupy the Demised Premises and open for business, and if such
notice shall be given, Tenant shall promptly thereafter commence all work that
is necessary to open the Demised Premises for business. Subject to the
foregoing provisions of this Section, Tenant shall have the right to install
its fixtures and equipment during the period in which Landlord is performing
Landlord's Work, provided Tenant does not interfere with the progress of
Landlord's Work, and all work is performed by local union labor, and, further,
provided, that insurance meeting the requirements of Section 7.02 is furnished,
or caused by Tenant to be furnished, to Landlord prior to any such entry. Such
entry into the Demised Premises by Tenant prior to the Commencement Date is and
shall be at the Tenant's sole cost and risk, except for the negligence or
willful misconduct of Landlord or its employees, agents or contractors, and the
provisions of Section 7.01 and Section 7.02 shall be applicable during any such
4 <PAGE>
period prior to the Commencement Date. All fixturing and/or other work to be
performed by or on behalf of Tenant (other than Landlord's Work hereunder)
shall be done in accordance with plans and specifications therefor submitted to
and approved by Landlord prior to the commencement of such fixturing and/or
other work, which approval shall not be unreasonably withheld or delayed, and
in accordance with and subject to the provisions of Article 19 hereof. No
changes (other than immaterial changes necessitated by field conditions) shall
be made in said plans and specifications nor shall there be any deviation in
the prosecution of the work in accordance with said plans and specifications
without Landlord's prior written approval, which approval shall not be
unreasonably withheld or delayed. Notwithstanding the prohibition against non-
union labor set forth above, Tenant may use or employ non-union labor to
perform the work to be performed by Tenant under this Lease; provided, however,
if Tenant's use of non-union labor causes or results in a labor dispute
delaying or interfering with the progress of any other construction within the
Center or with the operation of the Center, Tenant shall within twenty-four
(24) hours following notice from Landlord (which may be oral or written) cause
each conflicting labor to leave the Demised Premises, and thereafter Tenant
shall prosecute its work only with local union labor.
Section 5.03. If Tenant claims that some or all of Landlord's Work has
not been performed by Landlord upon delivery of notice of substantial
completion of Landlord's Work, as provided herein, Tenant shall, within fifteen
(15) days of said date (or fifteen (15) days following the date Tenant opens
for the transaction of business, whichever date is sooner), submit to Landlord
a written list of the work Tenant claims remains to be performed by Landlord,
and Landlord shall have thirty (30) days thereafter to complete such work. If
Landlord fails to complete such work within such thirty (30) day period, the
sole remedy of Tenant shall be to complete such work and Tenant shall have the
right to set off the cost thereof from the rent due Landlord in order to
reimburse Tenant for the cost and expense of completion of the work. Upon
written request of Landlord, Tenant will, within five (5) days following
request (but not sooner than the expiration of the applicable fifteen (15) day
period set forth in the first sentence of this Section), furnish to Landlord a
written statement that Tenant is in occupancy of the Demised Premises, that
Landlord's Work has been completed in accordance with Landlord's obligations or
in lieu thereof, a list of the work Tenant claims to be incomplete.
Section 5.04. Notwithstanding anything contained in this Lease to the
contrary, Landlord will guaranty completion of Landlord's Work to provide for
beneficial occupancy by the Tenant no later than August 15, 1995 provided that
the Tenant has approved final floor plans and has furnished to Landlord carpet
and paint selections and all other necessary information needed for Landlord to
apply for a building permit (which permit shall be applied for no later than
July 15, 1995).
If possession of the Demised Premises (with Landlord's Work substantially
completed) shall not be delivered to Tenant on or prior to such date, Tenant
shall have the right to cancel this Lease upon ten (10) days notice to
Landlord, unless possession of the Demised Premises (with Landlord's Work
substantially completed) shall be delivered to Tenant prior to the expiration
of such ten (10) day period. If Tenant shall not exercise such right of
cancellation and Landlord's Work shall not be substantially completed (or
deemed substantially completed) on or before August 15, 1995, then Tenant shall
receive a credit against the payment of two (2) days of annual minimum rent
accruing hereunder for each day following August 15, 1995 on which Landlord's
Work shall not be substantially complete (or deemed substantially complete).
Tenant's right to cancel this Lease and the credit against the payment of
annual minimum rent accruing under this Lease, each as provided in this
paragraph, shall be Tenant's sole remedies in the event Landlord's Work shall
not be substantially complete (or deemed substantially complete) or prior to
5 <PAGE>
the dates required in this Section 5.04.
If the substantial completion of Landlord's Work is delayed by reason of:
(i) any act or omission of Tenant or any of its employees, agents or
contractors; or (ii) any failure (not due to any act or omission of Landlord or
any of its employees, agents or contractors) to plan or execute Tenant's work
necessary for Tenant's occupancy of the Demised Premises with reasonable speed
and diligence, or (iii) any changes by Tenant in Landlord's Work or any changes
or substitutions requested by Tenant; or (iv) Tenant's failure to furnish plans
and specifications required to be furnished by Tenant, or subsequent changes
thereto; or (v) Tenant's request for materials, finishes or installations other
than Landlord's typical building standard; or (vi) the performance or
incompletion of work by a party employed or retained by Tenant; then Landlord's
Work shall be deemed substantially completed on the date when the same would
have been substantially completed but for such delay and, in addition, Tenant
shall pay to Landlord all reasonable costs and damages which Landlord may
sustain by reason of such delay.
Section 5.05. If there shall be a delay in the construction, repair or
restoration of the Demised Premises or Center or any portion thereof caused by
strikes, riots, acts of God, shortages of labor or materials, national
emergency, governmental restrictions, laws or regulations, the act or failure
to act of Tenant, including without limitation, delays in delivering
construction criteria and plan approval, or for any other cause or causes
beyond Landlord's control, at Landlord's option such delay shall not be a
violation of this Lease, and the time periods set forth in this Lease for any
such work shall, at Landlord's option, be extended for a period of time equal
to the period of delay.
Section 5.06. The Plot Plan shows the approximate location of
existing buildings, buildings under construction, proposed buildings and
certain areas reserved for related site improvements and future construction at
the option of Landlord. Landlord shall have the right to develop the Center in
the manner it sees fit and in the sole and absolute discretion of Landlord: to
construct or not construct any buildings other than the Building, to change the
nature or identity of the occupants of any such buildings, and to vary the
floor areas, stories and heights, sizes, shapes and design of any such
buildings and the divisions or portions thereof. Landlord shall exercise its
rights under this Section 5.06 in a manner so as to minimize interference with
Tenant's use of the Demised Premises for the purposes set forth in Section 2.01
hereof, provided that in no event shall Landlord be required to use overtime or
premium pay labor. If Landlord's exercise of its rights under this Section
5.06 prevents Tenant from using the Demised Premises for the purposes set forth
in Section 2.01 hereof or from having access to the Demised Premises, in either
case, for three (3) consecutive days, then all annual minimum rent and all
additional rent payable pursuant to Section 7.03, Article 12 and Article 14
shall abate from the day Landlord's exercise of such rights prevented Tenant
from using the Demised Premises for the purposes set forth in Section 2.01
hereof or having access to the Demised Premises, as the case may be, to the day
on which such exercise no longer prevents Tenant from using the Demised
Premises for the purposes set forth in Section 2.01 hereof or having access to
the Demised Premises, as the case may be.
ARTICLE 6. ALTERATIONS AND REPAIRS
Section 6.01. No structural (or electrical, plumbing or other building
system) alterations or additions shall at any time be made by or at the
instance of Tenant without Landlord's prior written consent, which consent
shall not be unreasonably withheld or delayed. Tenant may make any non-
structural non-electrical non-plumbing non-building system alteration upon
6 <PAGE>
prior notice thereof to Tenant accompanied by plans or drawings showing the
proposed work. All work, repairs, and/or alterations made by or at the
instance of Tenant shall be done in a good and workmanlike manner, with first
class new materials, in compliance with any applicable governmental rules and
regulations, and subject to Article 19 hereof, and the cost thereof shall be
paid by Tenant so that the Demised Premises shall at all times be free of
liens for labor or materials supplied or claimed to have been supplied to the
Demised Premises. Any alterations, installations, repairs, additions or
improvements (inclusive of paneling and other wall coverings), except Tenant's
trade fixtures, shall, at the option of Landlord, become the property of
Landlord and shall remain upon and be surrendered with the Demised Premises,
as part thereof, at the expiration or sooner termination of the term of this
Lease. If Tenant is in default hereunder or is dispossessed, or vacates the
premises, voluntarily or otherwise, and fails to remove any property, equipment
and fixtures within ten (10) days following notice by Landlord, then and in
that event, the said property, equipment and fixtures shall be deemed to be
abandoned and Landlord may remove and dispose of such property and charge the
cost and expense of removal and disposal to Tenant. Trade fixtures shall be
defined as fixtures and equipment used by Tenant in the operation of its
business, but not including any fixtures and equipment which are part of the
operation of the Demised Premises or the Building.
Section 6.02. Anything to the contrary contained herein
notwithstanding, it is expressly understood and agreed that Tenant may install,
connect and operate such machinery, fixtures and equipment as may be deemed
necessary or desirable by the Tenant for its business, subject to compliance
with applicable rules and regulations of governmental bodies and bureaus having
jurisdiction thereover. Subject to the terms and conditions of this Lease, the
machinery, fixtures and equipment belonging to Tenant shall, at all times, be
considered and intended to be personal property of Tenant, and not part of the
realty, and subject to removal by Tenant, provided, at the time of such
removal, that Tenant is not in default pursuant to any of the terms, covenants,
provisions or conditions of this Lease beyond any applicable notice and cure
periods. Tenant, at its own cost and expense, shall pay for any damage to the
Demised Premises or Building caused by the installation thereof or such
removal, and this obligation shall survive the expiration or sooner termination
of the term of this Lease.
Section 6.03. Landlord shall, following reasonable notice from Tenant,
promptly make all necessary repairs and replacements to (i) the exterior and
structural portions of the Demised Premises, including the foundations thereof,
and (ii) all utility and plumbing systems and other building wide systems
serving the Demised Premises to the extent such serve premises other than the
Demised Premises and are not maintained by any utility company or municipality,
provided, however, in no event shall Landlord be required to make any repairs
or replacements caused by any act, omission, or negligence of Tenant, any sub-
tenant, or concessionaire, or their respective employees, agents, invitees,
licensees or contractors. Tenant shall make all other repairs and replacements
to the Demised Premises. Tenant shall maintain throughout the term of this
Lease, including any extension term hereof, a protective service maintenance
contract with a contractor approved by Landlord, which approval shall not be
unreasonably withheld or delayed, providing for periodic maintenance of the
H.V.A.C. system serving the Demised Premises, including without limitation
periodic changing of any and all filters, changing of belts, lubricating of
equipment and maintenance of operating levels of freon in accordance with
manufacturers specifications. Said contract shall provide for maintenance
inspection and service not less than three (3) times per year. A copy of any
such maintenance contract shall be delivered to Landlord on a yearly basis.
Tenant shall keep all glass clean and in good condition, and Tenant shall
replace any glass which may be damaged or broken with glass of the same
quality. Tenant shall keep the sidewalk, if any, adjacent to the Demised
7 <PAGE>
Premises free and clear of trash, litter and rubbish.
Section 6.04. Nothing contained in this Lease shall authorize Tenant to
do any act which may create or be the foundation for any lien, mortgage or
other encumbrance upon the reversion or other estate of Landlord, or of any
interest of Landlord in the Demised Premises, or upon or in the Building or
Center of which the same form a part; it being agreed that should Tenant cause
any alterations, changes, additions, installations, improvements or repairs to
be made to the Demised Premises, or cause materials to be furnished or labor to
be performed therein or thereon, neither Landlord nor the Demised Premises
shall, under any circumstances, be liable for the payment of any expense
incurred or for the value of any work done or materials furnished to the
Demised Premises or any part thereof. All such alterations, changes, additions,
improvements, repairs, materials and labor shall be at Tenant's sole expense
and T enant shall be solely and wholly responsible to contractors,
subcontractors, laborers and materialmen furnishing labor and material to the
Demised Premises or any part thereof. If, because of any act or omission of
Tenant, any mechanic's or other lien or order for the payment of money shall be
filed against the Demised Premises or the Building or improvements thereon or
therein, or upon the Center, or against Landlord (whether or not such lien or
order is valid or enforceable as such), Tenant shall, at Tenant's own cost and
expense, within ten (10) days after notice of the filing thereof, cause the
same to be canceled and discharged of record, or furnish Landlord with a surety
bond issued by a surety company reasonably satisfactory to Landlord, protecting
Landlord from any loss because of nonpayment of such lien or claim, and Tenant
hereby indemnifies and saves harmless Landlord from and against any and all
costs, expenses, claims, losses or damages, including reasonable counsel fees,
resulting therefrom or by reason thereof.
Section 6.05. Except for the repair obligations of Landlord under
Section 6.03 above and the restoration obligations of Landlord under and as
set forth in Articles 8 and 10 hereof and except as otherwise specifically
provided in this Lease, the Tenant shall take good care of the Demised Premises
and, at its cost and expense, keep and maintain in good repair the interior of
the Demised Premises, including, but not limited to the air conditioning and
heating plant, the plumbing pipes and fixtures belonging thereto; and shall
repair or replace all mechanical and working parts used in connection with the
air conditioning, electrical, heating and plumbing plants, fixtures and
systems; and shall keep the water and sewer pipes and connections free from
other obstructions; and shall generally maintain and repair the interior of
the Demised Premises and shall, at the end or the expiration of the Term (or
Extension Term, whichever is applicable), deliver up the Demised Premises in
good order and condition, damages by the elements, ordinary wear and tear
excepted. Tenant covenants and agrees that it shall not cause or permit any
waste (other than reasonable wear and tear), damage or disfigurement to the
Demised Premises, or any overloading of the floors of the Building.
Section 6.06. At no time prior to or during the lease term shall
Tenant cause any penetrations through the roof of the Demised Premises. Any
proposed penetrations through the roof shall be made by Landlord's roofer or by
a roofer qualified to Landlord.
ARTICLE 7. INDEMNITY AND INSURANCE
Section 7.01. Tenant hereby indemnifies and saves harmless Landlord
from and against any claims and all loss, cost, liability, damage and/or
expense, including, but not limited to reasonable counsel fees, penalties and
fines, incurred in connection with or arising from (i) any default by Tenant in
the observance or performance of any of the provisions, covenants or conditions
of this Lease on Tenant's part to be observed or performed, (ii) the use or
8 <PAGE>
occupancy or manner of use or occupancy of the Demised Premises by Tenant or
any person claiming through or under Tenant, or (iii) any acts, omissions, or
negligence of Tenant or any such person, or any contractor, agent, servant,
employee, visitor or licensee of Tenant, or any such person, in or about the
Demised Premises. If any action or proceeding shall be brought against
Landlord based upon any such claim, Tenant, upon notice from Landlord, shall
cause such action or proceeding to be defended, at Tenant's expense, by counsel
acting for Tenant's insurance carriers in connection with such defense or by
other counsel reasonably satisfactory to Landlord. The express indemnification
obligation of Tenant pursuant to this Section 7.01 shall not apply to damage or
injury which occurs as a result of a structural fault in the Demised Premises,
or the failure of Landlord to perform its obligations with respect to the
Common Areas, provided same are not the result of any act, omission or
negligence or Tenant, or any contractor, agent, servant, employee, visitor or
licensee of Tenant, provided, however, nothing contained in this sentence shall
be deemed to relieve Tenant from its obligations under this Lease or for any
joint responsibility or joint contribution obligations permitted at law or in
equity.
Section 7.02. Tenant shall, during the Term (including any extension
term) and during any period prior to the commencement of the Term during which
Tenant or anyone acting by or on behalf of Tenant enters the Demised Premises,
at Tenant's own cost and expense, maintain and provide, or cause to be
maintained and provided: (a) comprehensive general liability insurance for the
benefit and protection of Landlord and Tenant (said policy to name Landlord,
ground lessor, if any, and any other parties designated by Landlord, as
additional insureds) in an amount not less than $1,000,000 for injuries or
death to any one person, and not less than $2,000,000 for injuries or death to
more than one person in any one accident or occurrence and for damage to
property in an amount not less than $500,000 arising out of any one accident or
occurrence; (b) worker's compensation insurance covering all persons employed
in connection with Tenant's use and occupancy of the Demised Premises or any
construction or alteration work therein; (c) insurance against loss or damage
to Tenant's contents, including without limitation, trade fixtures and
equipment, by fire, lightning, and other risks from time to time included under
standard "extended coverage" policies, and vandalism and malicious mischief, in
amounts sufficient to prevent Landlord and Tenant from becoming co-insurers of
any loss under such policy, but in any event, not less than 100 percent of the
full insurable value of such property; (d) boiler and pressure vessel insurance
on all of Tenant's equipment, parts thereof and appurtenances attached or
connected to the Demised Premises which by reason of their use or existence are
capable of bursting, erupting, collapsing or exploding, in the minimum amount
of Five Hundred Thousand ($500,000.00) Dollars for damage to property resulting
from such perils; and (e) insurance covering such other risks as may be
requested by Landlord occasioned by or attributable to the use or occupancy or
manner of use or occupancy of the Demised Premises by Tenant, provided, any
insurance required of Tenant pursuant to this clause (e) is also then being
required by other landlords of space in the state of New Jersey similar to the
Demised Premises (in terms of size and use). Said policies shall be issued by
companies having a Best's Insurance Guide rating of "A" or better (and if such
ratings shall no longer be available, then by companies reasonably
satisfactory to Landlord), licensed to do business in the state in which the
Demised Premises is located. Said policies or certificates thereof shall be
delivered to Landlord at the commencement of the Term (or prior thereto in the
event of earlier entry by Tenant upon the Demised Premises), together with
proof of payment of premium therefor, and renewal policies or certificates
therefor shall be delivered to Landlord not less than ten (10) days prior to
the expiration dates thereof. Said policies and/or certificates shall contain
an undertaking by the insurer to give Landlord not less than ten (10) days
written notice of any cancellation or change in scope or amount of coverage of
said policies.
9 <PAGE>
Section 7.03. (a) Landlord shall, during the Term, maintain and provide
general hazard insurance against loss or damage to the Building by fire,
lightning, including "builder's risk endorsements" during the course of
construction, other risks from time to time included under standard "Extended
Coverage" policies, vandalism and malicious mischief, in amounts not less than
100 percent of the full replacement value of the Building and any other
Building or portion thereof covered by such insurance and rent loss insurance
covering all minimum and additional rental payable hereunder. Tenant shall pay
its proportionate share of the cost of maintaining and providing such
insurance, based upon the method of calculation set forth in Article 31 hereof.
Section 7.03. (b) Such payment shall be made to Landlord in monthly
installments on or before the first day of each calendar month, in advance, in
an amount reasonably estimated by Landlord. Periodically, Landlord shall
furnish Tenant with a written statement of the actual amount of Tenant's
proportionate share of said insurance costs. If the total amount paid by
Tenant under this section for any period during the Lease Term shall be less
than the actual amount due from Tenant for such period, as shown on such
statement, Tenant shall pay to Landlord the difference between the amount paid
by Tenant and the actual amount due, such deficiency to be paid within thirty
(30) days after demand therefor by Landlord; and if the total amount paid by
Tenant hereunder for any such period shall exceed the actual amount due from
Tenant for such period, the excess shall promptly be applied by Landlord to the
next accruing monthly installments thereof or, at Landlord's option, to any
other charges payable by Tenant. For the calendar years in which this Lease
commences and terminates, the provisions of this section shall apply and
Tenant's liability for its proportionate share thereof for such years shall be
subject to a pro rata adjustment based on the number of days of said calendar
years during the Lease Term. Prior to or at the commencement of the Lease Term
and from time to time thereafter throughout the Lease Term, Landlord will
notify Tenant in writing of Landlord's estimate of Tenant's monthly
installments due hereunder. Tenant's obligations under this section shall
survive the expiration of the Lease Term. Landlord shall provide Tenant copies
of the bills evidencing the insurance costs paid by Tenant pursuant to this
Section 7.03 upon Tenant's request therefor.
ARTICLE 8. FIRE DAMAGE
Section 8.01. If the Demised Premises shall be partially damaged by
fire or other insured casualty, the damages shall be repaired by and at the
expense of Landlord and the annual minimum rental and additional rent due
under Section 7.03, Article 12 and Article 14 of this Lease until such repairs
shall be made shall abate equitably according to the part of the Demised
Premises which is unusable by Tenant or, if by reason thereof, the Demised
Premises are rendered untenantable, said rental and additional rent due under
Section 7.03, Article 12 and Article 14 of this Lease shall totally abate until
such repairs shall be made. Notwithstanding the foregoing, if the Demised
Premises or the Building shall be damaged to such extent that Landlord shall
decide to demolish same, or not to rebuild same, then, and in such event,
Landlord may terminate this Lease upon notice to Tenant given within ninety
(90) days following such event, and upon the date specified in such notice,
which date shall not be less than thirty (30) days nor more than sixty (60)
days following the giving of said notice, this Lease shall terminate and Tenant
shall vacate and surrender the Demised Premises to Landlord. Any annual
minimum rental prepaid by Tenant beyond said date (after accounting for any
abatement of rent to which Tenant is entitled pursuant to this Section 8.01)
shall be promptly refunded to Tenant. Notwithstanding any of the foregoing
provisions of this Article, if Landlord or the holder of any superior mortgage
shall be unable to collect all of the insurance proceeds (including rent
insurance proceeds) applicable to damage or destruction of the Demised Premises
10 <PAGE>
or the Building by fire or other cause, by reason of some action or inaction on
the part of the Tenant or any of its employees, agents or contractors, then,
without prejudice to any other remedies which may be available against Tenant,
the abatement of Tenant's rents provided for in this Article shall not be
effective to the extent of the uncollected insurance proceeds.
Section 8.02. If this Lease shall not be terminated as provided above
in this Article, Landlord shall, at its expense, proceed with the restoration
of the Demised Premises, provided, Landlord's obligations hereunder shall not
exceed the scope of the initial building standard construction of the Demised
Premises and further provided, that Landlord's restoration obligations shall
be subject to building and zoning laws then in effect. In the event Landlord
shall not substantially complete the restoration of the Demised Premises within
nine (9) months following the date of destruction, Tenant shall have the right
to terminate this Lease by notice received by Landlord prior to the date upon
which Landlord shall substantially complete the restoration of the Demised
Premises. No penalty shall accrue for reasonable delay which may arise by
reason of adjustment of insurance on the part of Landlord. If Landlord shall
so restore the Demised Premises, Tenant shall repair, restore and redecorate
the Demised Premises and reoccupy and reopen the Demised Premises, within
forty-five (45) days following notice of restoration, in a manner and to
substantially the condition existing prior to the event of damage, except to
the extent that Landlord is obligated above, and Tenant shall hold in trust
the proceeds of all insurance carried by Tenant on its property for the
purpose of such repair and restoration.
Section 8.03. Nothing hereinabove contained with respect to the
Tenant's right to abate the rent under proper conditions shall be construed to
limit or effect the Landlord's right to payment under the rental loss coverage
to be provided pursuant to Section 7.03 hereof.
ARTICLE 9. WAIVER OF SUBROGATION
Section 9.01. Landlord, its officers, agents, employees, subsidiaries
and affiliated entities and corporations shall not be liable for any damage to
or destruction of any of Tenant's goods, merchandise, fixtures, furniture or
property of whatsoever nature, caused by fire or any other cause whatsoever,
except the negligence of any such parties, and Tenant hereby releases and
waives any right of recovery against Landlord, its officers, agents, employees,
subsidiaries and affiliated entities and corporations for any such loss. Tenant
shall procure a waiver of subrogation on the part of the insurer against such
parties by an endorsement to all insurance policies whereby the insurer
recognizes the provisions of this Section 9.01; provided that if such waiver of
subrogation requires the payment of additional premiums, such waiver does not
have to be procured unless the party requiring the waiver is willing to pay for
such additional premiums.
Section 9.02. Tenant, its officers, agents, employees, subsidiaries and
affiliated entities and corporations shall not be liable for any damage to or
destruction of any of Landlord's goods, merchandise, fixtures, furniture or
property of whatsoever nature, caused by fire or any other cause whatsoever,
except the negligence of any such parties, and Landlord hereby releases and
waives any right of recovery against Tenant, its officers, agents, employees,
subsidiaries and affiliated entities and corporations for any such loss.
Landlord shall procure a waiver of subrogation on the part of the insurer
against such parties by an endorsement to all insurance policies whereby the
insurer recognizes the provisions of this Section 9.02; provided that if such
waiver of subrogation requires the payment of additional premiums, such waiver
does not have to be procured unless the party requiring the waiver is willing
to pay for such additional premiums.
11 <PAGE>
ARTICLE 10. CONDEMNATION
Section 10.01. If the whole of the Demised Premises shall be taken by
any governmental authority under the power of condemnation, eminent domain, or
expropriation, or in the event of a conveyance in lieu thereof, the Term of
this Lease shall cease as of the day possession shall be taken by such
governmental authority. If more than 25 percent of the Demised Premises shall
be so taken or conveyed, either Landlord or Tenant shall have the right to
terminate this Lease upon notice to the other party, effective as of the day
possession shall be taken by such governmental authority. If this Lease is so
terminated, annual minimum rental shall be prorated as of the date that
possession must be surrendered to the condemning authority.
Section 10.02. If this Lease continues after a partial taking, the
annual minimum rental shall abate equitably as to the part of the Demised
Premises which is taken. If this Lease continues after any such taking or
conveyance, Landlord shall make all necessary repairs and restorations so as to
restore the remainder of the Demised Premises to a complete architectural unit.
Landlord's reconstruction obligations shall not exceed the amount of the award
or compensation for the taking, shall not exceed the scope of the initial
building standard construction of the Demised Premises, and shall be subject to
building and zoning laws then in effect.
Section 10.03. If so much of the Center, Common Areas or Building shall
be so taken or conveyed so that in the reasonable exercise of Landlord's
judgment, the continued operation of the Building for use by its tenants is
unfeasible, then, in such event, and provided that all other leases for space
in the Building are terminated to the extent Landlord may terminate the same
pursuant to the terms of such other leases, Landlord may, by notice to Tenant,
delivered not later than thirty (30) days following the date that possession of
the premises taken or conveyed is delivered to the governmental authority,
terminate this Lease, and rent shall be pro rated as of the date that
possession must be surrendered to the condemning authority.
Section 10.04. Tenant and not Landlord shall be entitled to any portion
of the award made to Tenant for the value of Tenant's removable trade fixtures
and equipment other than equipment necessary for the operation of the Building.
All compensation awarded for the taking of the Building, the fee and the
leasehold shall belong to and be the property of Landlord, and Tenant shall not
be entitled to and hereby waives any damages for the unexpired portion of the
Term of this Lease, or injury to its leasehold interest.
ARTICLE 11. ASSIGNMENT AND SUBLETTING
Section 11.01. Tenant, for itself, its heirs, distributees, executors,
administrators, legal representatives, successors and assigns, as the case may
be, expressly covenants that it shall not assign, mortgage or encumber this
agreement, nor sublet or underlet nor suffer or permit the Demised Premises or
any part thereof to be used by others without the prior written consent of
Landlord in each instance. If, with consent of Landlord, this Lease may be
assigned, or the Demised Premises or any part thereof be underlet or occupied
by anybody other than Tenant, Landlord may collect rent from the assignee,
undertenant or occupant and apply the amount collected to the rent herein
reserved, but no such assignment, underletting, occupancy or collecting shall
be deemed to relieve Tenant or any guarantor of this Lease or guarantor of the
obligations of Tenant hereunder of any of its or their obligations hereunder
nor be deemed a waiver of this covenant, or the acceptance of the assignee,
undertenant or occupant as tenant, or a release of Tenant or any guarantor of
this Lease or any guarantor of the obligations of Tenant hereunder from its or
12 <PAGE>
their obligations under the covenants, provisions and conditions hereof; it
being understood and agreed that Tenant and any guarantor of this Lease or any
guarantor of the obligations of Tenant hereunder shall remain obligated as
primary obligors under this Lease. The consent by Landlord to an assignment or
underletting shall not in any wise be construed to relieve Tenant or any other
Tenant, assignee, undertenant, or occupant of the Demised Premises from
obtaining the express consent in writing of Landlord to any further assignment
or underletting, and no such assignment or subletting shall be made to anyone
who shall occupy the Demised Premises for any use other than as permitted by
Section 2.01 or which would in any way violate the applicable ordinances, rules
and regulations of applicable governmental boards or bureaus having or
claiming jurisdiction thereof, or of the carrier of the fire insurance to be
provided under this Lease. Notwithstanding anything to the contrary in this
Lease, Landlord's consent shall not be required for any of the following
permitted transfers (each a "Permitted Transfer"): (a) the assignment of this
Lease or the subletting of the Demised Premises to any parent corporation
wholly-owning Tenant or any wholly-owned subsidiary of Tenant or Tenant's
parent corporation; (b) the assignment of this Lease or the subletting of the
Demised Premises to (i) any entity fifty (50%) percent or more of which is
owned by Tenant, (ii) any entity which owns fifty (50%) percent or more of
Tenant, or (iii) any entity fifty (50%) percent or more of which is under
common ownership with Tenant; (c) the assignment of this Lease to a corporation
or other entity acquiring all or substantially all of the Tenant's assets; or
(d) the transfer of this Lease to any successor of Tenant by consolidation,
merger or other corporate action.
Section 11.02. Supplementing the provisions of Section 11.01 of this
Lease, provided Tenant is not in default under any of the terms, covenants,
conditions and provisions of this Lease, Landlord shall not unreasonably
withhold or delay its consent to any proposed assignment of this Lease or
subletting of the entire Demised Premises. Any assignment or transfer of this
Lease and any subletting of all or a portion of the Demised Premises shall (i)
except as to a Permitted Transfer, be subject to Landlord's prior written
consent and (ii) be made only if, and shall not be effective until, the
assignee or subtenant shall execute, acknowledge and deliver to Landlord a
recordable agreement, in form and substance reasonably satisfactory to Landlord
and counsel for Landlord, whereby the assignee or subtenant shall assume for
the benefit of Landlord the obligations and performance of this Lease and agree
to be personally bound by and upon all of the covenants, agreements, terms,
provisions and conditions hereof on the part of Tenant to be performed or
observed, and whereby Tenant (and any guarantor of this Lease or of the
Tenant's obligations hereunder) covenants and agrees to remain liable as a
primary obligor for the due performance of all of the covenants, agreements,
terms, provisions and conditions of this Lease on the part of Tenant to be
performed or observed. In the event of any assignment of this Lease or any
subletting of all or any portion of the Demised Premises, the obligations of
Tenant and any guarantor of this Lease or any guarantor of the obligations of
Tenant under this Lease as a primary obligor shall be unaffected and shall
remain in full force and effect.
Section 11.03. Notwithstanding anything heretofore contained, in the
event that Tenant desires to assign this Lease or sublet all or a portion of
the Demised Premises, Tenant shall first notify Landlord in writing of its
intention, and such notice shall state the name of the proposed assignee or
subtenant, together with its full address and a description of its proposed use
(but nothing contained herein shall permit, nor obligate Landlord to permit, a
use other than the use permitted by Section 2.01 of this Lease, it being
understood that any change in use shall be subject to Landlord's consent, which
Tenant agrees may, notwithstanding anything contained herein to the contrary,
be unreasonably withheld). Tenant shall include therewith such financial
information as may be available concerning the proposed assignee or subtenant,
13 <PAGE>
including without limitation current updated financial statements (which
financial information Tenant, and/or the proposed assignee or subtenant shall
supplement on demand if reasonably required by Landlord). In addition, Tenant
shall simultaneously tender a duplicate original of the instrument of
assignment or sublease reasonably satisfactory to counsel for Landlord.
Section 11.04. Except in the case of a Permitted Transfer, Tenant
hereby covenants and agrees to tender to Landlord upon receipt fifty (50%)
percent of any annual minimum rent or additional rent or lump sum or
installment payment or sum which Tenant shall receive from or on behalf of any
assignee(s) or subtenant(s) or any occupant by, through or under Tenant, which
is in excess of the annual minimum rent or additional rent payable by Tenant in
accordance with the provisions of this Lease (or in the event of a subletting
of less than the whole of the Demised Premises, the annual minimum rent or
additional rent allocable to that portion of the Demised Premises affected by
such sublease). At the time of submission of the proposed assignment or
sublease to Landlord, Tenant shall certify to Landlord in writing whether or
not the assignee or subtenant has agreed to pay any such monies to Tenant or
any designee of Tenant other than as specified and set forth in such
instruments, and if so Tenant shall certify the amounts and time of payment
thereof in reasonable detail.
ARTICLE 12. COMMON AREA MAINTENANCE
Section 12.01. As used in this lease, the term "Common Area Operating
Costs" shall include the total cost and expense incurred by Landlord in
operating, lighting, striping, maintaining, cleaning, landscaping, repairing
(including replacement and resurfacing) managing, signing, equipping and
insuring the Common Areas within Lot Nos. 46.24 and 46.25 plus ten (10%)
percent of the foregoing costs to cover Landlord's administrative and overhead
costs. Such costs and expenses shall include, without limitation: cleaning;
fire and police protection and general security (Landlord not incurring or
assuming any obligation to provide such protection or security or any liability
for the failure of the same); repairing and replacing paving; keeping the
Common Areas supervised, drained, reasonably free of snow, ice, rubbish and
other obstructions, and in a neat, clean, orderly and sanitary condition; the
charges for rubbish containers and removal (except that at Landlord's option,
Tenant shall be directly responsible for contracting for and for providing
(subject to Landlord's approval of the provisions and conditions of the
agreement therefor, such approval not to be unreasonably withheld or delayed)
rubbish containers and removal); the maintenance of any and all fire protection
systems servicing Lot Nos. 46.24 and 46.25; the cost of public liability
insurance; keeping the Common Areas suitably lighted; maintaining signs (other
than Tenant's signs), markers, painted lines delineating parking spaces, and
o t her means and methods of pedestrian and vehicular traffic control;
constructing, maintaining and repairing of onsite and offsite traffic
controls; maintaining adequate roadways, entrances and exits; maintaining any
plantings and landscaped areas; Lot Nos. 46.24 and 46.25 management fees
incurred by Landlord, including management fees payable to parties or entities
owned or controlled by Landlord or any of them; maintenance and repair of all
utilities, utility conduits and storm drainage systems situated within or
servicing Lot Nos. 46.24 and 46.25; fees for required licenses and permits; and
depreciation of machinery and equipment used in the operation and maintenance
of the Common Areas (to the extent the cost thereof is amortized with respect
to the year in question) and personal property taxes and other charges incurred
in connection with such equipment. Notwithstanding anything to the contrary
contained in this Lease, Common Area Operating Costs shall expressly exclude:
(a) the cost of any repairs made by Landlord because of the occurrence of any
casualty for which Landlord is actually reimbursed by insurance or otherwise
compensated, including direct reimbursement by any tenant or occupant of the
14 <PAGE>
Center; (b) costs associated with any expansion of the buildings or other
permanent improvements comprising the Center provided the same are deemed to be
capital costs by generally accepted accounting principles; (c) the cost of
providing or performing renovations, improvements, maintenance or repairs to or
within any premises leased to any other tenant or occupant of the Center
(excluding any pipes, conduits, etc., located in any such premises which serve
premises in addition to such premises); (d) leasing commissions,
advertising expenses, architectural and engineering fees and other costs
incurred in connection with the leasing premises within the Center including
costs incurred in relocating or moving tenants; (e) legal fees and costs
incurred in enforcing leases of other tenants in the Center; (f) costs, fines
or penalties incurred due to willful violations by Landlord (and not caused or
otherwise reimbursable by Tenant) of any governmental rules or authority; (g)
principal and interest payable with respect to any financing for the Center
other than financing in connection with the purchase of equipment used in the
operations, repair and maintenance of the Common Areas;
(h) costs and fines assessed against Landlord for its violation of any leases
with other tenants in the Center; (i) rental attributed to any ground or
underlying lease of the Center; and (j) costs incurred for the removal or
remediation of hazardous materials and the costs incurred for compliance with
all applicable laws relating to hazardous materials. The term "Common Areas"
shall be defined as all paved areas, driveways, truckways, walkways, and
landscaped and planted areas within Lot Nos. 46.24 and 46.25. Landlord shall
maintain, light, clean and repair (including snow removal) the Common Areas so
that such Common Areas may be used for their intended purposes, and in order
to enable Landlord to perform its obligations as aforesaid, Landlord may incur
such Common Area Operating Costs as Landlord, in its sole discretion, may
determine. Landlord shall not include in one item of Common Area Operating
Costs costs included as another item of Common Area Operating Costs.
Section 12.02. During the initial term of this Lease and during any
extension term hereof, Tenant shall pay Landlord Tenant's proportionate share
of Common Area Operating Costs incurred or expended by Landlord as aforesaid.
Such payment shall be made to Landlord in monthly installments on or before
the first day of each calendar month, in advance, in an amount estimated by
Landlord. Following the expiration of each calendar year during the Lease
Term hereof, Landlord shall furnish Tenant with a written statement of the
actual amount of Tenant's proportionate share of the Common Area Operating
Costs for such year. If the total amount paid by Tenant under this section
for any calendar year during the Lease term shall be less than the actual
amount due from Tenant for such year, as shown on such statement, Tenant shall
pay to Landlord the difference between the amount paid by Tenant and the
actual amount due, such deficiency to be paid within thirty (30) days after
demand therefor by Landlord; and if the total amount paid by Tenant hereunder
for any such calendar year shall exceed such actual amount due from Tenant for
such calendar year, such excess shall promptly be applied by Landlord to the
next accruing monthly installments of Tenant's proportionate share of Common
Area Operating Costs or, at Landlord's option, to any other charges payable by
Tenant. For the calendar years in which this Lease commences and terminates,
the provisions of this section shall apply, and Tenant's liability for its
proportionate share of any Common Area Operating Costs for such years shall be
subject to a pro rata adjustment based on the number of days of said calendar
years during the Lease term. Prior to or at the commencement of the Lease
term and from time to time thereafter throughout the Lease term, Landlord will
notify Tenant in writing of Landlord's reasonable estimate of Tenant's monthly
installments due hereunder. Tenant's obligations under this section shall
survive the expiration of the Lease term. Tenant's proportionate share of
Common Area Operating Costs shall be a fraction, having as its numerator, the
number of square feet of floor area within the Demised Premises and as its
denominator, the total number of square feet of floor area of all buildings
within Lot Nos. 46.24 and 46.25 or, at Landlord's option, provided there shall
15 <PAGE>
be a reasonable basis therefor, the portion thereof affected by such cost,
including the Demised Premises. Notwithstanding the foregoing provisions of
this Article, in the event the obligations of Tenant under this Article 12 are
specifically identifiable separate charges relating to Tenant and/or the
Demised Premises, then, and in such event, the obligations of Tenant under this
Article 12 may, at Landlord's option, be measured and payable in accordance
with such separate and specifically identifiable charge and not by the
provisions of the preceding sentence.
Tenant shall have the right, upon ten (10) days advance, written
notice by Tenant to Landlord, during regular business hours at Landlord's
office to audit, inspect and copy the books and records of Landlord for the
calendar year in which such audit, inspection or copying is made and/or the
calendar year immediately prior thereto with respect to any costs or item which
is passed through to Tenant as Common Area Operating Costs. Tenant shall keep
any information discovered in the course of any such audit, inspection and
copying confidential except as may be necessary in order for Tenant to enforce
its rights under this Lease or as may be required by law.
Section 12.03. Tenant, its concessionaires, officers, employees, and
agents may use the Common Areas, subject to such reasonable, non-discriminatory
rules and regulations as Landlord may from time to time impose, including the
designation of specific areas in which vehicles owned or operated by Tenant,
its concessionaires, officers, employees and agents must be parked. Tenant
shall abide by such rules and regulations and cause its concessionaires,
officers, employees, agents, customers and invitees to conform thereto.
Landlord may, at any time, close temporarily any Common Areas to make repairs
or changes therein or to effect construction repairs or changes within Lot Nos.
46.24 and 46.25, and Landlord may do such other acts in and to the Common Areas
as in its reasonable judgment may be desirable to improve the convenience
thereof. Landlord shall perform such other acts in a manner so as to minimize
interference with Tenant's use of the Demised Premises for the purposes set
forth in Section 2.01 hereof, provided that in no event shall Landlord be
required to use overtime or premium pay labor. If any such other acts are
performed in a manner which prevents Tenant from using the Demised Premises for
the purposes set forth in Section 2.01 hereof or from having access to the
Demised Premises, in either case, for three (3) consecutive days, then all
annual minimum rent and all additional rent payable pursuant to Section 7.03,
Article 12 and Article 14 shall abate from the day such other acts prevented
Tenant from using the Demised Premises for the purposes set forth in Section
2.01 hereof or having access to the Demised Premises, as the case may be, to
the day on which such other acts no longer prevent Tenant from using the
Demised Premises for the purposes set forth in Section 2.01 hereof or having
access to the Demised Premises, as the case may be.
Section 12.04. Notwithstanding anything to the contrary herein
contained, Landlord hereby reserves the right (and Tenant hereby consents
thereto) to construct or permit the construction, use and maintenance within
the Common Areas of Lot Nos. 46.24 and 46.25 including without limitation, the
parking areas, of various commercial type buildings, structures, and
appurtenances, and equipment incidental thereto. Landlord shall exercise its
rights under this Section 12.04 in a manner so as to minimize interference with
Tenant's use of the Demised Premises for the purposes set forth in Section 2.01
hereof, provided that in no event shall Landlord be required to use overtime or
premium pay labor. If Landlord's exercise of its rights under this Section
12.04 prevents Tenant from using the Demised Premises for the purposes set
forth in Section 2.01 hereof or from having access to the Demised Premises, in
either case, for three (3) consecutive days, then all annual minimum rent and
all additional rent payable pursuant to Section 7.03, Article 12 and Article 14
shall abate from the day Landlord's exercise of such rights prevented Tenant
from using the Demised Premises for the purposes set forth in Section 2.01
16 <PAGE>
hereof or having access to the Demised Premises, as the case may be, to the day
on which such exercise no longer prevents Tenant from using the Demised
Premises for the purposes set forth in Section 2.01 hereof or having access to
the Demised Premises, as the case may be.
ARTICLE 13. UTILITIES
Section 13.01. Tenant shall pay, as and when they shall be due and
payable, all water charges, taxes, water rates and/or meter charges, sprinkler
charges (standby or otherwise), sewer taxes, sewer charges, sewer fees, and
sewer rental taxes and charges for utilities, including, without limitation,
the charges for gas, electricity, and other utilities furnished to Tenant and
consumed in the Demised Premises. Tenant shall heat the Demised Premises
whenever the weather shall require. If Landlord, or any property of Landlord,
shall be held responsible for any expense covered by this Article, Tenant shall
pay Landlord the amount thereof within thirty (30) days following written
request. Landlord shall not be responsible to Tenant for any failure or
interruption of any such services, irrespective of the cause thereof.
ARTICLE 14. TAXES
Section 14.01. (a) Subject to the reimbursement obligations of Tenant
hereinafter set forth, Landlord shall pay during the Term of this Lease, all
real estate taxes assessed or imposed upon or respecting the land and
improvements within and upon Lot No. 46.25. The term "real estate taxes" for
purposes of this Lease shall exclude income, franchise, estate or inheritance
taxes levied against Landlord or taxes based upon rental receipts, but shall
include any taxes levied in lieu of or as a substitute for real estate taxes.
Tenant shall pay to Landlord, as additional rent, at the time and in the manner
set forth in Section 14.01 (b), Tenant's proportionate share of such taxes,
which proportionate share shall be based upon the method of calculation set
forth in Article 31 hereof. Notwithstanding the foregoing, if the improvements
within the Demised Premises and/or the balance of the improvements or any part
thereof upon Lot No. 46.25 shall receive a separate assessment based upon the
certification of the Tax Assessor, then the taxes payable by Tenant for such
improvements may, at Landlord's option, be based thereon.
Section 14.01. (b) All amounts payable by Tenant pursuant to this
Article shall be paid to Landlord in monthly installments on or before the
first day of each calendar month, in advance, in an amount reasonably estimated
by Landlord; provided, that in the event Landlord is required under any
mortgage encumbering Lot No. 46.25 to escrow real estate taxes, Landlord may,
but shall not be obligated to, use the amount required to be so escrowed as a
basis for its estimate of the monthly installments due from Tenant hereunder.
As soon as shall be reasonably practicable following the expiration of each
calendar year during the Lease Term, Landlord shall furnish Tenant with a
written statement of the actual amount of Tenant's share of the taxes for such
year. If the total amount paid by Tenant under this section for any calendar
year during the Lease Term shall be less than the actual amount due from Tenant
for such year, as shown on such statement, Tenant shall pay to Landlord the
difference between the amount paid by Tenant and the actual amount due, such
deficiency to be paid within thirty (30) days after demand therefor by
Landlord; and if the total amount paid by Tenant hereunder for any such
calendar year shall exceed such actual amount due from Tenant for such calendar
year, such excess shall be applied by Landlord to the next accruing monthly
installments of taxes due from Tenant or, at Landlord's option, to any other
charges payable by Tenant. For the calendar years in which this Lease commences
and terminates the provisions of this Section shall apply, and Tenant's
liability for its share of taxes for such years shall be subject to a pro rata
17 <PAGE>
adjustment based on the number of days of said calendar years during the Lease
Term. Prior to or at the commencement of the Lease Term and from time to time
thereafter throughout the Lease Term, Landlord may notify Tenant in writing of
Landlord's reasonable estimate of Tenant's monthly installments due hereunder.
Tenant's obligations under this Section shall survive the expiration of the
Lease Term. Landlord shall provide Tenant with a copy of the most recent tax
bill for Lot No. 46.25 upon request therefor.
Section 14.02. Tenant shall be liable for all taxes on or against
property and trade fixtures and equipment placed by Tenant in or about the
Demised Premises, or taxes on Tenant's right to occupy the Demised Premises.
If any such taxes are levied against Landlord or Landlord's property, and if
Landlord pays same, or if the assessed valuation of Landlord's property is
increased by the inclusion therein of a value placed upon such property, and if
the Landlord pays the taxes based on such increased assessment, Tenant, upon
demand, shall repay to Landlord the taxes so paid by Landlord or the portion of
such taxes resulting from such increase in assessment.
ARTICLE 15. REMEDIES OF LANDLORD
Section 15.01. (a) If Tenant shall default in the payment of the annual
minimum rental reserved herein, or in the payment of any item of additional
rent or other monies due hereunder, or any part of same, and any such default
shall continue for more than five (5) days after written notice of such
default; or
Section 15.01. (b) If Tenant shall default in the observance of any of
the provisions, covenants and conditions of this Lease (other than a default
covered by subsection (a) above and other than Sections which provide a
specific period or date for performance), and such default shall continue for
more than thirty (30) days after written notice of such default, or for such
other period provided in the relevant Section hereof; or
Section 15.01. (c) If Tenant shall fail to occupy the Demised Premises
and open for business at the commencement of the Term of this Lease, as above
provided, or if the Demised Premises shall be abandoned, deserted or vacated,
or if Tenant shall sublet the Demised Premises or assign this Lease, except as
herein provided; or
Section 15.01. (d) If Tenant or any guarantor of Tenant's obligations
hereunder shall make an assignment for the benefit of creditors, or if any such
party shall file or have filed against it a petition in bankruptcy, or be
adjudicated a bankrupt by any court and such adjudication shall not be vacated
within sixty (60) days, or if Tenant or any guarantor of Tenant's obligations
hereunder takes the benefit of any insolvency act, or if Tenant or any
guarantor of Tenant's obligations hereunder be dissolved voluntarily or
involuntarily or have a receiver of its property appointed in any proceedings
other than bankruptcy proceedings and such appointment shall not be vacated
within sixty (60) days after it has been made, or if any levy, sale or
execution of any kind is made upon or of any property of Tenant in the Demised
Premises; then, upon the happening of any one or more of the defaults or events
specified above, at the option of Landlord: (1) upon ten (10) days notice to
Tenant, this Lease and the Term hereof shall wholly cease and terminate
on the date specified within the notice, with the same force and effect as
though such termination was the date of the expiration of the Term of this
Lease, and thereupon, or at any time thereafter, Landlord may re-enter
said premises either by force, or otherwise, and have possession of the
same and/or may recover possession thereof by summary proceeding, or
otherwise (but Tenant
18 <PAGE>
shall remain liable to Landlord as hereinafter provided); or (2) Landlord may,
without further notice, exercise any remedy available at law or in equity.
Section 15.02. In case of any default, event, re-entry, expiration,
termination and/or dispossession by summary proceedings, or otherwise, Tenant
shall, nevertheless, remain and continue liable to Landlord in a sum equal to
all annual minimum rental and additional rent herein reserved for the balance
of the Term herein demised as the same may become due and payable pursuant to
the provisions of this Lease. Landlord may repair or alter the Demised
Premises in such manner as Landlord may deem reasonably necessary or advisable,
and/or let or relet the Demised Premises and any and all parts thereof for the
whole or any part of the remainder of the original Term hereof or for a longer
period, in Landlord's name, or as the agent of Tenant, and, out of any rent so
collected or received, Landlord shall, first, pay to itself, the expense and
cost of retaking, repossessing, repairing and/or altering the Demised Premises,
and the expense of removing all persons and property therefrom, second, pay to
itself, any cost or expense sustained in securing any new tenant or tenants,
and third, pay to itself, any balance remaining on account of the liability of
Tenant to Landlord for the sum equal to the annual minimum rental and
additional rent reserved herein and unpaid by Tenant for the remainder of the
Term herein demised. Any entry or re-entry by Landlord, whether had or taken
under summary proceedings or otherwise, shall not absolve or discharge Tenant
from liability hereunder. Nothing in this Section 15.02 is intended to
constitute a waiver by Tenant of the duty of Landlord to mitigate damages in
the event of Tenant's default to the extent such duty exists pursuant to New
Jersey law, provided, however, Tenant agrees that Landlord shall not be
required to retain the services of an outside third party broker and Landlord
shall not be deemed to have failed to use reasonable efforts to mitigate
damages if Landlord shall not retain the services of an outside third party
broker.
Section 15.03. Should any rent so collected by Landlord after the
payment aforesaid be insufficient fully to pay to Landlord a sum equal to all
annual minimum rental and additional rent herein reserved, the balance or
deficiency shall be paid by Tenant on the rent days herein specified; that is,
upon each of such rent days Tenant shall pay to Landlord the amount of the
deficiency then existing and Tenant shall be and remain liable for any such
deficiency, and the right of Landlord to recover from Tenant the amount
thereof, or a sum equal to the amount of all annual minimum rental and
additional rent herein reserved if there shall be no reletting, shall survive
the issuance of any dispossessory warrant or other termination hereof.
Section 15.04. Suit or suits for the recovery of such deficiency or
damage, or for a sum equal to any installment or installments of annual minimum
rental or additional rent hereunder, may be brought by Landlord from time to
time at Landlord's election, and nothing herein contained shall be deemed to
require Landlord to await the date on which this Lease or the Term hereof would
have expired by limitation had there been no such default by Tenant or no such
termination or cancellation.
Section 15.05. Tenant hereby expressly waives service of any notice
of intention to re-enter subsequent to the giving of the aforesaid notices
under Section 15.01 above. Tenant hereby expressly waives any and all right
to recover or regain possession of the Demised Premises or to reinstate or to
redeem this tenancy or this Lease as is permitted or provided by or under any
statute, law, or decision now or hereafter in force and effect.
Section 15.06. Tenant shall reimburse Landlord, within thirty (30)
days following written demand, for any reasonable counsel fees or collection
charges incurred or expended by Landlord by reason of Tenant's default in the
performance of any provision, covenant, or condition of this Lease and any
19 <PAGE>
such amounts, at the option of Landlord, may be recovered in the same action or
proceeding forming the basis of the default or in another action or proceeding.
Section 15.07. Notwithstanding any other remedy provided for hereunder
and without the requirement of notice, except as provided in this Section, if
Tenant shall not comply with any of its obligations hereunder, Landlord shall
have the right, at Landlord's sole option, at anytime in the event of an
emergency or otherwise after ten (10) days notice to Tenant, to cure such
breach at Tenant's expense. Tenant shall reimburse Landlord, within thirty
(30) days following demand, as additional rent, for all costs and expenses
incurred by Landlord in curing such breach, together with interest computed
thereon at the rate of fifteen (15%) percent per annum or the maximum rate
permitted by law, whichever shall be the lesser.
Section 15.08. Notwithstanding anything to the contrary contained in
this Lease, if Tenant fails to pay any rent, additional rent or any other
money item due hereunder within thirty (30) days after same are due and
payable, Landlord shall have the right (in addition to any other rights or
remedies of Landlord and without the requirement of any notice) to commence
immediate legal proceedings or action for dispossession and damages or Landlord
may avail itself of any other remedies at law or in equity and include in such
action or proceeding any amounts then due and payable as of the date of the
commencement of such action or proceeding. Notwithstanding anything contained
in this Lease, if Tenant fails to pay any monetary items due hereunder on or
prior to the date which is ten (10) days following the date on which the same
are due and payable, a late charge of four ($.04) cents for each ONE ($1.00)
DOLLAR so overdue shall become immediately due and payable to the Landlord as
damages for failure to make prompt payment and the same shall be considered as
additional rent hereunder payable together with the next installment of monthly
rent. In addition, all such unpaid monetary items shall bear interest at the
rate of fifteen (15%) percent per annum or the maximum rate permitted by law,
whichever shall be the lesser, from the date such monies were due until the
date on which Landlord shall receive payment.
Section 15.09. The rights and remedies whether herein or elsewhere
provided in this Lease shall be cumulative and the exercise of any one right or
remedy shall not preclude the exercise of or act as a waiver of any other right
or remedy of Landlord hereunder, or which may be existing at law, or in equity,
by statute or otherwise.
Section 15.10. Tenant covenants and agrees to give any mortgagee
and/or ground lessor of the Center or any portion thereof of whom Tenant has
notice, notice of any default by Landlord under this Lease and such mortgagee
and/or ground lessor shall be afforded the right (but shall not have the
obligation) to cure any default by Landlord within such reasonable period of
time as may be required by such mortgagee and/or ground lessor.
ARTICLE 16. WAIVER OF TRIAL BY JURY
Section 16.01. It is mutually agreed by and between Landlord, Tenant
and any guarantor of the obligations of Tenant hereunder, that the respective
parties hereto shall and they hereby do waive trial by jury in any action,
proceeding, or counterclaim brought by the parties hereto on any matters
whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the Demised
Premises, and/or any claim of injury or damage, and any emergency, summary or
statutory remedy. If Landlord commences any summary proceeding, or any other
action for collection of rent or additional rent hereunder, Tenant shall not
interpose any counterclaim (other than compulsory counterclaims) or cross claim
20 <PAGE>
of any nature in any such proceeding or action, nor shall Tenant move to
consolidate any such claim with any claim being maintained by Landlord.
ARTICLE 17. ACCESS TO PREMISES
Section 17.01. Landlord and its designees shall have the right to enter
upon the Demised Premises at all times in the case of an emergency and
otherwise upon at least twenty-four (24) hours notice to inspect and examine
same, to make repairs, additions, alterations, or improvements to the Demised
Premises, the Building within which the Demised Premises are located or any
property owned or controlled by Landlord within such Building. Landlord's
rights of entry as aforesaid, and the taking of all property into and upon the
Demised Premises that may be required in connection therewith, shall not be
considered an eviction of Tenant, in whole or in part, constructive or
otherwise, and Landlord shall not be liable to Tenant for any expense, damage,
or loss or interruption of the business of Tenant by reason thereof, and the
rent reserved hereunder shall continue without abatement during the period of
any such entry and while such repairs, alterations, improvements or additions
are being made. Landlord or Landlord's designees shall have the right, upon at
least twenty-four (24) hours notice, to enter the Demised Premises at all
reasonable times to show the Demised Premises to prospective purchasers,
mortgagees or lessees of the Demised Premises or building of which the Demised
Premises form a part. During the six month period prior to the expiration of
the Term hereof, Landlord may exhibit the Demised Premises to prospective
tenants and Landlord may place upon the Demised Premises notices reading, "To
Let" or "For Rent", which notices Tenant shall allow to be posted conspicuously
without molestation.
If Landlord, in the exercise of its rights under this Article 17, shall
unreasonably interfere with Tenant's occupancy of the Demised Premises and such
interference results in Tenant being unable to use the Demised Premises for the
purposes set forth in Section 2.01 hereof for three (3) consecutive days, then
all annual minimum rent and all additional rent payable pursuant to Section
7.03, Article 12 and Article 14 shall abate from the date on which such
interference resulted in Tenant being unable to use the Demised Premises for
the purposes set forth in Section 2.01 hereof until the earlier of the date on
which Tenant resumes, or is again able to resume, use of the Demised Premises
for the purposes set forth in Section 2.01 hereof.
ARTICLE 18. NO WAIVER
Section 18.01. No delay or omission of the exercise of any right by
either party hereto shall impair any such right or shall be construed as a
waiver of any default or as acquiescence therein. One or more waivers of any
provision, covenant, or condition of this Lease by either party shall not be
construed by the other party as a waiver of a subsequent breach of any other or
the same provisions, covenant, or condition. No requirements whatsoever of this
Lease shall be deemed waived or varied because of either party's failure or
delay in taking advantage of any default, and Landlord's acceptance of any
payment from Tenant with actual or constructive knowledge of any default shall
not constitute a waiver of Landlord's rights in respect to such default, nor of
any subsequent or continued breach of any such default or any other requirement
of this Lease.
Section 18.02. No payment by Tenant or receipt by Landlord of a lesser
amount than the rent or other sum stipulated to be paid or reserved shall be
deemed to be other than on account of the earliest stipulated or reserved sum
payable, nor shall any such payment and acceptance by Landlord be deemed an
accord and satisfaction or a modification or waiver of any rights or
obligations or liabilities hereunder notwithstanding any statement, written or
oral, accompanying such payment, or by way of endorsement or otherwise; and
21 <PAGE>
Landlord may accept any such payment whether by check, draft or other means
whatsoever without prejudice to Landlord's right to recover the balance owing,
or to pursue any other remedy in this Lease or at law or in equity provided.
Landlord may, at Landlord's option, accept payment of rent or any other charge
hereunder from any person or entity other than the Tenant named herein and the
same shall not constitute a recognition by Landlord of, or vest in said person
or entity, any rights hereunder.
ARTICLE 19. REQUIREMENTS OF LAW;
INSURANCE REQUIREMENTS
Section 19.01. In Tenant's performance of its rights and obligations
under this Lease, including without limitation, any preterm right, obligation
or entry into the Demised Premises, Tenant covenants and agrees to comply with
all laws, orders, and regulations of federal, state, city, county, governmental
and municipal authorities, fire insurance rating organizations and fire
insurance underwriters, and insurance companies issuing coverage respecting the
Demised Premises and Tenant shall make all alterations or installations
necessary to comply therewith. Notwithstanding anything in this Lease to the
contrary, Tenant shall not be obligated to make any alterations or
installations necessary to comply with law to those portions of the Demised
Premises which Landlord is obligated to repair throughout the term of this
Lease pursuant to Section 6.03 hereof unless such alteration or installation is
required by law on account of Tenant's particular use or occupancy or manner of
use or occupancy of the Demised Premises. Tenant shall secure all permits or
approvals necessary to operate its business within the Demised Premises and
shall only operate its business within the Demised Premises in compliance with
all laws, orders and regulations of federal, state, city and county,
governmental and municipal authorities, fire insurance rating organizations and
fire insurance underwriters, and insurance companies issuing coverage
respecting the Demised Premises.
Section 19.02. Tenant shall not use or occupy the Demised Premises or
do or permit anything to be done therein in any manner which shall make it
impossible for Landlord and/or Tenant to obtain at standard rates any
insurance required or desired, or which will invalidate or increase the cost
to Landlord of any insurance.
Section 19.03. If, by reason of Tenant's failure to comply with the
provisions of Section 19.01 above, or if, by reason of any act or failure to
act of Tenant, its agents, servants, contractors, employees or licensees, or
if, by reason of the use of the Demised Premises, the fire insurance rates
applicable to the Demised Premises, or of the Building or any other premises
in said Building, shall be increased above the rate applicable to the
occupancy permitted hereunder, Tenant shall pay to Landlord, within thirty
(30) days following demand, the amount of additional premium for fire
insurance payable by reason thereof.
Section 19.04. No abatement, diminution, or reduction in annual
minimum rental or any sums constituting additional rent shall be claimed by or
allowed to Tenant for any inconvenience or interruption, cessation or loss of
business caused directly or indirectly, by any present or future laws,
ordinances, rules or regulations, requirements or orders of federal, state,
county, township or municipal governments or any other lawful authority
whatsoever, or by priorities, rationing, or curtailment of labor or materials,
or by war, civil commotion, strikes or riots, or any manner or thing resulting
therefrom, or by any other cause or causes beyond the control of Landlord, nor
shall this Lease be affected by any such causes.
22 <PAGE>
ARTICLE 20. SIGNS
Section 20.01. Tenant shall not place, install or maintain any sign
upon or outside the Demised Premises or in the Center until approved by
Landlord, which approval shall not be unreasonably withheld or delayed; nor
shall Tenant place, install or maintain any awning, canopy, aerial, antenna or
the like in or upon the Demised Premises, the Building or the Center. Any sign
must conform to all applicable rules, regulations, codes and directives of
governmental agencies having jurisdiction, and Tenant shall, at its expense,
apply for and obtain all permits necessary in connection therewith. If
Landlord shall submit to Tenant a general sign criteria or specification,
Tenant shall comply therewith. Tenant shall be solely responsible for all
maintenance and repairs respecting its signs.
ARTICLE 21. TENANT'S ADDITIONAL COVENANTS
Section 21.01. Tenant covenants and agrees for itself, its officers,
employees, contractors, agents, servants, licensees, invitees, subtenants,
concessionaires, and all others doing business with Tenant (hereinafter for the
purposes of this Article, collectively referred to as "Tenant") that:
(a) There is no clause (a) to this Section 21.01;
(b) Tenant shall not encumber or obstruct the Center or sidewalks in
and about the Demised Premises;
(c) Tenant shall not display, advertise or sell its products or goods in
the Common Areas of the Center or sidewalk in and about the Demised Premises;
(d) Tenant shall not permit any deliveries to be made through the front
entrance of the Demised Premises unless there is no access thereto otherwise;
(e) Tenant shall not cause or permit trash, refuse, dirt or other
rubbish to accumulate on the Demised Premises or in the Center and shall cause
same to be promptly removed;
(f) Tenant shall not injure, overload, deface, commit waste or otherwise
harm the Demised Premises or any part thereof;
(g) Tenant shall not commit any nuisance;
(h) Tenant shall not permit the emission from the Demised Premises of any
objectionable noise or odor;
(i) Tenant shall not burn any trash, rubbish, dirt or refuse within the
Center;
(j) Tenant shall use the Demised Premises only for business and
commercial purposes (subject to the provisions of Article 2 hereof) and Tenant
shall not use, allow or permit any industrial, manufacturing or processing
activities within the Demised Premises, except as may be expressly permitted by
Section 2.01 of this Lease;
(k) Tenant shall conform and comply with all nondiscriminatory and
uniformly applicable rules and regulations which Landlord may reasonably
promulgate for the management and use of the Center;
(l) Tenant shall not use any advertising medium that may constitute a
nuisance, such as loudspeakers, sound amplifiers or phonographs, in a manner to
be heard outside the Demised Premises;
23 <PAGE>
(m) Tenant shall cooperate with Landlord in promoting the use of the name
of the Center;
(n) Tenant shall not place a load on any floor of the Demised Premises
exceeding the floor load per square foot which such floor was designed to
carry;
(o) Tenant shall not install, operate or maintain in the Demised Premises
any electrical equipment which will overload the electrical system therein or
any part thereof beyond the capacity for proper and safe operation, as
determined by Landlord, in relation to the overall system and requirements for
electricity in the Building;
(p) Tenant shall not install, operate, or maintain any electrical
equipment in the Demised Premises which does not comply with applicable codes;
and
(q) No portion of the Demised Premises shall be used or occupied for the
sale, dispensing, storage or display of food, foodstuffs, or food products for
consumption on or off the Demised Premises, provided that the foregoing shall
not prohibit the use and occupancy of the Demised Premises as permitted by
Section 2.01 hereof nor the installation and use of vending machines serving
solely Tenant's employees.
ARTICLE 22. EASEMENTS FOR UTILITIES
Section 22.01. Landlord or its designee shall have the right and Tenant
shall permit Landlord or its designee to erect, use, maintain and repair pipes,
cables, conduits, plumbing, vents and wires in, to and through the Demised
Premises as and to the extent that Landlord may now or hereafter deem necessary
or appropriate for the use or proper operation and maintenance of the Demised
Premises, or the Building or any other portion of the Center. Landlord's
rights under this Article shall be exercised, as far as practicable, in such
manner as to avoid unreasonable interference with Tenant's occupancy of the
Demised Premises. If Landlord, in the exercise of its rights under this
Section 22.01, shall unreasonably interfere with Tenant's occupancy of the
Demised Premises and such interference results in Tenant being unable to use
the Demised Premises for the purposes set forth in Section 2.01 hereof for
three (3) consecutive days, then all annual minimum rental and all additional
rent payable pursuant to Section 7.03, Article 12 and Article 14 shall abate
with respect to the Demised Premises from the date on which such interference
resulted in Tenant being unable to use the Demised Premises for the purposes
set forth in Section 2.01 hereof until the earlier of the date on which Tenant
resumes, or is again able to resume, use of the Demised Premises for the
purposes set forth in Section 2.01 hereof.
ARTICLE 23. CONSENTS AND APPROVALS
Section 23.01. With respect to any provision of this Lease providing
that Landlord shall not unreasonably withhold or unreasonably delay any consent
or any approval, Tenant, in no event, shall be entitled to make, nor shall
Tenant make, any claim for, and Tenant hereby waives any claim for money
damages; nor shall Tenant claim any money damages by way of setoff,
counterclaim or defense, based upon any claim or assertion by Tenant that
Landlord has unreasonably withheld or unreasonably delayed any consent or
approval; but Tenant's sole remedy shall be an action or proceeding to enforce
any such provision, or for specific performance, injunction or declaratory
judgment.
24 <PAGE>
THERE IS NO ARTICLE 24 TO THIS LEASE
ARTICLE 25. END OF TERM HOLDOVER
Section 25.01. If the last day of the Term of this Lease falls on a
Sunday, or legal holiday, this Lease shall expire on the business day
immediately following. Upon the expiration or other termination of the Term of
this Lease, Tenant shall quit and surrender to Landlord the Demised Premises,
together with all buildings and improvements thereon, "broom-clean" and in
good order and condition, ordinary wear and tear and damage by the elements
excepted, and Tenant shall thereupon remove all property of Tenant and, failing
to do so, Landlord may cause all of the said property to be removed, stored
and/or disposed of at the expense of Tenant. Tenant shall pay all costs and
expenses thereby incurred. Any property not so removed shall be deemed to have
been abandoned by Tenant and may be retained or disposed of by Landlord as
Landlord, in its sole discretion, shall determine and Tenant hereby releases
Landlord from all claims for loss or damage to such property arising out of
such retention or disposition thereof. Tenant's obligations under this Article
shall survive the expiration or other termination of the Term of this Lease.
Section 25.02. If Tenant remains in possession of the Demised Premises
at the expiration of the Term hereof, Tenant, at Landlord's option, shall be
deemed to be occupying the Demised Premises as a tenant from month to month,
at a monthly rental equal to one hundred and fifty (150%) percent of the sum
of the monthly installment of annual minimum rent payable during the last
month of the Term hereof plus all additional rent coming due hereunder. In the
event of such holdover, Tenant's occupancy of the Demised Premises, except as
aforesaid, shall be subject to all other conditions, provisions and
obligations of this Lease, but only insofar as the same are applicable to a
month to month tenancy. Such month to month tenancy shall be terminable by
Landlord upon one (1) month's notice to Tenant, and if Landlord shall give
such notice, Tenant shall quit and surrender the Demised Premises to Landlord
as above provided.
Section 25.03. Notwithstanding anything to the contrary contained in
this Lease, if Landlord shall be unable to provide possession of the Demised
Premises because of the holding-over or retention of possession of any prior
tenant, undertenant or occupants, or for any other reason whatsoever, Landlord
shall not be subject to any liability for the failure to give possession on the
date herein provided, if any, and the validity of this Lease shall not be
impaired under such circumstances, but the term of the Lease shall be extended
proportionately until after Landlord shall have given Tenant written notice
that the Demised Premises are ready for Tenant's occupancy. If permission is
given to Tenant to enter into possession of the Demised Premises or to occupy
premises other than the Demised Premises prior to the date specified as the
commencement of the term of this Lease, Tenant covenants and agrees that such
occupancy shall be deemed to be under all of the terms, covenants, conditions
and provisions of this Lease. Nothing in this Section 25.03 shall impair
Tenant's right to terminate this Lease pursuant to Section 5.04 hereof.
ARTICLE 26. AUTHORITY TO EXECUTE
Section 26.01. Landlord and Tenant do hereby respectively represent to
the other that it has the capacity to enter into this Agreement.
ARTICLE 27. NOTICES
Section 27.01. All notices, demands, certifications, designations,
25 <PAGE>
statements and other communications to be given pursuant to this Lease shall be
in writing and sent by prepaid certified or registered U.S. mail, return
receipt requested, or by a recognized overnight courier service which requires
acknowledgment of receipt of delivery from addressee, to the address of the
parties below specified or at such other address as may be given by written
notice in the manner prescribed in this paragraph. Landlord's address for
notice shall be c/o National Realty & Development Corp., 3 Manhattanville
Road, Purchase, New York 10577. Tenant's address for notices shall be the
address first set forth above for Tenant. Notice shall be deemed to be given
upon receipt or refusal of receipt by addressee. Addresses for notice may be
changed by giving notice pursuant to this Section.
ARTICLE 28. BROKER
Section 28.01. Tenant covenants, warrants and represents that it has
dealt with no broker except Prodevco Management Group, 2025 Lincoln Highway,
Edison, New Jersey 08817 ("PRODEVCO") respecting this Lease and that no
conversations, correspondence or negotiations were had by it with any broker
except with said PRODEVCO concerning the renting or leasing of the Demised
Premises. Tenant shall hold Landlord and National Realty & Development Corp.
harmless and defend (by counsel satisfactory to Landlord) said parties against
any claims for a brokerage commission arising out of any conversations,
correspondence or negotiations had by it with any broker except said PRODEVCO.
Section 28.02. Landlord covenants, warrants and represents that it has
dealt with no broker except Prodevco Management Group, 2025 Lincoln Highway,
Edison, New Jersey 08817 ("PRODEVCO") respecting this Lease and that no
conversations, correspondence or negotiations were had by it with any broker
except with said PRODEVCO concerning the renting or leasing of the Demised
Premises. Landlord shall hold Tenant harmless and defend (by counsel
satisfactory to Tenant) said parties against any claims for a brokerage
commission arising out of any conversations, correspondence or negotiations had
by it with any broker except said PRODEVCO. Landlord shall pay any commissions
owing to said PRODEVCO in accordance with separate agreement.
ARTICLE 29. MEMORANDUM OF LEASE
Section 29.01. Tenant agrees not to record this Lease. The parties
agree, upon request of either, to execute, in recordable form, a short form
lease entitled "Memorandum of Lease", it being the intention of the parties
that this Lease will not be recorded, but only a memorandum thereof. Such
short form lease shall contain those provisions of this Lease as shall be
desired in the reasonable discretion of counsel for the parties hereto,
provided that in no event shall such short form lease contain any provisions
relevant to the annual minimum rent and/or additional rent payable under this
Lease.
ARTICLE 30. AIR AND WATER POLLUTION
Section 30.01. Tenant hereby indemnifies and saves Landlord harmless
against any claim, damage, liability, costs, penalties or fines which the
Landlord may suffer as a result of air, land or water pollution caused by
Tenant in its use or occupancy or manner of use or occupancy of the Demised
Premises or in its storage, handling, possession, transportation and/or
disposal of any Hazardous Waste or Hazardous Substance (as such terms are
hereafter defined) within or about the Demised Premises. Tenant covenants and
26 <PAGE>
agrees to notify Landlord immediately of any claim or notice served upon it
with respect to any such claim that Tenant is causing air, land or water
pollution; and Tenant, in any event, will take immediate steps to halt, remedy
and cure any pollution of air, land or water caused by Tenant by its use of
the Demised Premises, at its sole cost and expense.
Section 30.02. (a) Tenant shall comply with all state and federal
environmental laws, including the Spill Compensation and Control Act ("SCCA")
(N.J.S.A. 58:10-23.11 et seq.) and the Industrial Site Recovery Act ("ISRA")
(N.J.S.A. 13:1K-6 et seq.) as the same may have been or may hereafter be
amended (collectively, the "Environmental Statutes") as the same may relate to
Tenant's use and occupancy or manner of use and occupancy of the Demised
Premises or any act or failure to act of Tenant. Tenant shall supply Landlord
on demand with any information Landlord may require in order to enable
Landlord to comply with the Environmental Statutes, including, without
limitation, ISRA, whether upon the transfer of title or closing of operations
at the Demised Premises, or for any reason whatsoever.
Section 30.02. (b) Tenant shall not use the Demised Premises for the
purpose of refining, producing, storing, handling, transferring, processing or
transporting said "Hazardous Substances", except in de minimis amounts, as
such term is defined in N.J.S.A. 5B:10-23.llb(k) of the New Jersey Spill
Compensation and Control Act (N.J.S.A. 58:10-23.11 et seq.).
Section 30.02. (c) Tenant shall not use the Demised Premises to
generate, manufacture, refine, transport, treat, store or handle, except in de
minimis amounts, or dispose of "Hazardous Substances", or "Hazardous Wastes",
as such terms are defined in N.J.A.C. 7:1-3.3.
Section 30.02. (d) Tenant shall not cause or permit to exist, as a
result of an intentional or unintentional action or omission on its part, a
releasing, spilling, leaking, pumping, emitting, pouring, emptying or dumping
of a "Hazardous Substance", except in de minimis amounts, as such term is
defined in N.J.S.A. 58:10-23.llb(k) into waters of the State of New Jersey or
onto the lands from which it might flow or drain into said waters, or into
waters outside the jurisdiction of the State of New Jersey where damage may
result to the lands, waters, fish, shellfish, wildlife, biota, air and other
resources owned, managed, held in trust or otherwise controlled by the State of
New Jersey.
Section 30.02. (e) Tenant shall not use the Demised Premises as a
"Major Facility", as such term is defined in N.J.S.A. 58:10-23.lb(1).
Section 30.02. (f) Tenant shall not install nor permit to be installed
in the Demised Premises friable asbestos or any substance containing asbestos
and deemed hazardous by federal or state regulations respecting such material.
Section 30.03. Tenant represents that Tenant has not received a
summons, citation, directive, letter or other communication, written or oral,
from the New Jersey Department of Environmental Protection concerning any
intentional or unintentional action or omission on Tenant's part resulting in
the releasing, spilling, leaking, pumping, pouring, emitting, emptying or
dumping of "Hazardous Substances", as such term is defined in N.J.S.A.
58:10-23.llb(k), into the waters or onto the lands of the State of New Jersey,
or into the waters outside the jurisdiction of the State of New Jersey
resulting in damage to the lands, waters, fish, shellfish, wildlife, biota, air
and other resources owned, managed, held in trust or otherwise controlled by
the State of New Jersey.
Section 30.04. (a) In the event that Tenant does not expeditiously
proceed with any compliance with respect to the Demised Premises, the Building
27 <PAGE>
or the Center required of it by any State or Federal authority under the
Environmental Statutes, Landlord may after two (2) days notice to Tenant, elect
to undertake such compliance in order to protect its interest in the Demised
Premises. Any monies expended by Landlord in efforts to comply with any
environmental statute (including but not limited to: the costs of hiring
consultants, undertaking sampling and testing, performing any cleanup necessary
or useful in the compliance process and reasonable attorney's fees), together
with interest at fifteen (15%) percent per annum or the maximum rate permitted
by law, whichever shall be the lesser, will be added to and payable with the
next payment of annual minimum rental due from Tenant, or will be payable on
demand of Landlord.
Section 30.04. (b) Upon demand by Landlord, Tenant will provide
Landlord with all information as to the use or manner of use of the Demised
Premises by Tenant, and an environmental audit of the Demised Premises which is
designed to describe any materials on the Demised Premises which would require
a filing and/or any disclosure under the Environmental Statutes in the event of
any transfer or closure, or which would require remedial action under any other
Environmental Statutes.
Section 30.04. (c) In the event that Tenant receives notice from the
Department of Environmental Protection or any other governmental authority or
bureau having or asserting jurisdiction thereover under SCCA of a discharge on
or about the Demised Premises, or any other notice of violation of the
Environmental Statutes or any alleged or claimed violation thereof, Tenant will
immediately send a copy of such notice to Landlord and Tenant will promptly
proceed to remedy the condition described in the notice. Tenant shall take all
action necessary to ensure that the SCCA administrator does not spend Spill
Fund monies to clean up the site. In the event that the SCCA administrator
should spend money cleaning up property owned by Landlord due to Tenant's use
or occupancy or manner of use or occupancy of the Demised Premises or the act
or failure to act of Tenant, and/or a lien is imposed on the Demised Premises
or any portion of the parcel of which it forms a part or any property of
Landlord, Landlord may take such actions as it deems necessary to remove such
lien, including satisfaction thereof, or may require it to be bonded by Tenant,
and Tenant agrees to defend, indemnify and hold Landlord free and harmless from
and against all loss, costs, damage and expense (including reasonable
attorney's fees and costs) Landlord may sustain by reason of the assertion
against Landlord by any party of any claim in connection therewith.
ARTICLE 31. METHOD OF CALCULATION
Section 31.01. (a) The parties hereto acknowledge that the
proportionate share payable by Tenant pursuant to Section 7.03 and Section
14.01 shall be determined by the type of use to which the Demised Premises is
to be put - i.e., processing or non-office space or office space, thereby
creating a weighted fraction representing Tenant's proportionate share. The
numerator of such fraction shall be the sum of (a) the gross leasable area of
processing or non-office space within the Demised Premises; plus, (b) two (2)
times the gross leasable area of office space within the Demised Premises. The
denominator of such fraction shall be the sum of all the numerators, including
the numerator of Tenant, as calculated in the foregoing manner for each and
every space or division thereof (whether or not such space is leased or
occupied) within the Building or buildings upon Lot No. 46.25. Notwithstanding
the foregoing provisions of this Article, in the event the obligations of
Tenant under either Section 7.03 and/or Article 14 of this Lease are
specifically identifiable separate charges relating to Tenant, the Building
and/or the Demised Premises, then, and in such event the obligations of Tenant
(including Tenant's proportionate share thereof) under this Lease may, at
Landlord's option, be measured and payable in accordance with such separate and
28 <PAGE>
specifically identifiable charge. For purposes of this Lease, as of the date
hereof 3,696 square feet is deemed to be leased as office space and 1,416
square feet is deemed to be leased as non-office or processing space. In the
event Tenant shall hereafter make any alterations to the Demised Premises which
result in an increase in the amount of office space, Tenant hereby covenants
and agrees to execute upon demand a modification of lease agreement modifying
this Article 31 to evidence the resulting increase in office space. The
foregoing is not to be construed in any manner so as to relieve Tenant of its
obligations pursuant to Section 6.01 hereof.
Section 31.01. (b) Landlord shall have the right at any time during the
Term or any extension term hereof, and Tenant hereby consents thereto, to
subdivide Lot Nos. 46.24 and/or 46.25 into such additional lot or lots as
Landlord may in its sole discretion elect and to expand Lot Nos. 46.24 and/or
46.25 as Landlord may in its sole discretion elect, provided that the whole of
the Building shall remain entirely within one such subdivision.
Notwithstanding anything contained in this Lease to the contrary, in the event
of any such subdivision or expansion of Lot Nos. 46.24 and/or 46.25 by Landlord
then, at Landlord's option, (i) references in this Lease to Lot No. 46.24
and/or 46.25, as the case may be, may be deemed to be to the original
(pre-subdivision or pre-expansion) Lot No. 46.24 or 46.25, as the case may be,
or any portion(s) thereof of which the Demised Premises (or Common Areas) forms
a part, and (ii) in calculating Tenant's proportionate share(s), Landlord may
use as the denominator of the fraction(s) representing Tenant's proportionate
share(s) the building(s) or portions thereof within said original Lot Nos.
46.24 and 46.25 or any portion(s) thereof of which the Demised Premises (or
Common Areas) forms a part. In the event of such subdivision or expansion,
Tenant agrees to execute an agreement in recordable form setting forth the
description of Lot No. 46.24 and/or 46.25, as the case may be, as so subdivided
or expanded and as renamed and/or renumbered.
ARTICLE 32. SHIFT PREMISES
Section 32.01. Landlord hereby reserves the right (and Tenant hereby
acknowledges and consents thereto), after at least thirty (30) days written
notice to Tenant, to shift the location of the Demised Premises to an alternate
location of substantially equivalent size and condition within the Center,
provided Landlord shall reimburse Tenant for all reasonable actual out-of-
pocket expenses incurred by Tenant in connection with such shift upon demand
therefor accompanied by paid invoices evidencing such expenses.
THERE IS NO ARTICLE 33 TO THIS LEASE
ARTICLE 34. RELATIONSHIP OF PARTIES
Section 34.01. Nothing herein contained shall be deemed or construed
by the parties hereto, nor by any third party, as constituting the Landlord a
partner of Tenant in the conduct of Tenant's business, or as creating the
relationship of principal and agent or joint venturers between the parties
hereto, it being the intention of the parties hereto that the relationship
between them is and shall at all times be and remain that of Landlord and
Tenant only. Tenant agrees upon the demand of Landlord to deliver to Landlord
and any mortgagee of Landlord the most recently available financial statements
of Tenant and any guarantor of this Lease, certified to by an officer thereof,
and updated to the extent reasonably requested by Landlord or any such
mortgagee.
29 <PAGE>
ARTICLE 35. CAPTIONS
Section 35.01. The Article captions contained herein are for convenience
only and do not define, limit, or construe the contents of such Articles and
are in no way to be construed as a part of this Lease.
ARTICLE 36. DEFINITIONS
Section 36.01. Words of any gender used in this Lease shall be held to
include any other gender, and words in the singular number shall be held to
include the plural, when the sense requires.
Section 36.02. If any provision of this Lease or the application thereof
to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby and each provision of
this Lease shall be valid and be enforced to the fullest extent permitted by
law.
ARTICLE 37. ENTIRE AGREEMENT
Section 37.01. This instrument of Lease contains the entire and only
agreement between the parties concerning the Demised Premises. No prior oral
or written statements or representation, if any, of any party hereto or any
representative of a party hereto, not contained in this instrument, shall have
any force or effect. This Lease shall not be modified in any way, except by a
writing executed by Landlord and Tenant. No oral agreement or representations
shall be deemed to constitute a lease other than this agreement. This
agreement shall not be binding until it shall have been executed and delivered
by Landlord and Tenant. The submission of this Lease to Tenant prior to its
execution by Landlord shall not be an offer to lease.
ARTICLE 38. SUCCESSORS IN INTEREST
Section 38.01. All provisions herein contained shall bind and inure to
the benefit of the respective parties hereto, their heirs, personal
representatives, successors and assigns, as the case may be. In the event
Landlord or any successor-lessor (owner) of the Demised Premises shall convey
or otherwise dispose of the Demised Premises and/or the Center and/or the Tax
Lot of which the Demised Premises forms a part, all liabilities and
obligations of Landlord or such successor-lessor (owner), as Landlord under
this Lease shall terminate upon such conveyance or disposal.
Section 38.02. If Landlord, or any successor in interest to Landlord,
shall be an individual, joint venturer, executor, estate, personal
representative, conservator, tenancy-in-common, trustee, trust, partnership,
general or limited, limited liability partnership, limited liability company,
firm or corporation, there shall be no personal liability on the part of such
individual or on the part of any members of such joint venture,
tenancy-in-common, trustee, trust, partnership, company, firm or corporation,
its officers, managers, directors, members or stockholders, or on the part of
such joint venture, estate, tenancy-in-common, trustee, trust, partnership,
company, firm or corporation as to any of the provisions, covenants or
conditions of this Lease. Tenant hereby acknowledges that it shall look
solely to the real property interest of Landlord in Lot No. 46.25 (or, in the
event of a subdivision of said Lot, such subdivided portion thereof which
includes the Demised Premises) for the satisfaction or assertion of any claims,
30 <PAGE>
rights and remedies of Tenant against Landlord, in the event of breach by
Landlord of any of the terms, provisions, covenants or conditions of this
Lease.
ARTICLE 39. SECURITY
Section 39.01. Tenant has deposited with Landlord the sum of SIX
THOUSAND EIGHT HUNDRED SIXTEEN and 00/100 ($6,816.00) DOLLARS as security for
the faithful performance and observance by Tenant of the terms, provisions,
covenants and conditions of this Lease. In the event Tenant defaults in
respect of any of the provisions, covenants and conditions of this Lease,
including, but not limited to, the payment of annual minimum rental and
additional rent, Landlord may, from time to time, use, apply, or retain the
whole or any part of the security so deposited to the extent required for the
payment of any annual minimum rental and additional rent or any other sum as to
which Tenant is in default or for any sum which Landlord may expend or may be
required to expend by reason of Tenant's default in respect of any of the
provisions, covenants and conditions of this Lease, including, but not limited
to, reasonable counsel fees and other collection charges, or of any damages or
deficiency in the reletting, repairing or altering of the Demised Premises,
whether such damages or deficiency accrued before or after summary proceedings
or other re-entry by Landlord. In the event that Tenant shall fully and
faithfully comply with all the provisions, covenants and conditions of this
Lease, the security shall be returned to Tenant, without interest, after the
expiration of the Lease, and after delivery of entire possession of the Demised
Premises to Landlord. If, due to Tenant's default hereunder, Landlord shall be
entitled to apply or retain any portion of said security, Tenant shall within
thirty (30) days following demand, deposit with Landlord such amount as may be
necessary to restore the amount of security to the amount set forth in the
first sentence of this Article. Tenant shall not assign or encumber the
security deposited hereunder and neither Landlord or its successors or assigns
shall be bound by any such assignment or encumbrance. In the absence of
evidence satisfactory to Landlord of any assignment of the right to receive the
security, or the remaining portion thereof, Landlord may return the security to
the original tenant regardless of any number of assignments of the Lease
itself. In the event of a sale of the Demised Premises or larger premises of
which the Demised Premises form a part, Landlord shall transfer the security to
the purchaser for the benefit of Tenant and Landlord, after giving notice to
Tenant, shall be deemed released by Tenant from all liability for the return of
such security and Tenant shall look solely to the new owner for the return
thereof. No holder of any mortgage upon the Demised Premises or the larger
property of which the Demised Premises forms a part shall be responsible in
connection with the security deposited hereunder unless such mortgagee shall
have in fact received such security and acknowledged such receipt in writing to
Tenant.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
the day and year first above written.
ATTEST: 46.25 ASSOCIATES L.P.,
a Delaware limited partnership
By: Middlesex Business Development Corp.
By: /s/ Robert C. Baker
Robert C. Baker
President
31<PAGE>
MICROFRAME, INC.,
a New Jersey corporation
By: /s/ Lonnie L. Sciambi
Lonnie L. Sciambi
President and Chief Executive Officer
32<PAGE>
STATE OF NEW YORK )
SS.:
COUNTY OF WESTCHESTER )
BE IT REMEMBERED, that on the 20th day of July, 1995, before me, the
subscriber, a notary public of the State of New York, , personally appeared
Robert C. Baker, President of Middlesex Business Development Corp., as general
partner of 46.25 ASSOCIATES L.P., who, I am satisfied, is the person who
signed the within instrument; and I having first made known to him the
contents thereof, he thereupon acknowledged that he signed, sealed with the
corporate seal, and delivered the said instrument as such officer aforesaid,
and that the within instrument is the voluntary act and deed of said
corporation as such general partner, made by virtue of the authority of its
board of directors.
/s/ Patricia Ormerod
NOTARY PUBLIC
PATRICIA ORMEROD
Notary Public, State of New York
No. 4893560
Qualified in Westchester County
Commission Expires June 1, 1997
STATE OF NEW JERSEY )
SS.:
COUNTY OF MIDDLESEX )
BE IT REMEMBERED, that on the 13th day of July, 1995, before me, the
subscriber, a notary public of the State of New Jersey, personally appeared
Lonnie L. Sciambi, President and Chief Executive Officer of MICROFRAME, INC.,
who, I am satisfied, is the person who signed the within instrument; and I
having first made known to him the contents thereof, he thereupon acknowledged
that he signed, sealed with the corporate seal, and delivered the said
instrument as such officer aforesaid, and that the within instrument is the
voluntary act and deed of said corporation, made by virtue of the authority of
its board of directors.
/s/ Pauline Siecinski
NOTARY PUBLIC
PAULINE SIECINSKI
NOTARY PUBLIC OF NEW JERSEY
My Commission Expires Nov. 6, 1999
33<PAGE>
<PAGE>
EXHIBIT 10.29
</PAGE>
1994 STOCK OPTION PLAN
of
MICROFRAME, INC.
(as amended on July 17, 1995)
1. PURPOSES OF THE PLAN. This stock option plan (the "Plan") is
designed to provide an incentive to key employees (including directors and
officers who are key employees) and to consultants and directors who are not
employees of MicroFrame, Inc., a New Jersey corporation (the "Company"), and
its present and future subsidiary corporations, as defined in Paragraph 19
("Subsidiaries"), and to offer an additional inducement in obtaining the
services of such individuals. The Plan provides for the grant of "incentive
stock options" ("ISOs") within the meaning of Section 422 of the Internal Reve-
nue Code of 1986, as amended (the "Code"), and nonqualified stock options
("NQSOs"), but the Company makes no warranty as to the qualification of any
option as an "incentive stock option" under the Code.
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Paragraph 12, the aggregate number of shares of Common Stock, $.001 par value
per share, of the Company ("Common Stock") for which options may be granted
under the Plan shall not exceed 750,000. Such shares of Common Stock may, in
the discretion of the Board of Directors of the Company (the "Board of
Directors"), consist either in whole or in part of authorized but unissued
shares of Common Stock or shares of Common Stock held in the treasury of the
Company. The Company shall at all times during the term of the Plan reserve
and keep available such number of shares of Common Stock as will be sufficient
to satisfy the requirements of the Plan. Subject to the provisions of
Paragraph 13, any shares of Common Stock subject to an option which for any
reason expires, is cancelled or is terminated unexercised or which ceases for
any reason to be exercisable shall again become available for the granting of
options under the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered
by a committee of the Board of Directors (the "Committee") consisting of not
less than two directors, each of whom shall be a "disinterested person" within
the meaning of Rule 16b-3 (or any successor rule or regulation) promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). A
majority of the members of the Committee shall constitute a quorum, and the
acts of a majority of the members present at any meeting at which a quorum is
present, and any acts approved in writing by all members without a meeting,
shall be the acts of the Committee.
Subject to the express provisions of the Plan, the Committee shall
have the authority, in its sole discretion, with respect to Employee Options
and Consultant Options (each as defined in Paragraph 19): to determine the key
employees who shall receive Employee Options and the consultants who shall
receive Consultant Options; the times when they shall receive options; whether
an Employee Option shall be an ISO or a NQSO; the number of shares of Common
Stock to be subject to each option; the term of each option; the date each
option shall become exercisable; whether an option shall be exercisable in
whole, in part or in installments, and, if in installments, the number of
shares of Common Stock to be subject to each installment; whether the
installments shall be cumulative; the date each installment shall become
exercisable and the term of each installment; whether to accelerate the date of
exercise of any installment; whether shares of Common Stock may be issued upon
the exercise of an option as partly paid, and, if so, the dates when future
installments of the exercise price shall become due and the amounts of such
<PAGE>
installments; the exercise price of each option; the form of payment of the
exercise price; whether to restrict the sale or other disposition of the shares
of Common Stock acquired upon the exercise of an option and to waive any such
restriction; whether to subject the exercise of all or any portion of an option
to the fulfillment of contingencies as specified in the contract referred to in
Paragraph 11 (the "Contract"), including without limitation, contingencies
relating to entering into a covenant not to compete with the Company and its
Parent (as defined in Paragraph 19) and Subsidiaries, to financial objectives
for the Company, a Subsidiary, a division, a product line or other category,
and/or the period of continued relationship of the optionee with the Company or
its Subsidiaries, and to determine whether such contingencies have been met;
and with respect to Employee Options, Consultant Options and Non-Employee
Director Options (as defined in Paragraph 19): to determine the amount, if any,
necessary to satisfy the Company's obligation to withhold taxes or other
amounts; the fair market value of a share of Common Stock; to construe the
respective Contracts and the Plan; with the consent of the optionee, to cancel
or modify an option, provided such option as modified would be permitted to be
granted on such date under the terms of the Plan; to prescribe, amend and
rescind rules and regulations relating to the Plan; and to make all other
determinations necessary or advisable for administering the Plan. The
determinations of the Committee on the matters referred to in this Paragraph 3
shall be conclusive.
No member or former member of the Committee shall be liable for any
action, failure to act or determination made in good faith with respect to the
Plan or any option hereunder. In addition, the Company shall indemnify and hold
each member and former member of the Committee harmless from and against any
liability, claim for damages and expenses in connection therewith by reason of
any action, failure to act or determination made in good faith under or in
connection with the Plan or any option hereunder to the fullest extent
permitted with respect to directors under the Company's certificate of
incorporation, by-laws or applicable law.
4. ELIGIBILITY; GRANTS. The Committee may from time to time,
consistent with the purposes of the Plan, grant Employee Options to key
employees (including officers and directors who are key employees), and
Consultant Options to consultants, of the Company or any of its Subsidiaries.
Such options granted shall cover such number of shares of Common Stock as the
Committee may determine; provided, however, that the maximum number of shares
subject to Employee Options that may be granted to any individual during any
calendar year under the Plan (the "162(m) Maximum") shall be 75,000 shares; and
further provided that the aggregate market value (determined at the time the
option is granted) of the shares of Common Stock for which any eligible
employee may be granted ISOs under the Plan or any other plan of the Company,
or of a Parent or a Subsidiary of the Company, which are exercisable for the
first time by such optionee during any calendar year shall not exceed $100,000.
The $100,000 ISO limitation shall be applied by taking ISOs into account in the
order in which they were granted. Any option (or the portion thereof) granted
in excess of such amount shall be treated as a NQSO.
Immediately following each annual meeting of shareholders of the
Company at which directors are elected (an "Annual Meeting") during the term of
the Plan, every person who is a Non-Employee Director (as defined in Paragraph
19) at such time, whether or not elected at such meeting, shall be granted a
Non-Employee Director Option to purchase 10,000 shares of Common Stock. In
addition, on the day an individual first becomes a Non-Employee Director if
other than at an Annual Meeting, such Non-Employee Director shall be granted an
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option to purchase a number of shares of Common Stock equal to 2,500 multiplied
by the number of full three-month periods remaining until the first anniversary
of the immediately preceding Annual Meeting. Each Non-Employee Director Option
shall become exercisable as to 2,500 shares of Common Stock upon each three-
month anniversary of the date of grant, provided that the holder continues to
serve as a Non-Employee Director on such date; and further provided, that if
the next Annual Meeting is held on or before the first anniversary of the
immediately preceding Annual Meeting, the last 2,500 shares of Common Stock
under such Non-Employee Director Option shall become exercisable on the day
preceding the next Annual Meeting (if he continues to be a Non-Employee
Director on such date). In the event the remaining shares available for grant
under the Plan are not sufficient to grant the Non-Employee Director Options to
each such Non-Employee Director on any date, the number of shares subject to
the Non-Employee Director Options to be granted on such date shall be reduced
proportionately. The Committee shall not have any discretion with respect to
the selection of directors to receive Non-Employee Director Options or the
amount, the price or the timing with respect thereto. A Non-Employee Director
shall not be entitled to receive any options under the Plan other than Non-
Employee Director Options.
5. EXERCISE PRICE. The exercise price of the shares of Common
Stock under each Employee Option and Consultant Option shall be determined by
the Committee; provided, however, that the exercise price of an ISO shall not
be less than the fair market value of the Common Stock subject to such option
on the date of grant; and further provided, that if, at the time an ISO is
granted, the optionee owns (or is deemed to own under Section 424(d) of the
Code) stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company, of any of its Subsidiaries or of a Parent, the
exercise price of such ISO shall not be less than 110% of the fair market value
of the Common Stock subject to such ISO on the date of grant. The exercise
price of the shares of Common Stock under each Non-Employee Director Option
shall be equal to the fair market value of the Common Stock subject to such
option on the date of grant.
The fair market value of a share of Common Stock on any day shall
be (a) if the principal market for the Common Stock is a national securities
exchange, the average of the highest and lowest sales prices per share of
Common Stock on such day as reported by such exchange or on a composite tape
reflecting transactions on such exchange, (b) if the principal market for the
Common Stock is not a national securities exchange and the Common Stock is
quoted on the National Association of Securities Dealers Automated Quotations
System ("NASDAQ"), and (i) if actual sales price information is available with
respect to the Common Stock, the average of the highest and lowest sales prices
per share of Common Stock on such day on NASDAQ, or (ii) if such information is
not available, the average of the highest bid and lowest asked prices per share
of Common Stock on such day on NASDAQ, or (c) if the principal market for the
Common Stock is not a national securities exchange and the Common Stock is not
quoted on NASDAQ, the average of the highest bid and lowest asked prices per
share of Common Stock on such day as reported on the NASDAQ OTC Bulletin Board
Service or by National Quotation Bureau, Incorporated or a comparable service;
provided, however, that if clauses (a), (b) and (c) of this Paragraph are all
inapplicable, or if no trades have been made or no quotes are available for
such day, the fair market value of the Common Stock shall be determined by the
Board by any method consistent with applicable regulations adopted by the
Treasury Department relating to stock options.
6. TERM. The term of each Employee Option and Consultant Option
granted pursuant to the Plan shall be such term as is established by the
-3-<PAGE>
Committee, in its sole discretion, at or before the time such option is
granted; provided, however, that the term of each ISO granted pursuant to the
Plan shall be for a period not exceeding 10 years from the date of grant
thereof; and further, provided, that if, at the time an ISO is granted, the
optionee owns (or is deemed to own under Section 424(d) of the Code) stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, of any of its Subsidiaries or of a Parent, the term of
the ISO shall be for a period not exceeding five years from the date of grant.
Employee Options and Consultant Options shall be subject to earlier termination
as hereinafter provided. Subject to earlier termination as hereinafter
provided, each Non-Employee Director Option shall have a term of five years
commencing on the date of grant.
7. EXERCISE. An option (or any part or installment thereof), to
the extent then exercisable, shall be exercised by giving written notice to the
Company at its principal office stating which option is being exercised,
specifying the number of shares of Common Stock as to which such option is
being exercised and accompanied by payment in full of the aggregate exercise
price therefor (or the amount due on exercise if the Contract with respect to
an Employee Option permits installment payments) (a) in cash or by certified
check or (b) in the case of an Employee Option or a Consultant Option, if the
applicable Contract permits, with previously acquired shares of Common Stock
having an aggregate fair market value, on the date of exercise, equal to the
aggregate exercise price of all options being exercised, or with any
combination of cash, certified check or shares of Common Stock. In such case,
the fair market value of the Common Stock shall be determined in accordance
with Paragraph 5.
The Committee may, in its discretion, permit payment of the
exercise price of an option by delivery by the optionee of a properly executed
notice, together with a copy of his irrevocable instructions to a broker
acceptable to the Committee to deliver promptly to the Company the amount of
sale or loan proceeds sufficient to pay such exercise price. In connection
therewith, the Company may enter into agreements for coordinated procedures
with one or more brokerage firms.
A person entitled to receive Common Stock upon the exercise of an
option shall not have the rights of a shareholder with respect to such shares
of Common Stock until the date of issuance of a stock certificate to him for
such shares; provided, however, that until such stock certificate is issued,
any option holder using previously acquired shares of Common Stock in payment
of an option exercise price shall continue to have the rights of a shareholder
with respect to such previously acquired shares.
In no case may a fraction of a share of Common Stock be purchased
or issued under the Plan.
8. TERMINATION OF RELATIONSHIP. Except as may otherwise be
expressly provided in the applicable Contract, any holder of an Employee Option
whose employment with the Company (and its Parent and Subsidiaries) has
terminated for any reason other than his death or Disability (as defined in
Paragraph 19) may exercise such option, to the extent exercisable on the date
of such termination, at any time within three months after the date of
termination, but not thereafter and in no event after the date the option would
otherwise have expired; provided, however, that if his employment is terminated
either (a) for cause, or (b) without the consent of the Company, such option
shall terminate immediately. Except as may otherwise be expressly provided in
the applicable Contract, Employee Options granted under the Plan shall not be
-4-<PAGE>
affected by any change in the status of the holder so long as he continues to
be an employee or a consultant of the Company, its Parent or any of the
Subsidiaries (regardless of having been transferred from one corporation to
another).
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the time of the
determination, the individual was an employee of such corporation for purposes
of Section 422(a) of the Code. As a result, an individual on military, sick
leave or other bona fide leave of absence shall continue to be considered an
employee for purposes of the Plan during such leave if the period of the leave
does not exceed 90 days, or, if longer, so long as the individual's right to
reemployment with the Company (or a related corporation) is guaranteed either
by statute or by contract. If the period of leave exceeds 90 days and the
individual's right to reemployment is not guaranteed by statute or by contract,
the employment relationship shall be deemed to have terminated on the 91st day
of such leave.
Except as may otherwise be expressly provided in the applicable
Contract, the holder of a Consultant Option whose consulting relationship with
the Company (and its Parent and Subsidiaries) has terminated for any reason may
exercise such option, to the extent exercisable on the date of such
termination, at any time within three months after the date of termination, but
not thereafter and in no event after the date the option would otherwise have
expired; provided, however, that if such relationship was terminated either (a)
for cause or (b) without the consent of the Company (other than as a result of
the death or Disability of the holder or a key employee of the holder), the
option shall terminate immediately. Except as may otherwise be expressly
provided in the applicable Contract, Consultant Options granted under the Plan
shall not be affected by a change in the relationship, so long as the holder of
the option continues to be a consultant of the Company, its Parent or any of
its Subsidiaries (regardless of having ceased to be a consultant for any of
such corporations).
The holder of an Non-Employee Director Option who ceases to be a
Non-Employee Director of the Company (and its Parent and Subsidiaries) for any
reason may exercise such option, to the extent exercisable on the date of such
termination, at any time during its term; provided, however, that if the Non-
Employee Director is removed as a director of the Company for cause, the option
shall terminate immediately.
Nothing in the Plan or in any option granted under the Plan shall
confer on any individual any right to continue in the employ or as a consultant
of the Company, its Parent or any of its Subsidiaries, or as a director of the
Company, or interfere in any way with any right of the Company, its Parent or
any of its Subsidiaries to terminate the holder's relationship at any time for
any reason whatsoever without liability to the Company, its Parent or any of
its Subsidiaries.
9. DEATH OR DISABILITY OF AN OPTIONEE. If an optionee dies (a)
while he is employed by the Company, its Parent or any of its Subsidiaries, (b)
within three months after the termination of his employment (unless such
termination was for cause or without the consent of the Company) or (c) within
one year following the termination of his employment by reason of Disability,
his Employee Option may be exercised, to the extent exercisable on the date of
his death, by his executor, administrator or other person at the time entitled
by law to his rights under such option, at any time within one year after
-5-<PAGE>
death, but not thereafter and in no event after the date the option would
otherwise have expired.
Any optionee whose employment has terminated by reason of
Disability may exercise his Employee Option, to the extent exercisable upon the
effective date of such termination, at any time within one year after such
date, but not thereafter and in no event after the date the option would
otherwise have expired.
The term of a Non-Employee Director Option shall not be affected by
the death or Disability of the holder. The termination of a Consultant Option
as a result of the death or Disability of the holder of the option (or a key
employee thereof) shall be governed by Paragraph 8. If the holder of a Non-
Employee Director Option or Consultant Option dies during the term of such
option, the option may be exercised, to the extent exercisable on the date of
his death, at any time during its term by his executor, administrator or other
person at the time entitled by law to his rights under such option.
10. COMPLIANCE WITH SECURITIES LAWS. The Committee may require,
in its discretion, as a condition to the exercise of any option that either (a)
a Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of Common Stock to be issued upon
such exercise shall be effective and current at the time of exercise, or (b)
there is an exemption from registration under the Securities Act for the
issuance of shares of Common Stock upon such exercise. Nothing herein shall be
construed as requiring the Company to register under the Securities Act the
shares subject to any option.
The Committee may require the optionee to execute and deliver to
the Company his representations and warranties, in form and substance
satisfactory to the Committee, that (a) the shares of Common Stock to be issued
upon the exercise of the option are being acquired by the optionee for his own
account, for investment only and not with a view to the resale or distribution
thereof, and (b) any subsequent resale or distribution of shares of Common
Stock by such optionee will be made only pursuant to (i) a Registration
Statement under the Securities Act which is effective and current with respect
to the shares of Common Stock being sold, or (ii) a specific exemption from the
registration requirements of the Securities Act, but in claiming such
exemption, the optionee shall, prior to any offer of sale or sale of such
shares of Common Stock, provide the Company with a favorable written opinion of
counsel, in form and substance satisfactory to the Company, as to the
applicability of such exemption to the proposed sale or distribution.
In addition, if at any time the Committee shall determine in its
discretion that the listing or qualification of the shares of Common Stock
subject to such option on any securities exchange or under any applicable law,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition to, or in connection with, the granting of an option
or the issue of shares of Common Stock thereunder, such option may not be
exercised in whole or in part unless such listing, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
11. STOCK OPTION CONTRACTS. Each option shall be evidenced by an
appropriate Contract which shall be duly executed by the Company and the
optionee, and shall contain such terms and conditions not inconsistent herewith
as may be determined by the Committee.
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12. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Notwithstanding any
other provision of the Plan, in the event of any change in the outstanding
Common Stock by reason of a stock dividend, recapitalization, merger in which
the Company is the surviving corporation, split-up, combination or exchange of
shares or the like, the aggregate number and kind of shares subject to the
Plan, the aggregate number and kind of shares subject to each outstanding
option and the exercise price thereof, and the number and kind of shares
subject to future Non-Employee Director Options and the 162(m) Maximum shall be
appropriately adjusted by the Board of Directors, whose determination shall be
conclusive.
In the event of (a) the liquidation or dissolution of the Company,
or (b) a merger in which the Company is not the surviving corporation or a
consolidation involving the Company, any outstanding options shall terminate,
unless other provision is made therefor in the transaction.
13. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was adopted
by the Board of Directors on August 10, 1994 and was amended by the Board of
Directors on July 17, 1995. No option may be granted under the Plan after
August 9, 2004. The Board of Directors, without further approval of the
Company's shareholders, may at any time suspend or terminate the Plan, in whole
or in part, or amend it from time to time in such respects as it may deem
advisable, including, without limitation, in order that ISOs granted hereunder
meet the requirements for "incentive stock options" under the Code, to comply
with the provisions of Rule 16b-3 promulgated under the Exchange Act or Section
162(m) of the Code, and to conform to any change in applicable law or to
regulations or rulings of administrative agencies; provided, however, that no
amendment shall be effective without the requisite prior or subsequent
shareholder approval which would (a) except as contemplated in Paragraph 12,
increase the maximum number of shares of Common Stock for which options may be
granted under the Plan or change the 162(m) Maximum, (b) materially increase
the benefits to participants under the Plan or (c) change the eligibility
requirements to receive options hereunder. Notwithstanding the foregoing, the
provisions regarding the selection of directors for participation in, and the
amount, the price or the timing of, Non-Employee Director Options shall not be
amended more than once every six months, other than to comport with changes in
the Code, the Employee Retirement Income Security Act or the rules thereunder.
No termination, suspension or amendment of the Plan shall, without the consent
of the holder of an existing option affected thereby, adversely affect his
rights under such option. The power of the Committee to construe and
administer any options granted under the Plan prior to the termination or sus-
pension of the Plan nevertheless shall continue after such termination or
during such suspension.
14. NON-TRANSFERABILITY OF OPTIONS. No option granted under the
Plan shall be transferable otherwise than by will or the laws of descent and
distribution, and options may be exercised, during the lifetime of the holder
thereof, only by him or his legal representatives. Except to the extent
provided above, options may not be assigned, transferred, pledged, hypothecated
or disposed of in any way (whether by operation of law or otherwise) and shall
not be subject to execution, attachment or similar process.
15. WITHHOLDING TAXES. The Company may withhold cash and/or
shares of Common Stock to be issued with respect thereto having an aggregate
fair market value equal to the amount which it determines is necessary to
satisfy its obligation to withhold Federal, state and local income taxes or
other amounts incurred by reason of the grant or exercise of an option, its
disposition, or the disposition of the underlying shares of Common Stock.
-7-<PAGE>
Alternatively, the Company may require the holder to pay to the Company such
amount, in cash, promptly upon demand. The Company shall not be required to
issue any shares of Common Stock pursuant to any such option until all required
payments have been made. Fair market value of the shares of Common Stock shall
be determined in accordance with Paragraph 5.
Notwithstanding anything in the Plan or in any Contract to the
contrary, the Company may not withhold shares of Common Stock to satisfy the
tax withholding consequences of the exercise of an option by a holder who is
subject to the reporting requirements of Section 16(a) of the Exchange Act (as
it constitutes a deemed exercise of a stock appreciation right ("SAR") under
Rule 16b-3 under the Exchange Act), unless (a) the Company has filed all
periodic reports and statements required to be filed by it pursuant to Section
13(a) of the Exchange Act for at least one year prior to the date of such
exercise, (b) the Company on a regular basis releases for publication quarterly
and annual summary statements of sales and earnings in the manner contemplated
in the rules promulgated under Section 16 of the Exchange Act, (c) except when
the date of exercise of such SAR is automatic or fixed in advance under the
Plan and is outside the control of the holder, the election by such holder to
receive cash in full or partial settlement of the SAR, as well as the exercise
of the SAR for cash, is made during the period beginning on the third business
day following the date of release of the summary statements referred to in
clause (b) and ending on the 12th business day following such date, and (d) the
option has been held for at least six months from the date of grant to the date
of cash settlement. Any holder subject to the reporting requirements of
Section 16(a) of the Exchange Act may request the Committee to withhold shares
only if the option is exercised within the applicable period prescribed above.
16. LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such
legend or legends upon the certificates for shares of Common Stock issued upon
exercise of an option under the Plan and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares as it determines,
in its discretion, to be necessary or appropriate to (a) prevent a violation
of, or to perfect an exemption from, the registration requirements of the
Securities Act, (b) implement the provisions of the Plan or any agreement
between the Company and the optionee with respect to such shares of Common
Stock, or (c) permit the Company to determine the occurrence of a
"disqualifying disposition," as described in Section 421(b) of the Code, of the
shares of Common Stock transferred upon the exercise of an ISO granted under
the Plan.
The Company shall pay all issuance taxes with respect to the
issuance of shares of Common Stock upon the exercise of an option granted under
the Plan, as well as all fees and expenses incurred by the Company in
connection with such issuance.
17. USE OF PROCEEDS. The cash proceeds from the sale of shares
of Common Stock pursuant to the exercise of options under the Plan shall be
added to the general funds of the Company and used for corporate purposes as
the Board of Directors may determine.
18. SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CERTAIN
CONSTITUENT CORPORATIONS. Anything in this Plan to the contrary
notwithstanding, the Board of Directors may, without further approval by the
shareholders, substitute new options for prior options of a Constituent
Corporation (as defined in Paragraph 19) or assume the prior options of such
Constituent Corporation.
-8- <PAGE>
19. DEFINITIONS.
(a) Subsidiary. The term "Subsidiary" shall have the same
definition as "subsidiary corporation" in Section 424(f) of the Code.
(b) Parent. The term "Parent" shall have the same definition as
"parent corporation" in Section 424(e) of the Code.
(c) Constituent Corporation. The term "Constituent Corporation"
shall mean any corporation which engages with the Company, its Parent or any
Subsidiary in a transaction to which Section 424(a) of the Code applies (or
would apply if the option assumed or substituted were an ISO), or any Parent or
any Subsidiary of such corporation.
(d) Disability. The term "Disability" shall mean a permanent and
total disability within the meaning of Section 22(e)(3) of the Code.
(e) Employee Option. The term "Employee Option" shall mean an
option granted pursuant to the Plan to an individual who, at the time of grant,
is a key employee of the Company or a Subsidiary of the Company.
(f) Consultant Option. The term "Consultant Option" shall mean a
NQSO granted pursuant to the Plan to a person who, at the time of grant, is a
consultant to Company or a Subsidiary of the Company, and at such time is nei-
ther a common law employee of the Company or any of its Subsidiaries nor a
director of the Company.
(g) Non-Employee Director Option. The term "Non-Employee
Director Option" shall mean a NQSO granted pursuant to the Plan to a person
who, at the time of the grant, is a Non-Employee Director.
(h) Non-Employee Director. The term "Non-Employee Director"
shall mean an individual who is a director of the Company, but is not a common
law employee of the Company or of any of its Subsidiaries.
20. GOVERNING LAW. The Plan, such options as may be granted
hereunder and all related matters shall be governed by, and construed in
accordance with, the laws of the State of New Jersey, without regard to
conflict of law provisions.
21. PARTIAL INVALIDITY. The invalidity or illegality of any
provision herein shall not affect the validity of any other provision.
22. SHAREHOLDER APPROVAL. The amendment to the Plan shall be
subject to approval by the affirmative vote, in person or by proxy, of a
majority of all outstanding shares of the Company at the next duly held meeting
of the Company's shareholders at which a quorum is present. No options granted
pursuant to the amendment may be exercised prior to such approval, provided
that the date of grant of any options granted thereunder shall be determined as
if the amendment to the Plan had not been subject to such approval.
Notwithstanding the foregoing, if the amendment to the Plan is not approved by
a vote of the shareholders of the Company on or before July 16, 1996, the
amendment and any options granted thereunder shall terminate, but the Plan as
in effect prior to the amendment and all options granted thereunder shall
remain in full force and effect.
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<PAGE>
EXHIBIT 10.30
</PAGE>
SHARE PURCHASE AGREEMENT (EBA)
------------------------------
MARC KEGELAERS
AND
MICROFRAME EUROPE N.V.
September 15, 1995 <PAGE>
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT made the 15th day of September, 1995
between Marc Kegelaers, an individual residing at Tuyaertsstraat 32, B-2850
B00M, Belgium ("Kegelaers" or the "Seller"), and MicroFrame Europe N.V., a
corporation existing under the laws of Belgium (the "Purchaser"), with its
registered office at Tuyaertsstraat 32, B-2850 B00M and registered with the
Commercial Register of Antwerpen duly represented by Lonnie L. Sciambi,
Chairman of the Board.
W I T N E S S E T H
WHEREAS, the Corporation (as hereinafter defined) is a
marketing organization engaged in the business of creating and managing
distribution networks and original equipment manufacturer relations for
suppliers to the telecommunications industry; and
WHEREAS, all of the issued and outstanding shares of capital
stock of the Corporation are directly owned by the Seller; and
WHEREAS, the Seller has agreed to sell to the Purchaser and
the Purchaser, in reliance upon the representations and warranties of the
Seller contained herein, has agreed to purchase from the Seller all of the
issued and outstanding shares of capital stock of the Corporation, in
accordance with the terms and conditions of this Agreement;
NOW THEREFORE, in consideration of the premises and the
mutual covenants contained in this Agreement and other valuable consideration
(the receipt and adequacy of which is hereby acknowledged by each of the
Parties, as hereinafter defined), the Parties agree as follows:
ARTICLE 1
INTERPRETATION
1.01 Defined Terms. As used in this Agreement, the following terms have
the following meanings:
" A c counts Receivable" means all accounts receivable, notes
receivable and other debts due or accruing to the Corporation in connection
with the Business as more particularly set out in Schedule 1.01(a);
"Agreement" means this share purchase agreement and all schedules
and instruments in amendment or confirmation of it; "hereof", "hereto" and
"hereunder" and similar expressions mean and refer to this Agreement and not to
any particular Article, Section, Subsection, Schedule or other subdivision;
"Article", "Section", "Subsection", "Schedule" or other subdivision of this
Agreement followed by a number means and refers to the specified Article,
Section, Subsection, Schedule or other subdivision of this Agreement;
"Assets" means all property and assets of the Corporation of every
kind and wherever situated as set forth on the Financial Statements or acquired
in the ordinary course of business since the date of such Financial Statements
through the date hereof;
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" Authorization" means, with respect to any Person, any
authorization, order, permit, approval, grant, license, consent, right,
franchise, privilege, certificate, judgment, writ, injunction, award, decree,
or by-law, rule or regulation of any Governmental Entity, whether or not having
the force of law, having jurisdiction over such Person;
"Benefit Plans" means all employee benefit plans relating to the
employees of the Corporation, including profit sharing, deferred compensation,
phantom stock option, stock option, employee stock purchase, bonus, retirement,
health or insurance plans which are disclosed as benefit plans on Schedule
3.01(ff)(v);
"Billing Period" means each of the five "rolling" twelve (12) month
periods commencing on the first anniversary of the Closing Date and on each of
the four (4) anniversary dates thereafter, each of such periods to include an
additional period of ninety (90) days following its scheduled expiration to
collect the Europe Revenues generated during such period, which if not
collected during said 90-day period shall be deemed relinquished by Seller, and
shall not carryforward to the next billing period.
"Books and Records" means, if applicable, all technical, business
and financial records, financial books and records of account, books, data,
reports, files, lists, drawings, plans, logs, briefs, customer and supplier
lists, deeds, certificates, contracts, surveys, title opinions or any other
documentation including the Corporate Records and information in any form
whatsoever (including written, printed, electronic or computer printout form)
relating to the Business;
"Business" means the business presently carried on by the
Corporation consisting of the creating and managing of distribution networks
and original equipment manufacturer relations for suppliers to the
telecommunications industry;
"Business Day" means any day of the year, other than a Saturday,
Sunday or any day which is declared a public holiday in Belgium;
"Cash Earn Out" means the portion of the Purchase Price referred to
in Section 2.02(iii) hereof and paid in accordance with Section 2.03 hereof;
"Claim" means any claim of any nature whatsoever, including any
demand, liability, obligation, debt, cause of action, suit, proceeding,
judgment, award, assessment, and reassessment;
"Closing" means the completion of the transaction of purchase and
sale contemplated in this Agreement;
"Closing Date" means the date upon which the Closing has occurred;
"Consents" means the consents of contracting parties to any
Contracts which are required thereunder with respect to the transactions
contemplated in this Agreement, and "Consent" means any one of such Consents;
"Consulting Agreement" shall mean the consulting agreement of even
date herewith between Kegelaers and MicroFrame Europe N.V.;
"Contracts" means all contracts through the date hereof to which
the Corporation is a party including all contracts, leases, licenses,
undertakings, engagements or commitments of any nature, written or oral, which
the Corporation has entered into in connection with the Business;
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"Corporate Records" means the corporate records of the Corporation,
including (i) the certificate of incorporation, if any, by-laws, any unanimous
shareholders agreement and any amendments thereto; (ii) all minutes of meetings
and resolutions of shareholders, directors and any committee thereof; (iii) the
share certificate books, register of shareholders and register of transfers;
and (iv) all accounting records, including without limitation all records
relating to the Financial Statements;
" Corporation" means European Business Associates BVBA, a
corporation existing under the laws of Belgium with its registered office at
Tuyaertsstraat 32, 2850 B00M, registered with the Commercial Register of
Antwerpen under the number 276751;
"Effective Time" means 3:00 p.m. on the Closing Date;
"Encumbrances" means liens, charges, mortgages, pledges, security
interests, claims, defects of title, restrictions and any other rights of third
parties relating to any property, including rights of set-off and voting
trusts, and other encumbrances of any kind;
"European Revenues"means the cash revenues of the Purchaser and the
Parent Corporation generated and collected as a result of any sales from the
European Countries set out on Schedule 1.01(b) hereof;
"Financial Statements" means the nonaudited balance sheet of the
Corporation for the fiscal year ended December 31, 1994 and the six month
period ended June 30, 1995 and the accompanying statements of income and
retained earnings and changes in financial position for the period then ended
and all notes thereto;
"GAAP" means at any time, generally accepted accounting principles
in Belgium and the European Union;
" Governmental Entity" means (i) any multinational, federal,
provincial, state, municipal, local or other governmental or public department,
court, commission, board, bureau, agency or instrumentality, domestic or
foreign; (ii) any subdivision, agent, commission, board, or authority of any of
the foregoing; or (iii) any quasigovernmental or private body exercising any
regulatory, expropriation or taxing authority under or for the account of any
of the foregoing;
"Intellectual Properties" means any and all right, title, interest
and benefit of the Corporation in and to any registered or unregistered world
marks, trade or brand names, service marks, copyrights, copyright applications,
designs, inventions, patents, patent applications, patent rights (including any
patents issuing on such applications or rights), licenses, sub-licenses,
franchises, technology, computer rights and other intellectual or industrial
property other than know how;
"Laws" means all statutes, codes, ordinances, decrees, rules,
regulations, municipal by-laws, judicial or arbitral or administrative or
ministerial or departmental or regulatory judgments, orders, decisions, rulings
or awards, policies, guidelines or any provisions of the foregoing, including
general principles of common and equity, binding on or affecting the Person
referred to in the context in which such word is used; and "Law" means any one
of them;
"Leased Properties" means the real properties forming the subject
matter of the Property Lease at the municipal address listed in Schedule
3.01(v);
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"Letter Agreement" means the letter of agreement entered into on
May 31, 1995 among the Purchaser, the Corporation and Kegelaers;
"Lien" means, through the date hereof, any bailment, assignment,
levy, execution, seizure, attachment, garnishment, security interest, ownership
interest or with respect to ownership interest created by permitted
encumbrances, mortgage, charge, pledge, lien, or other encumbrance whatsoever,
whether fixed or floating and howsoever created or arising;
"Loss" means any loss whatsoever, including expenses, costs,
damages, penalties, fines, charges, claims, demands, liabilities, interest and
any and all reasonable legal fees and disbursements;
" Parent Corporation" means MicroFrame, Inc., a corporation
organized under the laws of the State of New Jersey, which corporation owns 124
shares of capital stock of the Purchaser;
"Parties" means the Seller and the Purchaser; and "Party" means any
one of them;
"Person" means an individual, partnership, corporation, trust,
unincorporated association, joint venture or other entity or Governmental
Entity, and pronouns have a similarly extended meaning;
"Property Lease" means the lease of real property to which the
Corporation is a party, as listed and described in Schedule 3.01(v);
"Purchase Price" has the meaning ascribed thereto in Section 2.02;
"Purchased Shares" means 100 shares of capital stock, no par value
of the Corporation, being all of the issued and outstanding shares of the
Corporation;
"Purchaser" means MicroFrame Europe N.V., a corporation existing
under the laws of Belgium;
"Purchaser Stock" means "restricted" shares (as such term is
defined in Rule 144 of the Securities Act of 1933) of the Common Stock, $.001
par value, of the Parent Corporation;
"Seller" shall have the same meaning set forth in the preamble to
this Agreement;
"Share Earn Out" means the portion of the Purchase Price referred
to in Section 2.02(iv) hereof and paid in accordance with Section 2.04 hereof;
Definitions set forth in any Schedule are incorporated herein by
reference.
1.02 Gender and Number. Any reference in this Agreement to gender shall
include all genders, and words importing the singular number only shall include
the plural and vice versa.
1.03 Headings, Etc. The division of this Agreement into Articles,
Sections, Subsections and other subdivisions and the insertion of headings are
for convenience of reference only and shall not affect or be utilized in the
construction or interpretation of this Agreement.
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1.04 Currency. All references in this Agreement to dollars are
expressed in U.S. currency.
1.05 Severability. Any Article, Section, Subsection or other subdivision
of this Agreement or any other provision of this Agreement which is, or becomes,
illegal, invalid or unenforceable shall be severed from this Agreement and be
ineffective to the extent of such illegality, invalidity or unenforceability
and shall not affect or impair the remaining provisions hereof.
1.06 Entire Agreement. This Agreement together with the Consulting
Agreement constitutes the entire agreement between the Parties pertaining to
the subject matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the Parties
including, without limitation, the Letter Agreement dated May 31, 1995 among
the Purchaser, Kegelaers and the Corporation. There are no representations,
warranties, conditions or other agreements, express or implied, statutory or
otherwise, between the Parties in connection with the subject matter of this
Agreement, except as specifically set forth herein.
1.07 Amendments. This Agreement may only be amended, modified or
supplemented by a written agreement signed by all of the Parties.
1.08 Waiver. No waiver of any of the provisions of this Agreement shall
be deemed to constitute a waiver of any other provision (whether or not
similar), nor shall such waiver constitute a waiver or continuing waiver unless
otherwise expressly provided in writing duly executed by the Party to be bound
thereby.
1.09 Governing Law; Consent to Jurisdiction; Venue. This Agreement
shall be governed by and construed and enforced in accordance with the laws of
Belgium. Each party hereby waives personal service of any summons, complaint
or other process, which may be delivered by any of the means permitted for
notices under Section 9.02 hereof. In addition, without limiting the
foregoing, the Seller hereby appoints Jan Bergmans, Esq., Eikenstraat 80, B2840
Rumst, Belgium, counsel to the Seller, to receive, for him and on his behalf,
service of process with respect to any dispute between the Seller and the
Purchaser arising under or related to this Agreement or the Consulting
Agreement. In addition, the Purchaser hereby appoints David Gillet, Esq.,
Loeff Claeys Verbeke, Avenue de Tervueren 268A, 1150 Brussels, Belgium, counsel
to the Purchaser, to receive, for it and on its behalf, service of process with
respect to any dispute between the Seller and the Purchaser arising under or
related to this Agreement. Service of process upon such authorized agents
shall be deemed, in every respect, effective service of process upon the Seller
or the Purchaser, as the case may be.
1.10 Inclusion. Where the word "including" or "includes" is used in
this Agreement it means "including (or includes) without limitation".
1.11 Accounting Terms. All accounting terms not specifically defined
in this Agreement shall be construed in accordance with GAAP.
1.12 Incorporation of Schedules. The following are the schedules
attached to and incorporated in this Agreement:
Schedule 1.01(a) - Accounts Receivable (including Overdue
Accounts Receivable)
Schedule 1.01(b) - European Countries
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Schedule 2.04 - Share Earn Out
Schedule 3.01(p) - Authorizations
Schedule 3.01(v) - Leased Properties
Schedule 3.01(y) - Indebtedness
Schedule 3.01(w) - Material Contracts
Schedule 3.01 (aa) - Personal Property
Schedule 3.01(ee) - Financial Commitments to Seller
Schedule 3.01(ff) - Employees and Compensation
Schedule 3.01(ff)(v) - Benefit Plans
Schedule 3.01(hh) - Insurance Policies
Schedule 3.01(kk) - Bank Accounts and Powers of Attorney
ARTICLE 2
PURCHASED ASSETS AND PURCHASE PRICE
2.01 Purchase and Sale. Subject to the terms and conditions hereof, the
Seller agrees to sell, assign and transfer to the Purchaser and the Purchaser
agrees to purchase from the Seller on the Closing Date, the Purchased Shares.
2.02 Purchase Price. The aggregate purchase price (the "Purchase
Price") payable by the Purchaser to the Seller for the Purchased Shares shall
be (i) an aggregate amount of U.S.$50,000; (ii) an aggregate amount of 25,000
shares of Purchaser Stock; (iii) the Cash Earn Out amount calculated in
accordance with Section 2.03; and (iv) the Share Earn Out amount calculated in
accordance with Section 2.04.
2.03 Payment of the Cash Earn Out. Subject to compliance by Seller with
the terms and conditions contained herein and compliance by Kegelaers with the
terms and conditions of the Consulting Agreement, for each of the five (5)
Billing Periods, the Purchaser shall pay to the Seller an aggregate amount of
.5% (one-half of one percent) of European Revenues generated and collected
during the applicable Billing Period, to be paid no later than thirty (30) days
following each of the Billing Periods.
2.04 Payment of the Share Earn Out. Subject to compliance by Seller
with the terms and conditions contained herein and compliance by Kegelaers with
the terms and conditions of the Consulting Agreement, for each of the five (5)
Billing Periods, the Purchaser shall cause the Parent Corporation, to pay to
the Seller an aggregate amount of one (1) share of Purchaser Stock for the
amount of European Revenues set forth in column B of Schedule 2.04 hereto for
each of the respective Billing Periods set forth in column A of Schedule 2.04
hereto, provided that no payment of Purchaser Stock will be made for any
particular Billing Period pursuant to this paragraph 2.04 unless the European
Revenues during such period exceed the minimum thresholds listed in column C to
Schedule 2.04 hereto with respect to such period. Payments shall be made no
later than thirty (30) days following each of the Billing Periods.
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2.05 Death of the Seller. In the event of the death of the Seller and
provided that the Seller is not in default hereunder or under the Consulting
Agreement, the estate of the Seller shall be entitled to receive, and the
Company will pay to such estate, all amounts the Seller would have been
entitled to receive under this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLER
3.01 Representations and Warranties of the Seller. The Seller
represents as follows to the Purchaser and acknowledges and confirms that the
Purchaser is relying upon such representations and warranties in connection
with the purchase by the Purchaser of the Purchased Shares.
Corporate Matters Relating to the Seller and the Corporation
(a) Due Incorporation and Existence of the Corporation.
The Corporation is a corporation duly incorporated and validly existing and in
good standing under the laws of Belgium.
(b) Corporate Power. The Corporation has the corporate
power and authority to own its property and to carry on the Business as now
being conducted by it.
(c) Qualification. The Corporation is duly qualified,
licensed or registered to carry on business as a corporation in Belgium and in
all jurisdictions in which the nature of the Assets or the Business makes such
qualification necessary and where failure to so qualify would have a material
adverse effect on the affairs, assets, liabilities, business or prospects,
operations or conditions of the Corporation or the Business, financial or
otherwise.
(d) Authorized Capital. The authorized capital of the
Corporation consists of 100 shares of capital stock, no par value, of which at
the date hereof, 100 shares (and no more) have been duly issued and are
outstanding as fully paid and non-assessable. Immediately prior to Closing,
the Seller will be the registered and beneficial owner of an aggregate of 100
outstanding shares of capital stock, no par value, of the Corporation which
will be all of the issued and outstanding shares of the Corporation.
(e) Options, etc. Except for the Purchaser's rights
hereunder, no Person has any option, warrant, right, call, commitment,
conversion right, right of exchange or other agreement or any right or
privilege (whether by law, pre-emptive or contractual) capable of becoming an
option, warrant, right, call, commitment, conversion right, right of exchange
or other agreement (i) for the purchase from the Seller of any of the Purchased
Shares applicable to such Seller; or (ii) for the purchase, subscription,
allotment or issuance of any of the unissued shares in the capital of the
Corporation or of any securities of the Corporation.
(f) Title to Purchased Shares. The Seller is the
registered and beneficial owner of the Purchased Shares with good title
thereto, free and clear of all Encumbrances. The Seller has the right, power
and authority to enter into this Agreement and to sell the Purchased Shares as
contemplated herein. The delivery to the Purchaser by the Seller of the
Purchased Shares pursuant to the provisions hereof will transfer to the
Purchaser valid title thereto, free and clear of all Encumbrances, with all
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taxes attributable to the transfer of the Purchased Shares, excluding income
taxes, paid or provided for.
(g) Dividends, Distributions and Remuneration. Since
December 31, 1994, the Corporation has not, directly or indirectly, declared or
paid any dividends or declared or made any other distribution on any of its
shares of any class and has not, directly or indirectly, redeemed, purchased or
otherwise acquired any of its shares of any class or agreed to do so and has
not paid bonuses or salary in excess of those amounts set forth in Schedule
3.01(ff)
(h) Corporate Records. The Corporate Records of the
Corporation are complete and accurate in all material respects and all
corporate proceedings and actions of the Business reflected therein have been
conducted or taken in compliance with all applicable Laws and with the
Certificate of Incorporation and by-laws of the Corporation, and without
limiting the generality of the foregoing, to knowledge of the Seller, (i) the
minute books contain complete and accurate in all material respects minutes of
all meetings of the shareholders of the Corporation held since the
incorporation of the Corporation, and all such meetings were duly called and
held; (ii) the minute books contain all written resolutions passed or ratified
by the shareholders of the Corporation and all such resolutions were duly
passed or ratified; (iii) the register of shareholders is complete and accurate
in all material respects, and all such transfers have been duly completed and
approved and any exigible tax payable in connection with the transfer of any
securities of the Corporation has been duly paid; and (iv) all former and
present directors and officers of the Corporation were duly elected or
appointed as the case may be.
(i) Validity of Agreement. The execution, delivery and
performance by the Seller of this Agreement and the consummation of the
transactions contemplated hereby do not (or would not with the giving of
notice, the lapse of time or the happening of any other event or condition)
result in a violation or a breach of, or a default under or give rise to a
right of termination, amendment or cancellation or the acceleration of any
obligation under (A) any charter or by-law instruments of the Corporation; (B)
any contracts or instruments to which either the Seller or the Corporation is a
party or by which either the Seller or the Corporation is bound; or (C) of any
Laws applicable to either the Seller or the Corporation. This Agreement
constitutes a legal, valid and binding obligation of the Seller enforceable
against him in accordance with its terms.
(j) Restrictive Documents. Neither the Corporation nor the
Seller is subject to, or a party to, any charter or by-law restriction, any
Law, any Claim, any contract or instrument, any Encumbrance or any other
restriction of any kind or character which would prevent the consummation of
the transactions contemplated by this Agreement or compliance with the terms,
conditions and provisions hereof or the continued operation of the Business by
the Corporation after the Closing Date on substantially the same basis as
heretofore operated, or which would restrict the ability of the Purchaser to
acquire any of the Purchased Shares or to cause the Corporation to conduct the
Business in any area in each case except for the necessity of obtaining the
Consents.
(k) Acquisition of Purchaser Stock for Investment. The
Seller is acquiring the Purchaser Stock pursuant to Sections 2.02 and 2.04
hereof for investment and not with a view toward, or for the resale in
connection with, any distribution thereof, nor with any present intention of
distributing or selling such Purchaser Stock. The Seller understands that the
Purchaser Stock has not been registered under the Securities Act of 1933, as
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amended ("Securities Act"). The Seller agrees that such Purchaser Stock may
not be sold publicly, transferred, offered for sale, pledged, hypothecated or
otherwise disposed of within or outside the United States and must be held
unless it is subsequently registered under the Securities Act or unless an
exemption from registration is available under the Securities Act.
General Matters Relating to the Business
(l) Conduct of Business in Ordinary Course. Since June 30,
1995, the Business has been carried on in the ordinary course and the
Corporation has not:
(i) incurred any liability or obligation of any
nature (whether accrued, absolute, contingent or
o t h e rwise), which individually or in the
aggregate exceeded US $5,000;
(ii) sold, transferred or otherwise disposed of any of
the Assets;
(iii) made any material capital expenditure or
commitment therefor which individually or in the
aggregate exceeds US $5,000;
(iv) made any bonus or profit sharing payment or
distribution of profits by way of dividend or
otherwise;
(v) increased its indebtedness for borrowed money, or
made any loan to any Person;
(vi) wrote off as uncollectible any notes or Accounts
Receivable, except write-offs in the ordinary
course of the business charged to applicable
reserves, none of which individually or in the
aggregate is material to the Corporation;
(vii) permitted any of the Assets to be subject to any
Encumbrances;
(viii) canceled or waived any material claims or
material rights;
(ix) granted any general increase in the rate of
wages, salaries, bonuses, or other remuneration
of any executive or other employee;
(x) made any change in any method of accounting or
auditing practice;
(xi) entered into any non-arms-length transaction;
(xii) amended the articles or by-laws of the
Corporation; or
(xiii) agreed, whether or not in writing, to do
any of the foregoing.
(m) No Material Adverse Change. Since June 30, 1995, there
has been no change in the affairs, assets, liabilities, business, prospects,
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operations or conditions of the Corporation or the Business, financial or
otherwise, whether arising as a result of any legislative or regulatory change,
revocation of any license or right to do business, fire, explosion, accident,
casualty, labor trouble, flood, drought, riot, storm, condemnation, act of God,
public force or otherwise, which has materially adversely affected or which may
materially adversely affect the Corporation or the Business, except for general
economic conditions affecting Europe or the industry in which the Corporation
or the Business operates.
(n) Compliance with Laws. The Corporation is conducting
the Business in compliance with all applicable laws of each jurisdiction in
which the Business is carried on.
(o) Environmental Compliance. The Corporation has, since
its incorporation through the date hereof, never at any time received, handled,
generated, used, stored, deposited, labeled, handled, treated, documented,
transported or disposed of any hazardous substances except in accordance with
applicable law. Neither the Seller nor the Corporation has received notice
that any of the Leased Properties are subject to any material environmental
contamination including any patent or latent environmental contamination of the
atmosphere, air, soil, subsoil, ground water or surface waters within or
adjacent to the Leased Properties, or that any of the Leased Properties contain
any asbestos, urea formaldehyde foam insulation or polychlorinated byphenyls
(PCBs).
(p) Authorizations. The Corporation owns, holds, possesses
or lawfully uses in the operation of the Business all Authorizations which are
in any manner reasonably necessary for it to conduct the Business as presently
conducted or for the ownership and use of the Assets as used by the
Corporation, free and clear of all Encumbrances and in compliance with all laws
applicable thereto. All such Authorizations which are material to the conduct
of the Business or the ownership or use by the Corporation of the Assets are
listed and described in Schedule 3.01(p) and the Corporation is not in default,
nor has it received any notice of any Claim in default, with respect to any
such Authorizations. None of such Authorizations will be adversely affected by
the consummation of the transactions contemplated hereby. None of the Seller
owns or has any proprietary, financial or other interests (direct or indirect)
in any Authorization which the Corporation owns, possesses or uses in the
operation of the Business as now or previously conducted.
Matters Relating to the Assets
(q) Title to the Assets. The Corporation has good title to
all of the Assets. The Corporation has legal and beneficial ownership of the
Assets free and clear of all Encumbrances.
(r) No Options, Etc. No Person has any written or oral
agreement, option, understanding or commitment, or any right or privilege
capable of becoming such for the purchase from the Corporation of any of the
Assets, other than pursuant to purchase orders or other similar documents
accepted by the Corporation in the ordinary course of the Business.
(s) Collectibility. Accounts Receivable and amounts owing
to the Corporation by third parties are bona fide and collectible in full
without any offset or any other Claims.
(t) Liabilities. Except for those liabilities set forth on
the Financial Statements and for those liabilities incurred in the ordinary
course of business since the date of such Financial Statements or which are
otherwise disclosed herein, the Corporation is not subject to any liabilities,
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absolute or contingent, and whether or not required in accordance with the
applicable accounting Laws of Belgium to be disclosed on a balance sheet.
(u) Real Property. The Corporation is not the owner of, or
under any agreement or option to own, any real property or any interest
therein.
(v) Validity of Property Lease. The Corporation is not a
party to, or under any agreement or option to become a party to, any lease with
respect to real property or furnishings used or to be used in its Business,
other than the Property Lease. With respect to the Property Lease, (i) all
rents and additional rents due to the date hereof have been paid, (ii) neither
the lessor nor the lessee is in default thereunder, (iii) no waiver, indulgence
or postponement of the lessee's obligations thereunder has been granted by the
lessor, (iv) there exists no event of default or event, occurrence, condition
or act (including the purchase of the Purchased Shares hereunder) which, with
the giving of notice, the lapse of time or the happening of any other event or
condition, would become a default under such Property Lease, (v) the
Corporation has not violated any of the terms or conditions under the Property
Lease in any material respect, and (vi) all of the covenants, if any, to be
performed by any other party under any such Property Lease have been fully
performed. Schedule 3.01(v) contains a true, correct and complete copy of the
terms of the Property Lease.
(w) Material Contracts. All of the material Contracts of
the Corporation are listed on Schedule 3.01(w) hereof and except for such
Contracts and the Contracts listed in Schedules 3.01(ff) and 3.01(y) together
with the Property Lease, and the insurance policies set forth in Schedule
3.01(hh) , which constitute all the material Contracts of the Corporation, the
Corporation is not a party to or bound by any other:
(i) employment agreement, bonus, deferred
compensation, pension, profit sharing, stock
option, phantom stock plan, employee stock
purchase, health, insurance, retirement or other
employee benefit plan, any collective agreements
or any agreement (oral or written) providing for
compensation to be paid to any employee upon the
sale of any substantial portion of outstanding
shares in the capital of the Corporation;
(ii) agreement or commitment relating to the borrowing
of money;
(iii) agreement or commitment relating to capital
expenditures;
(iv) loan or advance to, or investment in, any other
Person or any agreement or commitment relating to
the making of any such loan, advance or
investment;
(v) bonds, debentures, mortgages, notes or other
similar indebtedness or liabilities whatsoever or
any agreement to create or issue any bonds,
debentures, mortgages, notes or other similar
indebtedness;
-11- <PAGE>
(vi) guarantee or other contingent liability in
respect of any indebtedness or obligation of any
other Person;
(vii) management, consulting or any other similar
agreement or commitment;
(viii) agreement or commitment limiting the freedom
of the Corporation or the owner of the Assets or
the Business to engage in any line of business
or to compete with any other Person;
(ix) licensing or other agreement or commitment
relating to intellectual property used by the
Corporation in the conduct of the Business;
(x) agreement or commitment on a non-arm's length
basis;
(xi) agreement or commitment not entered into in the
ordinary course of the Business; and
(xii) agreement, arrangement, commitment or
understanding with any Person, whether written or
oral, implied or otherwise, that is not recorded
in the Books and Records of the Corporation;
There are no Consents required in connection with the transactions contemplated
hereunder except as described in Schedule 3.01(p) and 3.01(w).
(x) No Breach of Contracts. Each of the Contracts is in
full force and effect and there exists no default or event of default or event,
occurrence, condition or act (including the purchase of the Purchased Shares
hereunder) which, with the giving of notice, the lapse of time or the happening
of any other event or condition, would become a default or event of default
thereunder. The Corporation has not violated or breached, in any respect, any
of the terms or conditions of any Contract and all the covenants to be
performed by any other party thereto have been fully performed. True, correct
and complete copies of all Contracts in writing have been delivered or made
available to the Purchaser.
(y) Indebtedness. Schedule 3.01(y) contains a complete and
accurate list of all third party funders to whom the Corporation is indebted.
The contracts and other instruments reflecting such indebtedness are all of the
contracts and such instruments to which the Corporation is a party pertaining
to the borrowing of money by the Corporation. All such contracts and
instruments are in full force and effect, no default exists thereunder and all
contracts and instruments pertaining thereto are reflected in the Books and
Records of the Corporation.
(z) Intellectual Property Rights. The Corporation does not
use, license or own any material Intellectual Properties in whole or in part
and no Intellectual Properties are required for the carrying on of the Business
in the manner heretofore carried on. The conduct of the Business does not
infringe upon the Intellectual Properties of any Person.
(aa) Condition of Equipment and Vehicles. All tangible
personal property forming part of the Assets, including furniture, machinery
and equipment and motor vehicles, whether owned or leased, are set forth in
-12- <PAGE>
Schedule 3.01 (aa), are in good operating condition and are in a state of good
repair and maintenance.
(bb) Subsidiaries. The Corporation has no subsidiaries or
agreements of any nature to acquire any subsidiary or to acquire any other
business.
Financial Matters
(cc) Books and Records. All Books and Records of the
Corporation have been fully, properly and accurately kept and completed in all
material respects. The Corporation's records, systems, controls, data or
information are under the exclusive ownership and direct control of the
Corporation.
(dd) Financial Statements. The Financial Statements have
been prepared in accordance with the applicable accounting principles of
Belgium, are consistent with those of previous fiscal years, are true and
correct in all respects and present fairly the financial position of the
Corporation as at December 31, 1994.
(ee) Commitments to Seller. The amounts and details of all
financial commitments owed by the Corporation to the Seller are set out in
Schedule 3.01(ee) hereof which represents any outstanding obligation of the
Corporation payable by the Corporation to the Seller as of the date hereof.
Particular Matters Relating to the Business
(ff) Employees.
(i) The Corporation is in compliance with all Laws
respecting employment and employment practices,
terms and conditions of employment and has not
and is not engaged in any unfair labor practice.
(ii) No unfair labor practice, complaint or grievance
against the Corporation is pending or is
threatened before any labor relations board or
similar Governmental Entity with respect to the
Business.
(iii) There is no labor strike, dispute, slowdown or
stoppage actually pending or threatened against
the Corporation with respect to the Business.
(iv) No union representation question exists
respecting the employees of the Corporation in
connection with the Business.
(v) The Corporation has never maintained or
contributed to any employee benefit plans other
than the Benefit Plans as set out in Schedule
3.01(ff)(v);
(vi) No grievance which might have an adverse effect
upon the Corporation or the conduct of the
Business exists, no arbitration proceeding
arising out of or under any collective agreement
is pending, and no claim therefor has been
asserted.
-13- <PAGE>
(vii) No collective bargaining agreement or similar
agreement is currently being negotiated by the
Corporation with respect to any employees of the
Corporation and no collective agreements are
currently in force with respect to its employees.
(viii) Schedule 3.01(ff) contains a complete list
of all permanent and full time employees of
the Corporation, their salaries and wage
rates, bonus arrangements, benefits,
positions and length of service.
(ix) No employee of the Corporation has any agreement
as to length of notice required to terminate his
or her employment, other than such as results by
law from the employment of an employee without
agreement as to such notice or as to length of
employment.
(x) All vacation pay (including all accrued vacation
pay), bonuses and commissions are set out in
Schedule 3.01(ff) and other employee benefit
payments are set out in Schedule 3.01(ff)(v).
(gg) None of the Benefit Plans, nor any trust created
thereunder, nor any trustee or administrator thereof, has engaged in any
prohibited transactions under the applicable Laws of Belgium. No matter
relating to any of the Benefit Plans is pending before any court or government
agency.
(hh) Insurance. Schedule 3.01(hh) sets forth a list of all
insurance policies which are maintained by or on behalf of the Corporation with
respect to the Corporation, the Business, its Assets, employees, and otherwise
and any pending Claims thereunder. The Corporation (or the Seller as the case
may be) is not in default with respect to the payment of any premiums under any
such insurance policy and has not failed to give any notice or to present any
Claim under any such insurance policy in a due and timely fashion. There is no
circumstance in respect of which any Person may make a Claim against the
Corporation, whether covered by insurance or not. Such policies are in full
force and effect free from any right of termination on the part of the
insurers, except upon notice as stipulated in such policies. There has not
been any material adverse change in the relationship of the Corporation with
its insurers, the availability of coverage, or in the premiums payable pursuant
to such policies.
(ii) Litigation. Except as set forth on Schedule 3.01(ii),
there is no action, suit or proceeding, at law or in equity, by any Person, nor
any arbitration, administrative or other proceeding by or before (or any
investigation by) any Governmental Entity pending or threatened against or
affecting the Corporation or any of its properties or rights or any of the
Assets, and the Seller does not know of any valid basis for any such action,
suit, proceeding, arbitration or investigation. The Corporation is not subject
to any judgment, order or decree entered in any lawsuit or proceeding.
(jj) Taxes. The Corporation has filed or caused to be
filed, within the times and within the manner prescribed by Law, all tax
returns and tax reports which are required to be filed by or with respect to
the Corporation or the Business in each jurisdiction in which the Corporation
is authorized to do business. The information contained in such returns and
-14- <PAGE>
reports is correct and complete in all material respects. All taxes and
assessments, of any kind (including interest and penalties), that are or may
become payable by or due from the Corporation, with respect to any time prior
to the date hereof, have been fully paid or disclosed or provided for in the
Books and Records and the Financial Statements. No examination of any tax
return of the Corporation is currently in progress, there are no outstanding
agreements or waivers extending the statutory period providing for an extension
of time with respect to the assessment or re-assessment of tax or the filing of
any tax return by, or any payment of any tax by the Corporation, and there are
no Claims (other than for tax liabilities accrued and not yet due which have
been fully provided for as aforesaid) pending against the Corporation in
respect of taxes or, to the best of the Corporation's or the Seller's
knowledge, threatened. The Corporation has withheld from each payment made by
it the amount of all taxes and other deductions required to be withheld
therefrom and has paid the same to the proper taxing or other authority within
the time prescribed under any applicable law.
(kk) Bank Accounts and Powers of Attorney. Schedule
3.01(kk) is a correct and complete list showing (i) the name of each bank in
which the Corporation has an account or safe deposit box and the names of all
persons authorized to draw thereon or to have access thereto; and (ii) the
names of any persons holding powers of attorney from the Corporation and a
summary statement of the terms thereof.
(ll) Full Disclosure. Neither this Agreement nor any
certificate or statement in writing which has been supplied by or on behalf of
the Corporation or the Seller in connection with the transactions contemplated
hereby contains any untrue statement of a material fact, or omits any statement
of a material fact necessary in order to make the statements contained herein
or therein not materially misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
4.01 Representations and Warranties of the Purchaser. The Purchaser
represents and warrants as follows to the Seller and acknowledges and confirms
that the Seller is relying on such representations and warranties in connection
with the sale by the Seller of the Purchased Shares:
(a) Due Incorporation and Existence. The Purchaser is a
corporation duly incorporated and validly existing and in good standing under
the laws of Belgium.
(b) Validity of Agreement. The Purchaser has all necessary
corporate power to enter into and to perform its obligations under this
Agreement. The execution, delivery and performance by the Purchaser of this
Agreement and the consummation of the transactions contemplated hereby:
(i) have been duly authorized by all necessary
corporate action on the part of the Purchaser;
and
(ii) do not (or would not with the giving of notice,
the lapse of time or the happening of any other
event or condition) result in a violation or a
breach of, or a default under or give rise to a
right of termination, amendment or cancellation
-15- <PAGE>
or the acceleration of any obligation under (A)
any charter or by-law instruments of the
Purchaser; (B) any contracts or instruments to
which the Purchaser is a party or by which the
Purchaser is bound; or (C) of any Laws applicable
to the Purchaser.
This Agreement constitutes a legal, valid and binding
obligation of the Purchaser enforceable against it in accordance with its terms
subject to bankruptcy, insolvency, reorganization, winding-up, moratorium and
other laws affecting the rights of creditors generally and by general
principles of equity.
ARTICLE 5
NON - COMPETITION
5.01 Non-Competition. (a) The Seller hereby covenants that he
will not, directly or indirectly, at any time prior to the eighth anniversary
of the Closing Date, engage in the business of, own or control any interest in,
act as a director, officer or consultant to or be connected in any manner with,
as an employee or otherwise, any person, firm, corporation, association or
other entity other than the Purchaser, the Parent Corporation or any of their
subsidiaries or affiliated entities which is directly or indirectly engaged in
any business in which the Purchaser, the Parent Corporation or any of their
subsidiaries or affiliated entities is then engaged;
(b) from and after the Closing Date, directly or
indirectly, solicit (i) any of the customers of the Corporation existing as of
the Closing Date or which existed within eighteen (18) months prior to the
Closing Date and which are transferred to the Purchaser, or (ii) any of the
Purchaser's or the Parent Corporation's or their subsidiaries' or affiliated
entities' customers; or
(c) induce or persuade any employee or consultant of
the Purchaser or any of its subsidiaries or affiliated entities to join him in
any activity prohibited by this Section 5.01.
ARTICLE 6
DELIVERIES AT CLOSING
6.01 Deliveries of the Seller. The Seller shall have delivered or
caused to be delivered to the Purchaser the following in form and substance
reasonably satisfactory to the Purchaser:
(a) all Consents required for the completion of
the transaction contemplated herein,
including the Consent of each financial
institution or other lender to which the
Corporation is currently indebted as set
forth in Schedule 3.01(y) herein;
(b) a shareholders' register representing the
Purchased Shares duly endorsed in blank for
transfer to the Purchaser;
(c) a duly executed resignation effective as at
the Closing Date of each director and
-16-<PAGE>
officer of the Corporation as the Purchaser
may specify;
(d) a release in favor of the Corporation of
such officers and directors of the
Corporation as the Purchaser may specify in
the form reasonable satisfactory to the
Purchaser;
(e) the Consulting Agreement duly executed by
Kegelaers and MicroFrame Europe N.V.
6.02 Deliveries of the Purchaser. The Purchaser shall have delivered or
caused to be delivered to the Seller the following in form and substance
satisfactory to the Seller:
(a) payment of the Purchase Price in accordance
with Article 2;
(b) the Consulting Agreement duly executed by
Kegelaers and MicroFrame Europe N.V.
ARTICLE 7
CLOSING
7.01 D a te, Time and Place of Closing. The completion of the
transactions contemplated by this Agreement shall take place at the offices of
Loeff, Claeys, Verbeke, on the Closing Date at the hour of 3:00 p.m.
7.02 Closing Procedures. Subject to satisfaction or waiver by the
relevant Party of the Deliveries at Closing set forth herein on the Closing
Date, the Seller shall deliver to the Purchaser actual possession of the
Purchased Shares and the instruments of conveyance described in Subsection 6.01
and upon such delivery, the Purchaser shall deliver to the Seller the
instruments of conveyance described in Section 6.02 and shall pay the Purchase
Price in accordance with Section 2.02. The transfer of possession of the
Purchased Shares shall be deemed to take effect as at the Effective Time on the
Closing Date.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITIES
8.01 Survival of Representations and Warranties. (a) The
representations and warranties of the Seller contained in this Agreement shall
survive the Closing and, notwithstanding such or any investigation made by or
on behalf of the Purchaser, shall continue in full force and effect for the
benefit of the Purchaser, without limitation hereunder.
(b) The representations and warranties of the Purchaser
contained in this Agreement shall survive the Closing and, notwithstanding such
Closing or any investigation made by or on behalf of the Seller, shall continue
in full force and effect for the benefit of the Seller, without limitation
hereunder.
8.02 Indemnification in Favor of the Purchaser. The Seller shall
indemnify and save the Purchaser and the Parent Corporation and their
-17- <PAGE>
respective shareholders, directors, officers, employees, agents and
representatives harmless (net of any income tax benefit resulting therefrom the
underlying Claims) of and from any Claim or Loss suffered by, imposed upon or
asserted against the Purchaser and the Parent Corporation as a result of, in
respect of, connected with or arising out of, under or pursuant to:
(a) any failure of the Seller to perform or fulfil any
covenant or undertaking of any of them under this Agreement; and
(b) any breach or inaccuracy of any representation or
warranty given by the Seller contained in this
Agreement.
8.03 Indemnification in Favor of the Seller. The Purchaser shall
indemnify and save the Seller harmless of and from any Claim or Loss suffered
by, imposed upon or asserted against the Seller as a result of, in respect of,
connected with or arising out of, under or pursuant to:
(a) any failure by the Purchaser to perform and
fulfil any covenant of the Purchaser under this
Agreement; and
(b) subject to the limitation period set forth in
Section 8.01 hereof, any breach or inaccuracy of
any representation or warranty given by the
Purchaser contained in this Agreement.
8.04 Indemnification Proceedings. (a) Any party seeking
indemnification under this Article (the "indemnified party") shall forthwith
notify the party against whom a claim for indemnification is sought hereunder
(the "indemnifying party") in writing, which notice shall specify, in
reasonable detail, the nature and estimated amount of the claim. If a claim by
a third party is made against an indemnified party, and if the indemnified
party intends to seek indemnity with respect thereto under this Article, the
indemnified party shall promptly (and in any case within 30 days of such claim
being made) notify the indemnifying party of such with reasonable particulars.
The indemnifying party shall have 30 days after receipt of such notice to
undertake to conduct and control, through counsel of its own choosing and at
its expense, the settlement or defense thereof, and the indemnified party shall
cooperate with it in connection therewith; except that with respect to
settlements entered into by the indemnifying party (i) the consent of the
indemnified party shall be required if the settlement provides for equitable
relief against the indemnified party, which consent shall not be unreasonably
withheld or delayed; and (ii) the indemnifying party shall obtain the release
of the indemnified party. If the indemnifying party undertakes to conduct and
control the settlement or defense of such claim (A) the indemnifying party
shall permit the indemnified party to participate in such settlement or defense
through counsel chosen by the indemnified party, provided that the fees and
expenses of such counsel shall be borne by the indemnified party; and (B) the
indemnifying party shall promptly reimburse the indemnified party for the full
amount of any loss resulting from any claim and all related expenses (other
than the fees and expenses of counsel as aforesaid) incurred by the indemnified
party. The indemnified party shall not pay or settle any claim so long as the
indemnifying party is reasonably contesting any such claim in good faith on a
timely basis. Notwithstanding the two immediately preceding sentences, the
indemnified party shall have the right to pay or settle any such claim,
provided that in such event, and unless it has done so due to default by the
indemnifying party in the performance of its obligations under this Article 8
it shall waive any right to indemnity therefor by the indemnifying party.
-18- <PAGE>
(b) With respect to third party claims, if the indemnifying
party does not notify the indemnified party within 30 days after the receipt of
the indemnified party's notice of a claim of indemnity hereunder that it elects
to undertake the defense thereof, the indemnified party shall have the right,
but not the obligation, to contest, settle or compromise the claim in the
exercise of its reasonable judgment at the expense of the indemnifying party.
(c) Failure by an indemnified party to provide notice on a
timely basis of a third party claim shall not relieve the indemnifying party of
its obligations hereunder, except that the foregoing shall not constitute a
waiver by the indemnifying party of any claim for direct damages caused by such
delay.
(d) In the event of any claim by a third party against an
indemnified party, the defense of which is being undertaken and controlled by
the indemnifying party, the indemnified party will use all reasonable efforts
to make available to the indemnifying party those employees whose assistance,
testimony or presence is necessary to assist the indemnifying party in
evaluating and in defending any such claims; provided that the indemnifying
party shall be responsible for the expense associated with any employees made
available by the indemnified party to the indemnifying party hereunder, which
expense shall be equal to an amount to be mutually agreed upon per person per
hour or per day for each day or portion thereof that such employees are
assisting the indemnifying party and which expenses shall not exceed the actual
cost to the indemnified party associated with such employees.
(e) With respect to third party claims, the indemnified
party shall make available to the indemnifying party or its representatives on
a timely basis all documents, records and other materials in the possession of
the indemnified party, at the expense of the indemnifying party, reasonably
required by the indemnifying party for its use in defending any claim and shall
otherwise cooperate on a timely basis with the indemnifying party in the
defense of such claim.
ARTICLE 9
MISCELLANEOUS
9.01 Further Assurances. From time to time subsequent to the Closing
Date, each Party shall at the request of any other Party execute and deliver
such additional conveyances, transfers and other assurances as may be
reasonably required to effectively carry out the intent of this Agreement and
to transfer the Purchased Shares to the Purchaser.
9.02 Notices. Any notice, direction or other instrument required or
permitted to be given hereunder shall be in writing and given by delivering or
sending it by telecopy or other similar form of communication addressed:
(a) to the Purchaser at:
MicroFrame Europe N.V.
c/o MicroFrame, Inc.
21 Meridian Road
Edison, New Jersey 08820
Attention: Mr. Lonnie L. Sciambi
President
-19-<PAGE>
with copies to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attention: James Alterbaum, Esq.
and
Loeff Claeys Verbeke
Avenue de Tervueren 268A
1150 Brussels, Belgium
Attention: Daniel Gillet, Esq.
(b) to the Seller at:
Mr. Marc Kegelaers
Tuyaertsstraat 32
B-2850 Boom, Belgium
with a copy to:
Jan Bergmans, Esq.
Eikenstraat 80
B2840 Rumst, Belgium
Any such notice, direction or other instrument given as aforesaid shall be
deemed to have been effectively given, if sent by telecopier or other similar
form of telecommunications on the next Business Day following such transmission
or, if delivered, to have been received on the date of such delivery. Any
Party may change its address for service from time to time by notice given in
accordance with the foregoing and any subsequent notice shall be sent to the
party at its changed address.
9.03 Publicity. Save as required by Law or in order to obtain Consents,
the Seller shall not issue any press release or make any other public statement
or announcement relating to or connected with or arising out of this Agreement
or the matters contained herein, without obtaining the prior written approval
of the Purchaser to the contents and the manner of presentation and publication
thereof. If disclosure is required by Law, the Seller shall consult in advance
with the Purchaser and attempt in good faith to reflect the Purchaser's
concerns in the required disclosure.
9.04 Brokers. It is understood and agreed that no broker, agent or
other intermediary acted for the Seller in connection with the sale of the
Purchased Shares and the Seller shall indemnify and save harmless the Purchaser
from and against any Claims whatsoever for any commission or other remuneration
payable or alleged to be payable to any broker, agent or other intermediary who
purports to act or have acted for the Seller.
9.05 Third Party Beneficiaries. Each Party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person, other than the Parties hereto, and no Person, other than
the Parties hereto, shall be entitled to rely on the provisions hereof in any
action, suit, proceeding, hearing or other forum.
9.06 Expenses. Except as otherwise expressly provided herein, all costs
and expenses (including the fees and disbursements of legal counsel, investment
advisers and auditors) incurred in connection with this Agreement and the
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transactions contemplated hereby shall be paid by the Party incurring such
expenses. The Seller represents and warrants that the Corporation has incurred
no costs or expenses.
9.07 Assignment. This Agreement, and each right, interest and
obligation hereunder, may not be assigned by either party hereto without the
prior written consent of the other party hereto, and any purported assignment
without such consent shall be void and without effect; provided, however, that
the purchaser may, at its option, assign all of its interest and rights
pursuant to this agreement to any wholly-owned subsidiary of the Purchaser.
9.08 Enurement. This Agreement shall enure to the benefit of and be
binding upon the Parties and their successors and shall enure to the benefit of
any permitted assigns.
9.09 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which, taken
together, shall constitute one and the same instrument.
9.10 Non-Merger. Except as otherwise expressly provided in this
Agreement, the covenants, representations and warranties of the Parties
contained in this Agreement shall not merge on and shall survive the Closing
and, notwithstanding such Closing, or any investigation made by or on behalf of
any Party, shall continue in full force and effect. Except as otherwise
expressly provided in this Agreement, closing shall not prejudice any right of
one Party against any other Party in respect of anything done or omitted
hereunder or in respect of any right to damages or other remedies.
9.11 Schedules. It is expressly acknowledged and agreed that any matter
disclosed by the Seller on any of the Schedules to this Agreement shall be
deemed to be disclosed by the Seller on each of the Schedules hereto. In
addition, the information set forth on each of the Schedules is stated as of
the date of this Agreement unless another date is indicated on such Schedule.
9.12 Transferability of Stock of the Corporation. Provided that the
Seller is not in breach of any term or condition with respect to this Agreement
and Kegelaers is not in breach of any term or condition with respect to the
Consulting Agreement, the Purchaser shall not transfer the Purchased Shares to
any non-Belgium corporation for a period of one (1) year from the Closing Date.
IN WITNESS WHEREOF this Agreement has been executed by the Parties
as of the date first above written.
/s/ Marc Kegelaers
MARC KEGELAERS
MICROFRAME EUROPE N.V.
/s/ Lonnie L. Sciambi
LONNIE L. SCIAMBI
Prisident and Chief Executive Officer
-21- <PAGE>
SCHEDULE 1.01 (a) Accounts Receivable
Outstanding Invoices:
Invoice Nr.: Date Customer Amount
95/021 31 August 1995 NeMO GmbH 7630 DEM
-22-<PAGE>
SCHEDULE 1.01 (b)European Countries
Iceland, Ireland, Scotland, England, Spain, Portugal, France, Andorra, Norway,
Sweden, Finland, Denmark, Holland, Belgium, Luxemburg, Germany, Switzerland,
Italy, Monaco, Liechtenstein, Estland, Letiand, Litauwen, Poland, Tsechia,
Austria, Slowenia, Slovakia, Hungary, Kroatia, Bosnia-Herzegovina, Yugoslavia,
Macedonia, Albania, Greece, Cyprus, Bulgaria, Turkey, Kreta, Rumenia, Moldavia,
Ukraine, Russia, White Russia, Israel, Libanon, Syria, Kuweit, Saudi Arabia,
Oman, Abu Dhabi, Bahrein, United Arab Emirates, Yemen, Egypt.
-23-<PAGE>
SCHEDULE 2.04 Share Earn Out
Billing Period One Share for
each US$____ Minimum Threshold
of European of European Revenue
1 $ 120 $ 1,200,000
2 $ 165 $ 1,600,000
3 $ 215 $ 2,100,000
4 $ 280 $ 2,750,000
5 $ 350 $ 3,000,000
-24-<PAGE>
SCHEDULE 3.01 (p)Authorizations
No authorizations have been granted.
The only person authorized to sign on behalf of the Company is Marc Kegelaers.
-25-<PAGE>
SCHEDULE 3.01 (v) Leased Properties
The Company rents its office at the Eikenstraat 80 in 2840 Rumst, Belgium from
Fiduciare Bergmans N.V.
Document Title: "Terbeschikkingsstelling van Kantoorruimte."
There are no other leases.
-26- <PAGE>
SCHEDULE 3.01 (y) Indebtedness
Other than the loans as described in schedule 3.01 (ee), there is no
indebtedness.
-27- <PAGE>
SCHEDULE 3.01(w) Material Contract
Cristie, UK: European Representative Agreement
P3K, Spain: European Representative Agreement
Exxon, Netherlands: Maintenance Contract for DL4000
Polaroid, Netherlands: Maintenance Contract for DL4000
Nationale Bank, Belgium: Maintenance Contract for DL4000
-28- <PAGE>
SCHEDULE 3.01 (aa) Personal Property
Following is a list of material assets, including furniture,
machinery and equipment that is Owned by E.B.A. and which is in
good working condition.
Furniture: 6 off office desks
3 off general purpose tables
3 off office chairs
4 off high filing cabinets
1 off low filing cabinet
2 off "Kitchen"-chairs
Company cars: 1 off Mercedes 190D
1 off Peugeot 405
1 off Opel Corsa
Equipment: 1 off desktop PC, Type Compaq Prolinea
2 off laptop PCs, Type IBM Thinkpad 340
1 off fax / answering machine; type Amstrad
1 off fax machine, type Olivetti
1 off fotocopier, type Olivetti Copia 8006
1 off CD ROM drive, type D2
1 off Tape Backup Unit, type Colorado Trakker 250
1 off PBX, type TOPCOM
1 off Printer, type HP Laserjet IIP
1 off printer, type HP Deskjet 510
2 off breakout boxes type Datacom Technologies
2 off maintenance toolboxes
1 off Cordless Phone, Type Samsung
1 off percolator
1 off water boiler
-29- <PAGE>
SCHEDULE 3.01 (ee) Financial Commitment to Sellers
Seller has issued two loans to the Company to finance the purchase of the
company cars.
Loan 1: Lender: Marc Kegelaers
Value: 500,000 Bef
Start date: April 1994
Nr. of monthly payments: 36
Interest rate : 12%
Balance on August 3 1: 299,686 Bef
Loan 2: Lender: Marc Kegelaers
Value: 250,000 Bef
Start date: April 1995
Nr. of monthly payments: 24
Interset rate : 12%
Balance on August 3 1: 212,367 Bef
-30-<PAGE>
SCHEDULE 3.01 (ff) Employees
Employee nr. 1:
Mieke Morreel
- - - Sexe :female
- - - Date of birth :January 11, 1966
- - - Date of employment :March 4, 1994
- - - Function :product engineer
- - - Base salary :66,300 Bef / month
- - - Bonuses :1 month of extra salary
- - - Holiday pay :1.85 month of extra salary
- - - Benefits :use of company car + 5000 bef month for non-
proven expenses
- - - Commission :nihil
Employee nr. 2:
Hans Schrauwen
- - - Sexe :male
- - - Date of birth :January 20, 1970
- - - Date of Employment :July 1, 1995
- - - Function :product engineer
- - - Base salary :6 1,000 Bef / month
- - - Bonuses :1 month of extra salary
- - - Holiday pay :1.85 month of extra salary
- - - Benefits :use of company car
- - - Commission :nihil
Bonus and holiday pay are valid for a full year of employment. For less than a
year employment, the amounts mentioned are accrued pro-rata the number of
months of employment.
The bonus is paid at the end of the year, on the condition that the employee is
still employed.
The holiday payment is paid in June of the year after the year during which the
holiday pay was accrued or when the employee leaves the company.
In addition to the amounts mentioned, the employer is required to pay an
"employer's contribution" for the social security system at a rate of +/- 37.5
% of the base amount. This is applicable to the base salary, the bonus and the
holiday payment.
This contribution covers health insurance; insurance against unemployment and
pension.
For Mieke, following grant have been obtained from the government:
- waiver of "employer's contribution" according to the following
schedule:
- first year of employment: 100% waived
- second year: 75% waived
- third year: 50 % waived
- additional subsidy of 10,000 bef/ month for a period of 24 months.
For Hans, no subsidies have been obtained as yet.
-31-<PAGE>
SCHEDULE 3.01 (ffv) Benefit Plans
There are none.
-32-<PAGE>
SCHEDULE 3.01 (hh) Insurance Policies
1) Car Insurance Policy nr: 5.895.226 + 5.895.225
Car: Mercedes 190D
Policy nr.: 5.894.093
Car: Peugeot 405D
Policy nr.: 5.909.673/4627
Car: Opel Corsa
2) Civil Liabilities: Policy nr.: 7.010.819
(Inshures damages to third parties ad a result of non-
nal operations and legal fees)
3) Employee Accidents: Policy nr.: 9.943.606/1484
4) Guaranteed Income: Policy nr.: 1.402.835
(Covers long-term and permanent disability of Marc
Kegelaers)
5) Fire and theft for the office at Eikenstraat : covered by the rental
agreement.
-33- <PAGE>
SCHEDULE 3.01 (ii) Potential and actual Litigation
"Rijkswacht Project"
Main Contractor: Datelnet Service N.V.
Subcontractor for CCL development, installation and project management: E.B.A.
Contract value to E.B.A.: 1,935,920 Bef
Invoiced before project finalization:
500,000 Bef in march 1994
360,000 Bef in march 1995.
This second payment was under the condition that
Datelnet had the right to reclaim the amount if
customer did not accept delivery of the software in
June 1995.
The customer has not accpeted the solution. Datelnet
is now in a position to reclaim its payment but has not
done so.
-34- <PAGE>
SCHEDULE 3.01 (kk) Bank Accounts and Powr of Attorney
Bank Accounts:
Banque Brussel Lambert, account nr. 320-0662756-25
Persons authorized to draw money and access to the account:
- Marc Kegelaers
- Lutgart Van Dyck (spouse of Marc Kegelaers)
Powers of attorney:
Have been granted to Fiduciare Bermans N.V. to represent EBA in it's dealings
with the tax authorities.
-35-<PAGE>
<PAGE>
EXHIBIT 10.31
</PAGE>
CONSULTING AGREEMENT
CONSULTING AGREEMENT dated as of September 15, 1995
between MICROFRAME EUROPE N.V., a Belgium corporation having its
place of business at Tuyaartstraat 32, 2850 Boom, Belgium (the
"Company") and MARC KEGELAERS, residing at Tuyaartstraat 32, 2850
Boom, Belgium (the "Consultant").
W I T N E S S E T H:
WHEREAS, the Company desires to retain the services of
Consultant upon the terms and conditions stated herein; and
WHEREAS, Consultant desires to render such services to
the Company upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties hereto hereby agree as follows:
1. Consulting Term. The Company hereby agrees to
retain Consultant, and Consultant hereby agrees to serve in such
capacity, as a general manager of the Company, upon the terms and
conditions set forth below for a five-year term commencing on the
date hereof (the "Term").
2. Duties. (a) Consultant shall, according to the
general instructions of the Company, perform such duties and
exercise such supervision and powers over and with regard to the
business of the Company and its respective present and future
subsidiaries and affiliated entities, consistent with Consultant's
position with the Company as may be established from time to time
by the Board of Directors or the President of the Company,
-1- <PAGE>
including, without limitation, responsibility with respect to the
operations of the Company, including the Company's distribution of
MicroFrame, Inc. products in Europe. Consultant shall be free to
determine his working hours as well as his vacation periods. He
will make himself available to the Company on a daily basis and
during any 49 of the 52 weeks in each year during the Term as
shall be mutually convenient for Consultant, on the one hand, and
the Company on the other.
In general, Mr. Kegelaers shall be present on the premises of
the Company inasmuch as his presence is necessary for the proper
performance of his contract.
Consultant shall report only to the Board of Directors and to
the President of the Company during the Term. Consultant
covenants and agrees that during the Term he will devote his full
time and efforts to the proper performance of his duties hereunder
and to the furtherance of the interests of the business of the
Company and its respective present and future subsidiaries and
affiliated entities.
(b) It is expressly understood that nothing herein
shall be deemed to create an employer-employee relationship
between the parties hereto and that Consultant is acting hereunder
solely as an independent contractor and no partnership, agency,
joint venture or other association between the parties hereto
shall be created or construed herefrom.
(c) The Consultant shall be alone responsible for
effecting his own tax payments and social security contributions.
-2- <PAGE>
3. Consulting Compensation. Subject to compliance
with the terms and conditions contained in the Share Purchase
Agreement of even date herewith ("Share Purchase Agreement"), of
which the Consultant is a party, by the Seller (as defined in the
Share Purchase Agreement), in consideration of the services to be
rendered by Consultant under this Agreement, the Company shall pay
the Consultant, as a consulting fee, the sum of US$ 75,000 per
annum for the first year of the Term, payable against the
submission by Consultant of invoices but at most each month. This
annual fee shall be increased by five percent (5%) over the annual
fee in effect for the immediately preceding year on each of the
first, second, third and fourth anniversaries of the date hereof.
4. Expenses. In addition to the consulting fee
provided for above, the Company shall reimburse Consultant for all
reasonable expenses incurred by him (a) which are necessary for
Consultant to perform his duties under this Agreement, and (b) for
which Consultant has submitted appropriate vouchers and/or receipts.
5. Termination upon Death or Disability. (a) In the
event of the death of Consultant during the Term, this Agreement
shall terminate and come to an end on the date of such death;
provided, however, that the estate of Consultant shall be entitled
to receive, and the Company will pay to such estate, all amounts
Consultant would have been entitled to receive hereunder prior to
his death.
-3- <PAGE>
(b) In the event that Consultant shall be
prevented from rendering substantially all of his services or
performing substantially all of his duties under the Agreement by
reason of illness, injury or incapacity for a period of at least
three (3) consecutive months, or six (6) months during any twelve
(12) month period ("disability"), the Company shall have the right
to terminate this Agreement upon two (2) weeks prior written
notice. Until so terminated, Consultant shall be entitled to
receive his consulting fee pursuant hereto even though he shall be
unable to perform services hereunder by reason of the illness,
injury or incapacity. Upon termination due to illness, injury or
incapacity as hereinabove provided, Consultant shall not be
entitled to receive any additional consulting fees from the month
in which such termination occurred or for any year thereafter.
6. Confidential Information. Consultant recognizes
and acknowledges that information relating to the financial,
business and other affairs of the Company or MicroFrame, Inc. and
their respective subsidiaries and affiliated entities, including
customers lists and other trade secrets, are valuable, special and
unique assets of the Company and MicroFrame, Inc. and are
considered confidential. Accordingly, Consultant will not, during
or after the Term, disclose or cause to be disclosed any of such
confidential information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever,
except as required in furtherance of the business of the Company
or their respective subsidiaries or affiliated entities. The
-4- <PAGE>
provisions of this paragraph shall not apply to information
generally known to the public or the trade. The provisions of
this paragraph 6 shall survive the expiration or termination of
this Agreement.
In the event of a breach or threatened breach by
Consultant of any provision of this paragraph 6, Consultant hereby
consents to the granting of a temporary or permanent injunction
against him by any court or competent jurisdiction prohibiting him
from violating any such provision of this Agreement. In any
proceeding for an injunction and upon any motion for a temporary
or permanent injunction, Consultant agrees that his ability to
answer in damages shall not be a bar or interposed as a defense to
the granting of such temporary or permanent injunction against
Consultant. Consultant further agrees that the Company and
MicroFrame, Inc. will not have an adequate remedy at law in the
event of any such breach by Consultant hereunder and that the
Company and MicroFrame, Inc. will suffer irreparable damage and
injury if Consultant breaches any of the provisions of this
paragraph 6. Nothing contained herein shall be construed as
prohibiting the Company or MicroFrame, Inc. from pursuing any
other remedy or remedies available to them including, without
limitation, the recovery of damages from Consultant.
7. Non-Competition and Solicitation. (a) Consultant
covenants and agrees that, during the Term and for a period of
three years thereafter, he will not, directly or indirectly,
engage in the business of, own or control any interest in, act as
-5- <PAGE>
director, officer or consultant to or be connected in any manner
with, as an employee or otherwise, any person, firm, corporation,
association or other entity other than the Company or MicroFrame,
Inc. or any of their respective subsidiaries or affiliated
entities which is engaged in any business in which the Company or
MicroFrame, Inc. or any of their subsidiaries or affiliated
entities is then engaged; and
(b) covenants and agrees that from and after the
date hereof he will not, directly or indirectly, solicit for the
benefit of any entity other than the Company or MicroFrame, Inc.
or their respective subsidiaries or affiliated entities any of the
customers of the Company or MicroFrame or their respective
subsidiaries or affiliated entities; and
(c) induce or persuade any employee or consultant
of the Company or MicroFrame, Inc. or their respective subsidiaries
or affiliated entities to join him in any activity prohibited by
this paragraph 7.
8. Assignability. This Agreement may not be assigned
by Consultant and all of its terms and conditions shall be binding
upon and inure to the benefit of the Company, Consultant and their
respective heirs, legal representatives, successors and assigns.
9. Entire Agreement; Modification. This Agreement
constitutes the entire agreement between the parties hereto and
may not be modified or amended except by a writing signed by all
the parties hereto.
-6- <PAGE>
10. No Waiver. The failure of any of the parties
hereto to enforce any provision hereof on any occasion shall not
be deemed to be a waiver of any preceding or succeeding breach of
such provision or of any other provision.
11. Notices. Any notice under the provisions of this
Agreement shall be given by registered or certified mail, return
receipt requested, directed to the addresses set forth above,
unless notice of a new address has been sent pursuant to the terms
of this paragraph.
12. Unenforceability; Severability. If any provision
of this Agreement is found to be void or unenforceable by a court
of competent jurisdiction, the remaining provisions of this
Agreement shall, nevertheless, be binding upon the parties hereto
with the same force and effect as if the unenforceable part has
been severed and deleted.
13. Governing Law and Jurisdiction. This agreement
shall be construed and governed by Belgian Law. Any dispute
between the Parties shall be of the exclusive competence of the
Courts of Antwerp.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
/s/ Marc Kegelaers
Marc Kegelaers
Agreed to and accepted
with respect to all
applicable provisions:
The Company
By: /s/ Lonnie L. Sciambi
Lonnie L. Sciambi
-7- <PAGE>
<PAGE>
EXHIBIT 10.32
</PAGE>
EUROPEAN BUSINESS ASSOCIATES BVBA
TUYAERTSSTRAAT 32
B-2850 BOOM, BELGIUM
September 15, 1995
MicroFrame, Inc.
21 Meridian Road
Edison, New Jersey 08820
Attn: Mr. Lonnie L. Sciambi, President
Dear Mr. Sciambi:
We hereby notify MicroFrame, Inc. (the "Company") that
the Exclusive Sales Representative Agreement (the "Agreement")
between the Company and European Business Associates dated
November 16, 1993 is hereby terminated, effective as of the day
hereof. Notwithstanding such termination, all of the terms and
conditions of paragraph 14 of the Agreement shall remain in full
force and effect.
We further waive all of our rights under the Agreement,
including, but not limited to, the 180 day notice provision which
further provides that the effective date of termination shall be
the ninetieth day after receipt of notice, as well as any and all
commissions we may be entitled to after the date hereof.
Very truly yours,
EUROPEAN BUSINESS ASSOCIATES BVBA
By:/s/ Marc Kegelaers
Marc Kegelaers, President
ACCEPTED AND AGREED TO:
MICROFRAME, INC.
By: /s/ Lonnie L. Sciambi
Lonnie L. Sciambi, President<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 5
<CIK> 0000754813
<NAME> MICROFRAME, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-96
<PERIOD-END> SEP-30-95
<CASH> 19,225
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<RECEIVABLES> 1,375,925
<ALLOWANCES> (75,091)
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0
0
<OTHER-SE> 2,798,220
<TOTAL-LIABILITY-AND-EQUITY> 4,158,483
<SALES> 2,606,940
<TOTAL-REVENUES> 2,606,940
<CGS> 1,165,874
<TOTAL-COSTS> 3,366,061
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<INTEREST-EXPENSE> 1,694
<INCOME-PRETAX> (757,753)
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