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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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<C> <S>
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
COMMISSION FILE NO. 1-10397
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AMERIQUEST TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
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<S> <C>
DELAWARE 33-0244136
(State or other jurisdiction of incorporation
or organization) (I.R.S. Employer Identification Number)
6100 HOLLYWOOD BLVD., STE. 700 33024
HOLLYWOOD, FLORIDA (Zip Code)
(Address of principal executive offices)
</TABLE>
(954) 967-2397
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $.01 par value
Title of each class
New York Stock Exchange
Name of each exchange on which registered
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No
- ---
The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of December 12, 1996 is approximately $12,533,402. For
purposes of making this calculation only, the Registrant has defined
"affiliates" as including all officers, directors and beneficial owners of more
than 10% of the outstanding Common Stock of the Registrant.
The number of shares of the Registrant's Common Stock outstanding as of
December 12, 1996: Common Stock, $.01 par value, 67,047,392 shares.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Exhibit Index is on page .
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PART I
FOREWORD
THE INFORMATION SET FORTH HEREIN IS BASED PRIMARILY ON HISTORICAL
INFORMATION. TO THE EXTENT THAT THIS ANNUAL REPORT ON FORM 10-K INCLUDES
FORWARD-LOOKING STATEMENTS, SUCH STATEMENTS INVOLVE UNCERTAINTY AND RISK, AND
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE REFLECTED IN SUCH
FORWARD-LOOKING STATEMENTS. A LIST OF THOSE FACTORS WHICH MANAGEMENT BELIEVES
COULD ADVERSELY AFFECT THE ACTUAL RESULTS IS SET FORTH IN A SECTION IMMEDIATELY
FOLLOWING THE DESCRIPTION OF AMERIQUEST'S BUSINESS IN THIS PART I UNDER THE
CAPTION "SPECIAL FACTORS TO BE CONSIDERED."
ITEM 1. BUSINESS.
THE COMPANY
AmeriQuest Technologies, Inc., a Delaware corporation ("AmeriQuest" or the
"Company"), maintains its principal executive offices at 6100 Hollywood Blvd.,
Ste. 700, Hollywood, Florida 33024, and its telephone number is (954) 967-2397.
AmeriQuest historically has conducted its business through its subsidiaries.
However, on July 31, 1996, all of its first-tier subsidiaries were merged into
AmeriQuest, except for CMS Enhancements, Inc. ("CMS Enhancements") and
AmeriQuest/Kenfil Inc. ("Kenfil"). Accordingly, the description of AmeriQuest's
business set forth below does not address the historical business of each
subsidiary individually.
AmeriQuest is primarily a national valued-added wholesale distributor of
microcomputers and related products to value-added resellers ("VARs"), systems
integrators, dealers and other distributors. AmeriQuest markets, sells and
supports a variety of products ranging from individual components, which are
typically sold in volume, to complete systems that have been fully configured,
assembled and tested prior to delivery to the customer. AmeriQuest's strategy
has been to emphasize the sale of these complete systems and to provide a high
level of value-added services, including consultation on component selection and
system assembly and configuration, testing and technical support services.
AmeriQuest also provides a variety of programs and seminars designed to enhance
its customers' technical capabilities. Kenfil markets and sells, as a
distributor, software products for the personal computer market in Asia.
CMS Enhancements is a supplier of hard disk drive subsystems for IBM
compatible and other leading personal and business computers. CMS Enhancements
also offers disk array, magneto-optical, CD-ROM, floppy disk drives and magnetic
tape back-up subsystems having a variety of data storage capacities.
AmeriQuest currently markets more than 35,000 products to original
equipment manufacturers, value-added resellers, systems integrators, dealers and
other distributors throughout the United States and in several foreign
countries, including national and regional distributors and large integrators.
AmeriQuest focuses its marketing efforts on the products of a limited number of
key vendors in order to become one of the leading distributors for each of its
principal vendors. This enables AmeriQuest to develop product-specific technical
expertise that enhances its value-added support services. AmeriQuest attempts to
minimize competition among vendors' products while maintaining some overlap to
provide protection against product shortages or discontinuations.
Control of AmeriQuest. Computer 2000, Inc., a wholly-owned subsidiary of
Computer 2000 AG (collectively referred to herein as "C-2000") owns 36,349,878
shares of AmeriQuest's Common Stock representing approximately 54% of the issued
and outstanding shares of AmeriQuest Common Stock. In addition, C-2000 holds
warrants and an option to purchase from AmeriQuest 18,753,097 shares of
AmeriQuest Common Stock, or approximately 28% of the total issued and
outstanding shares of AmeriQuest Common Stock. However, on a fully-diluted
basis, such shares would increase C-2000's ownership from approximately 54% to
approximately 58% as only 9,618,301 shares under such warrants and options are
not conditioned on the issuance of additional securities to others. As a result
of its ownership of more than 50% of AmeriQuest's voting shares, C-2000 assumed
control of the Board of Directors of AmeriQuest in August 1995.
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STRATEGY
Management appointed by C-2000 in August 1995 evaluated AmeriQuest's
resources upon assuming control, and determined that the choices available to
AmeriQuest were to either (i) increase sales volumes to levels where the thin
profit margins associated with commodity computer products would be sufficient
to achieve a profitable level of operations or (ii) engage in a niche strategy
with higher profit margins and improved logistical costs to achieve a profitable
level of operations. As a result of such evaluation, management is pursuing the
niche strategy, which it believes is more likely to succeed in light of both the
limited resources of AmeriQuest when compared with other very large
distributors, as well as the intensely competitive environment in which the
Company operates.
The Company's current business focus is to continue distribution in areas
which minimize direct competition with the largest competitors, and to
concentrate on selling higher-margin advanced systems and individual computer
components. AmeriQuest believes it is able to provide value-added services and
technical support to the areas of advanced systems and thus improve its margins
in those areas.
Although management believes that its niche strategy, when coupled with
cost reductions, as appropriate, will return AmeriQuest to profitability, there
are numerous risks and uncertainties and no assurance can be given that the new
strategy will succeed or that the Company will become profitable. Management
will periodically review the need to further reduce costs should sales for any
reason not materialize in amounts sufficient to cover the existing cost
structure.
PRODUCTS
AmeriQuest seeks to sell products from nationally-recognized vendors that
provide all the components most VARs require to fully configure their computer
systems. All new products are extensively tested prior to inclusion in
AmeriQuest's distribution network.
The following is a description of the major categories of products
currently sold by AmeriQuest and the principal current vendors of those
products:
Personal Computers -- AmeriQuest distributes desktop and portable
personal computers and multiuser microcomputers manufactured by Acer, IBM,
AST, Samsung, Texas Instruments and Unisys.
Advanced Computer Systems -- AmeriQuest distributes medium- sized
computer servers manufactured by IBM (RISC 6000 models) and Unisys (U
Series), together with software development tools from IBM, including AIX
and Lotus Notes; connectivity products from IBM, including routers, bridges
and switches. All such products are available to customers with leasing,
maintenance and engineering options, at additional cost.
Communications and Networks -- A local area network ("LAN") permits
microcomputers to communicate with one another and to function on an
integrated basis. AmeriQuest distributes LAN software and specialized
hardware products manufactured by Novell, Intel, IBM, C Net, Microdyne,
Digi-Board, D-Link and Unisys. In addition, the Company distributes modems
and other communication products manufactured by Boca Research, Multi-Tech
Systems and US Robotics.
Peripherals and Supplies -- AmeriQuest distributes a broad line of
laser, ink-jet and dot matrix printers, monitors, terminals, diskettes,
stand-by power supplies, accessories and supplies manufactured by numerous
companies including Okidata, Lexmark, Canon, Citizen, Genicom, CTX,
Techmedia, Goldstar, AOC, Viewsonic, Qume, Relisys, Samsung, Unisys, Wyse,
NEC, Acer, IBM, American Power, Tripplite, Techmedia, Orchestra, Creative
Labs and 3M.
Components and Mass Storage -- AmeriQuest distributes computer chips,
board products, hard and floppy disk drives, and other components and mass
storage devices manufactured by numerous companies including Intel, NEC,
Hewlett-Packard, K-Byte, Western Digital, Colorado Memory Systems and
Quantum. AmeriQuest's wholly-owned subsidiary, CMS Enhancements, is a
vendor for hard drives, providing primarily hard drive upgrades for laptop
computers.
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Software -- AmeriQuest sells a variety of operating systems and LAN
software products generally as part of its advanced systems sales.
AmeriQuest has also commenced the sale of certain applications software for
Unix and Advanced Systems. Among the manufacturers of these software
products are IBM, SCO and Novell.
VENDOR RELATIONS
To maintain strong relationships with its principal vendors, AmeriQuest
focuses on marketing the products of a limited number of key vendors. AmeriQuest
selects its product lines to minimize competition among vendors' products while
maintaining some overlap to provide protection against product shortages or
discontinuations.
AmeriQuest, like most hardware distributors, sells products throughout the
United States for vendors on a nonexclusive basis without geographic
restrictions. AmeriQuest has distribution agreements with most of its vendors
and believes they are in the form customarily used by each vendor and generally
contain provisions which allow termination by either party upon as little as
thirty days' notice. Most of AmeriQuest's major distribution agreements provide
price protection by giving AmeriQuest a credit, subject to specified
limitations, in the amount of any price reductions by the vendor between the
time of the initial sale to AmeriQuest and the subsequent sale by AmeriQuest to
its customer. Most of the major distribution agreements also give AmeriQuest
qualified return privileges on slow-moving inventory. AmeriQuest's distribution
agreements do not restrict AmeriQuest from selling similar products manufactured
by competitors. Any minimum purchase provisions in AmeriQuest's distribution
agreements are at levels that AmeriQuest believes do not impose significant
risk.
From time-to-time, the demand for certain products sold by AmeriQuest
exceeds the supply available from the vendor. AmeriQuest believes that its
ability to compete has not been adversely affected to a material extent by these
periodic shortages, although sales may be adversely affected for an interim
period. In order to limit the impact of such shortages, AmeriQuest generally
attempts to include comparable products from more than one vendor in its product
line.
SALES AND DISTRIBUTION
During fiscal year 1996 AmeriQuest's sales operations were divided into
five domestic regions, each covering a geographical section of the country, and
three international regions. AmeriQuest has since reorganized its domestic
standard distribution operations in Hollywood, Florida into specialized business
units based on the type of product assigned to each unit and one general sales
unit. In addition, the Advanced Systems Group operates from Horsham,
Pennsylvania; and CMS Enhancements operates from Costa Mesa, California.
AmeriQuest exports from Miami, Florida to South American markets; and foreign
operations operate from Hong Kong and Malaysia with respect to Asian markets.
Compensation for sales personnel is largely based on the gross profits
generated from sales. All of the Company's sales personnel receive technical
training and are responsible for opening new accounts and serving established
accounts. As a result of competitive pressures, reduced profit margins and the
way in which other, similar distributors have changed their businesses,
AmeriQuest places emphasis on telemarketing as its primary sales method.
Therefore, although some of the Company's sales personnel operate in the field,
the majority of such personnel are telemarketers.
Customer orders are generally made by a toll-free telephone call with a
sales representative in AmeriQuest's sales offices, and the order is entered
onto AmeriQuest's computer system. The sales representative has access to
available information on inventory and customer credit status and, upon
reviewing this data, can enter the order immediately. Shipment is usually made
the same day, except on orders that require assembly and testing. Customers may
also pick up their orders at the designated warehouse. All orders are handled on
a prepayment, C.O.D. or credit basis depending on the customer's
creditworthiness and previous payment history. In addition, AmeriQuest assists
some resellers in obtaining equipment financing
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through third-party floor planning programs from Deutsche Financial Services,
IBM Credit Corporation, AT&T Capital, FINOVA Group, Inc. and TransAmerica
Inventory Finance. Because of AmeriQuest's prompt delivery times, it maintains
no substantial backlog of orders.
CUSTOMERS AND CUSTOMER SERVICES
The Company sells to more than 7,500 computer resellers. The Company's
customers include VARs, dealers, computer superstores, corporate resellers,
systems integrators, and original equipment manufacturers as well as
independently owned retail outlets and consultants. AmeriQuest estimates that a
majority of its sales are to VARs and dealers. The Company's smaller customers
often do not have the resources to establish a large number of direct purchasing
relationships or to stock significant product inventories. Consequently, they
tend to purchase a high percentage of their products from distributors. Larger
resellers often establish direct relationships with manufacturers for their more
popular products, but utilize distributors for slower-moving products and for
fill-in orders of fast-moving products which may not be available on a timely
basis from manufacturers. No customer has accounted for more than ten percent of
AmeriQuest's net sales during 1995, 1994 or 1993. Sales by AmeriQuest are not
seasonal to any material extent.
Through the Company's wholesale distribution business, customers are
offered a single source of supply, prompt delivery, financing programs and
customer support.
Prompt Delivery. In most areas serviced by the Company, orders received by
6:00 p.m. local time are typically shipped the same day, provided the required
inventory is in stock. AmeriQuest typically delivers products from its regional
warehouses via United Parcel Service and other common carriers, with customers
in key commercial regions of the United States receiving orders within one to
two working days of shipment. AmeriQuest also will provide overnight air
handling if requested and paid for by the customer. These services allow
computer resellers to minimize inventory investment yet provide responsive
service to their customers. For larger customers in the United States,
AmeriQuest is able to provide a fulfillment service so that orders are shipped
directly to the computer resellers' customer, thereby reducing the need for
computer resellers to maintain inventories of certain products.
Customer Support. The Company currently offers computer resellers a single
source for over 35,000 competitively priced hardware and software products. By
purchasing from the Company, the reseller only needs to comply with a single set
of ordering, billing and product return procedures and may also benefit from
attractive volume pricing. The Company also provides training and product
information to its reseller customers.
AmeriQuest permits the return of products within certain time limits and
under certain conditions subject to a restocking charge, provided that the
products are unused. Products that are defective upon arrival are handled on a
manufacturers' warranty return basis without any restocking charge. Resellers
are allowed, within specified time limits, to return slow-moving products from
one manufacturer in exchange for more popular products from other manufacturers.
The Company's policy is not to grant cash refunds.
Unlike its competitors, AmeriQuest offers its resellers terms that reflect
those that are offered by each manufacturer's individual warranty program. This
pass through of manufacturers' warranties is yet another value-added service
that AmeriQuest provides to its customer base.
Financing Programs. AmeriQuest extends credit to qualified resellers,
thereby augmenting their ability to purchase products from a variety of sources.
Additionally, AmeriQuest arranges floor planning and lease financing through a
number of credit institutions and offers programs that permit credit card
purchases by qualified customers. To facilitate a reseller's ability to pursue
large purchase orders within the United States, the Company offers an
"assignment of proceeds" program. By instituting this practice AmeriQuest can,
based upon the credit worthiness of the end-user customer, assist its resellers
in securing purchase orders far in excess of what their normal credit facilities
would allow.
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EXPORT AND INTERNATIONAL OPERATIONS AND SALES
AmeriQuest serves Latin America through its regional office and warehouse
in Miami, Florida. This business represented approximately sixteen percent of
total sales for fiscal 1996.
In Asia, through its wholly-owned Kenfil subsidiaries, AmeriQuest is
engaged primarily in the distribution of business applications, utilities,
graphics and communication software. Kenfil currently has two wholly-owned
subsidiaries in the Far East. Although Asian sales represented approximately
five percent or less of net sales in each of the last three fiscal years, such
sales make a positive contribution to income, thereby offsetting other operating
losses within the Company. No assurance can be given that international sales
will continue at this level or make a significant contribution to pretax income
in future periods.
COMPETITION
Competition in the distribution of microcomputer products is intense.
Principal national distributors are Ingram Micro Inc., Merisel, Inc. and Tech
Data Corporation. AmeriQuest also competes with numerous manufacturers,
resellers, retailers and regional distributors. Many of AmeriQuest's major
competitors have substantially greater financial resources than AmeriQuest.
Competition is primarily based upon availability of product, price, speed
of delivery, convenience, technical support and other support services.
AmeriQuest believes that it is generally competitive with respect to each of
these factors and that its principal, competitive advantages are its personal
sales relationships, technical and other support services, and speed of
delivery.
EMPLOYEES
As of September 30, 1996, AmeriQuest had 451 full-time employees, including
(i) 190 persons employed in sales, sales support and marketing functions, and
(ii) 76 persons employed overseas. As of November 30, 1996, following the move
of its headquarters to Florida, AmeriQuest had 407 full-time employees,
including (i) 150 persons employed in sales, sales support and marketing
functions, and (ii) 78 persons employed overseas. None of AmeriQuest's employees
are covered by a collective bargaining agreement. AmeriQuest considers its
relations with its employees to be good.
SPECIAL FACTORS TO BE CONSIDERED
ADDITIONAL CAPITAL REQUIRED AND CONTINUED LOSSES
Equity Capital Required. The Company has experienced significant operating
losses during recent fiscal years and recorded a net loss of $67.6 million in
fiscal 1995 and a net loss of $33.6 million in fiscal 1996. The fiscal 1995 loss
included the write-off of approximately $23.8 million of intangible assets and
the liquidation of inventory associated with the termination of the Company's
entertainment software business. In addition, the fiscal 1995 loss included
costs associated with the integration of the significant acquisitions which took
place during that fiscal year. The Company recorded a net loss of $33.6 million
during fiscal 1996 (including lease termination and moving costs of $6.4
million). The result of such losses is that AmeriQuest has a negative tangible
net worth of $(11.2) million. Absent the infusion of additional equity capital
it is unlikely that AmeriQuest will be able to continue operations beyond
September 30, 1997. C-2000 has signed a binding commitment addressed to
AmeriQuest's Board of Directors which reads as follows:
"This will confirm the obligation of Computer 2000 AG to provide
AmeriQuest Technologies, Inc. with additional financing early in
calendar 1997 in the amount of at least USD 30 million. As you know,
Computer 2000 currently proposes that AmeriQuest commence as soon as
practicable a rights offering to all AmeriQuest stockholders in which
Computer 2000 would enter into a stand-by agreement to purchase at
least USD 30 million in the offering, to the extent that purchases are
not made by other stockholders. In the unanticipated event that it is
decided not to proceed with the rights offering, Computer 2000 will be
obligated to provide, in the same time frame, at least USD 30 million
in other equity or debt financing. Computer 2000 intends that the
foregoing constitutes its
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binding obligation and understands that you will rely on it in your
corporate planning for this fiscal year and in connection with the
preparation of your annual report on Form 10-K for the fiscal year
ended September 30, 1996 and in other filings with the Securities
Exchange Commission and that your independent accountants will rely on
it in connection with their report on your financial statements for
such fiscal year."
Debt Capital Required. In December 1995, C-2000 issued guarantees to
certain lenders to secure up to $66 million of lines of credit such lenders
might extend to the Company. In November 1996 C-2000 increased the $66 million
of credit lines to $76 million. The total amount guaranteed as of December 12,
1996 is $76 million. As of September 30, 1996, the Company had borrowed
approximately $65.1 million from such lenders under such lines of credit. These
borrowings were used in part to reduce the Company's interest-bearing
indebtedness under its previously outstanding lines of credit from approximately
$52 million to zero, resulting in a reduction, as of September 30, 1996, in the
average interest rate on the Company's total outstanding indebtedness from
approximately 11.0% per annum to approximately 6.4% per annum. In return for the
guarantees, AmeriQuest agreed to pay C-2000 one-half of one percent (0.5%) per
annum of the amounts guaranteed, on a weighted average basis, and provided
C-2000 with a security interest in all of the Company's assets, and agreed to
seek refinancing of its outstanding debt as soon as reasonably practicable.
C-2000's guarantees expire on September 30, 1997, and the lines of credit
guaranteed by C-2000 mature on March 31, 1997. No assurance can be given that
the lines of credit guaranteed by C-2000 will be extended beyond March 31, 1997
or that the Company will be able to obtain replacement debt financing from other
sources on or before such dates.
Additionally, should the Company ultimately be unable to service its
indebtedness, the Company will trigger the default provisions of such
indebtedness, including approximately $12 million owed to IBM Credit Corporation
("IBM Credit"). In such an event, even if C-2000 were to pay the indebtedness
guaranteed by it, such payment would not satisfy the Company's other
indebtedness, and the Company also would have an immediate obligation to repay
C-2000. C-2000 and/or the other lenders might also exercise their security
interests and other creditors' remedies, or they might renegotiate the terms of
the Company's outstanding indebtedness, increasing the Company's debt service
costs and, possibly, further restricting the Company's operations; or all or a
portion of such indebtedness might be converted into equity on terms negotiated
with the Company that might cause substantial dilution for the Company's current
stockholders; or other adverse consequences might result from such defaults.
Absent the anticipated infusion of capital from C-2000, the Company's ability to
continue in business would be adversely affected given that there is no
assurance that the Company could secure financing from other unaffiliated
sources, or that even if such financing were then available that it would be
available on terms acceptable to the Company.
MARKET CONSIDERATIONS
The New York Stock Exchange ("NYSE") has indicated that AmeriQuest is
currently not in compliance with certain of the NYSE's requirements for
continued listing on the NYSE. Although the NYSE has expressed a present
willingness to allow AmeriQuest's Common Stock to remain listed, unless
AmeriQuest is able to demonstrate substantial progress in meeting the NYSE's
listing requirements during the next three to six months, the NYSE could delist
AmeriQuest's Common Stock, thereby adversely affecting the public market for
such securities.
The price of the Company's Common Stock has been subject to significant
price fluctuations, and there can be no assurance that the price of the
Company's Common Stock will stabilize. In addition, the trading volume for the
Company's Common Stock has generally been relatively small. A large increase in
share trading volume in a short period of time could cause a significant change
in share trading prices.
INTEGRATION OF ACQUIRED COMPANIES
Prior to June 30, 1995, the Company had pursued a strategy of growth
through acquisitions. In fiscal 1993 and 1994, it acquired several regional
distributors; in June and September 1994, it acquired (in a two-step
acquisition) Kenfil, Inc. ("Kenfil"), a distributor of microcomputer software;
in November 1994, it acquired
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Ross White Enterprises, Inc. d/b/a "National Computer Distributors" ("NCD"), a
distributor of computer products and services specializing in systems and
connectivity applications; in September 1994, it acquired 50.1% of Robec, Inc.
("Robec"), a distributor of computer products and services specializing in UNIX
applications; and in November 1995, it acquired the balance of Robec's capital
stock as well as effective operating control.
The Company had pursued this acquisition strategy with the goal of
establishing the Company as a national distributor of value-added computer
products. The success of this strategy was dependent on the ability of the
Company to effectively consolidate and integrate the operations and management
information systems of the acquired businesses, combine differing corporate
cultures and obtain adequate financing to absorb the substantial restructuring
costs incurred in the consolidation and integration process and to fund working
capital requirements and continuing cash flow shortfalls. In addition, during
such time the Company was competing with national distributors with
substantially greater resources than the Company. As a result of these and other
factors, the Company has experienced losses since June 30, 1993. The integration
of the various organizations have required the dedication of management
resources which detracted from the day-to-day business of the combined Company.
The integration process has been complicated by the acquisition of control of
the Company by C-2000 in August 1995 and the resulting significant changes that
have been made in the Company's senior management team and directors. The
process of combining the acquired companies has also involved difficulties in
coordinating internal record keeping and information management that are
critical to the efficient operation of the integrated businesses.
NEED TO INCREASE SALES VOLUME
As a distributor, the Company must operate on small gross margins. Further,
the Company must incur operating expenses to maintain a sufficient level of
inventory, facilities, sales staff and support personnel necessary to support
sales of products. Although the Company continues to explore possible cost
reduction measures, it believes that further significant reductions in its
operating expenses will be difficult to achieve without also reducing the sales
volumes currently being generated from operations. As a result of these and
other factors, the Company must achieve substantially greater sales volumes at
satisfactory margins than it has in the past in order to achieve profitability.
While the Company's new management is attempting to increase sales, there can be
no assurance that sales will increase or that any increases will be of
sufficient magnitude or will occur soon enough to permit the Company to achieve
profitability without additional business or financial restructuring.
NEED TO MAINTAIN VENDOR BASE
The Company principally distributes computer products manufactured by other
vendors. Accordingly, the Company's relationships with its existing vendors are
critical to its ability to purchase on a favorable basis the products that it
resells. In addition, from time to time the Company may need to initiate
relationships with additional vendors without jeopardizing the Company's
existing vendor relationships. Any inability of the Company to preserve its
existing vendor relationships or to add new vendors when needed will have a
material, adverse effect on its future results of operations. The Company is
also dependent upon its vendors' willingness or ability to make timely shipment
of the products ordered by the Company. The failure of vendors to make shipments
on a timely basis could cause a material disruption of the Company's sales. In
the past, the Company has at times experienced delays in its ability to fill
customer orders, due to the inability of certain suppliers to meet their volume
and schedule requirements and/or due to the Company's shortages of cash
resources. Delays in shipments from suppliers can cause fluctuations in the
Company's short-term results and contribute to order cancellations.
RAPID CHANGES IN TECHNOLOGY AND MARKETS
The computer industry in general, and the specific markets in which the
Company competes, are characterized by rapidly changing technology, often
resulting in short product life cycles, rapid price declines, inventory
imbalances when compared with market demands, and significant shifts in market
dynamics. The Company believes its success is highly dependent upon its ability
to react to technological changes and shifts in market demand by continuing to
provide cost-competitive products that respond to current market needs. As a
value-added wholesale distributor, the Company is particularly vulnerable to
changes caused by
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technological innovation. The introduction of new products and the phasing out
of old products requires the Company to carefully manage its inventory to
minimize inventory obsolescence. The Company has experienced significant losses
due to inventory obsolescence in the past and losses due to selling products
acquired as vendor surpluses. The sale of surplus products was discontinued in
August 1996. There can be no assurance that the Company's inventory reserves
will adequately cover the amount of the Company's inventory which may become
obsolete for the period covered by the reserves. Should the Company fail to
provide new products on a timely basis that respond to industry demands, the
Company's operating results would be adversely affected.
COMPETITION
The Company competes in an industry characterized by intense and increasing
competition. Principal national distributors with which the Company competes
include Ingram Micro Inc., Tech Data Corporation and Merisel, Inc. The Company
also competes with numerous manufacturers, resellers and regional distributors.
Many of the Company's major competitors have substantially greater financial,
marketing and other resources than the Company. Competition in the computer
products distribution industry is based primarily on price and product
availability, and to a lesser extent on speed of delivery, convenience and the
level of marketing and technical support services provided. Because of the
intense competition within the industry, the Company has been forced to reduce
its prices, and the gross and operating profit margins on products traditionally
sold by the Company have been reduced. As technological changes occur, the
Company's products have had shorter and shorter product life cycles, and new
competing products are introduced by other vendors and resellers. Moreover, the
manner in which computer products are distributed and sold is changing, and new
methods of distribution and sale may emerge or expand. Recently, some industry
participants have indicated that they believe the total demand for personal
computers may be lessening and that the market for such computers may be
becoming saturated. These factors, among others, may cause increased competitive
pressures on the Company in the future.
DEPENDENCE UPON KEY PERSONNEL
The Company's success depends to a significant degree upon the continued
contributions of its key management, marketing, product development and
operational personnel and the Company's ability to retain and continue to
attract highly skilled personnel. Competition for employees in the computer
industry is intense, and there can be no assurance that the Company will be able
to attract and retain qualified employees. The Company has recently made a
number of management changes, and has had substantial layoffs and other employee
departures. If the Company continues to experience financial difficulties, it
may become increasingly difficult for it to hire new employees and retain
current employees. The Company does not carry any key person life insurance with
respect to any of its personnel.
POSSIBLE SALES BY STOCKHOLDERS
Approximately 10,884,905 outstanding shares (16%) of the Company's Common
Stock are the subject of five current resale Registration Statements. The
Company has also agreed to register the shares of the Common Stock of the
Company issued or issuable to C-2000 consisting of 36,349,878 shares presently
held by C-2000 and 18,753,097 additional shares subject to issuance upon the
exercise of outstanding warrants and an option held by C-2000. The Company may
grant additional registration rights when it issues securities in the future.
The public sale of the foregoing shares, or the perception that such shares may
be sold, may have the effect of substantially depressing the market price of the
Company's Common Stock and causing substantial fluctuations in the price of the
Company's Common Stock.
FORWARD-LOOKING INFORMATION
Future operating results may be impacted by a number of factors that could
cause actual results to differ materially from those stated herein, which
reflect management's current expectations. These factors include worldwide
economic and political conditions, industry specific factors, the Company's
ability to maintain access to external financing sources (including C-2000) and
its financial liquidity, the Company's ability to manage expense levels, the
continued financial strength of the Company's customers, and the Company's
ability to accurately anticipate customer demand and manage inventories.
8
<PAGE> 10
This Annual Report on Form 10-K contains certain forward-looking statements
that are based on current expectations. In light of the important factors that
can materially affect results, including those set forth above and elsewhere in
this Annual Report on Form 10-K, the inclusion of forward-looking information
herein should not be regarded as a representation by the Company or any other
person that the objectives or plans of the Company will be achieved. The Company
may encounter competitive, technological, financial, legal and business
challenges making it more difficult than expected to continue as a value-added
wholesale distributor of microcomputers; competitive conditions within the
computer industry may change adversely; demand for the products distributed by
the Company may weaken; the Company may be unable to retain existing key
management personnel; inventory risks may rise due to shifts in market demand;
the Company's forecasts may not accurately anticipate market demand; and there
may be other material adverse changes in the Company's operations or business.
Certain important presumptions affecting the forward-looking statements made
herein include, but are not limited to, (i) timely identifying and delivering
new products as well as enhancing existing products, (ii) implementing current
restructuring plans, (iii) accurately forecasting cash needs, and (iv) obtaining
new sources of external financing prior to the expiration of existing support
arrangements provided by C-2000. Assumptions relating to budgeting, marketing,
advertising, product mix and other management decisions are subjective in many
respects and thus susceptible to interpretations and periodic revisions based on
actual experience and business developments, the impact of which may cause the
Company to alter its marketing, cash expenditures or other budgets, which may in
turn affect the Company's financial position and results of operations.
ITEM 2. PROPERTIES.
AmeriQuest's principal offices are located in leased facilities in
Hollywood, Florida, which consists of approximately 35,268 square feet of office
space on three floors of a seven story office building.
The following table sets forth information regarding the regional offices
of AmeriQuest and its subsidiaries:
<TABLE>
<CAPTION>
SQUARE FEET LEASE EXPIRATION YEAR OPENED
----------- ----------------- ------------
<S> <C> <C> <C>
LOCATION
Hollywood, FL................................ 31,305 8/31/97 1992
Hollywood, FL................................ 3,963 9/30/97 1995
Horsham, PA.................................. 105,000 /98 1978
Lawrenceville, GA............................ 79,587 2/14/00 1995
Elk Grove, IL................................ 47,265 2/28/01 1996
Visalia, CA.................................. 46,800 6/30/99 1994
Miami, FL.................................... 31,975 2/1/99 1995
Costa Mesa, CA............................... 30,287 11/30/01 1996
Carrollton, TX............................... 13,520 3/31/98 1993
Marlboro, MA................................. 2,112 2/28/99 1994
Overland Park, KS............................ 977 9/30/98 1993
Girard, OH................................... 925 10/31/97 1995
West Valley City, UT......................... 600 2/28/99 1996
Asheville, NC................................ 500 1/15/97 1996
Falls Church, VA............................. 300 mo. to mo. 1984
SUBLEASED
Anaheim, CA.................................. 62,298 2/29/00 1995
Santa Ana, CA................................ 55,000 3/31/06 1995
Irvine, CA................................... 4,169 6/30/98 1993
Alpharetta, GA............................... 1,924 9/30/99 1994
</TABLE>
9
<PAGE> 11
<TABLE>
<CAPTION>
SQUARE FEET LEASE EXPIRATION YEAR OPENED
----------- ----------------- ------------
<S> <C> <C> <C>
VACANT
Westboro, MA................................. 7,800 2/28/97 1993
Redmond, WA.................................. 1,150 8/31/97 1994
Hauppauge, NY................................ 2,000 5/31/99 1994
</TABLE>
ITEM 3. LEGAL PROCEEDINGS.
AmeriQuest is both a plaintiff and defendant from time-to-time in lawsuits
incidental to its business. The management of AmeriQuest believes that none of
such current proceedings individually or in the aggregate, will have a material
adverse effect on AmeriQuest.
While not expected to be of material effect to the Company, Kenfil Inc. vs.
RLI Insurance Company, Superior Court of the State of California, County of Los
Angeles, No. BC 108564 filed July 12, 1994, involves litigation instituted by
Kenfil Inc. to recover additional monies for the damage it incurred in the
Northridge earthquake of January 17, 1994. The defendant cross-claimed on August
12, 1994 for return of the $840,000 it had paid on claims submitted by Kenfil
Inc., based on affidavits from former Kenfil employees alleging that they had
been instructed following the earthquake to intentionally destroy additional
inventory. The defendant's theory is that it is not obligated to even cover that
portion of the damage caused by the earthquake because of the possible fraud
involved with such actions; while the management of Kenfil maintains that only
that portion of damages actually incurred by the earthquake were submitted as
claimed losses. There exists a question of fact as to whether the defendant
justifiably relied on the inclusion of intentionally damaged products among the
products counted by defendant's agents. There is also a question of fact as to
whether the actions of Kenfil's employees in damaging additional inventory were
instigated by upper-level management and a question of law as to whether the
managers of Kenfil are able to take unauthorized actions which can be attributed
to Kenfil. Although there are pictures available to prove the actual damage
immediately following the earthquake, no assurance can be given as to the final
outcome of this legal matter.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth certain information regarding the current
officers of AmeriQuest.
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------- --- ------------------------------------------------------
<S> <C> <C>
Michael Dressen.................. 40 President and a Director
Holger Heims..................... 34 Executive Vice President, Secretary and Director
John Tonnison.................... 28 Vice President -- Information Systems
Dennis C. Fairchild.............. 47 Chief Financial Officer and Assistant Secretary
Alexander C. Kramer, Jr.......... 53 Vice President; General Manager of Advanced Systems Group
Kenneth V. Burke................. 45 Vice President; General Manager of CMS Enhancements
Richard G. McIntyre.............. 47 Vice President -- Sales and Marketing
</TABLE>
The officers are elected by the Board of Directors and serve at the
discretion of the Board of Directors, subject, however, to the provisions of
their employment agreements, which generally provide for severance payments in
the event of termination for other than "cause," as defined in each employment
agreement. The severance rights in currently effective employment agreements
provide for six-months salary upon termination without "cause", during which
time they are prohibited from competing with AmeriQuest or its subsidiaries.
Michael Dressen (age 40) was appointed to serve as President of AmeriQuest
in August 1996. From May 1995 to June 1996 he served as a Member of the
Executive Board for Transtec, a value-added reseller with its principal offices
in Tuebingen, Germany. From October 1991 to April 1995 he served as Managing
Director of Computer 2000 SpA Italy (a subsidiary of Computer 2000 AG). He was
appointed to serve as a Director of AmeriQuest on September 12, 1996.
Holger Heims (age 34) has served as an officer of AmeriQuest since August
1995, most recently as Executive Vice President and Secretary. From October,
1991 until August 1995 he was employed by
10
<PAGE> 12
Computer 2000 AG, most recently as Director of Investments, Tax & Legal. Mr.
Heims has a Masters of Business Administration degree from Munich University.
John Tonnison (age 28) has served as Vice President -- Information Systems
of AmeriQuest since January 1996. From October 1993 to December 1995 he served
as C-2000's director for implementation of SAP software systems. From October
1991 to September 1993 he served as a Director and as Director of Information
Systems for Frontline Distribution Ltd., C-2000's wholly-owned subsidiary in the
United Kingdom.
Dennis C. Fairchild (age 47) joined AmeriQuest upon its acquisition of NCD
in November 1994. Mr. Fairchild has served as Chief Financial Officer of NCD
since January 1994. From March 1990 to December 1993, Mr. Fairchild was a
partner in Coral Springs Connections, the owner of Southeast Frozen Foods, and
served as Chief Financial Officer of Southwest Frozen Foods. Mr. Fairchild is a
Certified Public Accountant and a CMA.
Alexander C. Kramer, Jr. (age 53) served as Vice President -- Operations of
Robec, Inc. for thirteen years prior to its acquisition in November 1995 by
AmeriQuest. Since November 1995 he has served in various capacities, most
recently as Vice President; General Manager of the Advanced Systems Group.
Kenneth V. Burke (age 45) served in various capacities while employed by
Mountain Computer, Inc. between 1981 to 1995, the last of which was as Executive
Vice President/General Manager of Summit, Inc., a subsidiary of Mountain
Computer, Inc. from 1991 to March 1995. Mr. Burke joined AmeriQuest in March,
1995, as Vice President; General Manager of CMS Enhancements.
Richard G. McIntyre (age 47) served as President of Peregrine Marketing,
the exclusive sales and marketing consultant for Olivetti Office USA from 1990
until February 1995, at which time he joined AmeriQuest as Vice
President -- Sales and Marketing.
11
<PAGE> 13
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The following table sets forth the market prices for the shares of Common
Stock of AmeriQuest. The prices reflect the high and low closing prices quoted
on the New York Stock Exchange for each calendar quarter since December 31,
1993.
AMERIQUEST
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1994
First Quarter............................................................ 6 4 1/8
Second Quarter........................................................... 4 1/8 3
Third Quarter............................................................ 4 1/4 3 1/8
Fourth Quarter........................................................... 4 2 5/8
1995
First Quarter............................................................ 3 1/4 2 1/2
Second Quarter........................................................... 3 1/4 1 3/4
Third Quarter............................................................ 2 1/8 1 1/8
Fourth Quarter........................................................... 1 3/8 5/8
1996
First Quarter............................................................ 1 1/4 3/4
Second Quarter........................................................... 1 1/2 3/4
Third Quarter............................................................ 15/16 9/16
</TABLE>
On December 12, 1996, the stock of AmeriQuest closed at $.50 per share on
the New York Stock Exchange. As of that date AmeriQuest had approximately 799
shareholders of record.
ITEM 6. SELECTED FINANCIAL DATA.
The following selected consolidated financial data has been derived from
and should be read in conjunction with the audited consolidated financial
statements of AmeriQuest, and the notes thereto, and with "Management's
Discussion and Analysis of Results of Operations and Financial Condition",
included elsewhere herein and incorporated herein by this reference (dollars in
thousands, except per share data).
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED YEAR ENDED JUNE 30,
SEPTEMBER 30, SEPTEMBER 30, ----------------------------------------------
1996 1995 1995 1994 1993 1992
------------- ------------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales(1)....................... $ 424,708 $ 100,723 $ 416,571 $ 87,593 $ 73,082 $ 115,053
Income (loss) before taxes......... (33,609) (7,041) (67,566) (7,971) 236 (9,623)
Net income (loss)(2)............... (33,609) (7,041) (67,566) (7,971) 236 (8,893)
Earnings (loss) per share.......... (0.76) (0.30) (3.76) (1.33) 0.08 (3.04)
Total assets....................... 116,372 115,531 128,008 65,145 20,274 23,522
Long-term obligations.............. 3,122 6,686 24,515(3) 3,442 1,817 274
Stockholders' equity (deficit)..... (11,206) 17,565 (25,709) 12,875 8,644 7,952
Weighted average shares
outstanding...................... 44,208,983 23,786,127 17,993,440 5,973,511 3,060,908 2,921,588
</TABLE>
- ---------------
(1) The sales increase in 1995 was due primarily to acquisitions. The sales
increase in 1994 compared to 1993 was largely due to the initiation of a
broader distribution strategy. Year to year sales declines from 1991 to
1993 were principally due to an eroding customer base and reduced emphasis
on commodity products.
(2) The losses in 1995 were due principally to abandonment of U.S. software
operations, consists of integrating prior acquisitions and the write down
of assets. Losses in 1994, 1992 and 1991 related principally to corporate
restructurings in 1994 and 1992 and erosion of the customer base in 1991 to
1993 not offset by operating cost decreases.
(3) Includes the $18 million advance from Computer 2000 related to its equity
investment (see Note 8 to the Consolidated Financial Statements) and $5.8
million associated with the issuance of 6.8 million shares of the Company's
common stock required to complete the Robec merger (see Note 2 to the
Consolidated Financial Statements).
12
<PAGE> 14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
SIGNIFICANT EVENTS
Commencing in the first half of fiscal 1994 and through early fiscal 1996,
the Company completed the acquisition of three regional distributors. Kenfil
Inc., Ross White Enterprises, Inc. d/b/a "National Computer Distributors"
("NCD"), and Robec, Inc. The Company issued 15,864,608 shares of its common
Stock and paid total consideration of approximately $29.5 million for these
acquisitions. During the quarter ended June 30, 1995 the Company closed the U.S.
entertainment software distribution business. The Company's Singapore operation
was sold in the quarter ended March 31, 1995 and its Australian operation was
closed in the quarter ended March 31, 1996.
Effective September 30, 1995 the Company changed its fiscal year-end to
September 30. Transition information for the three months ended September 30,
1995 is included in the Company's financial statements due to the change. The
following table presents the Company's results of operations as a percent of
sales:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEARS ENDED
YEAR ENDED SEPTEMBER JUNE 30,
SEPTEMBER 30, 30, -------------
1996 1995 1995 1994
------------- ------------ ----- -----
<S> <C> <C> <C> <C>
Sales.......................................... 100.0% 100.0% 100.0% 100.0%
Gross Profit................................... 5.5 7.4 3.8 14.4
Selling, general and administrative............ 10.8 12.9 12.8 16.1
Intangible write-off........................... 5.7
Loss on Sublease, move and restructuring....... 1.5 6.5
Interest....................................... 1.1 1.4 1.5 .8
Net Loss....................................... 7.9 7.0 16.2 9.1
</TABLE>
NET SALES
During the fiscal year ended September 30, 1996 sales decreased 9% compared
to the twelve months ended September 30, 1995 and increased 2% compared to the
twelve months ended June 30, 1995. Sales decreases were primarily attributable
to the sale of the Company's Singapore operations in the quarter ended March 31,
1995, the closing of Australian operations during the quarter ended March 31,
1996, the closing of the U.S. Retail software distribution business in the
quarter ended June 30, 1995, as well as continued competition in the computer
hardware distribution business and the loss of certain vendors. Sales increases
in the fiscal year ended September 30, 1996 and June 30, 1995 were due primarily
to the acquisitions of NCD, Robec and Kenfil during early fiscal 1995.
COST OF SALES AND GROSS PROFIT
Gross profit decreased to 5.5% of sales for the fiscal year ended September
30, 1996 compared to 7.4% for the three months ended September 30, 1995. The
decline is primarily attributable to continued extreme price competition within
the industry and lower levels of vendor rebates due to the lack of availability
of certain product lines.
During the fiscal year ended June 30, 1995 gross profit was affected by
competition and significant inventory losses related to the elimination of
certain product lines, loss of certain vendors and a strategy to reduce
inventories to increase operating cash flow. Gross profit in the fiscal year
ended June 30, 1994 reflects a much greater concentration of business in the
area of higher margin disk drive manufacturing.
AmeriQuest manages its inventories by maintaining sufficient quantities to
achieve high order fill rates while at the same time attempting to stock only
those products in high demand with a rapid turnover rate. Inventory balances
will fluctuate as the Company adds new product lines and when appropriate makes
larger purchases from manufacturers when the terms of purchases are considered
advantageous. The Company contracts with certain vendors who provide limited
price protection and stock return privileges to help reduce the risk of loss to
the company due to manufacturer price reductions. Price protection, however,
will not protect the company against slow moving and obsolete inventory. In
addition, returns from vendors of
13
<PAGE> 15
refurbished product previously returned to the vendor due to defects must be
sold at reduced prices decreasing overall margins.
An integral aspect of AmeriQuest's business is to exchange products sold to
customers which are either incompatible units or do not work for a variety of
technical or other reasons. If such products are ultimately determined to be
defective, AmeriQuest, under contract terms with its vendors, is able to return
such products to its vendors. Under such agreements AmeriQuest's economic risk
is nominal and generally limited to the cost of freight and technical services,
both of which cost categories are expensed currently. A warranty and return
reserve of approximately $1.5 million is reflected in the balance sheet at
September 30, 1996.
The Company receives funds under incentive programs based upon volume sales
or purchase of the vendors products. The incentive funds reduce the cost of the
products sold. Incentive programs resulted in $2.5 million for the year ended
September 30, 1996 and $2.4 million for the fiscal year ended June 30, 1995.
Incentive rebates for the quarter ended September 30, 1995 were $.6 million and
were insignificant in fiscal 1994.
AmeriQuest anticipates that it will continue to experience pressure on
gross margins due to industry competition. Although AmeriQuest expects that it
will be able to reduce selling, general and administrative expenses as a percent
of sales, no assurance can be given as to whether such reduction in fact will
occur or as to the actual amount of any such reductions. To the extent gross
margins decline and the Company is not successful in reducing selling, general
and administrative expenses as a percentage of sales, the Company will
experience further negative operating results.
OPERATING EXPENSES
For the years ended September 30, 1996 and the years June 30, 1995 and 1994
selling, general and administrative expenses, exclusive of charges for lease
termination, moving, restructuring and the write-off of intangibles were
approximately 10.8%, 12.8% and 16.1% of sales, respectively. Selling, general
and administrative expenses for the quarter ended September 30, 1995 were 12.9%
of sales. Selling, general and administrative expenses have declined during the
periods as a result of the integration of the Company's recent acquisitions and
elimination of duplicate overhead and a focus on streamlining the Company's
overhead cost structure. During fiscal years 1996 and 1995 the Company incurred
significant costs to resolve certain lawsuits and complete an information
systems conversion. In addition, bad debt expense was significant in fiscal 1996
as the Company increased export sales to higher credit risk Brazilian customers.
During the year ended September 30, 1996 the Company recorded a $6.4 million
charge to expense for the sublease of its California headquarters building and
the cost to relocate its headquarters to Florida.
During fiscal 1995, the Company wrote-off intangibles of $23.8 million
associated with the decision to terminate its entertainment software
distribution business in the U.S. and the elimination of certain redundant
regional distribution businesses. In addition, the Company incurred significant
costs associated with the closure of redundant warehouse facilities and the
reduction of personnel. The Company also wrote-off a significant amount of
customer receivables related to the termination of its entertainment software
distribution business and recorded bad debt reserves related to lower volume and
high credit risks.
In fiscal 1994 the Company recorded a $5.7 million restructuring charge for
the discontinuance of product lines related to the then direct manufacture of
personal computers utilizing proprietary design features.
Operating expenses are reduced by advertising revenues and market
development funds received from vendors as subsidy for or incentive to market
their products. Funds received during the year totaled $2.8 million for each of
the fiscal years ended September 30, 1996 and June 30, 1995 and $.4 million for
the quarter ended September 30, 1995. Funds received in 1994 were not
significant.
14
<PAGE> 16
OPERATING RESULTS
The annual and quarterly operating results of the domestic operations of
the Company have varied considerably due to the acquisition of distribution
companies, closure and sale of certain operating units and a reduced emphasis on
manufacturing and assembly for all but mass storage assembly products.
INTEREST EXPENSE
Interest expense decreased during the year ended September 30, 1996
compared to the year ended June 30, 1995 and quarter ended September 30, 1995
due to (i) guarantees provided by C-2000 to banks which charged lower interest
rates and (ii) equity infusions from C-2000, offset by continued losses.
Interest expenses increased in the year ended June 30, 1995 compared to the
prior fiscal year due to increased levels of debt to fund acquisitions and
operating losses.
INCOME TAXES
In the period July 1, 1993 through September 30, 1996 no income tax expense
was recorded due to losses or the availability of operating tax-loss carry
forwards.
INFLATION
To date AmeriQuest has not been significantly affected by inflation.
Moreover, technological changes in the electronics industry have generally
resulted in price reductions, despite increases in certain costs which may be
affected by inflation.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996 the Company had $2.3 million in cash and had borrowed
$77.4 million against lines of credit. The Company used $28.8 million in cash
for operating activities during the year ended September 30, 1996 compared to
$43.6 million for the year ended June 30, 1995 and $4.0 million for the quarter
ended September 30, 1995. Cash used in operations in fiscal 1996 resulted
primarily from operating losses. Operating activities in the upcoming year will
require additional cash from external financing sources. At September 30, 1996
the Company had a Stockholder's deficit of $11.2 million after operating losses
of $33.6 million in the year ended September 30, 1996 and $67.6 million in the
year ended June 30, 1995.
Accounts receivable days increased during fiscal 1996, representing longer
payment terms extended to customers in order to be competitive. Inventory
turnover increased, reflecting an intentional reduction in stock carried in an
effort to reduce obsolescence costs and carrying costs necessary to support the
business.
The Company maintains bank lines of credit guaranteed by C-2000 with four
German banks which total $76 million and mature on March 31, 1997. The interest
rates on such lines of credit are Libor plus .5%. C-2000 has committed to
continue the guarantee of the Company's bank lines through September 30, 1997.
The Company also maintains a $20 million line of credit with IBM Credit
Corporation ("IBMCC") which is secured by substantially all of the Company's
assets. Interest rates on the IBMCC line are prime plus 1.5%. Borrowings under
the IBMCC line at September 30, 1996 totaled $12.3 million. Borrowings under the
IBMCC line of credit are limited to a contractual percentage of eligible
inventories and receivables. The terms of the line include restrictive covenants
which require the maintenance of specific levels of tangible net worth, working
capital and operating results. IBMCC has subsequently approved amendments to the
agreement which waive prior defaults. Combined borrowings on all such lines
total $77.4 million at September 30, 1996.
While management believes that the Company's current sources of external
financing are adequate to meet its current operating requirements through
September 30, 1997, a significant portion of these external financing sources
are supported by guarantees provided by C-2000. The Company is currently
exploring securing additional equity capital in order to improve its net worth
and decrease its dependence on debt financing. C-2000 has signed a binding
commitment addressed to AmeriQuest's Board of Directors which reads as follows:
15
<PAGE> 17
"This will confirm the obligation of Computer 2000 AG to provide
AmeriQuest Technologies, Inc. with additional financing early in
calendar 1997 in the amount of at least USD 30 million. As you know,
Computer 2000 currently proposes that AmeriQuest commence as soon as
practicable a rights offering to all AmeriQuest stockholders in which
Computer 2000 would enter into a stand-by agreement to purchase at
least USD 30 million in the offering, to the extent that purchases are
not made by other stockholders. In the unanticipated event that it is
decided not to proceed with the rights offering, Computer 2000 will be
obligated to provide, in the same time frame, at least USD 30 million
in other equity or debt financing. Computer 2000 intends that the
foregoing constitutes its binding obligation and understands that you
will rely on it in your corporate planning for this fiscal year and in
connection with the preparation of your annual report on Form 10-K for
the fiscal year ended September 30, 1996 and in other filings with the
Securities Exchange Commission and that your independent accountants
will rely on it in connection with their report on your financial
statements for such fiscal year."
Management believes that the C-2000 $30 million financing will be adequate
for the Company to accomplish its fiscal 1997 operating plan and meet its
financial obligations on a timely basis during fiscal 1997.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements, notes thereto, and the report of independent
public accountants thereon are included herein. Supplementary data, including
quarterly financial information, is included following the financial statements.
A list of the information so included is set forth in response to Item 14(a)
entitled "Exhibits, Financial Statement Schedules, and Reports on Form 8-K,"
which is incorporated herein by this reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
16
<PAGE> 18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth certain information regarding the current
directors and officers of AmeriQuest.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- ----------------------------------------------------
<S> <C> <C>
Michael Dressen.................... 40 President and a Director
Holger Heims....................... 34 Executive Vice President, Secretary and Director
Harry Krischik..................... 45 Chairman of the Board of Directors
Manfred H. Guenzel................. 45 Director
Robert H. Beckett.................. 62 Director
Marc L. Werner..................... 39 Director
J.R. Dick Iverson.................. 68 Director
John Tonnison...................... 28 Vice President -- Information Systems
Dennis Fairchild................... 47 Chief Financial Officer
Alexander C. Kramer, Jr............ 53 Vice President; General Manager of Advanced Systems
Group
Kenneth V. Burke................... 45 Vice President; General Manager of CMS Enhancements
Richard G. McIntyre................ 47 Vice President -- Sales and Marketing
</TABLE>
Michael Dressen (age 40) was appointed to serve as President of AmeriQuest
in August 1996. From May 1995 to June 1996 he served as a Member of the
Executive Board for Transtec, a value-added reseller with its principal offices
in Tuebingen, Germany. From October 1991 to April 1995 he served as Managing
Director of Computer 2000 SpA Italy (a subsidiary of Computer 2000 AG). He was
appointed to serve as a Director of AmeriQuest on September 12, 1996.
Holger Heims (age 34) has served as an officer of AmeriQuest since August
1995, most recently as Executive Vice President and Secretary. From October,
1991 until August 1995 he was employed by Computer 2000 AG, most recently as
Director of Investments, Tax & Legal. Mr. Heims has a Masters of Business
Administration degree from Munich University.
Dr. Harry Krischik (age 45) has served as one of the Co-Presidents of
Computer 2000 for more than the last five years, with responsibility for the
areas of logistics, electronic data processing and human resources. He is now
responsible for worldwide sales and also has regional responsibility for
Southern Europe, North America and Latin America.
Manfred H. Guenzel (age 45) was appointed to serve as a Co-President and
Member of the Executive Board of Computer 2000 AG in January 1996. From August
1990 until January 1996, he served as Head of Corporate
Development/Acquisitions/Controlling (Energy, Chemistry, Aluminum Refractories,
Telecommunications) for VIAG AG, the ultimate parent of Computer 2000 AG.
Robert H. Beckett (age 62) served as the President and Chief Executive
Officer of Robec, Inc. from its inception in 1978 until its acquisition by
AmeriQuest in November 1995. He then served AmeriQuest as Vice President in
charge of the Advanced Systems Group until his retirement in June 1996. Mr.
Beckett holds a Bachelor of Science degree in Mechanical Engineering from
Worcester Polytechnic Institute.
Marc L. Werner (age 39) has been employed by Werner Co. and various
companies affiliated with Werner Co. since 1986, and currently serves as Chief
Executive Officer and President and Director for Werner Financial, Inc. Mr.
Werner is a Certified Public Accountant, and holds a Bachelor of Science degree
in Accounting from Northern Illinois University.
J. R. Dick Iverson (age 68) is currently retired, except for his service on
the board of directors of AmeriQuest, Telegen Corporation and ComStream
Corporation, a subsidiary of Spar Inc. From 1986 to 1994 he served as Chief
Executive Officer and President of the American Electronics Association.
17
<PAGE> 19
John Tonnison (age 28) has served as Vice President -- Information Systems
of AmeriQuest since January 1996. From October 1993 to December 1995 he served
as C-2000's director for implementation of SAP software systems. From October
1991 to September 1993 he served as a Director and as Director of Information
Systems for Frontline Distribution Ltd., C-2000's wholly-owned subsidiary in the
United Kingdom.
Dennis C. Fairchild (age 47) joined AmeriQuest upon its acquisition of NCD
in November 1994. Mr. Fairchild has served as Chief Financial Officer of NCD
since January 1994. From March 1990 to December 1993, Mr. Fairchild was a
partner in Coral Springs Connections, the owner of Southeast Frozen Foods, and
served as Chief Financial Officer of Southwest Frozen Foods. Mr. Fairchild is a
Certified Public Accountant and a CMA.
Alexander C. Kramer, Jr. (age 53) served as Vice President -- Operations of
Robec, Inc. for thirteen years prior to its acquisition in November 1995 by
AmeriQuest. Since November 1995 he has served in various capacities, most
recently as Vice President; General Manager of the Advanced Systems Group.
Kenneth V. Burke (age 45) served in various capacities while employed by
Mountain Computer, Inc. between 1981 to 1995, the last of which was as Executive
Vice President/General Manager of Summit, Inc., a subsidiary of Mountain
Computer, Inc. from 1991 to March 1995. Mr. Burke joined AmeriQuest in March,
1995, as Vice President; General Manager of CMS Enhancements.
Richard G. McIntyre (age 47) served as President of Peregrine Marketing,
the exclusive sales and marketing consultant for Olivetti Office USA from 1990
until February 1995, at which time he joined AmeriQuest as Vice
President -- Sales and Marketing.
18
<PAGE> 20
ITEM 11. EXECUTIVE COMPENSATION.
The following table provides information concerning the annual and
long-term compensation of the Chief Executive Officer of AmeriQuest and each of
the four other highest paid executive officers who served as such during fiscal
year 1996, and for two of the other highest paid executive officers who
terminated their employment with AmeriQuest prior to the end of fiscal year 1996
(collectively, the "Named Executive Officers") for services rendered to
AmeriQuest and its subsidiaries in all capacities during the fiscal years 1996,
1995 and 1994. This information includes the dollar values of base salaries and
bonus awards, and certain other compensation, if any, whether paid or deferred.
AmeriQuest does not provide long-term compensation benefits other than stock
options.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION(1) STOCK OPTION
----------------------------- AWARDS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (SHARES) COMPENSATION
- ----------------------------------------------- ---- -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
D. Stephen DeWindt, 1996 $210,000 -0- -0- $110,000(3)
Chief Executive Officer 1995 -0- -0- -0- -0-
1994 -0- -0- -0- -0-
Robert S. Beckett, 1996 $159,808(2) $19,974 -0- $110,000(3)
Vice President -- Components 1995 $150,000 -0- -0- -0-
1994 $119,769 -0- -0-
Kenneth V. Burke, 1996 $170,000 $60,000 -0- -0-
Vice President of AmeriQuest and General 1995 $ 92,772 $18,750 -0- -0-
Manager of CMS Enhancements, Inc., a wholly- 1994 -0- -0- -0- -0-
owned subsidiary of AmeriQuest
Alexander C. Kramer, Jr., 1996 $150,000 $19,974 -0- -0-
Vice President -- Advanced Systems Group 1995 $150,000 -0- -0- -0-
1994 $115,000 -0- -0- -0-
Dennis C. Fairchild, 1996 $145,000 $28,000 50,000 $ 50,000(4)
Chief Financial Officer 1995 $122,227 $40,000 -0- -0-
1994 $ 71,154 -0- -0- -0-
Robert H. Beckett, 1996 $129,831(2) $26,326 -0- $196,000(5)
Vice President -- Advanced Systems Group 1995 $196,000 -0- -0- -0-
1994 $127,500 -0- -0- -0-
John Faiman, 1996 $151,330(2) $19,974 50,000 $ 75,000(6)
Vice President -- U.S. Sales 1995 $154,124 -0- -0- -0-
1994 $153,124 -0- -0- -0-
</TABLE>
- ---------------
(1) In fiscal years 1996, 1995 and 1994, no executive officer received
perquisites or other personal benefits, securities or property which
exceeded the lesser of $50,000 or 10% of such executive officer's salary
and bonus.
(2) Salary compensation includes amounts paid for vacation time not taken by the
employees.
(3) Messrs. D. Stephen DeWindt and Robert S. Beckett terminated their employment
on September 30, 1996, and the amounts set forth under the column entitled
"All Other Compensation" represents severance payments to which they were
entitled under their respective employment agreements.
(4) Represents amounts advanced during the fiscal year in contemplation that the
same would be forgiven in fiscal 1997 as a bonus for the employee's
cooperation to move to Florida following the end of the 1996 fiscal year.
(5) Mr. Robert H. Beckett terminated his employment on May 17, 1996, and the
amount set forth under the column entitled "All Other Compensation"
represents a severance payment to which he was entitled under his
employment agreement.
(6) Mr. John Faiman terminated his employment on August 5, 1996, and the amount
set forth under the column entitled "All Other Compensation" represents a
severance payment to which he was entitled under his employment agreement.
19
<PAGE> 21
OPTION GRANTS
The following table provides, information concerning individual grants of
stock options made during fiscal year 1996 to each of the Named Executive
Officers.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
% OF TOTAL PRICE
NO. OF OPTIONS APPRECIATION
SECURITIES GRANTED TO FOR OPTION
UNDERLYING EMPLOYEES EXERCISE TERM(2)(3)
OPTIONS IN FISCAL PRICE (PER EXPIRATION ---------------
NAME GRANTED YEAR 1996 SHARE) DATE 0% 5% 10%
- ------------------------------------------ ---------- ---------- ----------- ---------- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
D. Stephen DeWindt........................ -0- -0- -0- -- $ 0 $ 0 $ 0
Robert S. Beckett......................... -0- -0- -0- -- $ 0 $ 0 $ 0
Kenneth V. Burke.......................... -0- -0- -0- -- $ 0 $ 0 $ 0
Alexander C. Kramer....................... -0- -0- -0- -- $ 0 $ 0 $ 0
Dennis C. Fairchild....................... 50,000 11% $2.00 7/20/01 $ 0 $ 0 $ 0
Robert H. Beckett......................... -0- -0- -0- -- $ 0 $ 0 $ 0
John Faiman............................... 50,000 11% $2.00 7/20/01 $ 0 $ 0 $ 0
</TABLE>
- ---------------
(1) Options granted to employees during fiscal 1996 totalled 450,000 shares
exercisable at $2.00 per share, the closing price of AmeriQuest Common
Stock on July 20, 1995. The grants made were primarily to honor promises of
prior managers to the employees involved.
(2) The potential realizable values shown in these columns illustrate the
results of hypothetical annual rates of appreciation compounded annually
from the date of grant until the end of the option term, assuming an
initial investment equal to the aggregate exercise price shown for the
option grant. These amounts are reported net of the option exercise price
(which may be paid by delivery of already-owned shares of Common Stock),
but before any taxes associated with the exercise or subsequent sale of the
underlying shares.
(3) The dollar amounts in these columns are based on the hypothetical annual
rates of appreciation noted and are therefore not intended to forecast
possible future appreciation, if any, of the price of AmeriQuest's Common
Stock. Alternative formulas for determining potential realizable value have
not been utilized because AmeriQuest is not aware of any formula which will
determine with reasonable accuracy a present value based on future unknown
or volatile factors. There can be no assurance that the dollar amounts
reflected in these columns will be achieved. Actual gains, if any, on stock
option exercises are dependent on the future performance of the Common
Stock and overall market conditions, as well as the executive officer's
continued employment through the vesting period.
20
<PAGE> 22
OPTION EXERCISES AND FISCAL YEAR END VALUES
The following table provides, as to the Named Executive Officers,
information concerning unexercised stock options at September 30, 1996. None of
the executive officers exercised any stock options during fiscal year 1996.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT SEPTEMBER 30, IN-THE-MONEY OPTIONS AT
1996 SEPTEMBER 30, 1996(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
D. Stephen DeWindt............................ -0- -0- -0- -0-
Robert S. Beckett(2).......................... 10,753 -0- $ 2,518 -0-
Kenneth V. Burke.............................. 37,500 112,500 -0- -0-
Alexander C. Kramer, Jr.(3)................... 26,882 26,882 1,799 1,799
Dennis C. Fairchild(4)........................ 10,000 40,000 -0- -0-
Robert H. Beckett............................. -0- -0- -0- -0-
John Faiman(5)................................ 50,000 -0- -0- -0-
</TABLE>
- ---------------
(1) Based on the closing price of AmeriQuest's Common Stock on the New York
Stock Exchange on September 30, 1996.
(2) The Severance Agreement with Robert S. Beckett as of September 30, 1996
acknowledged 10,753 shares as having vested at that time with respect to an
option granted on June 7, 1994.
(3) Represents 10,753 shares as having vested with respect to an option granted
on June 7, 1994 and 26,882 shares as having vested under an option granted
March 22, 1993.
(4) Represents shares vested under a 50,000 share option granted on July 22,
1995.
(5) Represents shares vested under a Severance Agreement dated August 5, 1996.
COMPENSATION OF OUTSIDE DIRECTORS
AmeriQuest pays its outside Directors, Robert H. Beckett, Marc L. Werner
and J.R. Dick Iverson $2,500 per calendar quarter plus expenses incurred to
attend Board meetings. All directors are also eligible to receive stock and/or
stock options as a form of compensation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During of fiscal 1996 the Compensation Committee consisted of D. Stephen
DeWindt, Dr. Harry Krischik and Marc L. Werner.
During the same period that Marc L. Werner was a member of the Compensation
Committee, Mr. Werner was also President and a Director of Manufacturers
Indemnity and Insurance Company of America ("MIICA"), a stockholder of
AmeriQuest.
In October 1994, AmeriQuest sold to MIICA 200,000 shares of Common Stock at
$2.50 per share. The purchase price at which AmeriQuest sold these shares was
$0.10 per share greater than the purchase price at which AmeriQuest offered and
sold shares in a separate private placement completed in October 1994. MIICA
paid-in $2,000 cash (equal to the par value for the shares) and remained
obligated to pay the balance of $498,000. This payment obligation was unsecured,
and did not bear interest. This payment obligation was originally due in October
1995, but in July 1995, AmeriQuest extended the due date until September 1996.
On March 29, 1996, the Board of Directors resolved to forgive this indebtedness
in consideration of the efforts expended by Marc L. Werner on behalf of
AmeriQuest above and beyond his role as a Director. At the time of the purchase
in October 1994, Marc L. Werner and his cousin Eric J. Werner were Directors of
both MIICA and AmeriQuest, and Marc L. Werner was a member of the Compensation
Committee.
21
<PAGE> 23
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of November 30, 1996, information
relating to the beneficial ownership of AmeriQuest's Common Stock by (i) each
person known to AmeriQuest to be the beneficial owner of more than five percent
of AmeriQuest's outstanding Common Stock, (ii) each director, (iii) each of the
Named Executive Officers, and (iv) all directors and executive officers as a
group. AmeriQuest knows of no agreements among its shareholders which relate to
voting or investment power over its Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP AS OF
NOVEMBER 30, 1996(1)
-----------------------------------------
NUMBER OF SHARES PERCENT OF CLASS(18)
---------------- --------------------
<S> <C> <C>
NAME AND ADDRESS OF BENEFICIAL OWNER
Computer 2000 Inc.(2)...................................... 38,933,429 56%
6100 Hollywood Blvd., Ste. 700
Hollywood, Florida 33024
Computer 2000 AG(2)........................................ 38,933,429 56%
Wolfratshauser Strasse 84
81379 Munchen, Germany
DIRECTORS AND OFFICERS(17)
Michael Dressen(3)......................................... -0- *
Holger Heims(4)............................................ -0- *
Harry Krischik(5).......................................... 38,933,429 56%
Manfred H. Guenzel(6)...................................... 38,933,429 56%
Robert H. Beckett(7)....................................... 3,497,657 5%
Marc L. Werner(8).......................................... 3,693,473 5%
J.R. Dick Iverson(9)....................................... 10,000 *
Alexander C. Kramer, Jr.(10)............................... 26,881 *
Dennis C. Fairchild(11).................................... 32,131 *
Kenneth V. Burke(12)....................................... 83,100 *
D. Stephen DeWindt(13)..................................... 100,000 *
Robert S. Beckett(14)...................................... -0- *
John Faiman(15)............................................ -0- *
All officers and directors as a group (15 persons)(17)..... 46,376,671(16) 65%
</TABLE>
- ---------------
* Denotes less than 1%
(1) Unless otherwise indicated below, the persons and entities named in the
table have sole voting and sole investment power with respect to all shares
beneficially owned, subject to community property laws where applicable.
(2) Includes shares owned directly by Computer 2000 Inc., a wholly-owned
subsidiary of Computer 2000 AG. The amount reflected in the table includes
2,583,021 shares subject to the Acquisition Maintenance Warrant in favor of
Computer 2000, Inc., which are currently exercisable and 530 shares subject
to outstanding Achievement Warrants in favor of Computer 2000 Inc., which
are currently exercisable. The warrants and option held by C-2000 are as
follows:
<TABLE>
<S> <C>
Acquisition Maintenance Warrants..................... 2,841,988
Achievement Warrants................................. 7,035,280
Unit Maintenance Warrants............................ 5,148,574
Maintenance Option................................... 3,727,255
</TABLE>
(3) Mr. Dressen became President of AmeriQuest on August 1, 1996, and was
appointed to serve as a Director on September 12, 1996.
(4) Mr. Heims is Executive Vice President, Secretary and a Director of
AmeriQuest.
(5) Represents the shares held of record by Computer 2000 Inc. (see footnote
(2) above). Mr. Krischik is a member of the Management Board of Computer
2000 AG, and therefore may be deemed to have shared voting power over the
shares of AmeriQuest held by Computer 2000 Inc. There is only a total of
five Co-Presidents of Computer 2000, of which Mr. Krischik is one. In this
regard, it should also be noted that the parent companies of Computer 2000,
Klockner & Co. AG and VIAG Aktiengesellschaft,
22
<PAGE> 24
have been asserting a significant degree of control over the affairs of
Computer 2000. Additionally, it should be noted that Messrs. Michael
Dressen and Holger Heims are nominees of Computer 2000. Mr. Krischik
disclaims beneficial ownership of all shares of AmeriQuest held by Computer
2000 Inc. Mr. Krischik is the Chairman of the Board of Directors of
AmeriQuest.
(6) Represents the shares held of record by Computer 2000, Inc. (see footnote
(2) above). Mr. Guenzel is a member of the Management Board of Computer
2000 AG, and therefore may be deemed to have shared voting power over the
shares of AmeriQuest held by Computer 2000 Inc. There is only a total of
five Co-Presidents of Computer 2000, of which Mr. Guenzel is one. In this
regard, it should also be noted that the parent companies of Computer 2000,
Klockner & Co. AG and VIAG Aktiengesellschaft, have been asserting a
significant degree of control over the affairs of Computer 2000.
Additionally, it should be noted that Messrs. Michael Dressen and Holger
Heims are nominees of Computer 2000. Mr. Guenzel disclaims beneficial
ownership of all shares of AmeriQuest held by Computer 2000 Inc. Mr.
Guenzel is a Director of AmeriQuest.
(7) Mr. Robert H. Beckett served as Senior Vice President -- Advanced Systems
Group from November 13, 1995 to the time of his severance from employment
in May 1996. Mr. Beckett still serves as a Director of AmeriQuest.
(8) Includes 80,000 shares of Common Stock held of record by Mr. Werner, of
which 20,000 shares are held by Mr. Werner as custodian for certain of his
children. The amount reflected in the table also includes 1,605,273 shares
of Common Stock and 1,700,000 shares of Common Stock subject to warrants,
each held of record by Manufacturers Indemnity and Insurance Company of
America. The warrants are currently exercisable. Mr. Werner is the
President and a Director of Manufacturers Indemnity and Insurance Company
of America and, therefore, may be deemed to have shared voting and
investment powers over the shares of AmeriQuest held by Manufacturers
Indemnity and Insurance Company of America. Mr. Werner disclaims beneficial
ownership of all shares of AmeriQuest held by Manufacturers Indemnity and
Insurance Company of America. Mr. Werner is a Director of AmeriQuest.
(9) Mr. Iverson commenced service as a Director of AmeriQuest on July 10, 1996.
(10) Includes 26,881 shares subject to stock options exercisable within 60 days
after November 30, 1996. Mr. Kramer serves as Vice President -- Advanced
Systems Group.
(11) Includes 10,000 shares subject to a 50,000 share stock option in favor of
Mr. Fairchild, which are exercisable within sixty days after November 30,
1996. Mr. Fairchild serves as the Chief Financial Officer of AmeriQuest.
(12) Includes 37,500 shares subject to a 150,000 share stock option in favor of
Mr. Burke, which are exercisable within sixty days after November 30, 1996.
Mr. Burke serves as Vice President of AmeriQuest and General Manager of CMS
Enhancements, Inc., a wholly-owned subsidiary of AmeriQuest.
(13) Includes 50,000 shares of Common Stock subject to a Warrant currently
exercisable in full. Mr. DeWindt served as Chairman of the Board of
Directors and Chief Executive Officer of AmeriQuest from August 21, 1995
until his severance from service on September 30, 1996.
(14) Mr. Robert S. Beckett served as Vice President -- Components of AmeriQuest
from November 13, 1995 until his severance from service on September 30,
1996.
(15) Mr. Faiman served as Vice President -- U.S. Sales until his severance from
employment on August 5, 1996.
(16) Includes 4,407,932 shares subject to stock options and warrants currently
vested and issuable upon exercise of such options and warrants.
(17) The address for the executive officers and directors and proposed directors
is: 6100 Hollywood Blvd., Ste. 700, Hollywood, Florida 33024.
(18) For purposes of determining the percentage of outstanding Common Stock held
by each person or group set forth in the table, the number of shares held
by a person or group is divided by the number of shares of AmeriQuest's
Common Stock outstanding on November 30, 1996 (67,047,392) plus the number
of shares of Common Stock subject to outstanding stock options and warrants
exercisable currently or within 60 days of November 30, 1996 by such person
or group, in accordance with Rule 13d-3(d)(1)
23
<PAGE> 25
under the Securities Exchange Act of 1934, as amended. Percentages of less
than 1% are represented by an asterisk.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In December 1995, C-2000 issued guarantees to certain lenders to secure up
to $66 million of lines of credit such lenders might extend to the Company. In
November 1996 C-2000 increased the $66 million of credit lines to $76 million.
The total amount guaranteed as of December 12, 1996 is approximately $76
million. As of September 30, 1996, the Company had borrowed approximately $65.1
million from such lenders under such lines of credit. These borrowings were used
in part to reduce the Company's interest-bearing indebtedness under its
previously outstanding lines of credit from approximately $52 million to zero,
resulting in a reduction, as of September 30, 1996, in the average interest rate
on the Company's total outstanding indebtedness from approximately 11.0% per
annum to approximately 6.4% per annum. In return for the guarantees, AmeriQuest
agreed to pay C-2000 one-half of one percent (0.5%) per annum of the amounts
guaranteed, on a weighted average basis, and provided C-2000 with a security
interest in all of the Company's assets, and agreed to seek refinancing of its
outstanding debt as soon as reasonably practicable. C-2000's guarantees expire
on September 30, 1997, and the lines of credit guaranteed by C-2000 mature on
March 31, 1997. In the opinion of management this financing was at least as
favorable to AmeriQuest as could have been obtained from unaffiliated third
party lenders.
---------------------
AmeriQuest leases its facility in Horsham, Pennsylvania from Bowe 3
Partners at a lease rate of approximately $522,000 per year for 105,000 square
feet of office and warehouse space. The Lease for this facility was scheduled to
terminate on December 31, 1996, but by mutual agreement of the parties was
extended on September 10, 1996 through January 31, 1998 at the same rate as that
currently in effect for September 1996. Robert H. Beckett, Robert S. Beckett and
Alexander C. Kramer, Jr. are partners in Bowe 3 Partners. In the opinion of
management the terms of the Lease are as favorable as could be obtained from
unaffiliated third parties.
---------------------
Reference is hereby made to the forgiveness of indebtedness from
Manufacturers Indemnity and Insurance Company of America which resulted from the
issuance of securities to Manufacturers Indemnity and Insurance Company of
America which is described above in the section entitled "Compensation Committee
Interlocks and Insider Participation."
24
<PAGE> 26
SEVERANCE ARRANGEMENTS WITH PRIOR MEMBERS OF MANAGEMENT
During fiscal 1996 AmeriQuest several officers terminated their employment
with AmeriQuest as part of its efforts to reduce overhead expenses and retain
personnel skilled enough to effect a turn-around of the Company. The following
table sets forth the amounts of severance payments made and the names of the
officers to whom such payments were made.
<TABLE>
<CAPTION>
EMPLOYEE SEVERANCE
NAME AND POSITION DATE OF SEVERANCE CONTRACT RIGHT PAID
- ---------------------------------------- ------------------- --------------------- ---------
<S> <C> <C> <C>
Thomas F. Ross.......................... November 3, 1995 $340,000 $ 340,000
Chief Operating Officer (two year's salary)
Donald Resnick.......................... January 31, 1996 None $ 100,000(1)
Chief Financial Officer
John Higgins............................ January 31, 1996 None $ 100,000(2)
Vice President Marketing and
Purchasing
Robert H. Beckett, Sr................... May 17, 1996 $196,000 $ 196,000
Vice President, Advanced Systems Group (one year's salary)
David R. Malmberg....................... May 28, 1996 $80,000 $ 80,000
Vice President, Purchasing (six month's salary)
John Faiman............................. August 5, 1996 None $ 100,000(3)
Vice President, U.S. Sales
D. Stephen DeWindt...................... September 30, 1996 $110,000 $ 110,000
Chief Executive Officer (six month's salary)
Robert S. Beckett....................... September 30, 1996 $150,000 $ 100,000
Vice President, Components (one year's salary)
</TABLE>
- ---------------
(1) Don Resnick had no written contract, only a resolution of the Board of
Directors, with no provision for severance. $80,000 of his severance pay
was structured as project completion pay.
(2) John Higgins had no written contract. He was given a repricing of his
175,000 shares under option from $2.00 to $.70 per share.
(3) John Faiman had no written contract.
25
<PAGE> 27
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Financial Statements and Schedules
<TABLE>
<CAPTION>
PAGE
REFERENCE
----------
<S> <C>
(1) Financial Statements included in Part II of this Report:
Report of Independent Public Accountants................................. F-1
Statements of Operations................................................. F-2
Balance Sheets........................................................... F-3
Statements of Stockholders' Equity....................................... F-4
Statements of Cash Flows................................................. F-5
Notes to Financial Statements............................................ F-7
(2) Financial Statement Schedules
Schedule II -- Valuation and Qualifying Accounts and Reserves............ F-17
</TABLE>
(b) Reports on Form 8-K
Not Applicable
(c) Exhibits
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. TITLE OF DOCUMENT PAGE NO. LOCATION OF FILING
- ---------- -------------------------------------- -------- ----------------------------------
<C> <S> <C> <C>
3.01(a)* Certificate of Incorporation of SEC File No. 1-10397
AmeriQuest as amended through 10-K for June 30, 1994
September 22, 1994.
3.01(b) Amendment to the Certificate of SEC File No. 1-10397
Incorporation of AmeriQuest dated 10-K for September 30, 1996
April 1, 1996 pursuant to which
authorized Common Stock was increased
to 200,000,000 shares and authorized
Preferred Stock was restored to
5,000,000 shares
3.01(c)* Certificate of Designations for SEC File No. 1-10397
Preferred Stock issued and issuable to 10-K for June 30, 1995
Computer 2000.
3.02* By-laws of AmeriQuest 189 SEC File No. 33-81726
4.01* Reference is made to Exhibits 3.01 and
3.02, the Certificate of Incorporation
and By-laws, which define the rights
of security holders
4.02* Specimen Stock Certificate 274 SEC File No. 33-81726
10.01* Inventory and Working Capital SEC File No. 1-10397
Financing Agreement dated May 5, 1995 10-K for June 30, 1995
by and between CDS Distribution, Inc.
and IBM Credit Corporation, as
amended.
</TABLE>
26
<PAGE> 28
<TABLE>
<CAPTION>
EXHIBIT
NO. TITLE OF DOCUMENT PAGE NO. LOCATION OF FILING
- ---------- -------------------------------------- -------- ----------------------------------
<C> <S> <C> <C>
10.02* Inventory and Working Capital SEC File No. 1-10397
Financing Agreement dated May 5, 1995 10-K for June 30, 1995
by and between CMS Enhancements, Inc.
and IBM Credit Corporation, as
amended.
10.03* Working Capital Financing Agreement SEC File No. 1-10397
dated May 5, 1995 by and between 10-K for June 30, 1995
AmeriQuest/Kenfil Inc. and IBM Credit
Corporation, as amended.
10.04* Inventory and Working Capital SEC File No. 0-18115
Financing Agreement dated September 8-K dated September 22, 1994
21, 1994 by and between Robec, Inc.
and IBM Credit Corporation, as
amended.
10.05* Incentive Stock Option Plan SEC File No. 2-96539
10.06* Employee Stock Bonus Plan SEC File 33-23809
10.07 1996 Equity Incentive Plan SEC File No. 1-10397
10-K for September 30, 1996
10.08* Employment Agreement for Steve DeWindt SEC File No. 1-10397
10-K for June 30, 1995
10.09* Employment Agreement for Mark Mulford SEC File No. 1-10397
10-K for June 30, 1995
10.10 Employment Agreement for Michael SEC File No. 1-10397
Dressen 10-K for September 30, 1996
10.11 Employment Agreement for Holger Heims SEC File No. 1-10397
10-K for September 30, 1996
10.12 Employment Agreement for Dennis C. SEC File No. 1-10397
Fairchild 10-K for September 30, 1996
10.13 Employment Agreement for Ken Burke SEC File No. 1-10397
10-K for September 30, 1996
10.14 Employment Agreement for Alexander C. SEC File No. 1-10397
Kramer, Jr. 10-K for September 30, 1996
10.15* Purchase Agreement dated August 7, SEC File No. 1-10397
1995 by and between AmeriQuest and 8-K dated August 7, 1995
Computer 2000 AG
10.16 Promissory Notes in favor of Computer SEC File No. 1-10397
2000 AG's lending sources, i.e. 10-K for September 30, 1996
Commerzbank Aktiengesellschaft,
Deutsche Bank AG, Bayerische
Hypotheken und Wechsel Bank
Aktiengesellschaft ("Hypo Bank") and
Bayerische Vereinsbank AG.
10.17 Guarantee of Indebtedness from SEC File No. 1-10397
Computer 2000 AG and Commitment for 10-K for September 30, 1996
additional funding in 1997.
10.18* Agreement of Sublease dated December SEC File No. 33-81726
5, 1994 by and between AmeriQuest and
The Austin Company.
</TABLE>
27
<PAGE> 29
<TABLE>
<CAPTION>
EXHIBIT
NO. TITLE OF DOCUMENT PAGE NO. LOCATION OF FILING
- ---------- -------------------------------------- -------- ----------------------------------
<C> <S> <C> <C>
10.19 Agreement of Subsublease dated January SEC File No. 1-10397
18, 1996 by and between AmeriQuest, 10-K for September 30, 1996
SOS Office Systems, Inc. and Tenet
Healthcare Corporation.
10.20 Lease dated July 8, 1992, as amended, SEC File No. 1-10397
by and between AmeriQuest as successor 10-K for September 30, 1996
in interest by merger to the interests
of Ross White Enterprises, Inc. d/b/a
"National Computer Distributors" and
Horizon Associates Joint Venture.
10.21 Lease Agreement dated January 1, 1994, SEC File No. 1-10397
as amended, by and between AmeriQuest 10-K for September 30, 1996
as successor in interest by merger to
the interests of Robec, Inc. and Bowe
3 Partners.
10.22 Commercial Lease Agreement dated SEC File No. 1-10397
November 22, 1994, by and between 10-K for September 30, 1996
AmeriQuest and Tradeport Partners.
10.23 Lease Agreement dated January 3, 1995, SEC File No. 1-10397
as amended, by and between AmeriQuest 10-K for September 30, 1996
as successor in interest by merger to
the interests of Ross White
Enterprises, Inc. d/b/a "National
Computer Distributors" and Elk Grove
Village Industrial Park.
10.24 Standard Industrial SEC File No. 1-10397
Lease -- Multi-tenant dated March 1, 10-K for September 30, 1996
1994, by and between AmeriQuest as
successor in interest by merger to the
interests of Ross White Enterprises,
Inc. d/b/a "National Computer
Distributors" and Oates Business Park.
10.25 Lease -- Industrial Commercial dated SEC File No. 1-10397
September 12, 1994, by and between 10-K for September 30, 1996
AmeriQuest as successor in interest by
merger to the interests of Ross White
Enterprises, Inc. d/b/a "National
Computer Distributors" and New World
Partners Joint Venture.
10.26 Lease Agreement dated on or about SEC File No. 1-10397
February 27, 1990, as amended, by and 10-K for September 30, 1996
between AmeriQuest as successor in
interest by merger to the interests of
Ross White Enterprises, Inc. d/b/a
"National Computer Distributors" and
Valwood West Associates and CIIF
Associates.
10.27 Lease Agreement dated January 25, SEC File No. 1-10397
1995, as amended, by and between 10-K for September 30, 1996
AmeriQuest and Anaheim Technology
Center.
</TABLE>
28
<PAGE> 30
<TABLE>
<CAPTION>
EXHIBIT
NO. TITLE OF DOCUMENT PAGE NO. LOCATION OF FILING
- ---------- -------------------------------------- -------- ----------------------------------
<S> <C> <C> <C>
10.28 Sublease dated as of September 4, 1996 SEC File No. 1-10397
by and between AmeriQuest and Central 10-K for September 30, 1996
Video, Inc.
10.29 Standard Industrial/Commercial Single- SEC File No. 1-10397
Tenant Lease -- Net, dated October 1, 10-K for September 30, 1996
1996 by and between CMS Enhancements,
Inc. and ICM Investments, Ltd., as
guaranteed by AmeriQuest.
21.01 Subsidiaries of AmeriQuest SEC File No. 1-10397
10-K for September 30, 1996
23.01 Consent of Arthur Andersen LLP to the SEC File No. 1-10397
incorporation of their report included 10-K for September 30, 1996
in the Annual Report on Form 10-K of
AmeriQuest for the fiscal year ended
September 30, 1996 into AmeriQuest's
previously filed Registration
Statements.
24.01 Powers of Attorney for Messrs. Harry SEC File No. 1-10397
Krischik, Manfred H. Guenzel, Michael 10-K for September 30, 1996
Dressen, Holger Heims, Robert H.
Beckett, Marc L. Werner and J.R. Dick
Iverson
27.01 Financial Data Schedule (for SEC use SEC File No. 1-10397
only) 10-K for September 30, 1995
</TABLE>
- ---------------
* Incorporated herein by reference to the indicated filing pursuant to Rule
12b-32 under the Securities Exchange Act of 1934, as amended, and Rule 24 of
the Commission's Rules of Practice.
29
<PAGE> 31
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1933, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Hollywood, State of Florida, on the 16th day of December, 1996.
AmeriQuest Technologies, Inc.
/s/ MICHAEL DRESSEN
--------------------------------------
By: Michael Dressen
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<S> <C> <C>
/s/ MICHAEL DRESSEN President and a Director December 16, 1996
- --------------------------------------------- (Principal Executive
Michael Dressen Officer)
/s/ HOLGER HEIMS Executive Vice President, December 16, 1996
- --------------------------------------------- Secretary and Director
Holger Heims
/s/ DENNIS C. FAIRCHILD Chief Financial Officer December 16, 1996
- --------------------------------------------- (Principal Financial and
Dennis C. Fairchild Accounting Officer)
/s/ DR. HARRY KRISCHIK Director December 16, 1996
- ---------------------------------------------
Dr. Harry Krischik**
/s/ MANFRED H. GUENZEL Director December 16, 1996
- ---------------------------------------------
Manfred H. Guenzel**
/s/ ROBERT H. BECKETT Director December 16, 1996
- ---------------------------------------------
Robert H. Beckett**
/s/ MARC L. WERNER Director December 16, 1996
- ---------------------------------------------
Marc L. Werner**
/s/ J.R. DICK IVERSON Director December 16, 1996
- ---------------------------------------------
J.R. Dick Iverson**
/s/ MICHAEL DRESSEN
- ---------------------------------------------
Michael Dressen*,
Attorney-in-Fact
/s/ HOLGER HEIMS
- ---------------------------------------------
Holger Heims,**
Attorney-in-Fact
</TABLE>
30
<PAGE> 32
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To AmeriQuest Technologies, Inc.:
We have audited the accompanying consolidated balance sheets of AmeriQuest
Technologies, Inc. (a Delaware corporation) and subsidiaries (AmeriQuest) as of
September 30, 1996, September 30, 1995 and June 30, 1995, and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for the fiscal year ended September 30, 1996, the three months ended
September 30, 1995 and the fiscal years ended June 30, 1995 and June 30, 1994.
These financial statements are the responsibility of AmeriQuest's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AmeriQuest as of September 30,
1996, September 30, 1995 and June 30, 1995, and the results of their operations
and their cash flows for the fiscal year ended September 30, 1996, the three
months ended September 30, 1995, and the fiscal years ended June 30, 1995 and
June 30, 1994 in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index on page
is presented for purposes of complying with the Securities and Exchange
Commissions rules and is not a required part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in our
audits of the basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.
ARTHUR ANDERSEN LLP
Los Angeles, California
December 16, 1996
F-1
<PAGE> 33
AMERIQUEST TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, JUNE 30, JUNE 30,
1996 1995 1995 1994
------------- ------------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
NET SALES................................ $ 424,708 $ 100,723 $ 416,571 $ 87,593
COST OF SALES............................ 401,165 93,308 400,820 75,023
---------- ---------- ---------- ---------
Gross profit........................... 23,543 7,415 15,751 12,570
OPERATING EXPENSES
Selling, general and administrative.... 45,998 13,019 53,471 14,144
Intangibles write-off.................. -- -- 23,777 --
Lease termination and relocation
costs............................... 6,400 -- -- --
Restructuring costs.................... -- -- -- 5,700
---------- ---------- ---------- ---------
52,398 13,019 77,248 19,844
---------- ---------- ---------- ---------
Loss from operations................... (28,855) (5,604) (61,497) (7,274)
Interest expense....................... 4,754 1,437 6,069 697
---------- ---------- ---------- ---------
Net loss............................... $ (33,609) $ (7,041) $ (67,566) $ (7,971)
========== ========== ========== =========
Net loss per common share and common
share equivalent.................... $ (0.76) $ (0.30) $ (3.76) $ (1.33)
========== ========== ========== =========
Weighted average shares
outstanding....................... 44,208,983 23,786,127 17,993,440 5,973,511
========== ========== ========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-2
<PAGE> 34
AMERIQUEST TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30, JUNE 30,
1996 1995 1995
------------- ------------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash..................................................... $ 2,300 $ 210 $ 970
Accounts receivable, net of allowances for doubtful
accounts of $5,811, $8,180 and $9,572 as of September
30, 1996, September 30, 1995 and June 30, 1995,
respectively.......................................... 56,492 51,589 56,342
Inventories.............................................. 38,019 42,335 49,101
Other current assets..................................... 2,837 975 1,362
--------- -------- --------
Total current assets............................. 99,648 95,109 107,775
PROPERTY AND EQUIPMENT, NET................................ 6,134 7,527 6,649
INTANGIBLE ASSETS, net of accumulated amortization of
$1,961, $961 and $754, as of September 30, 1996,
September 30, 1995 and June 30, 1995, respectively....... 9,546 10,536 10,411
OTHER ASSETS............................................... 1,044 2,359 3,173
--------- -------- --------
$ 116,372 $ 115,531 $128,008
========= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable......................................... $ 36,152 $ 36,792 $ 42,023
Lines of credit.......................................... 77,446 45,244 72,945
Other current liabilities................................ 10,858 9,244 14,234
--------- -------- --------
Total current liabilities........................ 124,456 91,280 129,202
LONG-TERM OBLIGATIONS...................................... 3,122 6,686 6,515
SUBORDINATED NOTE PAYABLE.................................. -- -- 18,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.01 par value; authorized 5,000,000
shares; issued and outstanding 0, 2,596,525 and 0 as
of September 30, 1996, September 30, 1995 and June 30,
1995, respectively.................................... -- 26 --
Common stock, $.01 par value; authorized 200,000,000
shares; issued and outstanding 67,047,392, 23,896,140
and 22,966,711 shares as of September 30, 1996,
September 30, 1995 and June 30, 1995, respectively.... 670 239 230
Additional paid-in capital............................... 111,144 106,476 56,196
Accumulated deficit...................................... (123,020) (89,176) (82,135)
--------- -------- --------
Total stockholders' equity (deficit)............. (11,206) 17,565 (25,709)
--------- -------- --------
$ 116,372 $ 115,531 $128,008
========= ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE> 35
AMERIQUEST TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL
------------------- ------------------- PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT)
---------- ------ ---------- ------ ---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT JUNE 30, 1993.......... -- $ -- 3,180,710 $ 32 $ 15,210 $ (6,598)
Common stock issued by private
placement........................ -- -- 4,905,072 49 9,054 --
Common stock issued for business
acquired......................... -- -- 1,730,330 17 3,011 --
Exercise of employee stock
options.......................... -- -- 41,667 1 70 --
Net loss for the year ended June
30, 1994......................... -- -- -- -- -- (7,971)
---------- ---- ---------- ---- -------- ---------
BALANCES AT JUNE 30, 1994.......... -- $ -- 9,857,779 $ 99 $ 27,345 $ (14,569)
---------- ---- ---------- ---- -------- ---------
Common stock issued by private
placement and other.............. -- -- 4,266,258 43 8,646 --
Common stock issued for business
acquired......................... -- -- 8,352,148 84 19,019 --
Exercise of employee stock
options.......................... -- -- 32,834 -- 51 --
Shares issued to employees......... -- -- 457,692 4 1,135 --
Net loss for the year ended June
30, 1995......................... -- -- -- -- -- (67,566)
---------- ---- ---------- ---- -------- ---------
BALANCES AT JUNE 30, 1995.......... -- $ -- 22,966,711 $230 $ 56,196 $ (82,135)
---------- ---- ---------- ---- -------- ---------
Conversion of subordinated note
payable.......................... 810,811 8 -- -- 17,992 --
Sale of subsidiary (Note 13)....... -- -- (350,000) (4) (697) --
Common stock issued by private
placement and other.............. -- -- 1,229,429 12 1,719 --
Exercise of employee stock
options.......................... -- -- 50,000 1 37 --
Sale of preferred stock............ 1,785,714 18 -- -- 31,229 --
Net loss for the three months ended
September 30, 1995............... -- -- -- -- -- (7,041)
---------- ---- ---------- ---- -------- ---------
BALANCES AT SEPTEMBER 30, 1995..... 2,596,525 $ 26 23,896,140 $239 $ 106,476 $ (89,176)
---------- ---- ---------- ---- -------- ---------
Exercise of employee stock
options.......................... -- -- 82,500 1 3 --
Preferred stock issued for
acquisition...................... 25,830 -- -- -- 1,603 --
Common stock issued for
acquisition...................... -- -- 3,969,905 40 2,367 --
Exercise of warrants by Computer
2000............................. 301,249 3 -- -- 232 --
Common stock issued for legal
settlement (Note 8).............. -- -- 500,000 5 305 --
Common stock issued for Series G
preferred stock dividend......... -- -- 197,958 2 233 (235)
Preferred stock conversion......... (2,923,604) (29) 33,104,371 330 (302) --
Exercise of warrants by Computer
2000............................. -- -- 5,296,518 53 227 --
Net loss for the year ended
September 30, 1996............... -- -- -- -- -- (33,609)
---------- ---- ---------- ---- -------- ---------
BALANCES AT SEPTEMBER 30, 1996..... -- $ -- 67,047,392 $670 $ 111,144 $(123,020)
========== ==== ========== ==== ======== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 36
AMERIQUEST TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, JUNE 30, JUNE 30,
1996 1995 1995 1994
------------- ------------------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net loss................................... $ (33,609) $ (7,041) $(67,566) $ (7,971)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization............ 3,235 691 4,723 1,107
Intangibles write-off.................... -- 23,777 --
Provision for losses on accounts
receivable............................ 1,661 758 5,787 577
Provision for losses on inventories...... 7,482 462 17,039 1,714
Loss on sale of equipment................ -- 1,540 --
Loss on abandonment of leasehold
improvements.......................... 956 -- -- --
Changes in operating assets and
liabilities:
(Increase)/decrease in accounts
receivable.......................... (6,564) 3,995 (3,016) (1,698)
(Increase)/decrease in inventories and
other............................... (5,028) 6,304 (390) (1,447)
(Increase)/decrease in other assets... 1,305 868 (189) 1,500
Increase/(decrease) in accounts
payable and other................... 1,728 (10,050) (25,312) (2,190)
-------- -------- -------- --------
Net cash used in operating activities...... (28,834) (4,013) (43,607) (8,408)
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property and equipment, net
of disposals.......................... (1,798) (1,361) (4,316) (1,546)
Net cash paid for acquisition of
businesses, net of cash acquired...... -- -- (1,973) 769
-------- -------- -------- --------
Net cash used in investing activities...... (1,798) (1,361) (6,289) (777)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from (payments on) line of
credit borrowings, net................ 32,202 (27,701) 20,926 3,741
Proceeds from subordinated debt.......... -- -- 18,000 --
Proceeds from sale of preferred and
common stock.......................... 520 32,315 8,740 7,624
-------- -------- -------- --------
Net cash provided by financing
activities............................... 32,722 4,614 47,666 11,365
-------- -------- -------- --------
Increase/(decrease) in cash................ 2,090 (760) (2,230) 2,180
Cash -- beginning of period................ 210 970 3,200 1,020
-------- -------- -------- --------
Cash -- end of period...................... $ 2,300 $ 210 $ 970 $ 3,200
======== ======== ======== ========
</TABLE>
F-5
<PAGE> 37
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
(DOLLARS IN THOUSANDS)
INTEREST ON LINES OF CREDIT:
During the fiscal year ended September 30, 1996, the three months ended
September 30, 1995, and the fiscal years ended June 30, 1995 and 1994, the
Company paid interest costs of approximately $4,774, $1,886, $5,974 and $728,
respectively.
INCOME TAXES:
During the fiscal year ended September 30, 1996, the three months ended
September 30, 1995, and the fiscal years ended June 30, 1995 and 1994, the
Company made no tax payments.
NONCASH INVESTING AND FINANCING ACTIVITIES:
ACQUISITION OF ROBEC MINORITY INTEREST:
During the fiscal year ended September 30, 1996, the Company issued
approximately 6,750,874 shares of common stock valued at $4,245 in exchange
for the remaining minority interest of Robec, Inc.
LEGAL SETTLEMENT:
During the fiscal year ended September 30, 1996, the Company issued
500,000 shares of common stock for full settlement of an accrued legal
liability of $310.
CONVERSION OF SUBORDINATED NOTE PAYABLE AND PREFERRED STOCK INTO COMMON STOCK:
During the three months ended September 30, 1995, the Company issued
approximately 811,000 shares of preferred stock upon conversion of an
$18,000 subordinated note payable.
During the fiscal year ended June 30, 1994, the Company issued
approximately 522,000 shares of common stock upon conversion of a $1,550
subordinated note payable.
During the fiscal year ended September 30, 1996, the Company converted
2,923,604 shares of preferred stock into 33,104,371 shares of the Company's
common stock.
INTANGIBLE WRITE-OFF:
During the fiscal year ended June 30, 1995, the Company wrote-off
$23,777 of intangibles related to the termination of its entertainment
software business and impairment of intangible assets at certain acquired
regional distributors.
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 38
AMERIQUEST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business. AmeriQuest Technologies, Inc. and subsidiaries
("Company" or "AmeriQuest") is a national value-added wholesale distributor of
computer hardware and related products to value-added resellers, system
integrators, computer retailers and other distributors. AmeriQuest is also a
supplier of hard disk drive subsystems compatible with leading business
computers, through its wholly-owned subsidiary, CMS Enhancements, Inc. ("CMS").
CMS also offers disk array, magneto-optical, CD-ROM, floppy disk drives and
magnetic tape back-up subsystems. Through its wholly-owned subsidiary,
AmeriQuest/Kenfil, Inc., AmeriQuest distributes business applications,
utilities, graphics and communication software to the Asian market.
The Company operates in the personal computer industry, which is affected
by significant technological change and short product life cycles. Product lines
sold by AmeriQuest are also offered by many other distributors, which in
combination with short product life cycles, can result in rapid declines in
product gross margins. In addition, inventory is subject to loss due to
short-term technological obsolescence. No one customer represents more than 10
percent of consolidated revenues. The Company's largest vendor accounted for
approximately 14%, %, 11% and 20% of the Company's purchases during the
fiscal year ended September 30, 1996, the three months ended September 30, 1995
and fiscal years ended June 30, 1995 and 1994, respectively. No other vendor
represented 10% or more of the Company's purchases during these periods.
Basis of consolidation. The consolidated financial statements include the
accounts of AmeriQuest and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
Accounting period. Effective September 30, 1995, the Company changed its
fiscal year end to September 30. The Company's 1995 and 1994 fiscal years ended
on the Saturday closest to June 30, 1995 and the Friday closest to June 30,
1994, respectively. The year end dates for the past three fiscal years were
September 30, 1996, July 1, 1995 and June 30, 1994. For presentation purposes,
fiscal year ends 1995 and 1994 are referred to as June 30. Results for the three
months ended September 30, 1995 and September 30, 1994 (unaudited) consist of
the following (in thousands except per share data):
<TABLE>
<CAPTION>
(UNAUDITED)
1995 1994
----------- -----------
<S> <C> <C>
Net sales................................................... $ 100,723 $ 49,476
Gross profit................................................ 7,415 4,772
Operating loss.............................................. (5,604) (386)
Net loss.................................................... (7,041) (1,113)
Loss per share.............................................. (.30) (.10)
Weighted average shares..................................... 23,786,127 11,622,873
</TABLE>
Inventories. Inventories consist principally of computer hardware and
software held for resale and are stated at the lower of first-in, first-out or
market. Reserves for inventory obsolescence and slow moving product are provided
based upon specified criteria, such as recent sales activity and date of
purchase.
Property and equipment. Property and equipment are stated at cost.
Depreciation and amortization are computed using straight-line method over
estimated useful lives as follows:
<TABLE>
<S> <C>
Equipment............................................................... 5 years
Furniture and fixtures.................................................. 5 years
Leasehold improvements.................................................. Lease term
Vehicles................................................................ 3 to 5 years
</TABLE>
Maintenance, repairs and minor renewals are charged directly to expense as
incurred. Additions and betterments to property and equipment are capitalized.
When assets are disposed of, the related cost and
F-7
<PAGE> 39
AMERIQUEST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
accumulated depreciation thereon are removed from the accounts and any resulting
gain or loss is included in operations.
Intangible assets. Intangible assets relate primarily to acquired
distribution channels and related vendor relationships and market positions.
Intangibles are amortized using the straight-line method from the date of
acquisition over the expected period to be benefitted, currently estimated at 10
years. In determining the appropriate amortization period, the Company
considered the historical length of the acquiree's vendor relationships and the
overall size and quality of the vendors and their product offerings. On a
quarterly basis, the Company assesses the recoverability of intangible assets
based upon consideration of past performance and future expectations of
undiscounted cash flow on an acquisition by acquisition basis to the extent
separately identifiable, in accordance with Statement of Financial Accounting
Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and For
Long Lived Assets to be Disposed of." To the extent separate assessment of such
acquired intangibles is no longer feasible (i.e. as a result of integrating
multiple acquisitions into a single business unit), such assessment is performed
on a combined basis as appropriate.
During the quarter ended June 30, 1995, in anticipation of the completion
of Computer 2000 AG's (Computer 2000) equity investment, the Company, with input
from Computer 2000 management, terminated its entertainment software business to
focus its management efforts and capital in the higher margin, value-added
products, application software and computer hardware distribution businesses.
Management determined that future operating cash flow from certain regional
acquisitions were not sufficient to recover the related intangible assets. As a
result of these assessments, the Company wrote-off approximately $23.8 million
of intangibles related to the termination of its entertainment software business
and the impairment of intangibles related to acquired regional distributors.
Market development funds and volume incentive rebates. In general, vendors
provide various incentive programs to the Company. The funds received under
these programs are determined based on purchases and/or sales of the vendors'
product and the performance of certain training, advertising and other market
development activities. Revenue associated with these funds is recorded when
earned either as a reduction of selling, general and administrative expenses or
product cost, according to the specific nature of the program.
Sales recognition. Sales are recorded as of the date shipments are made to
customers. Sales returns and allowances are reflected as a reduction in sales
and recorded in inventory at expected net realizable value. The Company permits
the return of products within certain time limits and will exchange returned
products. Products that are defective upon arrival are handled on a warranty
return basis with the Company's vendors. The Company provides for product
warranty and return obligations at the point of sale based on estimates of
expected future costs.
Income taxes. The Company accounts for income taxes under Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes" (SFAS 109),
which requires an asset and liability approach in accounting for income taxes
payable or refundable at the date of the financial statements as a result of all
events that have been recognized in the financial statements and as measured by
the provisions of enacted laws. Additionally, SFAS 109 requires that deferred
tax assets be evaluated and a valuation allowance be established if it is "more
likely than not" that all or a portion of the deferred tax asset will not be
realized.
Net loss per common share and common share equivalent. Net loss per common
share and common share equivalent is computed by dividing net loss by the
weighted average number of shares of common stock and common stock equivalents
outstanding. Common stock equivalents that increase earnings per share or
decrease loss per share are excluded from the computation.
Reclassifications. Certain amounts in the prior periods have been
reclassified to conform to the current year's presentation.
F-8
<PAGE> 40
AMERIQUEST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
certain estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting periods. Actual results could differ from those estimates.
2. ACQUISITIONS
The Company has pursued a strategy of growth through acquisition by
acquiring regional distributors with the goal of creating a national distributor
of value-added computers, subsystems and peripherals. The success of this
strategy is dependent upon the ability of the Company to effectively consolidate
and integrate the operations of the acquired businesses, combine different
cultures and obtain adequate financing to complete acquisitions and fund working
capital requirements. All of the Company's acquisitions completed during fiscal
years June 30, 1994 through September 30, 1996 have been accounted for in
accordance with the purchase method of accounting. The Company's consolidated
financial statements include acquiree's results of operations from the effective
acquisition dates.
The per share valuation of the Company's common stock issued in connection
with the following acquisitions represents a discount from the quoted market
price, based upon the weighted average discounts received on recently completed
private equity cash transactions. Management believes this method of valuation
is the best indication of fair value due to the Company's thin stock trading
value and small public float.
AmeriQuest/Kenfil, Inc. ("Kenfil"). As of June 30, 1994, the Company
acquired 51% of the outstanding common stock of Kenfil for common stock of the
Company. Kenfil distributed microcomputer software in both the U.S. and Asia. As
of September 1994, the Company acquired the remaining 49% of the outstanding
common stock of Kenfil and converted certain trade and subordinated debt of
Kenfil for common and preferred stock, subsequently converted to common stock of
the Company. During the fiscal year ended June 30, 1995, the former U.S.
operations of Kenfil, including principally educational and entertainment
software distribution, were terminated by the Company. Total consideration given
for the Kenfil acquisition was 5,846,162 shares of the Company's common stock
valued at approximately $14 million, plus transaction costs of $785,000.
Robec, Inc. ("Robec"). As of September 1994, the Company acquired 50.1% of
the outstanding common stock of Robec for common stock of the Company. Robec was
a distributor of computer products and services, specializing in systems and
UNIX applications based in Horsham, Pennsylvania. In November 1995, the Company
acquired the remaining 49.9% of Robec outstanding common stock not owned by the
Company.
The Robec merger agreement required the Company to issue additional common
shares to provide former and current Robec shareholders participating in the
merger with a minimum value associated with the Company's common stock issued or
to be issued to complete the merger transaction. Based upon the exchange ratio
included in the Robec merger agreement, 1,402,805 shares of the Company's common
stock valued at $2.7 million were issued in exchange for 50.1 percent of Robec's
common stock in September 1994. Due to the minimum value provisions and
adjustments to the exchange ratio included in the amended Robec merger
agreement, an additional 3,969,905 shares of the Company's common stock, 25,830
shares of Series G convertible preferred stock, (convertible into 2,583,011
shares of common stock) and a related preferred stock dividend of 197,958 shares
of common stock were issued to complete the Robec merger. The additional common
and preferred shares issued were valued at $4.2 million. Total consideration,
after conversion of the Series G convertible preferred stock into common stock,
was 8,153,679 shares of the Company's common stock valued at $6.9 million, plus
transaction costs of $265,000.
F-9
<PAGE> 41
AMERIQUEST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
National Computer Distributors ("NCD"). In November 1994, the Company
acquired all of the outstanding common stock of Ross White Enterprises, Inc.
d/b/a "National Computer Distributors" ("NCD") for cash and common stock of the
Company. NCD was a distributor of computer products and services, specializing
in systems and connectivity applications. Total consideration given in the NCD
acquisition was 1,864,767 shares of the Company's common stock valued at $4.1
million and cash of $3.4 million.
Management believes that distribution channel access represents the most
significant intangible acquired in connection with the acquisitions discussed
above. Management initially assigned a 10 year economic life to this intangible
asset as that is the period in which management expects to derive benefit from
the existing vendor relationships and market positions. Management determined
that 10 years is an appropriate economic life based upon the historical length
of the acquiree's vendor relationships and the overall size and quality of the
acquiree's vendors and their product offerings. See Note 1 for a discussion of
the Company's policy for evaluating the realization of the intangible assets,
the termination of the entertainment software business and the related fiscal
1995 write-off of intangibles.
The following unaudited pro forma combined information shows the results of
the Company's operations for the fiscal year ended June 30, 1995, as though the
acquisitions and the Computer 2000 equity investment (see Note 9) all had
occurred as of the beginning of the fiscal year (in thousands except per share
data):
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
-----------
1995
-----------
<S> <C>
Revenues................................................................ $ 520,134
Net loss................................................................ 70,020
Net loss per share...................................................... 1.33
Weighted average shares................................................. 52,729,000
</TABLE>
The pro forma results have been prepared for comparative purposes only and
are not necessarily indicative of the actual results of operations had the
acquisitions taken place at the beginning of the indicated period or the results
that may occur in the future. Furthermore, the pro forma results do not give
effect to cost savings or incremental costs which may occur as a result of the
integration and consolidation of the acquired companies.
The entertainment software business of Kenfil contributed revenues of $25
million and incurred net losses of $25.9 million on a pro forma basis during
fiscal year 1995.
3. INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------ JUNE 30,
1996 1995 1995
-------- -------- --------
<S> <C> <C> <C>
Finished goods............................................ $36,684 $40,815 $46,628
Raw materials and subassemblies........................... 1,335 1,520 2,473
------- ------- -------
$38,019 $42,335 $49,101
======= ======= =======
</TABLE>
Inventories are reflected net of reserves of approximately $6.8 million,
$13.3 million and $13.8 million at September 30, 1996, September 30, 1995 and
June 30, 1995, respectively. In estimating the inventory reserves, management
relied upon its knowledge of the industry, projected sales volumes, current
inventory levels, and aging of product on-hand. Because of the assumptions used,
the amounts the Company will ultimately realize could differ materially in the
near term from the net inventory balances as included in the accompanying
financial statements. Inventories do not contain any labor or overhead.
F-10
<PAGE> 42
AMERIQUEST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company manages its inventories by maintaining sufficient quantities to
achieve high order fill rates while at the same time attempting to stock only
those products in high demand with a rapid turnover rate. Inventory balances
will fluctuate as the Company adds new product lines and when appropriate, makes
large purchases from manufacturers when the terms of such purchases are
considered advantageous. Short product life years and rapid technological
obsolescence significantly increases the risk of declines in inventory value and
the lack of recovery of inventory balances at recorded values. The Company's
contracts with most of its vendors provide price protection and stock return
privileges to reduce to some degree the risk of loss to the Company due to
manufacturer price reductions and slow moving or obsolete inventory.
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------- JUNE 30,
1996 1995 1995
------- ------- --------
<S> <C> <C> <C>
Equipment................................................. $12,130 $12,011 $ 10,753
Furniture and fixtures.................................... 4,866 5,499 4,156
Leasehold improvements.................................... 2,193 2,475 2,358
------ ------ ------
19,189 19,985 17,267
Less accumulated depreciation and amortization............ 13,055 12,458 10,618
------ ------ ------
$ 6,134 $ 7,527 $ 6,649
====== ====== ======
</TABLE>
5. LINES OF CREDIT
As of September 30, 1996, the Company maintained floor planning
arrangements with IBM Credit Corporation (IBMCC) for a maximum credit line of
$35 million, bearing interest at the lender's prime rate plus two and
five-eighths percent (10.88 percent at September 30, 1996). The borrowing base
under the IBMCC facility is limited to a contractual percentage of eligible
inventories and receivables, which totaled $49,954, $ and $ at
September 30, 1996, September 30, 1995 and June 30, 1995, respectively. At
September 30, 1996, all inventories and accounts receivable were pledged as
collateral under this facility and IBMCC holds liens on substantially all other
assets owned by the Company. The amount outstanding under this arrangement at
September 30, 1996 was $12.3 million.
At September 30, 1996, the terms of the IBMCC lending agreement included
certain restrictive covenants which required the maintenance of specified
financial ratios generally related to tangible net worth, working capital and
total debt to tangible net worth. At various dates during fiscal year 1995 and
at September 30, 1996, the Company was in default with certain financial
covenants. In December 1996, the Company received an amendment to its credit
agreement with IBMCC, which waived the financial covenants the Company was not
in compliance with at September 30, 1996 and reduced the maximum borrowings
under the line of credit to $20 million.
In December 1995, the Company obtained lines of credit with four
Germany-based financial institutions at Libor-based interest rates which, in the
aggregate, provided for revolving credit totaling $66 million as of September
30, 1996. In October 1996, the total credit granted under these credit
facilities was increased by $10 million to allow a maximum extension of
financing to the Company of $76 million. All of the aforementioned German lines
of credit are guaranteed by Computer 2000 at September 30, 1996. Computer 2000's
guarantees expire on September 30, 1997, and the lines of credit guaranteed by
Computer 2000 mature on March 31, 1997.
As of September 30, 1995 and June 30, 1995, the Company had a revolving
line of credit with a bank that provided for borrowings up to $30 million and
$27 million, respectively, limited to specified percentages of
F-11
<PAGE> 43
AMERIQUEST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
eligible accounts receivable and inventory, with monthly interest at prime plus
one and one-half percent. Borrowings under the revolving credit agreement were
collateralized by the Company's trade accounts receivable, inventories and
property and equipment. The line of credit was paid in full and replaced by the
above German credit facilities in December 1995.
The weighted average interest rate for all borrowings under the above
credit facilities was 6.4%, 11.2%, 11.2% and 8.0% at September 30, 1996,
September 30, 1995, June 30, 1995 and June 30, 1994, respectively.
6. INCOME TAXES
The deferred tax assets, net of the valuation allowance, of the Company
consist of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER, 30,
--------------------- JUNE 30,
1996 1995 1995
-------- -------- --------
<S> <C> <C> <C>
Inventory reserves................................. $ 2,694 $ 5,420 $ 6,962
Allowance for doubtful accounts.................... 2,253 3,440 4,995
Other.............................................. 5,780 2,110 4,492
Net operating loss carryforwards................... 48,273 25,619 20,780
Valuation allowance................................ (59,000) (36,589) (37,229)
-------- -------- --------
$ -- $ -- $ --
======== ======== ========
</TABLE>
The valuation allowances at September 30, 1996 and 1995 and June 30, 1995
were provided because it is not more likely than not, as defined in SFAS 109,
that the deferred tax benefits will be realized through operations. The
valuation allowances recorded against deferred tax assets are based on
management's estimates related to the Company's ability to realize these
benefits. Appropriate adjustments will be made to the valuation allowances if
circumstances warrant in future periods. Such adjustments may have a significant
impact on the Company's financial statements.
The principal elements accounting for the difference between income taxes
computed at the statutory rate and the effective rate are as follows (in
thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
------------------ ------------------
1996 1995 1995 1994
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Tax credit computed at statutory rate........... $(13,444) $(2,816) $(27,026) $(3,200)
Intangible write-off and amortization........... 400 83 9,553 57
Net operating losses not benefitted............. 13,044 2,733 17,473 3,143
-------- ------- -------- -------
$ -- $ -- $ -- $ --
======== ======= ======== =======
</TABLE>
At September 30, 1996, the Company had an income tax operating loss
carryforward of approximately $128 million, which is available to offset
earnings in future periods through 2011, subject to limitations discussed below.
The Company experienced "ownership changes" in 1994 and 1995 for income tax
purposes, which will result in future annual limitations on the utilization of
net operating loss carryforwards to approximately $2.6 million per year.
F-12
<PAGE> 44
AMERIQUEST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. COMMITMENTS AND CONTINGENCIES
The Company leases its corporate office, warehouse space and certain
equipment under operating leases. Future minimum rental commitments for all
non-cancelable operating leases at September 30, 1996 are as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
- ------------------------
<S> <C>
1997............................................................... $ 3,681
1998............................................................... 2,786
1999............................................................... 2,579
2000............................................................... 2,033
2001............................................................... 1,497
Thereafter......................................................... 5,406
-------
$17,982
Less: sublease income.............................................. 10,286
-------
$ 7,696
=======
</TABLE>
Total rental expense under non-cancelable agreements for the periods ending
September 30, 1996, September 30, 1995, June 30, 1995 and June 30, 1994 was
approximately $3,759,000, $1,232,000, $4,291,000 and $1,083,000, respectively.
The Company is contingently liable at September 30, 1996 under the terms of
repurchase agreements with financial institutions providing inventory financing
for dealers of the Company's products. The contingent liability under those
agreements approximates the amount financed, reduced by the resale value of any
products which may be repurchased, and the risk of loss is spread over numerous
dealers and financial institutions. Losses under these agreements have been
immaterial in the past. Sales under these agreements during the years ended
September 30, 1996, September 30, 1995, June 30, 1995 and June 30, 1994 were
approximately $16 million, $2 million, $17 million, and $7 million,
respectively.
8. LEGAL PROCEEDINGS
Richard M. Terrell, et al. vs. AmeriQuest Technologies, Inc. In June 1995,
the Company entered into a settlement agreement with Microware Corporation
("Microware") regarding a default judgment in the amount of $15.9 million which
had been entered against the Company in favor of certain shareholders of the
defunct Microware. The underlying lawsuit relates to the Company's decision not
to proceed with the acquisition of Microware in early 1993. Under the terms of
the settlement the Company issued 125,000 shares of its common stock to the
plaintiffs and paid $50,000 in cash in exchange for vacation of the default
judgment, without prejudice. The plaintiffs refiled their claim in July 1995,
seeking $8 million of compensatory damages and $50 million of punitive damages.
The Company issued 500,000 additional shares of its common stock to the
plaintiffs in February 1996 in full settlement of the claim.
Kenfil vs. RLI Insurance Company. On July 12, 1994, Kenfil filed suit to
recover additional monies from RLI Insurance (RLI) for damage incurred in the
January 17, 1994 Northridge earthquake. RLI cross-claimed on August 12, 1994 for
the return of $840,000 paid on claims submitted by Kenfil based on affidavits
from former Kenfil employees alleging that they had been instructed, following
the earthquake, to intentionally destroy additional inventory. RLI contends that
it is not obligated to cover any portion of the damage caused by the earthquake
because of the possible fraud involved with such actions; while the management
of Kenfil maintains that only that portion of damages actually incurred during
the earthquake were submitted as claimed losses. There exists a question of fact
as to whether RLI justifiably relied on the inclusion of intentionally damaged
products among the products counted by RLI's agents. There is also a question of
fact as to whether the actions of Kenfil's employees in damaging additional
inventory were instigated by upper-
F-13
<PAGE> 45
AMERIQUEST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
level management and a question of law as to whether the managers of Kenfil are
able to take unauthorized actions which can be attributed to Kenfil. Although
there is evidence available to prove the actual damage immediately following the
earthquake, no assurance can be given as to the final outcome of this legal
matter.
The Company is also a party to various other legal matters. Based upon
discussions with counsel, management believes that the ultimate outcome of these
matters will not have a material adverse effect on the Company's future
financial position or its results of operations.
9. COMPUTER 2000 PURCHASE AGREEMENT AND RELATED BUSINESS TRANSACTIONS
In November 1994, AmeriQuest and Computer 2000 entered into an agreement
pursuant to which Computer 2000 agreed to invest approximately $50 million in
AmeriQuest in exchange for a majority ownership interest in AmeriQuest. Under
the agreement Computer 2000 initially loaned AmeriQuest $18 million in the form
of a subordinated note payable.
In August 1995, Computer 2000 exchanged the $18 million subordinated note
for 810,811 shares of AmeriQuest's Series A preferred stock (convertible into
8,108,110 shares of common stock). In addition, Computer 2000 purchased from
AmeriQuest, for $31.2 million, 1,785,714 shares of Series B preferred stock
(convertible into 17,857,140 shares of common stock). In April 1996, the 810,811
shares of Series A preferred stock and the 1,785,714 shares of Series B
preferred stock, noted above, were converted into 8,108,110 and 17,857,140
shares of common stock, respectively.
In connection with the conversion of the $18 million subordinated note, the
capital infusion of $31.2 million, the completion of the Robec merger and
various private placements throughout the fiscal year, Computer 2000 has been
issued warrants to purchase additional shares of common stock at prices ranging
from $.05 to $.53 per common share. During fiscal year ended September 30, 1996,
warrants were exercised by Computer 2000 to purchase 7,868,518 shares of common
stock. Assuming the exercise of the remaining warrants, Computer 2000 will hold
approximately 58% of the outstanding voting stock of the Company.
In March 1996, the shareholders approved an increase in the authorized
common stock of the Company from 30 to 200 million shares.
During November 1996, Computer 2000 has obligated itself to provide
AmeriQuest with additional financing early in calendar 1997 in the amount of $30
million.
F-14
<PAGE> 46
AMERIQUEST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. STOCK OPTION PLANS
The Company has instituted various stock option plans which authorize the
granting of options to key employees, directors, officers, vendors and customers
to purchase shares of the Company's common stock. All grants of options during
the years presented have been to employees or directors and were granted at the
then quoted market price. A summary of shares available for grant and the
options outstanding under the plans is as follows:
<TABLE>
<CAPTION>
SHARES
AVAILABLE OPTIONS PRICE
FOR GRANT OUTSTANDING RANGE
----------- ----------- -----------
<S> <C> <C> <C>
BALANCES, JUNE 30, 1993......................... 208,250 192,845 $ 1.50-3.00
Increase in shares available for grant.......... 250,000 -- --
Options granted................................. (20,000) 20,000 2.38-4.50
Options exercised............................... -- (41,667) 1.50-2.00
Cancelled....................................... 78,818 (78,818) --
---------- --------- ----------
BALANCES, JUNE 30, 1994......................... 517,068 92,360 $ 1.50-4.50
Options exercised............................... -- (32,834) 1.50
Cancelled....................................... 2,625 (2,625) 1.50-2.38
---------- --------- ----------
BALANCES, JUNE 30, 1995......................... 519,693 56,901 $ 1.50-4.50
Increase in shares available for grant.......... 2,000,000 --
Options granted................................. (2,795,000) 2,795,000 0.05-4.50
Cancelled....................................... 429,327 (429,327) 1.50-2.00
---------- --------- ----------
BALANCES, SEPTEMBER 30, 1995.................... 154,020 2,422,574 $ 0.05-4.50
Options granted................................. (301,978) 301,978 0.45-2.00
Options exercised............................... -- (82,500) 0.05
Cancelled....................................... 447,561 (447,561) 0.45-4.50
---------- --------- ----------
BALANCES, SEPTEMBER 30, 1996.................... 299,603 2,194,491 $ 0.05-4.50
========== ========= ==========
</TABLE>
Of the 2,194,491 options outstanding, 1,620,074 options outstanding are
currently exercisable.
11. LOSS ON SUBLEASE, RELOCATION AND RESTRUCTURING COSTS
During fiscal year 1994, the Company restructured certain of its activities
in order to emphasize and streamline its operations in value-added distribution.
The components of the restructuring charges are as follows (dollars in
thousands):
<TABLE>
<S> <C>
Employee terminations............................................ $ 500
Facilities abandonment........................................... 300
Discontinued product lines....................................... 4,900
------
$5,700
======
</TABLE>
F-15
<PAGE> 47
AMERIQUEST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During fiscal year 1996, the Company closed its corporate headquarters in
California and moved its operations to Florida. The components of the loss on
sublease and relocation costs are as follows (dollars in thousands):
<TABLE>
<S> <C>
Abandonment of leasehold improvements............................. $ 956
Lease payments in excess of sublease income....................... 2,744
Personnel costs................................................... 1,455
Other............................................................. 1,245
------
$6,400
======
</TABLE>
As of September 30, 1996, approximately $2.4 million is accrued for and is
primarily related to future lease payments in excess of sublease income.
12. FOREIGN SALES INFORMATION
A summary of the Company's operations by geographic area is as follows (in
thousands):
<TABLE>
<CAPTION>
U.S. FAR EAST ELIMINATION CONSOLIDATED
-------- -------- ----------- ------------
<S> <C> <C> <C> <C>
YEAR ENDED SEPTEMBER 30, 1996
Sales to unaffiliated customers.............. $404,151 $ 20,557 $ -- $424,708
Loss (income) from operations................ 29,231 (376) -- 28,855
Identifiable assets.......................... 110,955 5,417 -- 116,372
THREE MONTHS ENDED SEPTEMBER 30, 1995
Sales to unaffiliated customers.............. $ 94,742 $ 5,981 $ -- $100,723
Loss from operations......................... 5,541 63 -- 5,604
Identifiable assets.......................... 109,419 6,112 -- 115,531
YEAR ENDED JUNE 30, 1995
Sales to unaffiliated customers.............. $374,552 $ 42,019 $ -- $416,571
Loss from operations......................... 60,746 751 -- 61,497
Identifiable assets.......................... 122,548 5,460 -- 128,008
YEAR ENDED JUNE 30, 1994
Sales to unaffiliated customers.............. $ 62,089 $ 25,504 $ -- $ 87,593
Transfers between geographic areas........... 4,107 298 (4,405) --
Net sales.................................... 66,196 25,802 (4,405) 87,593
Loss from operations......................... 7,182 92 -- 7,274
Identifiable assets.......................... 62,584 2,561 -- 65,145
</TABLE>
There were no intercompany transfers between geographic areas during fiscal
1996, the three months ended September 30, 1995 and fiscal 1995.
United States sales include export sales of approximately $41.9 million,
$1.6 million, $6.4 million and $2.3 million made principally to Europe, Latin
America, the Far East and Canada during the fiscal year ended September 30,
1996, the three months ended September 30, 1995 and the fiscal years ended June
30, 1995 and 1994, respectively.
13. DISPOSITIONS
In August 1995, the Company completed the sale of its Singapore subsidiary,
("CMS Singapore") to a former officer and director of the Company. The Company
exchanged all of the stock of CMS Singapore for 350,000 shares of the Company's
previously issued common stock. Consideration received for the divestiture of
CMS Singapore is approximately equal to its net book value. Sales of CMS
Singapore approximated $20 million during the fiscal year ended June 30, 1995.
There were no sales during the three months ended September 30, 1995.
In March 1996, the Company closed its Australia subsidiary, ("CMS
Australia"). Sales of CMS Australia were approximately $1 million, $700,000, and
$2 million during the fiscal year ended September 30, 1996, the three months
ended September 30, 1995, and the fiscal year ended June 30, 1995, respectively.
F-16
<PAGE> 48
SCHEDULE II
AMERIQUEST TECHNOLOGIES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO DEDUCTIONS -- BALANCE
BEGINNING COST AND ACCOUNTS AT END OF
DESCRIPTIONS OF PERIOD EXPENSES WRITTEN-OFF OTHER PERIOD
- ------------------------------------------- ---------- ---------- ------------ ------ ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Allowance for Doubtful Accounts:
July 1, 1993 to June 30, 1994............ $ 253 $ 577 $ 353 $ 477
July 1, 1994 to June 30, 1995............ $ 477 $ 5,787 $ 622 $3,930(1) $ 9,572
July 1, 1995 to September 30, 1995....... $ 9,572 $ 758 $ 2,150 $ 8,180
October 1, 1995 to September 30, 1996.... $ 8,180 $ 1,661 $ 4,030 $ 5,811
Inventory Reserve:
July 1, 1993 to June 30, 1994............ $ 3,096 $ 1,714 $ 2,177 $ 2,633
July 1, 1994 to June 30, 1995............ $ 2,633 $ 17,039 $ 13,354 $7,461(1) $ 13,779
July 1, 1995 to September 30, 1995....... $ 13,779 $ 462 $ 929 $ 13,312
October 1, 1995 to September 30, 1996.... $ 13,312 $ 7,482 $ 13,976 $ 6,828
</TABLE>
(1) Additions to reserves related to acquisitions accounted for as part of their
purchase price allocation.
F-17
<PAGE> 49
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. TITLE OF DOCUMENT PAGE NO. LOCATION OF FILING
- ---------- -------------------------------------- -------- ----------------------------------
<C> <S> <C> <C>
3.01(a)* Certificate of Incorporation of SEC File No. 1-10397
AmeriQuest as amended through 10-K for June 30, 1994
September 22, 1994.
3.01(b) Amendment to the Certificate of SEC File No. 1-10397
Incorporation of AmeriQuest dated 10-K for September 30, 1996
April 1, 1996 pursuant to which
authorized Common Stock was increased
to 200,000,000 shares and authorized
Preferred Stock was restored to
5,000,000 shares
3.01(c)* Certificate of Designations for SEC File No. 1-10397
Preferred Stock issued and issuable to 10-K for June 30, 1995
Computer 2000.
3.02* By-laws of AmeriQuest 189 SEC File No. 33-81726
4.01* Reference is made to Exhibits 3.01 and
3.02, the Certificate of Incorporation
and By-laws, which define the rights
of security holders
4.02* Specimen Stock Certificate 274 SEC File No. 33-81726
10.01* Inventory and Working Capital SEC File No. 1-10397
Financing Agreement dated May 5, 1995 10-K for June 30, 1995
by and between CDS Distribution, Inc.
and IBM Credit Corporation, as
amended.
10.02* Inventory and Working Capital SEC File No. 1-10397
Financing Agreement dated May 5, 1995 10-K for June 30, 1995
by and between CMS Enhancements, Inc.
and IBM Credit Corporation, as
amended.
10.03* Working Capital Financing Agreement SEC File No. 1-10397
dated May 5, 1995 by and between 10-K for June 30, 1995
AmeriQuest/Kenfil Inc. and IBM Credit
Corporation, as amended.
10.04* Inventory and Working Capital SEC File No. 0-18115
Financing Agreement dated September 8-K dated September 22, 1994
21, 1994 by and between Robec, Inc.
and IBM Credit Corporation, as
amended.
10.05* Incentive Stock Option Plan SEC File No. 2-96539
10.06* Employee Stock Bonus Plan SEC File 33-23809
10.07 1996 Equity Incentive Plan SEC File No. 1-10397
10-K for September 30, 1996
10.08* Employment Agreement for Steve DeWindt SEC File No. 1-10397
10-K for June 30, 1995
10.09* Employment Agreement for Mark Mulford SEC File No. 1-10397
10-K for June 30, 1995
10.10 Employment Agreement for Michael SEC File No. 1-10397
Dressen 10-K for September 30, 1996
10.11 Employment Agreement for Holger Heims SEC File No. 1-10397
10-K for September 30, 1996
10.12 Employment Agreement for Dennis C. SEC File No. 1-10397
Fairchild 10-K for September 30, 1996
</TABLE>
<PAGE> 50
<TABLE>
<CAPTION>
EXHIBIT
NO. TITLE OF DOCUMENT PAGE NO. LOCATION OF FILING
- ---------- -------------------------------------- -------- ----------------------------------
<C> <S> <C> <C>
10.13 Employment Agreement for Ken Burke SEC File No. 1-10397
10-K for September 30, 1996
10.14 Employment Agreement for Alexander C. SEC File No. 1-10397
Kramer, Jr. 10-K for September 30, 1996
10.15* Purchase Agreement dated August 7, SEC File No. 1-10397
1995 by and between AmeriQuest and 8-K dated August 7, 1995
Computer 2000 AG
10.16 Promissory Notes in favor of Computer SEC File No. 1-10397
2000 AG's lending sources, i.e. 10-K for September 30, 1996
Commerzbank Aktiengesellschaft,
Deutsche Bank AG, Bayerische
Hypotheken und Wechsel Bank
Aktiengesellschaft ("Hypo Bank") and
Bayerische Vereinsbank AG.
10.17 Guarantee of Indebtedness from SEC File No. 1-10397
Computer 2000 AG and Commitment for 10-K for September 30, 1996
additional funding in 1997.
10.18* Agreement of Sublease dated December SEC File No. 33-81726
5, 1994 by and between AmeriQuest and
The Austin Company.
10.19 Agreement of Subsublease dated January SEC File No. 1-10397
18, 1996 by and between AmeriQuest, 10-K for September 30, 1996
SOS Office Systems, Inc. and Tenet
Healthcare Corporation.
10.20 Lease dated July 8, 1992, as amended, SEC File No. 1-10397
by and between AmeriQuest as successor 10-K for September 30, 1996
in interest by merger to the interests
of Ross White Enterprises, Inc. d/b/a
"National Computer Distributors" and
Horizon Associates Joint Venture.
10.21 Lease Agreement dated January 1, 1994, SEC File No. 1-10397
as amended, by and between AmeriQuest 10-K for September 30, 1996
as successor in interest by merger to
the interests of Robec, Inc. and Bowe
3 Partners.
10.22 Commercial Lease Agreement dated SEC File No. 1-10397
November 22, 1994, by and between 10-K for September 30, 1996
AmeriQuest and Tradeport Partners.
10.23 Lease Agreement dated January 3, 1995, SEC File No. 1-10397
as amended, by and between AmeriQuest 10-K for September 30, 1996
as successor in interest by merger to
the interests of Ross White
Enterprises, Inc. d/b/a "National
Computer Distributors" and Elk Grove
Village Industrial Park.
10.24 Standard Industrial SEC File No. 1-10397
Lease -- Multi-tenant dated March 1, 10-K for September 30, 1996
1994, by and between AmeriQuest as
successor in interest by merger to the
interests of Ross White Enterprises,
Inc. d/b/a "National Computer
Distributors" and Oates Business Park.
</TABLE>
<PAGE> 51
<TABLE>
<CAPTION>
EXHIBIT
NO. TITLE OF DOCUMENT PAGE NO. LOCATION OF FILING
- ---------- -------------------------------------- -------- ----------------------------------
<C> <S> <C> <C>
10.25 Lease -- Industrial Commercial dated SEC File No. 1-10397
September 12, 1994, by and between 10-K for September 30, 1996
AmeriQuest as successor in interest by
merger to the interests of Ross White
Enterprises, Inc. d/b/a "National
Computer Distributors" and New World
Partners Joint Venture.
10.26 Lease Agreement dated on or about SEC File No. 1-10397
February 27, 1990, as amended, by and 10-K for September 30, 1996
between AmeriQuest as successor in
interest by merger to the interests of
Ross White Enterprises, Inc. d/b/a
"National Computer Distributors" and
Valwood West Associates and CIIF
Associates.
10.27 Lease Agreement dated January 25, SEC File No. 1-10397
1995, as amended, by and between 10-K for September 30, 1996
AmeriQuest and Anaheim Technology
Center.
10.28 Sublease dated as of September 4, 1996 SEC File No. 1-10397
by and between AmeriQuest and Central 10-K for September 30, 1996
Video, Inc.
10.29 Standard Industrial/Commercial Single- SEC File No. 1-10397
Tenant Lease -- Net, dated October 1, 10-K for September 30, 1996
1996 by and between CMS Enhancements,
Inc. and ICM Investments, Ltd., as
guaranteed by AmeriQuest.
21.01 Subsidiaries of AmeriQuest SEC File No. 1-10397
10-K for September 30, 1996
23.01 Consent of Arthur Andersen LLP to the SEC File No. 1-10397
incorporation of their report included 10-K for September 30, 1996
in the Annual Report on Form 10-K of
AmeriQuest for the fiscal year ended
September 30, 1996 into AmeriQuest's
previously filed Registration
Statements.
24.01 Powers of Attorney for Messrs. Harry SEC File No. 1-10397
Krischik, Manfred H. Guenzel, Michael 10-K for September 30, 1996
Dressen, Holger Heims, Robert H.
Beckett, Marc L. Werner and J.R. Dick
Iverson
27.01 Financial Data Schedule (for SEC use SEC File No. 1-10397
only) 10-K for September 30, 1995
</TABLE>
- ---------------
* Incorporated herein by reference to the indicated filing pursuant to Rule
12b-32 under the Securities Exchange Act of 1934, as amended, and Rule 24 of
the Commission's Rules of Practice.
<PAGE> 1
EXHIBIT 3.01(b)
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
AMERIQUEST TECHNOLOGIES, INC.
AmeriQuest Technologies, Inc., a corporation existing under the
Delaware General Corporation Law (the "Corporation") does hereby certify the
following:
FIRST. The name of the corporation is AmeriQuest
Technologies, Inc.
SECOND. The Board of Directors of the Corporation duly
adopted a resolution at a meeting of the Board of Directors of the Corporation
pursuant to the provisions of Section 242 of the Delaware General Corporation
Law to increase the number of shares of authorized Common Stock of the
Corporation. The resolution setting forth the proposed amendment is as follows:
"RESOLVED, that the Certificate of Incorporation of
the Corporation be amended by changing the Article numbered
FOURTH to read as follows:
FOURTH. The total number of shares which the corporation shall
have authority to issue is 205,000,000, of which 200,000,000
shares shall be Common Stock, $.01 par value ("Common"), and
5,000,000 shares shall be Preferred Stock, $.01 par value
("Preferred Stock").
The Board of Directors is authorized, subject to the
limitations prescribed by law and the provisions of this
Article FOURTH, to provide for the issuance of the Preferred
Stock in series, and by filing a certificate pursuant to the
applicable laws of the State of Delaware, to establish from
time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and
rights of the shares of each such series and the
qualifications, limitations or restrictions thereof. The
authority of the Board of Directors with respect to each such
series shall include, but not be limited to, the determination
of the following:
"(a) The number of shares constituting that series and the
distinctive designation of that series; (b) The dividend rate,
if any, on the shares of that series, whether dividends shall
be cumulative, and, if so, from which date or dates, and the
relative priority, if any, of payment of dividends on shares
of that series; (c) Whether that series shall have voting
rights, in addition to the voting rights expressly required by
law, and, if so, the terms of such voting rights; (d) Whether
that series shall have conversion privileges, and, if so, the
terms and conditions of such conversion, including provisions
for adjustment of the conversion rate in such events as the
Board of Directors shall determine; (e) Whether or not the
shares of that series shall be redeemable, and, if so, the
terms and conditions of such redemption, including the date or
dates upon or after which they shall be redeemable, and the
amount per share payable in the case of redemption, which
amount may vary under different conditions and at different
redemption dates; (f) Whether that series shall have a sinking
fund for the redemption or purchase of shares of that series,
and, if so, the terms and amount of such sinking fund for the
redemption or purchase of shares of
<PAGE> 2
that series, and, if so, the terms and amount of such
sinking fund; (g) The rights of the shares of that series in
the event of a voluntary or involuntary liquidation,
dissolution or winding up of the corporation, and the relative
rights of priority, if any, of payment of shares of that
series; and (h) Any other relative rights, preferences and
limitations of that series."
THIRD. The foregoing Amendment to the Certificate of
Incorporation of the Corporation was approved and adopted at an Annual Meeting
of Stockholders by shareholders, voting in person and by proxy, holding shares
entitling them to exercise at least a majority of the voting power of the
outstanding shares (no greater proportion of the outstanding shares being
required by the provisions of the Certificate of Incorporation of the
Corporation or an amendment thereof) pursuant to the provisions of Section 212
of the Delaware General Corporation Law. A total of 27,784,573 shares of Common
Stock, 810,811 shares of Series A Preferred Stock (with voting rights equal to
8,108,110 shares of Common Stock), 1,785,714 shares of Series B Preferred Stock
(with voting rights equal to 17,857,140 shares of Common Stock), 198,341 shares
of Series D Preferred Stock (with voting rights equal to 1,983,410 shares of
Common Stock), 102,908 shares of Series E Preferred Stock (with voting rights
equal to 2,572,700 shares of Common Stock) and 25,830.1 shares of Series G
Preferred Stock (with voting rights equal to 2,583,010 shares of Common Stock)
were outstanding at the time of the vote, with all such classes voting together
and not as separate classes of stock. Accordingly, said amendment was duly
adopted in accordance with the provisions of Section 242 of the Delaware General
Corporation Law.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Amendment to be signed by D. Stephen DeWindt, its Chief Executive
Officer and Holger Heims, its Secretary, this 29th day of March, 1996.
AmeriQuest Technologies, Inc.
ATTEST:
- ------------------------------ -------------------------------------
Holger Heims, Secretary D. Stephen DeWindt, Chief Executive Officer
- 2 -
<PAGE> 1
EXHIBIT 10.07
AMERIQUEST TECHNOLOGIES, INC.
1996 EQUITY INCENTIVE PLAN
As Adopted February 12, 1996
1. PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent,
Subsidiaries and Affiliates, by offering them an opportunity to participate in
the Company's future performance through awards of Options, Restricted Stock and
Stock Bonuses. Capitalized terms not defined in the text are defined in Section
23.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2 and 18,
the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 2,000,000 Shares. Subject to Sections 2.2 and 18,
Shares that: (a) are subject to issuance upon exercise of an Option but cease to
be subject to such Option for any reason other than exercise of such Option; (b)
are subject to an Award granted hereunder but are forfeited or are repurchased
by the Company at the original issue price; or (c) are subject to an Award that
otherwise terminates without Shares being issued will again be available for
grant and issuance in connection with future Awards under this Plan. At all
times the Company shall reserve and keep available a sufficient number of Shares
as shall be required to satisfy the requirements of all outstanding Options
granted under this Plan and all other outstanding but unvested Awards granted
under this Plan.
2.2 Adjustment of Shares. In the event that the number of
outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the stockholders of the
Company and compliance with applicable securities laws; provided, however, that
fractions of a Share will not be issued but will either be replaced by a cash
payment equal to the Fair Market Value of such fraction of a Share or will be
rounded up to the nearest whole Share, as determined by the Committee.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted
only to employees (including officers and directors who are also employees) of
the Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors, consultants, independent contractors
and advisors of the Company or any Parent, Subsidiary or Affiliate of the
Company; provided such consultants, contractors and advisors render bona fide
services not in connection with the offer and sale of securities in a
capitalraising transaction. No person will be eligible to receive more than
500,000 Shares in any calendar year under this Plan pursuant to the grant of
Awards hereunder, other than new employees of the Company or of a Parent,
Subsidiary or Affiliate of the Company (including new employees who are also
officers and directors of the Company or any Parent, Subsidiary or Affiliate of
the Company) who are eligible to receive up to a maximum of 800,000 Shares in
the calendar year in which they commence their employment. A person may be
granted more than one Award under this Plan.
4. ADMINISTRATION.
4.1 Committee Authority. This Plan will be administered by the
Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the
<PAGE> 2
direction of the Board, the Committee will have full power to implement and
carry out this Plan. Without limitation, the Committee will have the authority
to:
(a) construe and interpret this Plan, any Award Agreement and any
other agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating to
this Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration subject
to Awards;
(f) determine whether Awards will be granted singly, in
combination with, in tandem with, in replacement of, or as
alternatives to, other Awards under this Plan or any other
incentive or compensation plan of the Company or any Parent,
Subsidiary or Affiliate of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for the
administration of this Plan.
4.2 Committee Discretion. Any determination made by the
Committee with respect to any Award will be made in its sole discretion at the
time of grant of the Award or, unless in contravention of any express term of
this Plan or Award, at any later time, and such determination will be final and
binding on the Company and on all persons having an interest in any Award under
this Plan. The Committee may delegate to one or more officers of the Company the
authority to grant an Award under this Plan to Participants who are not Insiders
of the Company.
4.3 Exchange Act Requirements. If two or more members of the
Board are Outside Directors, the Committee will be comprised of at least two (2)
members of the Board, all of whom are Outside Directors and Disinterested
Persons. During all times that the Company is subject to Section 16 of the
Exchange Act, the Company will take appropriate steps to comply with the
disinterested administration requirements of Section 16(b) of the Exchange Act,
which will consist of the appointment by the Board of a Committee consisting of
not less than two (2) members of the Board, each of whom is a Disinterested
Person.
5. OPTIONS. The Committee may grant Options to eligible persons
and will determine whether such Options will be Incentive Stock Options within
the meaning of the Code ("ISOs")(or Nonqualified Stock Options ("NQSOs"), the
number of Shares subject to the Option, the Exercise Price of the Option, the
period during which the Option may be exercised, and all other terms and
conditions of the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under this Plan
will be evidenced by an Award Agreement which will expressly identify the Option
as an ISO or an NQSO ("Stock Option Agreement"), and will be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.
- 2 -
<PAGE> 3
5.2 Date of Grant. The date of grant of an Option will be the
date on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.
5.3 Exercise Period. Options will be exercisable within the
times or upon the events determined by the Committee as set forth in the Stock
Option Agreement governing such Option; provided, however, that no Option will
be exercisable after the expiration of ten (10) years from the date the Option
is granted; and provided further that no ISO granted to a person who directly or
by attribution owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of any Parent or Subsidiary of
the Company ("TEN PERCENT STOCKHOLDER") will be exercisable after the expiration
of five (5) years from the date the ISO is granted. The Committee also may
provide for the exercise of Options to become exercisable at one time or from
time to time, periodically or otherwise, in such number of Shares or percentage
of Shares as the Committee determines.
5.4 Exercise Price. The Exercise Price of an Option will be
determined by the Committee when the Option is granted and may be not less than
85% of the Fair Market Value of the Shares on the date of grant; provided that:
(i) the Exercise Price of an ISO will be not less than 100% of the Fair Market
Value of the Shares on the date of grant; and (ii) the Exercise Price of any ISO
granted to a Ten Percent Stockholder will not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased may be made in accordance with Section 8 of this Plan.
5.5 Method of Exercise. Options may be exercised only by
delivery to the Company of a written stock option exercise agreement (the
"EXERCISE AGREEMENT") in a form approved by the Committee (which need not be the
same for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.
5.6 Termination. Notwithstanding the exercise periods set
forth in the Stock Option Agreement, exercise of an Option will always be
subject to the following:
(a) If the Participant is Terminated for any reason except
retirement under a qualified retirement plan, death or
Disability, then the Participant may exercise such
Participant's Options only to the extent that such Options
would have been exercisable upon the Termination Date no later
than three (3) months after the Termination Date (or such
shorter or longer time period not exceeding five (5) years as
may be determined by the Committee, with any exercise beyond
three (3) months after the Termination Date deemed to be an
NQSO), but in any event, no later than the expiration date of
the Options.
(b) If the Participant is Terminated because of Participant's
retirement under a qualified retirement plan, death or
Disability (or the Participant dies within three (3) months
after a Termination other than because of Participant's death
or disability), then Participant's Options may be exercised
only to the extent that such Options would have been
exercisable by Participant on the Termination Date and must be
exercised by Participant (or Participant's legal
representative or authorized assignee) no later than twelve
(12) months after the Termination Date (or such shorter or
longer time period not exceeding five (5) years as may be
determined by the Committee, with any such exercise beyond (a)
three (3) months after the Termination Date when the
Termination is for any reason other than the Participant's
death or Disability, or (b) twelve (12) months after the
Termination Date when the Termination is for Participant's
death or Disability, deemed to be an NQSO), but in any event
no later than the expiration date of the Options.
- 3 -
<PAGE> 4
5.7 Limitations on Exercise. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 Limitations on ISOs. The aggregate Fair Market Value
(determined as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year (under
this Plan or under any other incentive stock option plan of the Company or any
Affiliate, Parent or Subsidiary of the Company) will not exceed $100,000. If the
Fair Market Value of Shares on the date of grant with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year exceeds
$100,000, then the Options for the first $100,000 worth of Shares to become
exercisable in such calendar year will be ISOs and the Options for the amount in
excess of $100,000 that become exercisable in that calendar year will be NQSOs.
In the event that the Code or the regulations promulgated thereunder are amended
after the Effective Date of this Plan to provide for a different limit on the
Fair Market Value of Shares permitted to be subject to ISOs, such different
limit will be automatically incorporated herein and will apply to any Options
granted after the effective date of such amendment.
5.9 Modification, Extension or Renewal. The Committee may
modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of a Participant, impair any of such Participant's rights
under any Option previously granted. Any outstanding ISO that is modified,
extended, renewed or otherwise altered will be treated in accordance with
Section 424(h) of the Code. The Committee may reduce the Exercise Price of
outstanding Options without the consent of Participants affected by a written
notice to them; provided, however, that the Exercise Price may not be reduced
below the minimum Exercise Price that would be permitted under Section 5.4 of
this Plan for Options granted on the date the action is taken to reduce the
Exercise Price.
5.10 No Disqualification. Notwithstanding any other provision
in this Plan, no term of this Plan relating to ISOs will be interpreted, amended
or altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the
Company to sell to an eligible person Shares that are subject to restrictions.
The Committee will determine to whom an offer will be made, the number of Shares
the person may purchase, the price to be paid (the "PURCHASE PRICE"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under a
Restricted Stock Award made pursuant to this Plan will be evidenced by an Award
Agreement ("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such form
(which need not be the same for each Participant) as the Committee will from
time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. The offer of Restricted Stock will be accepted by the
Participant's execution and delivery of the Restricted Stock Purchase Agreement
and full payment for the Shares to the Company within thirty (30) days from the
date the Restricted Stock Purchase Agreement is delivered to the person. If such
person does not execute and deliver the Restricted Stock Purchase Agreement
along with full payment for the Shares to the Company within thirty (30) days,
then the offer will terminate, unless otherwise determined by the Committee.
6.2 Purchase Price. The Purchase Price of Shares sold pursuant
to a Restricted Stock Award will be determined by the Committee and will be at
least 85% of the Fair Market Value of the Shares on the date the Restricted
Stock Award is granted, except in the case of a sale to a Ten Percent
Stockholder, in which case the Purchase Price will be 100% of the Fair Market
Value. Payment of the Purchase Price may be made in accordance with Section 8 of
this Plan.
6.3 Restrictions. Restricted Stock Awards will be subject to
such restrictions (if any) as the Committee may impose. The Committee may
provide for the lapse of such restrictions in installments and up
- 4 -
<PAGE> 5
may accelerate or waive such restrictions, in whole or part. based on length of
service, performance or such other factors or criteria as the Committee may
determine.
7. STOCK BONUSES.
7.1 Awards of Stock Bonuses. A Stock Bonus is an award of
Shares (which may consist of Restricted Stock) for services rendered to the
Company or any Parent, Subsidiary or Affiliate of the Company. A Stock Bonus may
be awarded for past services already rendered to the Company, or any Parent,
Subsidiary or Affiliate of the Company pursuant to an Award Agreement (the
"STOCK BONUS AGREEMENT") that will be in such form (which need not be the same
for each Participant) as the Committee will from time to time approve, and will
comply with and be subject to the terms and conditions of this Plan. A Stock
Bonus may be awarded upon satisfaction of such performance goals as are set out
in advance in the Participant's individual Award Agreement (the "PERFORMANCE
STOCK BONUS AGREEMENT") that will be in such form (which need not be the same
for each Participant) as the Committee will from time to time approve, and will
comply with and be subject to the terms and conditions of this Plan. Stock
Bonuses may vary from Participant to Participant and between groups of
Participants, and may be based upon the achievement of the Company, Parent,
Subsidiary or Affiliate and/or individual performance factors or upon such other
criteria as the Committee may determine.
7.2 Terms of Stock Bonuses. The Committee will determine the
number of Shares to be awarded to the Participant and whether such Shares will
be Restricted Stock. If the Stock Bonus is being earned upon the satisfaction of
performance goals pursuant to a Performance Stock Bonus Agreement, then the
Committee will determine: (a) the nature, length and starting date of any period
during which performance is to be measured (the "PERFORMANCE PERIOD") for each
Stock Bonus; (b) the performance goals and criteria to be used to measure the
performance, if any; (c) the number of Shares that may be awarded to the
Participant; and (d) the extent to which such Stock Bonuses have been earned.
Performance Periods may overlap and Participants may participate simultaneously
with respect to Stock Bonuses that are subject to different Performance Periods
and different performance goals and other criteria. The number of Shares may be
fixed or may vary in accordance with such performance goals and criteria as may
be determined by the Committee. The Committee may adjust the performance goals
applicable to the Stock Bonuses to take into account changes in law and
accounting or tax rules and to make such adjustments as the Committee deems
necessary or appropriate to reflect the impact of extraordinary or unusual
items, events or circumstances to avoid windfalls or hardships.
7.3 Form of Payment. The earned portion of a Stock Bonus may
be paid currently or on a deferred basis with such interest or dividend
equivalent, if any, as the Committee may determine. Payment may be made in the
form of cash, whole Shares, including Restricted Stock, or a combination
thereof, either in a lump sum payment or in installments, all as the Committee
will determine.
7.4 Termination During Performance Period. If a Participant is
Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Stock Bonus only to the extent earned as of the date of Termination in
accordance with the Performance Stock Bonus Agreement, unless the Committee will
determine otherwise.
8. PAYMENT FOR SHARE PURCHASES.
8.1 Payment. Payment for Shares purchased pursuant to this
Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid
for within the meaning of SEC Rule 144 (and, if such shares
were purchased from the Company by use of a promissory note,
such note has been fully paid with respect to such shares); or
(2) were obtained by Participant in the public market;
- 5 -
<PAGE> 6
(c) by tender of a full recourse promissory note having such terms
as may be approved by the Committee and bearing interest at a
rate sufficient to avoid imputation of income under Sections
483 and 1274 of the Code; provided, however, that Participants
who are not employees or directors of the Company will not be
entitled to purchase Shares with a promissory note unless the
note is adequately secured by collateral other than the
Shares;
(d) by waiver of compensation due or accrued to the Participant
for services rendered;
(e) with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the
participant and a broker-dealer that is a member of the
National Association of Securities Dealers (an "NASD
DEALER") whereby the Participant irrevocably elects to
exercise the Option and to sell a portion of the Shares
so purchased to pay for the Exercise Price, and whereby
the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the
Company; or
(2) through a "margin" commitment from the Participant and a
NASD Dealer whereby the Participant irrevocably elects
to exercise the Option and to pledge the Shares so
purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount
of the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to
forward the Exercise Price directly to the Company; or
(f) by any combination of the foregoing.
8.2 Loan Guarantees. The Committee may help the Participant
pay for Shares purchased under this Plan by authorizing a guarantee by the
Company of a third-party loan to the Participant.
9. WITHHOLDING TAXES.
9.1 Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.
9.2 Stock Withholding. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may allow the
Participant to satisfy the minimum withholding tax obligation by electing to
have the Company withhold from the Shares to be issued that number of Shares
having a Fair Market Value equal to the minimum amount required to be withheld,
determined on the date that the amount of tax to be withheld is to be determined
(the "TAX DATE"). All elections by a Participant to have Shares withheld for
this purpose will be made in writing in a form acceptable to the Committee and
will be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax
Date;
(b) once made, then except as provided below, the election will be
irrevocable as to the particular Shares as to which the
election is made;
(C) all elections will be subject to the consent or disapproval of
the Committee;
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<PAGE> 7
(d) if the Participant is an Insider and if the Company is subject
to Section 16(b) of the Exchange Act: (1) the election may not
be made within six (6) months of the date of grant of the
Award, except as otherwise permitted by SEC Rule 16b-3(e)
under the Exchange Act, and (2) either (A) the election to use
stock withholding must be irrevocably made at least six (6)
months prior to the Tax Date (although such election may be
revoked at any time at least six (6) months prior to the Tax
Date) or (B) the exercise of the Option or election to use
stock withholding must be made in the ten (10) day period
beginning on the third day following the release of the
Company's quarterly or annual summary statement of sales or
earnings; and
(e) in the event that the Tax Date is deferred until six (6)
months after the delivery of Shares under Section 83(b) of the
Code, the Participant will receive the full number of Shares
with respect to which the exercise occurs, but such
Participant will be unconditionally obligated to tender back
to the Company the proper number of Shares on the Tax Date.
10. PRIVILEGES OF STOCK OWNERSHIP.
10.1 Voting and Dividends. No Participant will have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a stockholder and have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Shares that
are repurchased at the Participant's original Purchase Price pursuant to Section
12.
10.2 Financial Statements. The Company will provide financial
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company will not be
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.
11. TRANSFERABILITY. Awards granted under this Plan, and any
interest therein, will not be transferable or assignable by Participant, and may
not be made subject to execution, attachment or similar process, otherwise than
by will or by the laws of descent and distribution or as consistent with the
specific Plan and Award Agreement provisions relating thereto. During the
lifetime of the Participant an Award will be exercisable only by the
Participant, and any elections with respect to an Award, may be made only by the
Participant.
12. RESTRICTIONS ON SHARES. At the discretion of the
Committee, the Company may reserve to itself and/or its assignee(s) in the
Award Agreement (a) a right of first refusal to purchase all Shares that a
Participant (or a subsequent transferee) may propose to transfer to a third
party, and/or (b) a right to repurchase a portion of or all Shares held by a
Participant following such Participant's Termination at any time within ninety
(90) days after the later of Participant's Termination Date and the date
Participant purchases Shares under this Plan, for cash and/or cancellation of
purchase money indebtedness, at: (A) with respect to Shares that are "Vested"
(as defined in the Award Agreement), the higher of: (1) Participant's original
Purchase Price, or (2) the Fair Market Value of such Shares on Participant's
Termination Date, provided, that such right of repurchase (i) must be exercised
as to all such "Vested" Shares unless a Participant consents to the Company's
repurchase of only a portion of such "Vested" Shares and (ii) terminates when
the Company's securities become publicly traded; or (B) with respect to Shares
that are not "Vested" (as defined in the Award Agreement), at the Participant's
original Purchase Price, provided, that the right to repurchase at the original
Purchase Price lapses at the rate of at least 20% per year over five (5) years
from the date the Shares were purchased (or from the date of grant of options
in the case of Shares obtained pursuant to a Stock Option Agreement and Stock
Option Exercise Agreement), and if the right to repurchase is assignable, the
assignee must pay the Company, upon assignment of the right to repurchase, cash
equal to the excess of the Fair Market Value of the Shares over the original
Purchase Price.
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<PAGE> 8
13. CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.
14. ESCROW: PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time
or from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant may agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will
not be effective unless such Award is in compliance with all applicable federal
and state securities laws, rules and regulations of any governmental body, and
the requirements of any stock exchange or automated quotation system upon which
the Shares may then be listed or quoted, as they are in effect on the date of
grant of the Award and also on the date of exercise or other issuance.
Notwithstanding any other provision in this Plan, the Company will have no
obligation to issue or deliver certificates for Shares under this Plan prior to:
(a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable; and/or (b) completion of any registration
or other qualification of such Shares under any state or federal law or ruling
of any governmental body that the Company determines to be necessary or
advisable. The Company will be under no obligation to register the Shares with
the SEC or to effect compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or automated quotation
system, and the Company will have no liability for any inability or failure to
do so.
17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award
granted under this Plan will confer or be deemed to confer on any Participant
any right to continue in the employ of, or to continue any other relationship
with, the Company or any Parent, Subsidiary or Affiliate of the Company or limit
in any way the right of the Company or any Parent, Subsidiary or Affiliate of
the Company to terminate Participant's employment or other relationship at any
time, with or without cause.
18. CORPORATE TRANSACTIONS.
18.1 Assumption or Replacement of Awards by Successor. In the
event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the
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<PAGE> 9
Company is the surviving corporation but after which the stockholders of the
Company (other than any stockholder which merges (or which owns or controls
another corporation which merges) with the Company in such merger) cease to own
their shares or other equity interests in the Company, (d) the sale of
substantially all of the assets of the Company, or (e) any other transaction
which qualifies as a "corporate transaction" under Section 424(a) of the Code
wherein the stockholders of the Company give up all of their equity interest in
the Company (except for the acquisition, sale or transfer of all or
substantially all of the outstanding shares of the Company from or by the
stockholders of the Company), any or all outstanding Awards may be assumed,
converted or replaced by the successor corporation (if any), which assumption,
conversion or replacement will be binding on all Participants. In the
alternative, the successor corporation may substitute equivalent Awards or
provide substantially similar consideration to Participants as was provided to
stockholders (after taking into account the existing provisions of the Awards).
The successor corporation may also issue, in place of outstanding Shares of the
Company held by the Participant, substantially similar shares or other property
subject to repurchase restrictions no less favorable to the Participant. In the
event such successor corporation (if any) refuses to assume or substitute
Options, as provided above, pursuant to a transaction described in this
Subsection 18.1, such Options will expire on such transaction at such time and
on such conditions as the Board will determine.
18.2 Other Treatment of Awards. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 18, in
the event of the occurrence of any transaction described in Section 18.1, any
outstanding Awards will be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, sale of assets or other
"corporate transaction."
18.3 Assumption of Awards by the Company. The Company, from
time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either; (a) granting an Award under this Plan in substitution
of such other company's award; or (b) assuming such award as if it had been
granted under this Plan if the terms of such assumed award could be applied to
an Award granted under this Plan. Such substitution or assumption will be
permissible if the holder of the substituted or assumed award would have been
eligible to be granted an Award under this Plan if the other company had applied
the rules of this Plan to such grant. In the event the Company assumes an award
granted by another company, the terms and conditions of such award will remain
unchanged (except that the exercise price and the number and nature of Shares
issuable upon exercise of any such option will be adjusted appropriately
pursuant to Section 424(a) of the Code). In the event the Company elects to
grant a new Option rather than assuming an existing option, such new Option may
be granted with a similarly adjusted Exercise Price.
19. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become
effective on the date of adoption by the Board (the "Effective Date"). This Plan
shall be approved by the stockholders of the Company (excluding Shares issued
pursuant to this Plan), consistent with applicable laws, within twelve (12)
months before or after the date this Plan is adopted by the Board. Upon the
Effective Date, the Board may grant Awards pursuant to this Plan; provided,
however, that: (a) no Option may be exercised prior to initial stockholder
approval of this Plan; (b) no Option granted pursuant to an increase in the
number of Shares subject to this Plan approved by the Board will be exercised
prior to the time such increase has been approved by the stockholders of the
Company; and (c) in the event that stockholder approval of such increase is not
obtained within the time period provided herein, all Awards granted hereunder
will be canceled, any Shares issued pursuant to any Award will be canceled, and
any purchase of Shares hereunder will be rescinded. So long as the Company is
subject to Section 16(b) of the Exchange Act, the Company will comply with the
requirements of Rule 16b-3 (or its successor), as amended, with respect to
stockholder approval.
20. TERM OF PLAN. Unless earlier terminated as provided herein,
this Plan will terminate ten (10) years from the date this Plan is adopted by
the Board or, if earlier, the date of stockholder approval.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to this Plan; provided, however, that the Board will not, without the approval
of the stockholders of the Company, amend this Plan in any manner that requires
such stockholder approval pursuant to the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans or (if the Company is
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<PAGE> 10
subject to the Exchange Act or Section 16(b) of the Exchange Act) pursuant to
the Exchange Act or Rule l6b-3 (or its successor), as amended, thereunder,
respectively.
22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan
by the Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
23. DEFINITIONS. As used in this Plan, the following terms will
have the following meanings:
"Affiliate" means any corporation that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, another corporation, where "control" (including the terms
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to cause the direction of the management and policies of
the corporation, whether through the ownership of voting securities, by contract
or otherwise.
"Award" means any award under this Plan, including any Option,
Restricted Stock or Stock Bonus.
"Award Agreement" means, with respect to each Award, the
signed written agreement between the Company and the Participant setting forth
the terms and conditions of the Award.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee appointed by the Board to
administer this Plan, or if no such committee is appointed, the Board.
"Company" means Ameriquest Technologies, Inc., a corporation
organized under the laws of the State of Delaware, or any successor corporation.
"Disability" means a disability, whether temporary or
permanent, partial or total, within the meaning of Section 22(e)(3) of the Code,
as determined by the Committee.
"Disinterested Person" means a director who has not, during
the period that person is a member of the Committee and for one year prior to
commencing service as a member of the Committee, been granted or awarded equity
securities pursuant to this Plan or any other plan of the Company or any Parent,
Subsidiary or Affiliate of the Company, except in accordance with the
requirements set forth in Rule 16b-3(c)(2)(i) (and any successor regulation
thereto) as promulgated by the SEC under Section 16(b) of the Exchange Act, as
such rule is amended from time to time and as interpreted by the SEC.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exercise Price" means the price at which a holder of an
Option may purchase the Shares issuable upon exercise of the Option.
"Fair Market Value" means, as of any date, the value of a
share of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the New York Stock
Exchange, its closing price on the New York Stock Exchange on
the last trading day prior to the date of determination as
reported in The Wall Street Journal;
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<PAGE> 11
(b) if such Common Stock is publicly traded and is then listed on
a national securities exchange, its closing price on the last
trading day prior to the date of determination on the
principal national securities exchange on which the Common
Stock is listed or admitted to trading as reported in The Wall
Street Journal;
(c) if such Common Stock is publicly traded but is not quoted on
the Nasdaq National Market nor listed or admitted to trading
on a national securities exchange, the average of the closing
bid and asked prices on the last trading day prior to the date
of determination as reported in The Wall Street Journal; or
(d) if none of the foregoing is applicable, by the Committee in
good faith.
"Insider" means an officer or director of the Company or any
other person whose transactions in the Company's Common Stock are subject to
Section 16 of the Exchange Act.
"Outside Director" means any director who is not; (a) a
current employee of the Company or any Parent, Subsidiary or Affiliate of the
Company; (b) a former employee of the Company or any Parent, Subsidiary or
Affiliate of the Company who is receiving compensation for prior services (other
than benefits under a tax-qualified pension plan); (c) a current or former
officer of the Company or any Parent, Subsidiary or Affiliate of the Company; or
(d) currently receiving compensation for personal services in any capacity,
other than as a director, from the Company or any Parent, Subsidiary or
Affiliate of the Company; provided, however, that at such time as the term
"Outside Director", as used in Section 162(m) of the Code is defined in
regulations promulgated under Section 162(m) of the Code, "Outside Director"
will have the meaning set forth in such regulations, as amended from time to
time and as interpreted by the Internal Revenue Service.
"Option" means an award of an option to purchase Shares
pursuant to Section 5.
"Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if at the time of the
granting of an Award under this Plan, each of such corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
"Participant" means a person who receives an Award under this
Plan.
"Plan" means this Ameriquest Technologies, Inc. 1996 Equity
Incentive Plan, as amended from time to time.
"Restricted Stock Award" means an award of Shares pursuant to
Section 6.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means shares of the Company's Common Stock reserved
for issuance under this Plan, as adjusted pursuant to Sections 2 and 18, and any
successor security.
"Stock Bonus " means an award of Shares, or cash in lieu of
Shares, pursuant to Section 7.
"Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if, at the time of
granting of the Award, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
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<PAGE> 12
"Termination" or "Terminated" means, for purposes of this Plan
with respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, director, consultant, independent contractor or
advisor to the Company or a Parent, Subsidiary or Affiliate of the Company,
except in the case of sick leave, military leave, or any other leave of absence
approved by the Committee, provided that such leave is for a period of not more
than ninety (90) days, or reinstatement upon the expiration of such leave is
guaranteed by contract or statute. The Committee will have sole discretion to
determine whether a Participant has ceased to provide services and the effective
date on which the Participant ceased to provide services (the "Termination
Date").
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<PAGE> 1
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of
August 1, 1996 (the "Effective Date") between AmeriQuest Technologies, Inc., a
Delaware corporation with its principal offices located at 3 Imperial Promenade,
Suite 300, Santa Ana, California ("Company"), and Michael Dressen, a resident of
Miami Beach, Florida ("Employee").
In consideration of the promises and the terms and conditions set forth
in this Agreement, the parties agree as follows:
1. Position. During the term of this Agreement, Company will employ
Employee, and Employee will serve Company as the Company's President. Employee
will report directly to the Chairman of the Board of Directors of Company and
Chief Executive Officer.
2. Duties. Employee will serve Company in such capacities and with such
duties and responsibilities as the Board of Directors and Chief Executive
Officer of Company may from time to time determine. Employee will comply with
and be bound by Company's operating policies, procedures, and practices from
time to time in effect during Employee's employment. Employee will perform his
duties under this Agreement at the offices of Company, provided, that Employee
may be required to do extensive traveling in connection with the performance of
his duties hereunder. Employee hereby represents and warrants that he is free
to enter into and fully perform this Agreement and the agreements referred to
herein without breach of any agreement or contract to which he is a party or by
which he is bound.
3. Exclusive Service. During his employment with Company, Employee will
devote his full time and efforts exclusively to this employment and apply all
his skill and experience to the performance of his duties and advancing
Company's interests in accordance with Employee's experience and skills. In
addition, during his employment with Company, Employee will not engage in any
consulting activity except with the prior written approval of Company, or at the
direction of Company, and Employee will otherwise do nothing inconsistent with
the performance of his duties hereunder.
4. Obligation Not to Compete. Employee hereby agrees that while he is
employed by Company (the "Restricted Period"), Employee shall within the
territory of the United States not engage in or provide services to any business
that is competitive with or detrimental to any present or contemplated business
of Company known to Employee. Employee also agrees that, during the Restricted
Period, he shall not in any manner attempt to induce or assist others to attempt
to induce any customer or client of Company to terminate his association with
Company, nor do anything directly or indirectly to interfere with the
relationship between Company and any such persons or concerns in the territory
of the United States. Each of the following activities shall, without
limitation, be deemed to constitute engaging in business within the meaning of
this Section: to engage in, work with, have an interest or concern in, advise,
lend money to, guarantee the debts or obligations of, or permit one's name or
any party thereof to be used in connection with, an enterprise or endeavor,
either individually, in partnership, or in conjunction with any person or
persons, firms, associations, companies, or corporations, whether as a
principal, agent, shareholder.
<PAGE> 2
employee, officer, director, partner, consultant or in any other manner
whatsoever; provided, however, that Employee shall retain the right to invest in
or have an interest in entities traded on any public market or offered by any
national brokerage house, provided that said interest does not exceed one
percent (1%) of the voting control of said entity. In addition, Employee may
make passive investments in privately held entities that are determined by the
Board of Directors of Company not to be competitors of Company. Company may
elect to extend the term of this non-competition clause for a maximum period of
six month following the termination according to Section 8.1.(b)and 8.1(c)
provided that a monthly fee in the amount of the last applicable monthly base
salary is paid to Employee.
5. TERM OF AGREEMENT. This Agreement will commence on the Effective
Date, and will continue for a period of eleven months and thereafter unless
terminated pursuant to Section 8 hereof.
6. COMPENSATION AND BENEFITS.
6.1 Base Salary. Company agrees to pay Employee an initial
minimum salary of Two Hundred Thousand Dollars ($200,000.00) per year.
Employee's salary will be payable as earned in accordance with Company's
customary payroll practice. During the first year of employment, the guaranteed
portion of the bonus set forth in Section 6.4 will be paid monthly on a pro rata
basis.
6.2 Additional Benefits. Employee will be eligible to
participate in Company's employee benefit plans of general application,
including without limitation those plans covering pension and profit sharing,
executive bonuses, stock purchases in accordance with the rules established for
individual participation in any such plan and applicable law. Employee will
receive such other benefits, including twenty vacation days per year, holidays
and sick leave, as Company generally provides to its employees holding similar
positions as that of Employee. In addition, Employee will be allowed up to ten
working days of home leave. Employer will fully reimburse Employee, net of any
taxes, for the cost of life, health and dental insurance as incurred by
Employee.
6.3 Stock Options. Upon approval of the Board of Directors,
Employee will receive options to purchase 100,000 shares of Company's Common
Stock per full year of employment, fully exercisable at the end of each such
year. The exercise price of all such options shall be equal to the closing
market price of the Company's stock on the New York Stock Exchange as of
September 12, 1996.
6.4 Cash Bonus. Promptly after commencement of Employee's
employment with Company, Employee shall receive a bonus of $20,000.00. In
addition, Employee will be eligible to earn a bonus of up to One Hundred
Thousand Dollars ($100,000.00) (the "Performance Bonus") during his first year
of employment with Company, of which $40,000 shall be guaranteed. The
performance criteria relative to the Performance Bonus shall be agreed later.
2
<PAGE> 3
6.5 Expenses. Company will reimburse Employee for all
reasonable and necessary expenses incurred by Employee in connection with
Company's business, provided that such expenses are in accordance with Company's
applicable policy and are properly documented and accounted for in accordance
with the requirements of the Internal Revenue Service.
7. PROPRIETARY RIGHTS. Employee hereby agrees to execute an Employee
Confidentiality Agreement with Company in substantially the form attached hereto
as Exhibit A.
8. TERMINATION.
8.1 Events of Termination. Employee's employment with Company
shall terminate upon any one of the following:
(a) the Company's determination made in good faith that it is
terminating Employee for "cause" as defined under Section 8.2 below
("Termination for Cause");
(b) six months after the effective date of a written notice
sent to Employee stating that Company is terminating his employment,
without cause, which notice can be given by Company at any time after
the Effective Date at Company's sole discretion, for any reason or for
no reason; or
(c) the effective date of a written notice sent to Company
from Employee stating that Employee is electing to terminate his
employment with Company.
8.2 "Cause" Defined. For purposes of this Agreement, "cause"
for Employee's termination will exist at any time after the happening of one or
more of the following events:
(a) dishonest conduct or a deliberate attempt to do an
injury to the Company;
(b) Employee's material breach of a term of this
Agreement;
(c) an unlawful or criminal act which would reflect badly
on the Company in the Company's reasonable judgment;
(d) Employee's death.
3
<PAGE> 4
9. EFFECT OF TERMINATION.
9.1 TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION. In the
event of any termination of this Agreement pursuant to Sections 8.1(a) or 8.1
(c), the Company shall pay Employee the compensation and benefits otherwise
payable to Employee under Section 6 through the effective date of termination as
referred to by Company or by Employee in their written notices pursuant to
Sections 8.1(a) or 8.1(c). Employee's rights under the Company's benefit plans
of general application shall be determined under the provisions of those plans.
9.2 TERMINATION WITHOUT CAUSE. In the event of any termination
of this Agreement pursuant to Section 8.1(b), the Company shall pay Employee
the compensation and benefits otherwise payable to Employee under Section 6
through the last day of the six month period following the effective date of the
notice referred to in Section 8.1(b).
10. MISCELLANEOUS.
10.1 ARBITRATION. Employee and Company shall submit to
mandatory binding arbitration in any controversy or claim arising out of, or
relating to, this Agreement or any breach hereof, provided, however, that
Company retains its right to, and shall not be prohibited, limited or in any
other way restricted from, seeking or obtaining equitable relief from a court
having jurisdiction over the parties. Such arbitration shall be conducted in
accordance with the commercial arbitration rules of the American Arbitration
Association in effect at that time, and judgment upon the determination or
award rendered by the arbitrator may be entered in any court having
jurisdiction thereof.
10.2 SEVERABILITY. If any provision of this Agreement shall be
found by any arbitrator or court of competent jurisdiction to be invalid or
unenforceable, then the parties hereby waive such provision to the extent that
it is found to be invalid or unenforceable and to the extent that to do so would
not deprive one of the parties of the substantial benefit of its bargain. Such
provision shall, to the extent allowable by law and the preceding sentence, be
modified by such arbitrator or court so that it becomes enforceable and, as
modified, shall be enforced as any other provision hereof, all the other
provisions continuing in full force and effect.
10.3 NO WAIVER. The failure by either party at any time to
require performance or compliance by the other of any of its obligations or
agreements shall in no way affect the right to require such performance or
compliance at any time thereafter. The waiver by either party of a breach of any
provision hereof shall not be taken or held to be a waiver of any preceding or
succeeding breach of such provision or as a waiver of the provision itself. No
waiver of any kind shall be effective or binding, unless it is in writing and is
signed by the party against whom such waiver is sought to be enforced.
4
<PAGE> 5
10.4 ASSIGNMENT. This Agreement and all rights hereunder are
personal to Employee and may not be transferred or assigned by Employee at any
time. Company may assign its rights, together with its obligations hereunder, to
any parent, subsidiary, affiliate or successor, or in connection with any sale,
transfer or other disposition of all or substantially all of its business and
assets, provided, however, that any such assignee assumes Company's obligations
hereunder.
10.5 WITHHOLDING. All sums payable to Employee hereunder shall
be reduced by all federal, state, local and other withholding and similar taxes
and payments required by applicable law.
10.6 ENTIRE AGREEMENT. This Agreement and the Employee
Confidentiality Agreement constitute the entire and only agreements between the
parties relating to employment of Employee with Company, and this Agreement
supersedes and cancels any and all previous contracts, arrangements or
understandings with respect thereto.
10.7 AMENDMENT. This Agreement may be amended, modified,
superseded, canceled, renewed or extended only by an agreement in writing
executed by both parties hereto.
10.8 NOTICES. All notices and other communications required or
permitted under this Agreement shall be in writing and hand delivered, sent by
telecopier, sent by certified first class mail, postage pre-paid, or sent by
nationally recognized express courier service. Such notices and other
communications shall be effective upon receipt if hand delivered or sent by
telecopier, five (5) days after mailing if sent by mail, and one (1) day after
dispatch if sent by express courier, to the following addresses, or such other
addresses as any party shall notify the other parties:
If to Company: AmeriQuest Technologies, Inc.
3 Imperial Promenade, Suite 300
Santa Ana, CA 92707
Telecopier: (714) 445-5350
Attention: Chairman of the Board
If to Employee: Michael Dressen
6301 Collins Avenue
Miami Beach, Florida, 33141
10.9 Binding Nature. This Agreement shall be binding upon, and
inure to the benefit of, the successors and personal representatives of the
respective parties hereto.
5
<PAGE> 6
10.10 HEADINGS. The headings contained in this Agreement are
for reference purposes only and shall in no way affect the meaning or
interpretation of this Agreement. In this Agreement, the singular includes the
plural, the plural included the singular, the masculine gender includes both
male and female referents, and the word "or" is used in the inclusive sense.
10.11 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original but all of
which, taken together, constitute one and the same agreement.
10.12 Governing Law. This Agreement and the rights and
obligations of the parties hereto shall be construed in accordance with the laws
of the State of California, without giving effect to the principles of conflict
of laws.
IN WITNESS WHEREOF, Company and Employee have executed this Agreement
as of the date First above written.
"COMPANY" "EMPLOYEE"
AMERIQUEST TECHNOLOGIES, INC. MICHAEL DRESSEN
BY: /s/ Harry Krischik /s/ Michael Dressen
------------------------------ ------------------------------------
Name: Harry Krischik
----------------------------
Title: CHAIRMAN OF THE BOARD
---------------------------
<PAGE> 7
EXHIBIT A
CONFIDENTIALITY AGREEMENT
<PAGE> 8
EMPLOYEE INVENTION ASSIGNMENT AND CONFIDENTIALITY AGREEMENT
In consideration of, and as a condition of my employment with AmeriQuest
Technologies, Inc., a Delaware corporation (the "COMPANY"), I hereby represent
to the Company and the Company and I agree as follows:
1. PURPOSE OF AGREEMENT. I understand that the Company is engaged in a
continuous program of research, development, production, and marketing in
connection with its business and that it is critical for the Company to preserve
and protect its "Proprietary Information" (as defined below), its rights in
"Inventions" (as defined below), and in all related intellectual property
rights. Accordingly, I am entering into this Agreement as a condition of my
employment with the Company, whether or not I am expected to create inventions
of value for the Company.
2. DISCLOSURE OF INVENTIONS. I will promptly disclose in confidence to
the Company all inventions, improvements, designs, original works of authorship,
formulas, processes, compositions of matter, computer software programs,
databases, mask works, and trade secrets ("INVENTIONS") that I make or
conceive or first reduce to practice or create, either alone or jointly with
others, during the period of my employment, whether or not in the course of my
employment, and whether or not such Inventions are patentable, copyrightable or
protectible as trade secrets.
3. WORK FOR HIRE; ASSIGNMENT OF INVENTIONS. I acknowledge that any
copyrightable works prepared by me within the scope of my employment are "works
for hire" under the Copyright Act and that the Company will be considered the
author and owner of such copyrightable works. I further acknowledge that all
Inventions that (a) are developed using equipment, supplies, facilities or trade
secrets of the Company, (b) result from work performed by me for the Company, or
(c) relate to the Company's business or current or anticipated research and
development, will be the sole and exclusive property of the Company and are
hereby irrevocably assigned by me to the Company.
4. ASSIGNMENT OF OTHER RIGHTS. In addition to the foregoing assignment
of Inventions to the Company, I hereby irrevocably transfer and assign to the
Company: (a) all worldwide patents, patent applications, copyrights, mask works,
trade secrets, and other intellectual property rights in any Invention; and (b)
any and all "Moral Rights" (as defined below) that I may have in or with respect
to any Invention. I also hereby forever waive and agree never to assert any and
all Moral Rights I may have in or with respect to any Invention, even after
termination of my work on behalf of the Company. "MORAL RIGHTS" means any rights
to claim authorship of an Invention, to object to or prevent the modification.
of any Invention, or to withdraw from circulation or control the publication or
distribution of any Invention, and any similar right, existing under judicial or
statutory law of any country in the world, or under any treaty, regardless of
whether or not such right is denominated or generally referred to as a "moral
right."
5. ASSISTANCE. I will assist the Company in every proper way to obtain
for the Company and enforce patents, copyrights, mask work rights, trade secret
rights, and other legal protections for the Company's Inventions in any and all
countries. I will execute any documents that the Company may reasonably request
for use in obtaining or enforcing such patents, copyrights, mask work rights,
trade secrets, and other legal protections. My obligations under this paragraph
will continue beyond the termination of my employment with the Company, provided
that the Company will compensate me at a reasonable rate after such termination
for time or expenses actually spent by me at the Company's request on such
assistance. I appoint the Secretary of the Company as my attorney-in-fact to
execute documents on my behalf for this purpose.
8
<PAGE> 9
6. PROPRIETARY INFORMATION. I understand that my employment by the
Company creates a relationship of confidence and trust with respect to any
information of a confidential or secret nature that may be disclosed to me by
the Company that relates to the business of the Company or to the business of
any parent, subsidiary, affiliate, customer or supplier of the Company or any
other party with whom the Company agrees to hold information of such party in
confidence ("PROPRIETARY INFORMATION"). Such Proprietary Information includes
but is not limited to Inventions, marketing plans, product plans, business
strategies, financial information, forecasts, personnel information, and
customer lists.
7. CONFIDENTIALITY. At all times, both during my employment and after
its termination, I will keep and hold all such Proprietary Information in strict
confidence and trust, and I will not use or disclose any of such Proprietary
Information without the prior written consent of the Company, except as may be
necessary to perform my duties as an employee of the Company for the benefit of
the Company. Upon termination of my employment with the Company, I will promptly
deliver to the Company all documents and materials of any nature pertaining to
my work with the Company, and I will not take with me any documents or materials
or copies thereof containing any Proprietary Information.
8. NO BREACH OF PRIOR AGREEMENT. I represent that my performance of all
the terms of this Agreement and my duties as an employee of the Company will not
breach any invention assignment, proprietary information, or similar agreement
with any former employer or other party. I represent that I will not bring with
me to the Company or use in the performance of my duties for the Company any
documents or materials of a former employer that are not generally available to
the public or have not been legally transferred to the Company.
9. NOTIFICATION. I hereby authorize the Company to notify my actual or
future employers of the terms of this Agreement and my responsibilities
hereunder.
10. NAME & LIKENESS RIGHTS, ETC. I hereby authorize the Company to use,
reuse, and to grant others the right to use and reuse, my name, photograph,
likeness (including caricature), voice, and biographical information, and any
reproduction or simulation thereof, in any media now known or hereafter
developed (including but not limited to film, video, and digital or other
electronic media), both during and after my employment, for whatever purposes
the Company deems necessary.
11. INJUNCTIVE RELIEF. I understand that in the event of a breach or
threatened breach of this Agreement by me the Company may suffer irreparable
harm and will therefore be entitled to injunctive relief to enforce this
Agreement.
12. GOVERNING LAW; SEVERABILITY. This Agreement will be governed and
interpreted in accordance with the internal laws of the State of Florida,
without regard to or application of choice-of-law rules or principles. In the
event that any provision of this Agreement is found by a court, arbitrator, or
other tribunal to be illegal, invalid or unenforceable, then such provision
shall not be
9
<PAGE> 10
voided, but shall be enforced to the maximum extent permissible under applicable
law, and the remainder of this Agreement shall remain in full force and
effect.
13. NO DUTY TO EMPLOY. I understand that this Agreement does not constitute
a contract of employment or obligate the Company to employ me for any stated
period of time. This Agreement shall be effective as of the first day of my
employment by the Company, namely: August 1, 1996.
AMERIQUEST TECHNOLOGIES, INC.: EMPLOYEE:
BY:/s/Harry Krischik /s/
------------------------- --------------------------
Signature
Name: Harry Krischik Name:
----------------------- --------------------
Title: Chairman of the Board
------------------------
Date:
--------------------
10
<PAGE> 1
EXHIBIT 10.11
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of
October 1, 1996 (the "Effective Date") between AmeriQuest Technologies, Inc., a
Delaware corporation with its principal offices located at 6100 Hollywood Blvd.
Hollywood, Florida 33024 ("Company"), and Holger Heims, a resident of Miami
Beach, Florida ("Employee").
In consideration of the promises and the terms and conditions set forth
in this Agreement, the parties agree as follows:
1. POSITION. During the term of this Agreement, Company will employ
Employee, and Employee will serve Company as Executive Vice President and
Corporate Secretary. Employee will report directly to the Chairman of the Board
of Directors and the President of the Company.
2. DUTIES. Employee will serve Company in such capacities and with such
duties and responsibilities as the Board of Directors may from time to time
determine. Employee will comply with and be bound by Company's operating
policies, procedures, and practices from time to time in effect during
Employee's employment. Employee will perform his duties under this Agreement at
the offices of Company, provided, that Employee may be required to do extensive
traveling in connection with the performance of his duties hereunder. Employee
hereby represents and warrants that he is free to enter into and fully perform
this Agreement and the agreements referred to herein without breach of any
agreement or contract to which he is a party or by which he is bound.
3. EXCLUSIVE SERVICE. During his employment with Company, Employee will
devote his full time and efforts exclusively to this employment and apply all
his skill and experience to the performance of his duties and advancing
Company's interests in accordance with Employee's experience and skills. In
addition, during his employment with Company, Employee will not engage in any
consulting activity except with the prior written approval of Company, or at the
direction of Company, and Employee will otherwise do nothing inconsistent with
the performance of his duties hereunder.
4. OBLIGATION NOT TO COMPETE. Employee hereby agrees that while he is
employed by Company (the "Restricted Period"), Employee shall within the
territory of the United States not engage in or provide services to any business
that is competitive with or detrimental to any present or contemplated business
of Company known to Employee. Employee also agrees that, during the Restricted
Period, he shall not in any manner attempt to induce or assist others to attempt
to induce any customer or client of Company to terminate his association with
Company, nor do anything directly or indirectly to interfere with the
relationship between Company and any such persons or concerns in the territory
of the United States. Each of the following activities shall, without
limitation, be deemed to constitute engaging in business within the meaning of
this Section: to engage in, work with, have an
<PAGE> 2
interest or concern in, advise, lend money to, guarantee the debts or
obligations of or permit one's name or any party thereof to be used in
connection with, an enterprise or endeavor, either individually, in partnership,
or in conjunction with any person or persons, firms, associations, companies, or
corporations, whether as a principal, agent, shareholder, employee, officer,
director, partner, consultant or in any other manner whatsoever, provided,
however, that Employee shall retain the right to invest in or have an interest
in entities traded on any public market or offered by any national brokerage
house, provided that said interest does not exceed one percent (1%) of the
voting control of said entity. In addition, Employee may make passive
investments in privately held entities that are determined by the Board of
Directors of Company not to be competitors of Company. Company may elect to
extend the term of this non-competition clause for a maximum period of six month
following the termination according to Section 7.1.(b) and 7.1(c) provided
that a monthly fee in the amount of the last applicable monthly base salary is
paid to Employee.
5. TERM OF AGREEMENT. This Agreement will commence on the Effective
Date, and will continue for a period of eleven months and thereafter unless
terminated pursuant to Section 7 hereof.
6. COMPENSATION AND BENEFITS.
6.1 BASE SALARY. Company agrees to pay Employee an initial
minimum salary of One Hundred and Fifty Thousand Dollars($150,000.00) per year.
Employee's salary will be payable as earned in accordance with Company's
customary payroll practice.
6.2 ADDITIONAL BENEFITS. Employee will be eligible to
participate in Company's employee benefit plans of general application,
including without limitation those plans covering pension and profit sharing,
executive bonuses, stock purchases, stock options, in accordance with the rules
established for individual participation in any such plan and applicable law,
Employee will receive such other benefits, including vacation, holidays and sick
leave, as Company generally provides to its employees holding similar positions
as that of Employee. Employer will fully reimburse Employee, net of any taxes,
for the cost of health and dental insurance as incurred by Employee.
6.3 EXPENSES. Company will reimburse Employee for all
reasonable and necessary expenses incurred by Employee in connection with
Company's business, provided that such expenses are deductible to Company, are
in accordance with Company's applicable policy and are properly documented and
accounted for in accordance with the requirements of the Internal Revenue
Service.
7. TERMINATION.
7.1 EVENTS OF TERMINATION. Employee's employment with Company
shall terminate upon any one of the following:
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<PAGE> 3
(a) the Company's determination made in good faith that it is
terminating Employee for "cause" as defined under Section 7.2 below
("Termination for Cause");
(b) six months after the effective date of a written notice
sent to Employee stating that Company is terminating his employment,
without cause, which notice can be given by Company at any time after
the Effective Date at Company's sole discretion, for any reason or for
no reason; or
(c) the effective date of a written notice sent to Company
from Employee stating that Employee is electing to terminate his
employment with Company.
7.2 "CAUSE" DEFINED. For purposes of this Agreement, "cause"
for Employee's termination will exist at any time after the happening of one or
more of the following events:
(a) dishonest conduct or deliberate attempt to do an injury to
the Company;
(b) Employee's material breach of a term of this Agreement;
(c) an unlawful or criminal act which would reflect badly on
the Company in the Company's reasonable judgment;
(d) Employee's death.
8. EFFECT OF TERMINATION.
8.1 TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION. In the
event of any termination of this Agreement pursuant to Sections 7.1(a) or 7.1
(c), the Company shall pay Employee the compensation and benefits otherwise
payable to Employee under Section 6 through the effective date of termination as
referred to by Company or by Employee in their written notices pursuant to
Sections 7.1(a) or 7.1(c). Employee's rights under the Company's benefit plans
of general application shall be determined under the provisions of those plans.
8.2 TERMINATION WITHOUT CAUSE. In the event of any termination
of this Agreement pursuant to Section 7.l(b), the Company shall pay Employee
the compensation and benefits otherwise payable to Employee under Section 6
through the last day of the six month period following the effective date of the
notice referred to in Section 7.1(b)
9. MISCELLANEOUS.
9.1 ARBITRATION. Employee and Company shall submit to
mandatory binding arbitration in any controversy or claim arising out of, or
relating to, this Agreement or any breach hereof, provided, however, that
Company retains its right to, and shall not be prohibited, limited or in any
other way restricted from, seeking or obtaining equitable relief from
- 3 -
<PAGE> 4
a court having jurisdiction over the parties. Such arbitration shall be
conducted in accordance with the commercial arbitration rules of the American
Arbitration Association in effect at that time, and judgment upon the
determination or award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.
9.2 SEVERABILITY. If any provision of this Agreement shall be
found by any arbitrator or court of competent jurisdiction to be invalid or
unenforceable, then the parties hereby waive such provision to the extent that
it is found to be invalid or unenforceable and to the extent that to do so would
not deprive one of the parties of the substantial benefit of its bargain. Such
provision shall, to the extent allowable by law and the preceding sentence, be
modified by such arbitrator or court so that it becomes enforceable and, as
modified, shall be enforced as any other provision hereof, all the other
provisions continuing in full force and effect.
9.3 NO WAIVER. The failure by either party at any time to
require performance or compliance by the other of any of its obligations or
agreements shall in no way affect the right to require such performance or
compliance at any time thereafter. The waiver by either party of a breach of any
provision hereof shall not be taken or held to be a waiver of any preceding or
succeeding breach of such provision or as a waiver of the provision itself. No
waiver of any kind shall be effective or binding, unless it is in writing and is
signed by the party against whom such waiver is sought to be enforced.
9.4 ASSIGNMENT. This Agreement and all rights hereunder are
personal to Employee and may not be transferred or assigned by Employee at any
time. Company may assign its rights, together with its obligations hereunder, to
any parent, subsidiary, affiliate or successor, or in connection with any sale,
transfer or other disposition of all or substantially all of its business and
assets, provided, however, that any such assignee assumes Company's obligations
hereunder.
9.5 WITHHOLDING. All sums payable to Employee hereunder shall
be reduced by all federal, state, local and other withholding and similar taxes
and payments required by applicable law.
9.6 ENTIRE AGREEMENT. This Agreement constitutes the entire
and only agreement between the parties relating to employment of Employee with
Company, and this Agreement supersedes and cancels any and all previous
contracts, arrangements or understandings with respect thereto.
9.7 AMENDMENT. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended only by an agreement in writing
executed by both parties hereto.
9.8 NOTICES. All notices and other communications required or
permitted under this Agreement shall be in writing and hand delivered, sent by
telecopier, sent by certified first class mail, postage pre-paid, or sent by
nationally recognized express courier service. Such notices and other
communications shall be effective upon receipt if hand delivered or sent by
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<PAGE> 5
telecopier, five (5) days after mailing if sent by mail, and one (1) day after
dispatch if sent by express courier, to the following addresses, or such other
addresses as any party shall notify the other parties
If to Company: AmeriQuest Technologies, Inc.
----------------------------------
6100 Hollywood Blvd.
----------------------------------
Hollywood, Florida 33024
----------------------------------
Telecopier: (954) 989-9206
----------------------------------
Attention: Chairman of the Board of Directors
----------------------------------
If to Employee: Holger Heims
----------------------------------
6301 Collins Ave.,
----------------------------------
Miami Beach, FL 33141
----------------------------------
9.9 BINDING NATURE. This Agreement shall be binding upon, and
inure to the benefit of, the successors and personal representatives of the
respective parties hereto.
9.10 HEADINGS. The headings contained in this Agreement are
for reference purposes only and shall in no way affect the meaning or
interpretation of this Agreement. In this Agreement, the singular includes the
plural, the plural included the singular, the masculine gender includes both
male and female referents, and the word "or" is used in the inclusive sense.
9.11 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original but all of
which, taken together, constitute one and the same agreement.
9.12 GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereto shall be construed in accordance with the laws
of the State of California, without giving effect to the principles of conflict
of laws.
IN WITNESS WHEREOF, Company and Employee have executed this
Agreement as of the date first above written.
"COMPANY" "EMPLOYEE"
AMERIQUEST TECHNOLOGIES, INC. HOLGER HEIMS
By: /s/ Harry Krischik
-------------------------------
Name: HARRY KRISCHIK
-----------------------------
Title: CHAIRMAN OF THE BOARD
----------------------------
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<PAGE> 1
EXHIBIT 10.12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made as of the 1st day of April, 1995, by and
between AmeriQuest Technologies, Inc., a Delaware corporation having its
principal place of business at 2722 Michelson Drive, Irvine, California 92715
("Employer") and Dennis C. Fairchild, an individual ("Employee").
In consideration of the mutual promises and agreements set
forth in this Agreement, Employer and Employee agree as follows:
1. JOB TITLE AND DUTIES. Employer hereby employs, engages
and hires Employee in the position of Chief Accounting Officer. In this
position, Employee is expected to perform such duties as are consistent with
the position of Chief Accounting Officer as may from time-to-time be assigned
to the Employee by Employer.
Employee hereby accepts and agrees to being hired, engaged and
employed, subject to the general supervision and orders, advice and direction
of Employer as given by Employer's Board of Directors, President, or other such
supervisory personnel of Employer to whom Employee shall be responsible.
Employee agrees to perform any duties customarily performed by one holding the
same or similar position in the same or similar businesses or enterprises as
that of the Employer. Employee shall perform his duties at the principal
location of the Employer's offices, currently in Orange County, California, or
any other place or places that Employer shall in good faith require, or as the
interest, needs, business or opportunity of Employer shall require.
2. TERM OF EMPLOYMENT. The term of this Agreement shall
commence on the date set forth above (the "Commencement Date") and shall
continue for a period of two (2) years or until terminated pursuant to Section
11 of this Agreement. All terms and conditions in this Agreement pertaining to
Employee's employment by the Company are confidential and shall not be
disclosed by Employee to any other employees of Employer.
3. COMPENSATION. As full payment for the services performed
by Employee in full discharge of his duties under this Agreement, Employer
shall pay to Employee and Employee shall accept as full payment from Employer,
compensation, subject to such deductions and withholdings as may be required by
law or by Employer's policies and procedures from time to time in effect, as
follows:
-1-
<PAGE> 2
(A) BASE SALARY. Employee shall receive a base salary of
$140,000.00 per year (the "Base Salary") which shall be payable on
such basis, no less frequently than monthly, as Employer shall, from
time to time, determine. Employee's Base Salary hereunder shall be
subject to review and adjustment by Employer, in Employer's
discretion, one year from the Commencement Date.
(B) PERFORMANCE BONUS. Employee shall be entitled to a
performance bonus of up to $60,000.00 per year, to be paid in equal
quarterly installments (the "Performance Bonus") based upon Employee's
achievement of certain goals, pursuant to the "Management By
Objective" Plan (the "MBO Plan") of Employer as may be in effect from
time to time. All terms and conditions regarding Employee's
entitlement to the Performance Bonus shall be governed by the MBO Plan
as it shall, from time to time, be amended by Employer.
(C) Stock Options. Employer shall grant to Employee stock
options, subject to the terms of the Stock Option Agreement attached hereto as
Exhibit A, to purchase all or a part of an aggregate of 50,000 shares of the
Employer's common stock. Employee's stock options shall vest over a 56 month
period, with the first 12,500 shares vesting on the first day of the month
which is 14 months following the Commencement Date. The remaining 37,500
shares shall vest in three equal installments of 12,500 shares each, on the
first day of the months which shall be 28, 42, and 56 months respectively,
following the Commencement Date. The options will be exercisable at an
exercise price equal to the closing price of Employer's common stock on the New
York Stock Exchange as of the Commencement Date. In the event the Employee's
employment with Employer hereunder is terminated for any reason whatsoever,
Employee shall receive only those stock options which shall have vested prior
to the date of such termination of employment.
4. POLICIES AND PROCEDURES. This Agreement hereby
incorporates Employer's standard "Policies and Procedures Manual" as
constituted on this date, and as it may be amended in the future from time to
time. Employee hereby agrees to abide by all "Policies and Procedures" as may
be adopted by Employer from time to time, and to not, intentionally or
negligently, act in any manner inconsistent with said Policies and Procedures
or in any other manner which may cause financial or other damage to Employer.
Without in any way limiting the contents of the Policies and
Procedures Manual, or of the obligation of Employee to comply with all Policies
and Procedures, Employee hereby specifically acknowledges and confirms that
Employee has read and will comply with those sections of the Policies and
Procedures Manual dealing with Equal Opportunity Policies, Sexual Harassment
Policies, and Compliance with Securities Laws.
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<PAGE> 3
5. BENEFITS. Employee shall be entitled to such employment
benefits as Employer may, from time to time, grant to its employees generally.
6. EMPLOYEE'S EXCLUSIVITY. Employee will at all times
faithfully, industriously, and to the best of Employee's ability, experience,
and talents perform all of the duties that may be required of and from Employee
pursuant to the terms of this Agreement, to the satisfaction of Employer.
Employee shall not, during the term of this Agreement, be interested directly
or indirectly, in any manner as an advisor or employee for compensation, or as
a partner, officer, director, stockholder, or in any other capacity in any other
business enterprises without the prior written consent of Employer. Employee
shall not be prohibited hereunder from making investments of personal funds in
capital stock or other securities of any corporation whose stock or securities
are publicly owned or are regularly traded on any public exchange.
7. CONFIDENTIALITY.
(a) Non-Disclosure and Non-Use of Confidential
Information. The Employee shall not, directly or indirectly,
during, or at any time after his employment by the Employer,
use for himself or others, or disclose to others, any
Confidential Information of the Employer, whether or not
conceived, developed or perfected by him unless the Employee
first secures written consent of the Employer to such
disclosure or use, which may or may not be given in the
absolute discretion of the Employer, or until such information
shall have become a matter of public knowledge.
(b) "Confidential Information" Defined. The term
"Confidential Information" shall include, without limitation:
records of research and technical data; computer programs
(whether under license from others or developed in-house as a
proprietary product of the Employer), processes, machines,
equipment and process designs, including any drawings and
descriptions thereof; operating instructions; training
manuals; production and development processes; production
schedules; procedures; machinery; business and financial
information; customer lists; customer buying records; pricing
policies; product and merchandise sources; supply sources;
marketing information and plans; pricing policies; product and
merchandise sources; long-range plans; salary information;
contracts; and correspondence and other information of the
Employer, or of other parties doing business with the
Employer; and such other information as is maintained in
confidence but which is disclosed to Employee in trust, or
which the Employee is placed in a position to discover by
virtue of the trust and confidence reposed in him
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<PAGE> 4
by his employment. Such Confidential Information is hereby
expressly distinguished from general information and know-how
inherently available in any employment.
(c) Return of Records. Upon termination of
Employee's employment or at any other time upon request,
Employee will return promptly to Employer, as its property,
any or all Confidential Information, in whatever form it may
exist, and by whomever prepared, which are then in Employee's
custody, possession or control.
8. NON-COMPETITION. Employee acknowledges that his ability
to earn a living is not so closely tied to the business of Employer and the
market segment of which Employer is a part that the termination of his
employment would not work an undue hardship on Employee or his family. In
recognition of this fact, and in partial consideration of the Severance Pay to
which Employee is entitled pursuant to Paragraph 11 below, Employee agrees that
in the event employment of Employee with Employer is terminated for any reason
other than at the expiration of the term set forth in Section 2 hereof,
Employee will not accept employment, or work in any manner for a company,
business, or organization engaged in the business of distributing, reselling,
or aggregating computer equipment, or any other business which may be engaged
in by Employer at the date of such termination, for a period of twelve months
following such termination of employment. Employee acknowledges that Employer
conducts its business throughout the United States, and that accordingly this
prohibition against competition will extend to any company, business, or
organization doing business in the United States. In the event following
termination of Employee's employment with Employer, Employee engages in a
business which competes with that of Employer, or otherwise violates this
Section, the Severance Pay provided for in Section 11 hereof shall terminate.
This Non-Competition Section shall be deemed binding upon
Employee in all respects and in the event of Employee's violation of this
Section, Employer shall be entitled to initiate injunctive relief against
Employee. In addition, Employee shall be liable to Employer for any damages
that Employer shall suffer as a result of any breach hereof.
9. CONFLICTS OF INTEREST. Employee covenants, warrants and
agrees that Employee will not engage in any activities that will create a
conflict of interest between Employee's actions and the furtherance of the
interests of Employer. Employee covenants and agrees that while Employee is at
work, Employee will utilize all such time for the furtherance of Employer's
business and will not work on personal projects or projects for any other
group, cause or organization unless specifically disclosed to and approved in
writing by Employer.
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<PAGE> 5
10. TERMINATION. Unless otherwise agreed to in writing by
the Employer and the Employee, this Agreement shall terminate upon the
occurrence of any of the following events:
(a) At any time by mutual agreement in writing signed by
the Employer and the Employee.
(b) Upon the death or disability of the Employee.
(c) Upon the bankruptcy, liquidation or termination of
business by the Employer.
(d) At the option of Employer, after not less than thirty
(30) days prior written notice to Employee provided,
however, that if Employee's employment shall be
terminated for "Cause" (as defined in Section 11
below) such termination may be effective immediately
upon notice by Employer to Employee.
11. SEVERANCE PAYMENTS. Upon termination of Employee's
employment hereunder, the Base Salary of Employee shall be paid by Employer up
to the effective date of termination. Any Performance Bonus which Employee may
have otherwise earned under the MBO Plan for the quarter in which such
termination shall occur, shall be canceled and shall not be payable to
Employee. If Employee's employment is terminated by Employer pursuant to
Section 11(d) above without "Cause," and, subject to Employee's compliance with
all other terms of this Agreement, including, without limitation, the
Confidentiality and Non-Competition provisions of Section 7 and 8 above,
Employer shall continue the payment of Employee's Base Salary as severance pay
("Severance Pay") for a period of six months year from the date of the
termination of Employee's employment. For purposes of this Agreement, "Cause"
shall mean any one or more of the following:
(a) The inability or failure of Employee to perform
assigned duties;
(b) Any breach of this Agreement by the Employee; or
(c) Any act by the Employee which would impair Employee's
ability to function in the capacity hired, including,
but not limited to, any act of sexual harassment of
other employees, moral turpitude or dishonesty.
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<PAGE> 6
Other than the payment of Employee's Base Salary and the
Severance Pay as heretofore provided, following termination of employment
Employer shall have no further obligation to pay any sums, or provide any
benefits to Employee.
12. RELOCATION COSTS. Employee shall be reimbursed for the
"Relocation Costs," as defined below, incurred by Employee as a result of any
required relocation of Employee's residence from Florida to California. The
term "Relocation Costs" shall include the following:
(a) Moving costs for Employee's automobiles, home
furnishings, and other personal property.
(b) Real estate commissions and closing costs incurred on
the sale of Employee's Florida home and closing costs
incurred on the purchase of Employee's California
home.
(c) An interim travel allowance in order to provide
Employee with one round trip coach fare from Los
Angeles to Fort Lauderdale for each month until
Employee's family is able to relocate to California.
(d) Interim living accommodations and a reasonable
expense allowance for food and other incidentals
incurred in Orange County, California during the
period that Employee is required to perform services
in California, but prior to the time Employee's
family is able to move to California. Interim living
accommodations shall either be provided by Employer,
or at Employer's option, shall be reimbursed to
Employee in such amount as may be agreed to in
writing by Employer.
(e) For the first twelve (12) months from the date of
purchase of a home in California, the Company shall
pay you an amount equal to the increased monthly
interest payment attributable to any increase in the
interest rate on your California home mortgage over
the interest rate which had been charged on your
Florida home mortgage.
13. MISCELLANEOUS. The following provisions are also
integral parts of this Agreement:
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<PAGE> 7
A. This Agreement shall be binding upon and shall
inure to the benefit of the successors, assigns, personal representatives and
heirs of the respective parties hereto, and any entities resulting from the
reorganization, consolidation or merger of Employer.
B. The headings used in this Agreement are inserted
for reference purposes only and shall not be deemed to limit or affect in any
way the meaning or interpretation of any of the terms or provisions of this
Agreement.
C. This Agreement constitutes the entire
understanding and agreement between the parties and supersedes all prior
agreements, representations or understandings between the parties relating to
the subject matter hereof.
D. The provisions of this Agreement are severable,
and should any provision hereof be void, voidable or unenforceable, such void,
voidable, or unenforceable provision shall not affect any other provision of
this Agreement
E. Any waiver by either party hereto of any kind of
character whatsoever by the other party, whether such waiver be direct or
implied, shall not be construed as a continuing waiver of or consent to any
subsequent breach of this Agreement on the part of the other party.
F. The several rights and remedies herein expressly
reserved to each of the parties shall be construed as cumulative; and none of
them shall be exclusive of, in lieu, or in limitation of any other right,
remedy or priority allowed by law. Without limiting the generality of the
foregoing, Employee shall be liable to Employer for any damages that Employer
shall suffer as a result of any breach of any terms of this Agreement.
G. The parties agree that time is of the essence in
the performance of the duties herein.
H. This Agreement shall be interpreted, construed
and enforced according to the laws of the State of California. Venue for the
resolution of any dispute hereunder shall lie in the Superior Court of the
State of, California, Orange County, California. The parties each agree to
waive trial by jury in any action arising in connection with this Agreement or
the employment relationship between Employer and Employees.
I. The parties agree that in the event any acts or a
court proceeding is brought by either party to enforce any provisions under
this Agreement, each party shall bear its
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<PAGE> 8
own costs in connection therewith, and neither party shall be entitled to
recover any attorneys fees or court costs.
J. Except as otherwise provided herein this
Agreement and the rights and obligations herein may not be assigned or assumed
by either party hereto without the prior written consent of the other party.
K. All terms and words used in this Agreement
regardless of the number and gender in which they are used shall be deemed and
construed to include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context or sense of this
Agreement or any paragraph or cause herein may require, the same as if the
words had been fully and properly written in the required number and gender.
L. This Agreement may not be amended or modified
except by mutual written agreement of the parties.
M. The obligations of Employee set forth in Sections
7 and 8 hereof represent independent covenants by which Employee will remain
bound notwithstanding any breach by Employer of the provisions hereunder, and
shall survive the termination of this Agreement.
REMAINDER OF PAGE LEFT BLANK INTENTIONALLY
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<PAGE> 9
N. All notices, demands and requests required or
permitted to be given hereunder shall be deemed duly given if delivered or
mailed by registered or certified mail, postage prepaid, addressed to the
following:
If to Employer, to:
AmeriQuest Technologies, Inc.
2722 Michelson Drive
Irvine, California 92715
If to Employee, to:
Dennis C. Fairchild
5512 N.W. 86th Way
Coral Springs, Florida 33067
Either party shall have the right to specifically, in writing,
in the manner above provided, another address to which subsequent notices to
the parties shall be given. Any notice given hereunder shall be deemed to have
been given as of the date delivered or mailed.
DATED this 1st day of April, 1995.
EMPLOYER: EMPLOYEE:
AmeriQuest Technologies Inc.
By: /s/ Gregory A. White By: /s/ Dennis C. Fairchild
--------------------------- --------------------------
Gregory A. White Dennis C. Fairchild
President and Chief Chief Accounting Officer
Operating Officer
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<PAGE> 10
[LOGO] AMERIQUEST TECHNOLOGIES, INC.
MEMORANDUM
TO: AUDREY HYNES
FROM: GREG WHITE
DATE: MARCH 28, 1995
SUBJECT: DENNIS FAIRCHILD
Per our conversation, please process the following payroll changes for Dennis
Fairchild.
- - Effective January 1, 1995, change rate of pay from $100,000/year to
$140,000/year.
- - Issue a retroactive pay raise in the amount of $10,000. This is to be
given to Dennis in a March 31, 1995 paycheck.
- - Dennis is now eligible for a $60,000 Quarterly Bonus Plan. Please
issue his Q1 bonus check in the amount of $15,000. This is to be
given to Dennis in a March 31, 1995 paycheck.
APPROVAL:
/s/ Greg White 3-28-95
- ----------------------------- --------------------
GREG WHITE, PRESIDENT DATE
cc: Dennis Fairchild
2722 Michelson Drive - Irvine, California 92715 - 714-222-6000
Fax: 714-261-0556
<PAGE> 1
EXHIBIT 10.13
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made as of the 1st day of April, 1995, by and
between AmeriQuest Technologies, Inc., a Delaware corporation having its
principal place of business at 3 Promenade, Santa Ana, California 92705
("Employer") and Ken Burke, an individual ("Employee").
In consideration of the mutual promises and agreements set
forth in this Agreement, Employer and Employee agree as follows:
1. JOB TITLE AND DUTIES. Employer hereby employs, engages
and hires Employee in the position of Senior Vice President and General Manager
for Employer's wholly owned subsidiary CMS Enhancements, Inc. ("CMS"). In this
position, Employee is expected to perform such duties as are consistent with
such position as may from time-to-time be assigned to the Employee by Employer.
Employee hereby accepts and agrees to being hired, engaged and
employed, subject to the general supervision and orders, advice and direction
of Employer as given by Employer's Board of Directors, President, or other such
supervisory personnel of Employer to whom Employee shall be responsible.
Employee agrees to perform any duties customarily performed by one holding the
same or similar position in the same or similar businesses or enterprises as
that of the Employer. Employee shall perform his duties at the principal
location of the Employer's offices, currently in Orange County, California, or
any other place or places that Employer shall in good faith require, or as the
interest, needs, business or opportunity of Employer shall require. Employee
shall report directly to the President of Employer.
2. TERM OF EMPLOYMENT. The term of this Agreement shall
commence on the date set forth above (the "Commencement Date") and shall
continue for a period of two (2) years or until terminated pursuant to Section
11 of this Agreement. All terms and conditions in this Agreement pertaining to
Employee's employment by the Company are confidential and shall not be
disclosed by Employee to any other employees of Employer.
3. COMPENSATION. As full payment for the services performed
by Employee in full discharge of his duties under this Agreement, Employer
shall pay to Employee and Employee shall accept as full payment from Employer,
compensation, subject to such deductions and withholdings as may be required by
law or by Employer's policies and procedures from time to time in effect, as
follows:
(A) BASE SALARY. Employee shall receive a base salary of
$170,000.00 per year (the "Base Salary") which shall be payable on
such basis, no less frequently than monthly, as Employer shall, from
time to time, determine. Employee's Base Salary hereunder shall be
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<PAGE> 2
subject to review and adjustment by Employer, in Employer's discretion,
one year from the Commencement Date.
(B) PERFORMANCE BONUS. Employee shall be entitled to a
performance bonus of up to $100,000.00 per year, to be paid in equal
quarterly installments (the "Performance Bonus") based upon Employee's
achievement of certain goals, pursuant to the "Management By
Objective" Plan (the "MBO Plan") of Employer as may be in effect from
time to time. All terms and conditions regarding Employee's
entitlement to the Performance Bonus shall be governed by the MBO Plan
as it shall, from time to time, be amended by Employer. In the event
the Gross Profits of CMS (as determined by the certified public
accounting firm regularly employed by Employer) are more than
$18,750,000.00 and less than $22,500,000.00 for the fiscal year ending
June 30, 1996, the foregoing performance bonus shall be increased by
$50,000.00, and in the event such Gross Profits of CMS exceed
$22,500,000. for the fiscal year ending June 30, 1996, the performance
bonus shall be increased by an additional $50,000.00.
(C) Stock Options. Employer shall grant to Employee stock
options, subject to the terms of the Stock Option Agreement attached hereto as
Exhibit A, to purchase all or a part of an aggregate of 50,000 shares of the
Employer's common stock. Employee's stock options shall vest over a 56 month
period, with the first 12,500 shares vesting on the first day of the month
which is 14 months following the Commencement Date. The remaining 37,500
shares shall vest in three equal installments of 12,500 shares each, on the
first day of the months which shall be 28, 42, and 56 months respectively,
following the Commencement Date. The options will be exercisable at an
exercise price equal to the closing price of Employer's common stock on the New
York Stock Exchange as of the Commencement Date. In the event the Employee's
employment with Employer hereunder is terminated for any reason whatsoever,
Employee shall receive only those stock options which shall have vested prior
to the date of such termination of employment. In addition, Employer shall
grant to Employee stock options to purchase up to an additional 100,000 shares
of Employer's common stock subject to Employee's satisfaction of the conditions
set forth in Section 1(b) of the Stock Option Agreement.
4. POLICIES AND PROCEDURES. This Agreement hereby
incorporates Employer's standard "Policies and Procedures Manual" as constituted
on this date, and as it may be amended in the future from time to time.
Employee hereby agrees to abide by all "Policies and Procedures" as may be
adopted by Employer from time to time, and to not, intentionally or
negligently, act in any manner inconsistent with said Policies and Procedures
or in any other manner which may cause financial or other damage to Employer.
Without in any way limiting the contents of the Policies and
Procedures Manual, or of the obligation of Employee to comply with all Policies
and Procedures, Employee hereby specifically acknowledges and confirms that
Employee has read and will comply with those sections of the Policies
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<PAGE> 3
and Procedures Manual dealing with Equal Opportunity Policies, Sexual
Harassment Policies, and Compliance with Securities Laws.
5. BENEFITS. Employee shall be entitled to such employment
benefits as Employer may, from time to time, grant to its employees generally.
6. EMPLOYEE'S EXCLUSIVITY. Employee will at all times
faithfully, industriously, and to the best of Employee's ability, experience,
and talents perform all of the duties that may be required of and from Employee
pursuant to the terms of this Agreement, to the satisfaction of Employer.
Employee shall not, during the term of this Agreement, be interested directly
or indirectly, in any manner as an advisor or employee for compensation, or as
a partner, officer, director, stockholder, or in any other capacity in any
other business enterprises without the prior written consent of Employer.
Employee shall not be prohibited hereunder from making investments of personal
funds in capital stock or other securities of any corporation whose stock or
securities are publicly owned or are regularly traded on any public exchange.
7. CONFIDENTIALITY.
(a) Non-Disclosure and Non-Use of Confidential
Information. The Employee shall not, directly or indirectly,
during, or at any time after his employment by the Employer,
use for himself or others, or disclose to others, any
Confidential Information of the Employer, whether or not
conceived, developed or perfected by him unless the Employee
first secures written consent of the Employer to such
disclosure or use, which may or may not be given in the
absolute discretion of the Employer, or until such information
shall have become a matter of public knowledge.
(b) "Confidential Information" Defined. The term
"Confidential Information" shall include, without limitation:
records of research and technical data; computer programs
(whether under license from others or developed in-house as a
proprietary product of the Employer), processes, machines,
equipment and process designs, including any drawings and
descriptions thereof; operating instructions; training
manuals; production and development processes; production
schedules; procedures; machinery; business and financial
information; customer lists; customer buying records; pricing
policies; product and merchandise sources; supply sources;
marketing information and plans; pricing policies; product and
merchandise sources; long-range plans; salary information;
contracts; and correspondence and other information of the
Employer, or of other parties doing business with the
Employer, and such other information as is maintained in
confidence but which is disclosed to Employee in trust, or
which the Employee is placed in a position to discover by
virtue of the trust and confidence reposed in him by his
employment. Such Confidential Information is hereby expressly
distinguished from general information and know-how inherently
available in any employment.
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<PAGE> 4
(c) Return of Records. Upon termination of
Employee's employment or at any other time upon request,
Employee will return promptly to Employer, as its property,
any or all Confidential Information, in whatever form it may
exist, and by whomever prepared, which are then in Employee's
custody, possession or control.
8. NON-COMPETITION. Employee acknowledges that his ability
to earn a living is not so closely tied to the business of Employer and the
market segment of which Employer is a part that the termination of his
employment would not work an undue hardship on Employee or his family. In
recognition of this fact, and in partial consideration of the Severance Pay to
which Employee is entitled pursuant to Paragraph 11 below, Employee agrees that
in the event employment of Employee with Employer is terminated for any reason
other than at the expiration of the term set forth in Section 2 hereof, Employee
will not accept employment, or work in any manner for a company, business, or
organization engaged in the business of distributing, reselling, or aggregating
computer equipment, or any other business which may be engaged in by Employer
at the date of such termination, for a period of twelve months following such
termination of employment. Employee acknowledges that Employer conducts its
business throughout the United States, and that accordingly this prohibition
against competition will extend to any company, business, or organization doing
business in the United States. In the event following termination of
Employee's employment with Employer, Employee engages in a business which
competes with that of Employer, or otherwise violates this Section, the
Severance Pay provided for in Section 11 hereof shall terminate.
This Non-Competition Section shall be deemed binding upon
Employee in all respects and in the event of Employee's violation of this
Section, Employer shall be entitled to initiate injunctive relief against
Employee. In addition, Employee shall be liable to Employer for any damages
that Employer shall suffer as a result of any breach hereof.
9. CONFLICTS OF INTEREST. Employee covenants, warrants and
agrees that Employee will not engage in any activities that will create a
conflict of interest between Employee's actions and the furtherance of the
interests of Employer. Employee covenants and agrees that while Employee, is at
work, Employee will utilize all such time for the furtherance of Employer's
business and will not work on personal projects or projects for any other
group, cause or organization unless specifically disclosed to and approved in
writing by Employer.
10. TERMINATION. Unless otherwise agreed to in writing by
the Employer and the Employee, this Agreement shall terminate upon the
occurrence of any of the following events:
(a) At any time by mutual agreement in writing signed by
the Employer and the Employee.
(b) Upon the death or disability of the Employee.
(c) Upon the bankruptcy, liquidation or termination of
business by the Employer.
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<PAGE> 5
(d) At the option of Employer, after not less than thirty
(30) days prior written notice to Employee provided,
however, that if Employee's employment shall be
terminated for "Cause" (as defined in Section 11
below) such termination may be effective immediately
upon notice by Employer to Employee.
11. SEVERANCE PAYMENTS. Upon termination of Employee's
employment hereunder, the Base Salary of Employee shall be paid by Employer up
to the effective date of termination. Any Performance Bonus which Employee may
have otherwise earned under the MBO Plan for the quarter in which such
termination shall occur, shall be canceled and shall not be payable to
Employee. If Employee's employment is terminated by Employer pursuant to
Section 11(d) above without "Cause," and, subject to Employee's compliance
with all other terms of this Agreement, including, without limitation, the
Confidentiality and Non-Competition provisions of Section 7 and 8 above,
Employer shall continue the payment of Employee's Base Salary as severance pay
("Severance Pay") for a period of six months year from the date of the
termination of Employee's employment. For purposes of this Agreement, "Cause"
shall mean any one or more of the following:
(a) The inability or failure of Employee to perform
assigned duties;
(b) Any breach of this Agreement by the Employee; or
(c) Any act by the Employee which would impair Employee's
ability to function in the capacity hired, including,
but not limited to, any act of sexual harassment of
other employees, moral turpitude or dishonesty.
Other than the payment of Employee's Base Salary and the
Severance Pay as heretofore provided, following termination of employment
Employer shall have no further obligation to pay any sums, or provide any
benefits to Employee.
12. RELOCATION COSTS. Employee shall be reimbursed for the
"Relocation Costs," as defined below, incurred by Employee as a result of any
required relocation of Employee's residence from his current home in Santa
Cruz, California to a location in or near Irvine, California ("Southern
California"). The term "Relocation Costs" shall include the following:
(a) Moving costs for Employee's automobiles, home
furnishings, and other personal property.
(b) Interim living accommodations and a reasonable
expense allowance of up to $100 per day for a maximum
of 180 days for food and other incidentals incurred
in Irvine, California during the period that Employee
is required to perform services in Southern
California, but prior to the time Employee's family
moves to Southern California. Interim living
accommodations shall either be provided by Employer,
or at Employer's options, shall be reimbursed to
Employee in such amounts as may be agreed to in
writing by Employer.
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<PAGE> 6
(c) Closing costs incurred by Employee on the purchase of
a home in Southern California.
(d) Payment of the monthly mortgage on Employee's home in
San Jose, California, or payment of the rental or
mortgage payment of the Southern California home,
until the earlier of the nine (9) months from the
date that the temporary living accommodations
expires, or the date on which such residence is
rented out by Employee.
(e) Round trip coach airfare between Southern California
and San Jose, California for Employee and Employee's
wife, until Employee's San Jose home is rented, up to
a maximum of ten trips by each of Employee and
Employee's wife.
13. MISCELLANEOUS. The following provisions are also
integral parts of this Agreement:
A. This Agreement shall be binding upon and shall
inure to the benefit of the successors, assigns, personal representatives and
heirs of the respective parties hereto, and any entities resulting from the
reorganization, consolidation or merger of Employer.
B. The headings used in this Agreement are inserted
for reference purposes only and shall not be deemed to limit or affect in any
way the meaning or interpretation of any of the terms or provisions of this
Agreement.
C. This Agreement constitutes the entire
understanding and agreement between the parties and supersedes all prior
agreements, representations or understandings between the parties relating to
the subject matter hereof.
D. The provisions of this Agreement are severable,
and should any provision hereof be void, voidable or unenforceable, such void,
voidable, or unenforceable provision shall not affect any other provision of
this Agreement.
E. Any waiver by either party hereto of any kind of
character whatsoever by the other party, whether such waiver be direct or
implied, shall not be construed as a continuing waiver of or consent to any
subsequent breach of this Agreement on the part of the other party.
F. The several rights and remedies herein expressly
reserved to each of the parties shall be construed as cumulative; and none of
them shall be exclusive of, in lieu, or in limitation of any other right, remedy
or priority allowed by law. Without limiting the generality of the foregoing,
Employee shall be liable to Employer for any damages that Employer shall suffer
as a result of any breach of any terms of this Agreement.
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<PAGE> 7
G. The parties agree that time is of the essence in
the performance of the duties herein.
H. This Agreement shall be interpreted, construed
and enforced according to the laws of the State of California. Venue for the
resolution of any dispute hereunder shall lie in the Superior Court of the State
of, California, Orange County, California. The parties each agree to waive
trial by jury in any action arising in connection with this Agreement or the
employment relationship between Employer and Employees.
I. The parties agree that in the event any acts or a
court proceeding is brought by either party to enforce any provisions under
this Agreement, each party shall bear its own costs in connection therewith,
and neither party shall be entitled to recover any attorneys fees or court
costs.
J. Except as otherwise provided herein this
Agreement and the rights and obligations herein may not be assigned or assumed
by either party hereto without the prior written consent of the other party.
K. All terms and words used in this Agreement
regardless of the number and gender in which they are used shall be deemed and
construed to include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context or sense of this
Agreement or any paragraph or cause herein may require, the same as if the
words had been fully and properly written in the required number and gender.
L. This Agreement may not be amended or modified
except by mutual written agreement of the parties.
M. The obligations of Employee set forth in Sections
7 and 8 hereof represent independent covenants by which Employee will remain
bound notwithstanding any breach by Employer of the provisions hereunder, and
shall survive the termination of this Agreement.
REMAINDER OF PAGE LEFT BLANK INTENTIONALLY
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<PAGE> 8
N. All notices, demands and requests required or
permitted to be given hereunder shall be deemed duly given if delivered or
mailed by registered or certified mail, postage prepaid, addressed to the
following:
If to Employer, to:
AmeriQuest Technologies, Inc.
3 Imperial Promenade
Santa Ana, California 92705
If to Employee, to:
Ken Burke Fairchild
0 Kite Hill Road
Santa Cruz, CA 95060
Either party shall have the right to specifically, in writing,
in the manner above provided, another address to which subsequent notices to
the parties shall be given. Any notice given hereunder shall be deemed to have
been given as of the date delivered or mailed.
DATED this 1st day of April, 1995.
EMPLOYER: EMPLOYEE:
AmeriQuest Technologies Inc.
By: /s/ Gregory A. White By: /s/ Ken Burke
------------------------- ---------------------------
Gregory A. White Ken Burke
President and Chief Senior Vice President and
Operating Officer General Manager
CMS Enhancements
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<PAGE> 1
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made the 21st day of September, 1994, by
and between AmeriQuest Technologies, Inc., a Delaware corporation having its
principal place of business at 2722 Michelson Drive, Irvine, California 92715
("Employer") and Alexander C. Kramer, Jr., an individual ("Employee").
In consideration of the mutual promises and agreements set forth in
this Agreement, Employer and Employee agree as follows:
1. JOB TITLE AND DUTIES. Employer hereby employs, engages and hires
Employee in the position of Vice President - Operations of Robec, Inc.
(hereinafter called "AmeriQuest/Robec, Inc."). In this position, Employee is
expected to perform such duties as are consistent with such position as may from
time-to-time be assigned to Employee by the Board of Directors of
AmeriQuest/Robec, Inc.
Employee hereby accepts and agrees to being hired, engaged and
employed, subject to the general supervision and orders, advice and direction of
the Board of Directors of AmeriQuest/Robec, Inc. Employee agrees also to perform
any other duties customarily performed by one holding the same or similar
position in the same or similar businesses or enterprises as that of Employee.
Employee shall perform all of his duties in Horsham, Pennsylvania, and any other
place or places that Employer and Employee may agree upon.
2. TERM OF EMPLOYMENT. Subject to earlier termination pursuant to
Paragraph 13 below, this Agreement shall begin on the date first set forth above
and shall continue thereafter until September 30, 1996. Employer reserves the
right to terminate this Agreement without cause, subject however to the rights
of Employee to severance pay as provided in Paragraph 13 below.
3. COMPENSATION. Employer shall pay to Employee a base salary not less
than $150,000 per year ("Base Salary") during the term of this Agreement.
Salaried Employees who show a willingness to work overtime during those
periods of time where business considerations warrant will be fairly compensated
when being considered for salary review and bonuses.
Salaried Employees who work on a work holiday designated as such by
Employer shall be allowed to take a day of their choice as a paid holiday
subject to scheduling requirements and approval from Employees' Functional
Manager.
Salaried Employees shall receive fifty percent (50%) of their monthly
salary on the first (1st) day of each calendar month and the remaining fifty
percent (50%) on the sixteenth (16th) day of each calendar month.
<PAGE> 2
4. PERFORMANCE BONUS. Employee will be entitled to share with other
members of management in a performance bonus based on the net income before tax
actually achieved by AmeriQuest/Robec, Inc. when compared with the results
projected (as "pre-tax income") in the Robec business plan (the "Business
Plan"), a copy of which is attached hereto as Appendix I. The performance bonus
may be paid either in cash or stock of Employer, in the sole discretion of
Employer's Board of Directors, but shall not be payable for any quarter where
pre-tax income is not a positive number.
a. Overachievement Kicker. Should the actual results of
AmeriQuest/Robec, Inc.'s operations for any quarter during the
employment term exceed the projected results set forth in the Business
Plan, an Overachievement Kicker equal to 2.5% of Base Salary shall be
paid for every 10% increment over the projected results for the year in
question. This would be paid in addition to the amounts due Employees
as Base Salary and performance bonus, as described below.
b. 100% of Projected Results. Should such quarterly results of
AmeriQuest/Robec, Inc.'s operations equal at least 100% of the
projected results set forth in the Business Plan, the performance bonus
shall be equal to 25% of Employee's Base Salary.
C. 80% to 100% of Projected Results. Should such quarterly
results of AmeriQuest/Robec, Inc.'s operations exceed 80% of the
projected results set forth in the Business Plan but less than 100% of
such projected results for the period in question, the performance
bonus shall be equal to 15% of Employee's Base Salary.
d. 50% to 80% of Projected Results. Should such quarterly
results of AmeriQuest/Robec, Inc.'s operations exceed 50% of the
projected results set forth in the Business Plan, but less than 80% of
such projected results for the period in question, the performance
bonus shall be equal to 7.5% of Employee's Base Salary.
No performance bonus will be payable for any quarter in which the
actual results of operation are less than 50% of the level projected in the
Business Plan for the relevant period.
5. STOCK OPTIONS. Employee shall be eligible to receive stock options
under any stock option plan enacted by Employer from time to time for key
employees of Employer and its subsidiaries.
6. POLICIES AND PROCEDURES. To the extent not inconsistent with this
Agreement, Employee agrees to comply with Employer's standard "Policies and
- 2 -
<PAGE> 3
Procedures" manual as constituted on this date, and as it may be amended in the
future from time to time.
7. VACATION TIME. Employee hereby agrees that vacation time may be
scheduled only with the approval of Employer. This approval shall be based on
manpower needs at the time of the request and job duties and responsibilities of
Employee. However, notwithstanding the foregoing, Employee shall be entitled to
four weeks of vacation per year.
8. BENEFITS. Employee shall be entitled to such employment benefits as
Employer grants to its employees generally.
9. EMPLOYEE'S EXCLUSIVITY. Employee agrees that he will at all times
faithfully, industriously, and to the best of his ability experience and talents
perform all of the duties that may be required of and from him pursuant to the
express and explicit terms of this Agreement, to the reasonable satisfaction of
Employer. Further, Employee shall not, during the term of this Agreement be
interested directly or indirectly, in any manner as an advisor or employee for
compensation or as a partner, officer, director, stockholder, or in any other
capacity in any other business competitive with Employer's business or any
allied trade without the prior written consent of the Board of Directors of
Employer. This does not prevent or limit the right of any Employee to invest any
of his surplus funds in capital stock or other securities of any corporation
whose stock or securities are publicly owned or are regularly traded in any
public exchange, nor shall anything contained be deemed to prevent or limit
Employee from investing his surplus funds in real estate. Notwithstanding the
foregoing or any other provision of this Agreement, including without limitation
Paragraphs 9 through 12 hereof, Employee may be active in the business of EMEX,
L.P. provided that such involvement does not interfere with the performance of
his duties hereunder.
10. CONFIDENTIALITY.
(a) Non-Disclosure and Non-Use of Confidential Information.
Employee will not, directly or indirectly, during, or at any time after
his employment by Employer, use for himself or others, or disclose to
others except in the conduct of his duties hereunder, any Confidential
Information of Employer, whether or not conceived, developed or
perfected by him unless Employee first secures written consent of
Employer to such disclosure or use which may or may not be given in the
absolute discretion of Employer, or until such information shall have
become a matter of public knowledge, unless required by applicable law.
(b) "Confidential Information" Defined. The term "Confidential
Information" shall include, without limitation: records of research and
- 3 -
<PAGE> 4
technical data; computer programs, (whether under license from others
or developed in-house as a proprietary product of Employer), processes,
machines, equipment and process designs, including any drawings and
descriptions thereof; operating instructions; training manuals;
production and development processes; production schedules; procedures;
machinery; business and financial information; customer lists; customer
buying records; pricing policies; product and merchandise sources;
supply sources; marketing information and plans; pricing policies;
product and merchandise sources; long-range plans; salary information;
contracts; and correspondence and other information of Employer, or of
other parties doing business with Employer; and such other information
as is maintained in confidence but which is disclosed to Employee in
trust, or which Employee is placed in a position to discover by virtue
of the trust and confidence reposed in him by his employment. Such
Confidential Information is thereby expressly distinguished from
general information and know-how inherently available in any
employment.
(c) Return of Records. Upon termination of his employment by
Employer or at any other time upon request, Employee will return
promptly to Employer, as its property, all records related to
Confidential Information, in whatever form they may exist, and by
whomever prepared, which are then in his custody, possession or
control.
11. NON-COMPETITION CLAUSE. Employee acknowledges that his ability to
earn a living is not so closely tied to the business of Employer and the market
segment of which Employer is a part that the termination of his employment would
work an undue hardship on Employee or his family. In recognition of this fact,
and in partial consideration of the Severance Pay to which Employee is entitled
pursuant to Paragraph 13 below, Employee agrees that in the event Employee
leaves the employ of Employer, Employee will not accept employment, or work in
any manner for a company, business or organization which is a wholesale
distributor of computer and computer related equipment for a period of one year
after the termination of his employment with Employer. Employee agrees that this
prohibition will extend to any company, business or organization doing business
in the United States.
This Non-Competition Clause shall be deemed binding upon Employee in
all respects and in the event of Employee's violation of this Clause, Employer
shall be entitled to initiate injunctive relief against Employee. In addition,
Employer shall be entitled to any damages that Employer shall prove.
12. CONFLICTS OF INTEREST. Employee covenants, warrants and agrees that
Employee will not engage in any activities that will create a conflict of
interest between Employee's actions and the furtherance of the interest of
Employer.
- 4 -
<PAGE> 5
Further, Employer covenants and agrees that while Employee is at work, that
Employee will utilize his time for the furtherance of Employer's business and
will not work on personal projects or projects for any other group, cause or
organization unless specifically disclosed to and approved by Employer.
13. TERMINATION AND SEVERANCE PAY. Unless otherwise agreed to
in writing by Employer and Employee, this Agreement shall terminate upon the
occurrence of any of the following events:
(a) At any time by mutual agreement in writing signed by
Employer and Employee.
(b) Upon the death or disability of Employee.
(c) Upon the bankruptcy, liquidation or termination of
business by Employer.
(d) At the option of either Employer or Employee after
not less than thirty (30) days' prior written notice
to the other party of the effective date of such
termination, which may be with or without cause;
provided that Employee shall continue to render his
services and shall be paid his regular compensation
up to the effective date of termination.
Employer hereby agrees to pay Employee (i) severance pay equal to one
year's Base Salary and (ii) continue to include Employee and his family on
Employer health care insurance for a period of one year (at the expense of
Employer), upon the termination of Employee should the termination of Employee's
services be for any reason other than at Employer's election for "cause" or at
Employee's election pursuant to Subparagraph (d) above.
"Cause" is defined as any one or more of the following:
(i) Any material breach of this Agreement by Employee
which is not cured after reasonable notice; or
(ii) Any act by Employee which would constitute moral
turpitude including, but not limited to, any act of
sexual harassment of other employees.
14. SEXUAL HARASSMENT. Employee hereby acknowledges that
Employer does not condone the sexual harassment of its employees, and should
Employee ever determine that an officer, director, consultant or fellow employee
is
- 5 -
<PAGE> 6
subjecting Employee to sexual harassment, Employee covenants and agrees to
immediately inform the Board of Directors of such action by written notice to
Employer's agent for service of process, identifying the name of the offending
party, the date and place of the action complained of and a complete description
of the offensive action. Employer shall, upon receipt of such notice, convene a
panel of three employees to review the matter and submit its recommendation to
the Board of Directors. Employee acknowledges and agrees that Employer shall
have no liability to Employee whatsoever if Employer complies with the
recommendation of the employee panel with respect thereto. Additionally,
Employee hereby consents to immediate discharge from employment if Employee is
determined to be the cause of sexual harassment or has falsely accused another
of sexual harassment. Employee shall not be entitled to monetary damages for
sexual harassment unless and until the procedures set forth above have been
exhausted, the accused party has been retained by Employer and a second offense
occurs by the same offending party.
15. INSIDE INFORMATION. Employee acknowledges that his position with
Employer may afford him access to "inside information" regarding Employer which
is not generally available to the trading public. Both Employer and Employee
could be held liable for the misuse by Employee of any such information.
Accordingly, Employee represents, covenants, warrants and agrees to not effect
any trade in Employer's securities without first coordinating the same with
Employer's designated legal counsel for such matters. Failure to do so shall
constitute an immediate breach of this Agreement, for which Employee may be
terminated. Additionally, should Employee do so, Employee agrees that he shall
indemnify and hold Employer harmless from and against all damages that Employer
might incur, including, but not limited to attorney's fees and costs expended in
the defense of any legal claim against Employer and any damages resulting from
any such action.
16. MISCELLANEOUS. The following provisions are also integral parts of
this Agreement:
A. This Agreement shall be binding upon and shall inure to the
benefit of the successors, assigns, personal representatives and heirs of the
respective parties hereto, and any entities resulting from the reorganization,
consolidation or merger of Employer.
B. The headings used in this Agreement are inserted for
reference purposes only and shall not be deemed to limit or affect in any way
the meaning or interpretation of any of the terms or provisions of this
Agreement.
C. This Agreement constitutes the entire understanding and
agreement between the parties and supersedes all prior agreements,
representations or understandings between the parties relating to the subject
matter hereof.
- 6 -
<PAGE> 7
D. The provisions of this Agreement are severable, and should
any provision hereof be void, voidable or unenforceable, such void, voidable, or
unenforceable provision shall not affect any other provision of this Agreement.
E. Any waiver by either party hereto of any kind of character
whatsoever by the other party, whether such waiver be direct or implied, shall
not be construed as a continuing waiver of or consent to any subsequent breach
of this Agreement on the part of the other party.
F. The several rights and remedies herein expressly reserved
to each of the parties shall be construed as cumulative; and none of them shall
be exclusive of, in lieu, or in limitation of any other right, remedy or
priority allowed by law.
G. The parties agree that time is of the essence in the
performance of the duties herein.
H. This Agreement shall be interpreted, construed and enforced
according to the laws of the State of California.
I. The parties agree that in the event any action or court
proceeding is brought by either party to enforce the obligations under this
Agreement, the prevailing party shall be entitled to recover any reasonable
attorneys fees together with court and collection costs.
J. This Agreement and the rights and obligations herein may
not be assigned or assumed by either party hereto without the prior written
consent of the other party.
K. All terms and words used in this Agreement regardless of
the number and gender in which they are used shall be deemed and construed to
include any other number, singular or plural, and any other gender, masculine,
feminine or neuter, as the context or sense of this Agreement or any paragraph
or cause herein may require, the same as if the words had been fully and
properly written in the required number and gender.
L. This Agreement may not be amended or modified except by
mutual written agreement of the parties.
M. All notices, demands and requests required or permitted to
be given hereunder shall be deemed duly given if delivered or mailed by
registered or certified mail, postage prepaid, addressed to the following:
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<PAGE> 8
If to Employer, to:
AmeriQuest Technologies, Inc.
2722 Michelson Drive
Irvine, California 92715
If to Employee, to:
Alexander C. Kramer, Jr.
425 Privet Road
Horsham, PA 19044
Either party shall have the right to specifically, in writing,
in the manner above provided, another address to which subsequent notices to the
parties shall be given. Any notice given hereunder shall be deemed to have been
given as of the date delivered or mailed.
N. It is understood that the employment of Employee by
Employer is part and parcel of the business combination of Employer and Robec,
Inc. ("Robec"), and as such, the employment of Employee by Employer is a
pre-existing obligation of Robec now being discharged by AmeriQuest.
DATED this 21 day of September, 1994.
EMPLOYER: EMPLOYEE:
AMERIQUEST TECHNOLOGIES, INC. ALEXANDER C. KRAMER, JR.
By: /s/ Harold L. Clark /s/ Alexander C. Kramer, Jr.
------------------------------- --------------------------------
Harold L. Clark Alexander C. Kramer, Jr.
President
- 9 -
<PAGE> 9
APPENDIX I
AMERIOUEST/ROBEC
October '94 - June '95
<TABLE>
<CAPTION>
1st 2nd 3rd 4th
Qtr Qtr Qtr Qtr
--- --- --- ---
<S> <C> <C> <C> <C>
Net Sales $38,400 $39,500 $38,500
Gross Profit 2,765 3,278 3,138
Operating Exp. 2,971 3,160 3,003
------- ------- -------
Pre Tax Income (206) 118 135
======= ======= =======
July '95 - June '96
<CAPTION>
1st 2nd 3rd 4th
Qtr Qtr Qtr Qtr
--- --- --- ---
<S> <C> <C> <C> <C>
Net Sales $37,000 $42,000 $40,500 $39,500
Gross Profit 2,960 3,276 3,159 3,081
Operating Exp. 2,812 3,108 2,969 2,834
------- ------- ------- -------
Pre Tax Income 148 168 189 246
======= ======= ======= =======
July '96 - September '96
<CAPTION>
1st 2nd 3rd 4th
Qtr Qtr Qtr Qtr
--- --- --- ---
<S> <C> <C> <C> <C>
Net Sales $40,500
Gross Profit 3,038
Operating Exp. 2,855
-------
Pre Tax Income 182
=======
</TABLE>
<PAGE> 1
EXHIBIT 10.16
Execution Copy
SEPTEMBER 1996 NOTE
U.S. $20,000,000.00 September 19, 1996
FOR VALUE RECEIVED, AmeriQuest Technologies Inc., a corporation
organized under the laws of the State of Delaware (the "Borrower"), hereby
promises to pay to the order of COMMERZBANK AKTIENGESELLSCHAFT (the "Bank"), at
the Bank's office at 2 World Financial Center, New York, New York 10281-1050,
for the account of the respective Lending Office (as defined in the Letter
Agreement referred to below) the principal sum of U.S. $20,000,000.00 (Twenty
Million United States Dollars) or, if less, the aggregate unpaid principal
amount of all loans to the Borrower outstanding under the Letter Agreement,
dated as of January 9, 1996, as amended, between the Borrower and the Bank (as
such may be amended from time to time, the "Letter Agreement").
The Borrower shall pay the principal amount of each loan at the times
specified in the Letter Agreement (which Letter Agreement includes provisions
for repayment ON DEMAND), as amended, and shall pay interest on the unpaid
principal amount of each loan from the date of such loan until such principal
amount is paid in full, at such interest rates, and at such times, as are
specified in the Letter Agreement, as amended.
Both principal and interest are payable in lawful money of the United
States of America in immediately available funds. Prior to any transfer
hereof, all loans made by the Bank to the Borrower under the Letter Agreement,
as amended, and all payments made on account of principal hereof, shall be
recorded on the grid attached hereto which is a part of this September 1996
Note.
This September 1996 Note is the Note referred to in, and is entitled
to the benefits of, the Letter Agreement, as amended, which among other things,
provides for discretionary extensions of credit by the Bank to the Borrower
from time to time in an aggregate amount not to exceed the United States Dollar
amount first above mentioned, the indebtedness of the Borrower resulting from
such extensions of credit being evidenced by this September 1996 Note.
AMERIQUEST TECHNOLOGIES INC.
By: /s/ Dennis C. Fairchild
---------------------------
Name: Dennis C. Fairchild
Title: V.P. Finance
By: /s/ Holger Heims
---------------------------
Name: Holger Heims
Title: Corporate Secretary
<PAGE> 2
[COMMERZBANK LETTERHEAD]
2 World Financial Center
NEW YORK, NY 10281-1050
Telephone (212) 266-7200
AMERIQUEST TECHNOLOGIES INC.
3 Imperial Promenade
Santa Ana, California 92707
Attn: Mr. Mark Mulford
President & COO
September 19, 1996
SECOND AMENDMENT TO LETTER AGREEMENT, DATED AS OF JANUARY 9, 1996
Ladies and Gentlemen:
Reference is made to the Letter Agreement dated as of January 9, 1996 between
AmeriQuest Technologies Inc. (the "Borrower") and Commerzbank
Aktiengesellschaft, New York Branch and/or Grand Cayman Branch (as heretofore
amended, the "Letter Agreement"; unless otherwise indicated herein, capitalized
terms herein have the meanings assigned thereto in the Letter Agreement).
In accordance with our recent conversations, and in consideration of the mutual
promises contained herein and other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged by the parties hereto, upon
your acceptance hereof the parties hereto hereby make the following amendments
to the Letter Agreement:
1. The term "Termination Date" on page one of the Letter Agreement is hereby
amended in its entirety to read as follows:
"March 31, 1997".
2. Your indebtedness under the Letter Agreement as amended hereby shall be
evidenced by a new grid promissory note substantially in the form of the
Attachment 1 hereto (the "September 1996 Note").
3. It is a condition precedent to the availability of any credit hereunder
that your obligations under the Letter Agreement, as amended, and the September
1996 Note will be supported at all times hereunder by the Selbstschuldnerische
Hoechstbetrags-Buergschaft, dated December 21, 1995 (as amended on August 26,
1996, the "Guaranty") of Computer 2000 Aktiengesellschaft, Munich, Germany,
direct owner of 51% of your outstanding capital stock the ("Guarantor").
<PAGE> 3
[COMMERZBANK LETTERHEAD]
page 2 of letter dd. September 19, 1996 to AmeriQuest Technologies Inc.
- --------------------------------------------------------------------------------
4. From the date hereof, all references in the Letter Agreement and each of
the other credit documents to the Letter Agreement shall be deemed to be
references to the Letter Agreement, as amended hereby.
Except as expressly modified herein, the Letter Agreement shall remain in full
force and effect and is hereby confirmed and ratified in all respects.
This Second Amendment shall be governed by and construed in accordance with the
law of the State of New York.
We kindly ask you to express your acceptance of the above terms by executing
and returning to us the attached copy of this Second Amendment to Letter
Agreement, together with the attached execution copy of the September 1996
Note.
Very truly yours,
COMMERZBANK
Aktiengesellschaft
New York Branch
Grand Cayman Branch
/s/ Juergen Boysen /s/ Martin Faenger
----------------------- ------------------
Juergen Boysen Martin Faenger
Senior Vice President Vice President
Agreed and Accepted:
AMERIQUEST TECHNOLOGIES INC.
By: /s/ Dennis C. Fairchild By:
--------------------------- --------------------------
Name: Dennis C. Fairchild Name:
Title: V.P. Finance Title:
Date: October 1, 1996
<PAGE> 4
Attachment 1
SEPTEMBER 1996 NOTE
U.S. $20,000,000.00 September 19, 1996
FOR VALUE RECEIVED, AmeriQuest Technologies Inc., a corporation
organized under the laws of the State of Delaware (the "Borrower"), hereby
promises to pay to the order of COMMERZBANK AKTIENGESELLSCHAFT (the "Bank"), at
the Bank's office at 2 World Financial Center, New York, New York 10281-1050,
for the account of the respective Lending Office (as defined in the Letter
Agreement referred to below) the principal sum of U.S. $20,000,000.00 (Twenty
Million United States Dollars) or, if less, the aggregate unpaid principal
amount of all loans to the Borrower outstanding under the Letter Agreement,
dated as of January 9, 1996, as amended, between the Borrower and the Bank (as
such may be amended from time to time, the "Letter Agreement").
The Borrower shall pay the principal amount of each loan at the times
specified in the Letter Agreement (which Letter Agreement includes provisions
for repayment ON DEMAND), as amended, and shall pay interest on the unpaid
principal amount of each loan from the date of such loan until such principal
amount is paid in full, at such interest rates, and at such times, as are
specified in the Letter Agreement, as amended.
Both principal and interest are payable in lawful money of the United
States of America in immediately available funds. Prior to any transfer
hereof, all loans made by the Bank to the Borrower under the Letter Agreement,
as amended, and all payments made on account of principal hereof, shall be
recorded on the grid attached hereto which is a part of this September 1996
Note.
This September 1996 Note is the Note referred to in, and is entitled
to the benefits of, the Letter Agreement, as amended, which among other things,
provides for discretionary extensions of credit by the Bank to the Borrower
from time to time in an aggregate amount not to exceed the United States Dollar
amount first above mentioned, the indebtedness of the Borrower resulting from
such extensions of credit being evidenced by this September 1996 Note.
AMERIQUEST TECHNOLOGIES INC.
By: /s/ Dennis C. Fairchild
---------------------------
Name: Dennis C. Fairchild
Title: V.P. Finance
By: /s/ Holger Heims
---------------------------
Name: Holger Heims
Title: Corporate Secretary
<PAGE> 5
[DEUTSCHE BANK LETTERHEAD]
AmeriQuest Technologies dated as of November 4, 1996
6100 Hollywood Blvd Dept: LEX/dmq
Hollywood, FL 33024 Ref: CFI-3/21848
Tel: (212) 469-8132
Re: Second Addendum to the Advising Letter dated as of March 29, 1996 (the
"Advising Letter")
- -------------------------------------------------------------------------------
Ladies and Gentlemen:
Reference is made to the above-captioned Advising Letter. Unless otherwise
defined herein, terms defined therein are used with the same meaning herein.
The Advising Letter is hereby amended by increasing the aggregate principal
amount of the uncommitted line from US$14,000,000 to US$19,000,000. Prior to
our considering any drawdown request under the increased portion of the
uncommitted line, we need to receive a duly executed note in the form attached
hereto as Exhibit A and our standard account documentation.
Except as modified hereby, all the terms and provisions of the Advising Letter
shall continue in full force and effect.
Very truly yours,
Deutsche Bank AG
New York Branch/
Cayman Islands Branch
/s/ Andreas M. Sengpiel /s/ Wolf Kluge
------------------------ -----------------------
Andreas M. Sengpiel Wolf Kluge
Vice President Vice President
<PAGE> 6
EXHIBIT A
NOTE
U.S.$19,000,000 DATED AS OF NOVEMBER 4, 1996
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
Deutsche Bank AG (the "Bank") New York and/or Cayman Islands Branches in lawful
money of the United States of America and in immediately available funds the
principal amount of Nineteen Million United States Dollars (U.S.$19,000,000)
or, if less, the unpaid principal amount of all loans made by the Bank's New
York Branch or Cayman Islands Branch to the undersigned from time to time, at
the principal office of Deutsche Bank AG New York Branch, New York, New York,
on the dates endorsed on the schedule (the "Grid") attached hereto.
The undersigned also promises to pay interest on the unpaid principal
amounts made available by the Bank hereunder prior to maturity at the rates per
annum set forth on the Grid. The undersigned hereby promises to pay the Bank
interest, payable upon demand, on any amount of principal and, to the extent
permitted by law, interest, remaining unpaid hereunder after maturity (whether
by acceleration or otherwise) until paid in full at a rate equal to 2% plus the
Bank's Base Rate. "Base Rate" shall mean a fluctuating interest rate per
annum equal to the higher of the Bank's Prime Lending Rate or 0.50% above the
Bank's Overnight Federal Funds Rate. "Prime Lending Rate" shall mean the rate
announced by the Bank from time to time as its prime lending rate for unsecured
commercial loans within the United States (but is not intended to be the lowest
rate of interest charged by the Bank in connection with extensions of credit to
debtors). "Overnight Federal Funds Rate" shall mean the rate per annum at
which the New York Branch of the Bank, as a branch of a foreign bank, in its
sole discretion, can acquire federal funds in the interbank overnight federal
funds market including through brokers of recognized standing. Any change in
the interest rate resulting from a change in the Base Rate shall take effect at
the time of such change in the Base Rate. Interest shall be based on the bank
basis of a year of 360 days and the exact number of days elapsed. Interest
shall commence to accrue on the date of each loan and be payable in lawful
money of the United States of America at the office of the Bank listed above on
each such loan's maturity date stated on the Grid (unless such loan has a
maturity greater than three months in which event interest shall also be
payable quarterly in arrears). The undersigned authorizes the Bank to debit
its account with the Bank's New York Branch with respect to all payments
hereon.
At the time of the making of any loan hereunder and upon each
repayment of principal the Bank shall, and is hereby authorized to, make a
notation on the Grid of the date and the amount and maturity of each such loan,
the interest rate applicable thereto, and each principal repayment. However,
the failure to make any such notation shall not limit or otherwise affect the
undersigned's obligations hereunder with respect to any such loan or repayment
of principal. Although this Note is dated the date of issue, interest in
respect hereof shall be payable only for the period during which the loans
evidenced hereby are outstanding and, although the stated amount hereof may be
higher, this Note shall be enforceable, with respect to the undersigned's
obligation to pay the principal amount hereof, and interest hereon, only to the
extent of the unpaid principal amount of loans and accrued and unpaid interest
evidenced hereby.
The term "Liabilities" shall include the liability evidenced by this
Note and all other liabilities, direct or contingent, joint, several or
independent, of the undersigned now or hereafter existing, due or to become due
to, or held or to be held by, the Bank, whether created directly or acquired by
assignment or otherwise.
<PAGE> 7
Upon the occurrence of any of the following events (each an "Event of
Default"): (i) nonpayment when due of any of the Liabilities; (ii) any
representation in any financial or other statement of the undersigned delivered
to the Bank by or on behalf of the undersigned being untrue or omitting any
material fact; (iii) the failure of the undersigned or any of its subsidiaries
to generally pay its debts as they come due or the admission in writing by the
undersigned or any of its subsidiaries of its inability to pay its debts
generally, or the making by the undersigned or any of its subsidiaries of an
assignment for the benefit of creditors, or the institution of any proceeding
by or against the undersigned or any of its subsidiaries seeking to adjudicate
it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or the appointment of a receiver, trustee, custodian or other similar
official for the undersigned or any of its subsidiaries or for any substantial
part of the property of the undersigned or any of its subsidiaries and, in the
case of institution of any such proceeding against the undersigned or any of
its subsidiaries, either such proceeding remaining undismissed or unstayed for
a period of 30 days or any of the actions sought in the proceeding occurring,
or the undersigned or any of its subsidiaries taking any corporate or other
authorizing action in respect of the foregoing; (iv) failure of the undersigned
or any of its subsidiaries to pay when due any principal, interest, premium, or
other amount owing with respect to any of its indebtedness for borrowed money
(including guarantees thereof) or any other event occurring or condition
existing and continuing after any applicable grace period, the effect of which
is to accelerate or to permit the acceleration of the maturity of such
indebtedness; (v) any judgment or order for the payment of money shall be
rendered against the undersigned or any of its subsidiaries and shall remain
unpaid or unsatisfied for a period of 10 days; (vi) the undersigned becoming a
party to any merger, consolidation, or sale of all or substantially all of its
assets without the prior written consent of the Bank; (vii) failure of the
undersigned or any of its subsidiaries to perform any agreement with the Bank;
(viii) a change in the condition or the affairs of the undersigned or any of
its subsidiaries such that, in the opinion of the Bank, its credit risk is
increased or the Bank deems itself insecure for any other reason; or (ix) there
shall occur any change in the ownership of the undersigned which, in the
opinion of the Bank, is material; THEN AND IN ANY SUCH EVENT, the Bank in its
discretion may, by written notice to the undersigned, declare the principal of
and accrued interest on all Liabilities to be, whereupon the same shall become,
forthwith due and payable, without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by the undersigned,
provided, that upon the occurrence of any event specified in clause (iii) with
respect to the undersigned such amounts shall automatically become and be due
and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the undersigned.
In the case of any non-payment when due of any Liabilities, the
undersigned shall pay all costs and expenses of every kind for collection,
including all attorneys' fees.
In the event that a determination is made by the Bank in its sole
discretion that reserves must be maintained with any Federal Reserve Bank of
the United States, with any other governmental authority whatsoever or
otherwise pursuant to any Regulation of the Board of Governors of the Federal
Reserve System or otherwise, in connection with the loans evidenced hereby or
the funding thereof the undersigned agrees to pay and hold the Bank harmless
from and against the cost of acquiring and/or maintaining any such reserves.
If any principal payment hereunder is made for any reason whatsoever on a date
other than the maturity date, the undersigned (i) shall pay interest accrued
thereon and (ii) shall on demand indemnify the Bank against all losses,
including loss of profit and expenses, suffered by it in liquidating or
otherwise employing deposits acquired to fund such loans until the stated
maturity. A certificate of the Bank as to the amount required to be paid by the
undersigned under this paragraph shall accompany such demand and shall be,
except in the case of manifest error or in the absence of good faith, final and
conclusive.
2
<PAGE> 8
In the event that a determination is made by the Bank in its sole
discretion that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the Bank's capital as a consequence of its
obligations to the undersigned or of the loans to the undersigned evidenced
hereby to a level below that which the Bank could have achieved but for such
adoption, change, or compliance, the undersigned promises to pay on demand to
the Bank such additional amount or amounts as will compensate the Bank for such
reduction. A certificate of the Bank as to the amount required to be paid by
the undersigned under this paragraph shall accompany such demand and shall be,
except in the case of manifest error or in the absence of good faith, final and
conclusive.
All payments to be made hereunder by the undersigned shall be made
without set-off or counterclaim and in such amounts as may be necessary in
order that every such payment (after deduction or withholding for or on account
of any present or future taxes, levies, imposts, duties or other charges of
whatever nature imposed by the country of the undersigned or any political
subdivision or taxing authority therein or thereof) shall not be less than the
amounts otherwise specified to be paid hereunder.
No delay on the part of the Bank in exercising any of its options,
powers or rights, or partial or single exercise thereof, shall constitute a
waiver thereof. The options, powers and rights of the Bank specified herein
are in addition to those otherwise created.
This Note shall supersede and replace the Note dated as of March 29,
1996 the ("Old Note") and all amounts outstanding under the Old Note shall be
deemed to be outstanding under this Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. EACH OF THE UNDERSIGNED AND THE BANK HEREBY
IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS NOTE OR ANY MATTER
ARISING HEREUNDER.
Name: AmeriQuest Technologies, Inc.
----------------------------------
Address: 6100 Hollywood Blvd.
----------------------------------
Hollywood, FL 33024
----------------------------------
----------------------------------
Signature(s): /s/ Dennis C. Fairchild
----------------------------------
Signature(s): /s/ Holger Heims
----------------------------------
Respective Title(s), if any: CFO
----------------------------------
3
<PAGE> 9
SEVENTH AMENDED & RESTATED CORPORATE TERM
PROMISSORY NOTE (LIBOR) (THE "NOTE")
Dated as of September 25, 1996
For value received, AMERIQUEST TECHNOLOGIES, INC., a corporation organized
under the laws of the State of Delaware, with its principal place of business
located at 3 Imperial Promenade, Santa Anna, CA 92707 ("Borrower"), hereby
unconditionally promises to pay to the order of BAYERISCHE HYPOTHEKENUND
WECHSEL - BANK AKTIENGESELLSCHAFT, acting through its New York Branch
("Lender"), at its office at 32 Old Slip, Financial Square, 32nd Floor, New
York, New York 10005, or any other branch or office of Leader which it shall
designate) the principal sum of Fourteen Million United States Dollars (U.S.
$14,000,000.00) ("Principal") on March 25, 1997, ("Maturity Date") and to pay
interest thereon, to the extent permitted by applicable law, at per annum rates
equal to sixty five hundredths of a percent (0.65%) above LIBOR (as defined
below) for interest periods of 1, 2, 3 or 6 months (each a "LIBOR Interest
Period"), in accordance with the following.
1. INTEREST.
(a) "LIBOR" shall mean that rate of interest, as determined by Lender in its
sole judgment, at which, for a LIBOR Interest Period commencing on the date of
each loan ("Borrowing") and, if applicable, each successive LIBOR Interest
Period, U.S. dollar deposits in an amount equal to the outstanding Principal
shall be offered to Lender in the London Interbank market at approximately 11
a.m. London time two Business Days (as defined below) prior to the first day of
such LIBOR Interest Period, whether or not Borrower shall have notice thereof;
provided that LIBOR is available, and provided further, that each such period
shall commence on the day on which the immediately preceding period expires.
If LIBOR shall be deemed unavailable, interest shall accrue at a per annum rate
to be mutually agreed to by Lender and Borrower. LIBOR shall be deemed
unavailable if no deposit in the amount of the outstanding Principal hereunder
based on the LIBOR Interest Period selected is readily obtainable by Lender in
the London Interbank market, as determined by Lender in its sole judgment.
(b) As used herein, "Business Day" shall mean any day on which commercial
banks in London and New York City are open for general business.
(c) Except as otherwise provided herein, interest shall accrue on the
outstanding Principal from the date hereof until its payment to Lender in full,
computed on the basis of a 360-day year and the actual number of days elapsed.
Accrued interest shall be paid to Lender, (i) on the Maturity Date, (ii) on the
last day of each LIBOR Interest Period, (iii) when LIBOR is longer than three
months, every three months after the Initial Day (as defined below); and (iv)
whenever else a payment of Principal shall be made or shall become payable.
(d) Notwithstanding any provision to the contrary contained herein, (i) if the
last day of a LIBOR Interest Period falls on a day other than a Business Day,
then the last day of the LIBOR Interest Period shall be extended to fall on the
next succeeding Business Day, unless such extension would cause the last day of
the LIBOR Interest Period to occur in the next following calendar month, in
which case, the LIBOR Interest Period shall end on the immediately preceding
Business Day; (ii) if any LIBOR Interest Period begins on the last Business Day
of a calendar month (or a day for which there is no numerically corresponding
day in the calendar month at the end of such LIBOR Interest Period), then it
shall end on a day which is the last Business Day of the applicable calendar
mouth; and (iii) no LIBOR Interest Period may be selected that would end later
than the Maturity Date.
2. PREPAYMENTS.
The Principal may be paid before the end of a LIBOR Interest Period, only if
Lender shall have given its prior written consent. With such a prepayment,
Borrower shall also pay accrued interest and any other amounts owed to Lender
in respect of the Borrowing and shall reimburse Lender for any fee, cost,
expense or loss which Lender shall incur or suffer, in an amount to be
determined by Lender in its sole discretion, because of early payment of
Principal including, but not limited to, any fee, cost, expense or loss which
Lender shall incur in the redeployment of its funds.
<PAGE> 10
-2-
3. PAYMENTS.
(a) Each payment due under this Note shall be made in immediately available
funds at the Office of Lender or to such account as Lender may designate to
Borrower without any setoff, withholding or deduction of any kind. Whenever
any payment to be made hereunder would without this provision be due and
payable on a day which is not a Business Day, it shall be due on the next
succeeding Business Day, except as otherwise expressly provided herein.
(b) Lender shall apply payments received from or for the account of Borrower
first to accrued, unpaid interest due Lender and next to sums due Lender other
than Principal, notwithstanding any direction by Borrower to the contrary.
(c) All payments of Principal, interest and any other sums due hereunder shall
be made in the amounts required hereby without any reduction or setoff (unless
based on a final judgment on which execution may be had), notwithstanding the
assertion of any right of recoupment or setoff or any counterclaim, and without
any withholding on account of taxes, levies or duties or any other deduction
whatsoever. In the event that Borrower is required by law to withhold or to
deduct any sum from payment required hereby, Borrower shall, to the extent
permitted by applicable law, increase the amount paid by it to Lender by such
withholding or deductions as may be necessary so that Lender shall receive an
amount which after payment of any sum withheld or deducted shall be equal to
the amount that Lender would have received had such sum not been withheld or
deducted.
(d) In the event that Borrower does not cause a payment to be made when and as
due to Lender, Lender may charge the amount due to any account of Borrower with
Lender or any other branch or any subsidiary of Lender and apply funds from
such account to the payment due, unless Lender shall have agreed expressly with
Borrower not to do so.
4. NOTICE SELECTING LIBOR INTEREST PERIOD.
(a) To request a LIBOR Interest Period, Borrower shall in communication to
Lender ("Interest Notice") refer to this Note and specify the duration of such
LIBOR Interest Period and the Business Day on which such LIBOR Interest Period
is to commence ("Initial Day"). To be effective, an Interest Notice must be
received by Lender at least two full business days prior to the Initial Day.
An Interest Notice not in writing shall be deemed to have been complete and in
accordance with the record Lender makes of such LIBOR Interest Period.
(b) By requesting a LIBOR Interest Period, Borrower shall be deemed to
represent that, as of the Initial Day, the Representations and Warranties of
Section 6 hereof remain accurate and that no Event of Default (as defined
below) or an event which, with the giving of notice or the passage of time, or
both, would become an Event of Default, will result or have resulted. No LIBOR
Interest Period shall commence unless all such Representations and Warranties
shall then be true and correct.
5. CONDITIONS PRECEDENT.
The Principal shall not be available unless (i) all Representations and
Warranties of Borrower made in connection with this Note are true and correct,
as of the Effective Date, and (ii) Lender shall have received each of the
following in form and substance satisfactory to Lender and its counsel:
(a) A certified copy of corporate resolutions of each of Borrower and any
Guarantor authorizing it to execute and deliver, and perform its obligations
under, this Note, and any writing ("Loan Document") which it is contemplated
Borrower or such Guarantor will give or has given Lender as a condition or
requirement for borrowing under the Note;
(b) A certificate or certificates of each of Borrower's and any Guarantor's
corporate secretary or assistant secretary as to the incumbency and signatures
of the officers of Borrower or such Guarantor who shall have executed this Note
or any Loan Document and who shall be authorized to act on behalf of Borrower
with respect to this Note; and
(c) The unconditional guarantee of COMPUTER 2000 AG, Wolfratshauser
Strasse 84, 81379 Munich, Germany, in form and substance acceptable to
Lender.
<PAGE> 11
-3-
6. REPRESENTATIONS AND WARRANTIES.
By executing and delivering this Note, Borrower represents and warrants that:
(a) Borrower is a corporation duly organized, validly existing, and in good
standing and qualified to do business in the jurisdiction of its incorporation
and states in which it is operating;
(b) Borrower has full power and authority, not restricted by any law or
governmental regulation, to execute and deliver this Note and to perform its
obligations as contemplated hereby;
(c) execution and delivery of this Note has been duly authorized and it is
being duly executed and delivered to Lender; upon delivery it will evidence a
valid and legally binding obligation of Borrower, enforceable in accordance
with its terms;
(d) Borrower is not in default in the performance, observance or fulfillment
of any obligation, covenant or condition contained in any agreement or
instrument to which Borrower is a party;
(e) execution and delivery of this Note is not in violation of, nor is it an
event of default, or an event which with the passage of time or service of
notice may become an event of default, under any agreement or instrument to
which Borrower is a party;
(f) execution and delivery of, and performance under, this Note will not
result in the creation or imposition of any security interest in, or lien or
encumbrance upon, any asset of Borrower except in favor of Lender;
(g) Borrower has filed all tax returns and any other reports to government
agencies which it is required by law to file; and
(h) Borrower's financial statements, including any schedules and notes
pertaining thereto, are, and have been, prepared in accordance with generally
accepted accounting principles consistently applied except as noted in them,
and fully and fairly present, at the dates thereof, the financial condition of
Borrower and, if prepared on a consolidated basis, subsidiaries of Borrower
(such subsidiaries hereinafter "Consolidated Subsidiaries"), and the results of
operations for the period covered thereby; there has been no material, adverse
change in the financial condition or business of Borrower or any Consolidated
Subsidiary since the date as of which the statements last received by Lender
were prepared (which, as of the date hereof, is September 30, 1995).
7. EVENTS OF DEFAULT.
Any person, corporation or other entity that (i) directly or indirectly through
one or more intermediaries is controlled by Borrower or (ii) has given, or is
to give, a guaranty, pledge, security agreement, mortgage, conditional
assignment, comfort letter or other commitment to secure or support Borrower's
obligations to Lender shall hereafter be referred to as an "Affiliate". If any
of the following events ("Events of Default") shall occur, namely
(a) any representation or warranty set forth in this Note, in any document
given in connection with it or otherwise made in connection with any extension
of credit by Lender to Borrower shall prove to have been false or misleading in
any material respect when made or deemed to have been made; or
(b) Borrower shall fail to pay to Lender any principal when and as due
hereunder; or for five days Borrower shall fail either to pay to Lender any
other sum when and as due hereunder or to comply with any other obligation of
Borrower under this Note, or any document given in connection with it or to
fulfill any condition to the Borrowing which shall not have been expressly
waived in a writing signed by two officers of Lender; or Borrower or any
Affiliate shall fail to pay when and as due and payable or within any
applicable grace period any indebtedness of an amount material in respect of
his or its financial condition or business, or shall default with respect to
any evidence of indebtedness or any obligation for borrowed money in such an
amount, or with respect to the performance of any other obligation incurred in
connection with any such indebtedness or obligation; or
<PAGE> 12
-4-
(c) Borrower shall not, within ten days after Lender's request and Lender's
agreement to any reasonable requirement for confidential treatment of
information received, provide to Lender information Borrower has pertaining to
its business or finances, or to the business or finances of an Affiliate or
allow the inspection during business hours of his or its books and records; or
(d) a final judgment shall be entered against Borrower or an Affiliate for the
payment of money in an amount material in respect of his or its financial
condition or business, or it shall have, or may reasonably be expected to have,
a material, adverse effect on his or its financial condition or business, and
the same shall remain unsatisfied for a 30-day period during which it might be
executed upon; or any writ or warrant of attachment or execution or similar
process shall be issued or levied against Borrower's or Affiliate's property
having a book value in an amount material in respect of his or its financial
condition or business, and the same shall not be discharged, released, vacated
or bonded within 30 days after its issue or levy; or a judgment creditor shall
by any means, including levy, distraint, replevin or self-help, obtain actual
or constructive, possession of Borrower's or an Affiliate's property having a
book value in an amount material in respect of his or its financial condition
or business, or such possession shall have a material adverse effect on his or
its financial condition or business; or
(e) (i) Borrower generally shall not pay its debts as they become due, or as
it becomes insolvent or suspends its usual business; (ii) Borrower shall enter
into an agreement with its creditors to reduce its obligations to them or to
defer their fulfillment, make a general assignment, for the benefit of its
creditors, commence any proceeding relating to it under any Chapter of Title 11
of the United States Code or seek any other form of relief from its creditors
or from a court or governmental agency pursuant to any law, Statute or
procedure of any jurisdiction (federal, state or foreign) for the relief of
financially distressed debtors (each of the foregoing a "Debtor Relief
Procedure"); (iii) a Debtor Relief Procedure shall be commenced against
Borrower and shall not be dismissed or otherwise terminated within 30 days; or
(iv) Borrower shall take any action to effect any event described in clauses
(i), (ii) or (iii) of this subsection; the term "Borrower" used in this
subsection shall also include any Affiliate; or
(f) there shall have been any other material, adverse change in the financial
condition, business or operations of Borrower or any Affiliate or the condition
or affairs of Borrower or any Affiliate shall change in such a manner that, in
the opinion of Lender, its credit risk is increased or Lender shall deem itself
insecure, and Lender shall have given Borrower notice of such change or
insecurity and Borrower shall not have eliminated such risk within 30 days of
such notice; or
(g) this Note, or any guaranty of Borrower's or an Affiliate's obligations to
Lender or any agreement or commitment securing or supporting any such
obligation shall be declared by a court of competent jurisdiction to be not in
full force and effect or shall for any other reason cease to be fully
enforceable in courts within the United States having jurisdiction over
Borrower; or the validity or enforceability of any of the foregoing shall be
challenged, denied or contested by Borrower, any Affiliate, or person acting by
or through either Borrower or any Affiliate, or any person having possession,
custody or any control over any property of Borrower or any Affiliate, or any
governmental office or agency; or
(h) Borrower shall, without Lender's written consent signed by two of its
officers, transfer, or grant or allow to attach a security interest in,
Borrower's interest in (i) any asset without receiving fair consideration for
it or (ii) except in the ordinary course of its business, any asset having a
value material to Borrower's financial condition or that is material to the
successful operation of Borrower's business; or
(i) there shall occur any seizure, vesting or intervention by or under
authority of any government by which the management of Borrower or any
Affiliate shall be displaced, or its authority in the conduct of its business
shall be curtailed or impaired;
thereupon, by Lender giving notice thereof to Borrower, (i) every liability of
Borrower to Lender of whatever kind, whether absolute or contingent shall
forthwith become payable, both as to Principal and interest; and (ii) interest
shall accrue on the outstanding Principal until the date of its payment in full
at the lesser of (x) the maximum rate allowed by applicable law, or (y) two
percent above LIBOR for the duration of the then current LIBOR Interest Period,
and thereafter, at a rate two percent above the Base Rate in effect from time
to time. "Base Rate" shall mean those rates of interest fixed from time to
time
<PAGE> 13
-5-
by the management of the Lender as its "Base Rate" for the use of its loan
officers in setting interest rates for borrowing, whether or not Borrower shall
have notice thereof.
8. GOVERNING LAW; RESOLUTION OF DISPUTES.
This Note, any amendment to it or any note given as a replacement or in
substitution for it shall be construed in accordance with and governed by the
laws of the State of New York applicable to agreements made and to be performed
wholly in that State. IN CONNECTION WITH ANY DISPUTE WHICH MAY ARISE UNDER
THIS NOTE OR ANY AMENDMENT OF IT, OR ANY NOTE GIVEN AS A REPLACEMENT OR IN
SUBSTITUTION FOR IT, BORROWER HEREBY IRREVOCABLY SUBMITS TO, CONSENTS TO, AND
WAIVES ANY OBJECTION TO, THE JURISDICTION OF THE COURTS OF THE UNITED STATES
AND OF THE STATE OF NEW YORK LOCATED IN THE COUNTY OF NEW YORK WAIVES ANY
OBJECTION TO THE LAYING OF VENUE IN SUCH A COURT; AND WAIVES ANY RIGHT TO TRIAL
BY JURY.
9. CHANGE OF CIRCUMSTANCES.
(a) If after the date hereof there shall become effective any change in any
law or regulation, or in the application or interpretation thereof by a
governmental authority, or there shall be issued or changed any guideline
(whether or not having the force of law) by an entity charged with
responsibility therefor, including without limitation any issuance or change in
respect of reserve, capital adequacy, asset ratio, tax or similar requirements,
or if any such authority or entity shall request or direct that Lender comply
with any law, regulation or guideline or if the Lender shall commence
compliance with any law, regulation, or guideline, either in effect or expected
to become effective, and if as a result of such change, request, direction or
compliance the cost to the Lender of maintaining, or obtaining funds to
satisfy, its commitment or its other obligations regarding the transaction
represented hereby shall increase, the net income after taxes received or
receivable by the Lender in connection with this transaction shall be reduced
or the return it would receive on its capital or performance of this
transaction shall be diminished, Borrower shall compensate the Lender in the
manner requested by the Lender so that the Lender shall receive the sums or
return on its capital it could not receive because of such change, request,
direction or compliance. The Lender's request for such compensation shall be
accompanied by a certificate setting forth the basis of its entitlement thereto
and shall be conclusive, absent manifest error. The Lender shall not be
entitled to compensation pursuant to this provision because of an increase in
tax rates applicable to its general income.
(b) If there shall be a change in an applicable law or regulation or in the
interpretation thereof, or a material change in the New York and/or London
Interbank Eurodollar market, including any changes set forth in the foregoing
paragraph (a), as may have occurred, so that in Lender's judgment it shall
become unlawful for Lender to continue such Borrowing in accordance with this
Note, or if by doing so Lender, in its sole discretion, determines that it
would be subject to material adverse operational burdens or restrictions, then
Lender shall give notice of such fact to Borrower and outstanding Principal and
accrued interest, and all other sums owed to Lender, shall forthwith become
payable and Borrower shall pay to Lender such sums as would be payable under
this Note if a prepayment were made on the date of such notice in an amount
equal to the outstanding Principal of the Borrowing and reimburse Lender for
any fee, cost, expense or loss Lender shall incur or suffer because of such
change, in an amount to be determined by Lender in its sole discretion.
10. OTHER PROVISIONS.
(a) Borrower waives demand, presentment, protest, notice of dishonor and any
other form of notice, not expressly required of Lender by this Note, that may
be required to hold Borrower liable on this Note.
(b) Any notice or advice given to Borrower at the above address or any other
specified by it in writing shall be presumed received by Borrower immediately
if given by telex or facsimile transmission, within one day if given by
telegram, Express Mail or a recognized courier service, or within three days if
deposited, first class postage prepaid, in an official depository of the United
States Postal Service for mail to be delivered.
(c) Borrower shall reimburse Lender upon request for any out-of-pocket
expenses, including reasonable fees and disbursements of legal counsel,
incurred in connection with the enforcement of this Note or
<PAGE> 14
-6-
amendment of it, or any note given as a replacement or in substitution for it,
or maintenance of its rights thereunder. Each sum due to Lender under this
Note, other than Principal and interest, shall bear interest from the date of
demand until the date of payment in full at per annum rates equal to the lesser
of two percent above the Base Rate or the maximum extent allowed by applicable
law.
(d) In the event Lender extends credit to Borrower after the date hereof and
such extension of credit shall not be pursuant to a written agreement signed by
two officers of Lender or evidenced by a note accepted by Lender, it shall be
governed by and subject to all the provisions of this Note except that the term
and interest rate shall be as otherwise agreed.
(e) Neither Lender nor its directors, officers, attorneys, agents or employees
shall be liable to Borrower or any Affiliate for any loss or damage caused by
any act or omission on the part of any of them unless such loss or damage shall
have been caused by the gross negligence or willful misconduct of such person,
unless such loss or damage shall have been the direct, immediate and necessary
result of such act or omission and unless such result was intended by such
person or such person knew that such loss or damage was the probable result of
his act or omission.
(f) This Note constitutes the entire agreement with respect to the subject
matter hereof; Borrower has not relied upon any representation of Lender in
making the Borrowing or giving this Note. This Note supersedes all prior
agreements, understanding and arrangements, whether oral or written, regarding
the obligations of Borrower which it evidences.
(g) This Note may not be modified or amended except by an instrument or
instruments in writing signed by the person or entity against whom enforcement
of any such modification or amendment is sought, with two officers of Lender
signing if it must sign; the waiver by Lender of any condition of, or any
breach of any term or provision of, this Note shall be limited to such instance
and shall not be construed as a waiver of the conditions generally or of any
subsequent breach.
(h) In the event any one or more of the provisions contained in this Note, any
amendment of it or any note taken as a replacement or in substitution for it,
should be invalid, illegal or unenforceable in any respect, the remaining
provisions shall not for that reason be affected or impaired in any way.
(i) Unless the context otherwise requires, words of any gender shall include
each other gender where appropriate.
(j) This Note shall inure to the benefit of, and shall be binding upon, Lender
and Borrower, their respective successors and Lender's assigns.
AMERIQUEST TECHNOLOGIES INC., Borrower
By: /s/ Dennis C. Fairchild
-----------------------------------
Title: /s/ V.P. Finance
--------------------------------
By: /s/ Holger Heims
-----------------------------------
Title: Corp. Secretary
--------------------------------
<PAGE> 15
AMENDED AND RESTATED
PROMISSORY NOTE
Dated as of October 25, 1996
For value received AmeriQuest Technologies, Inc., a corporation duly organized
and existing under the laws of the State of Delaware ("Borrower"), with its
principal office at 6100 Hollywood Blvd., Hollywood, Florida 33024, hereby
unconditionally promises to pay to the order of BAYERISCHE VEREINSBANK AG New
York Branch or such other lending office, branch, agency, affiliate or
subsidiary of BAYERISCHE VEREINSBANK AG, as it may designate ("Lender") in
immediately available funds without any setoff, withholding or deduction, at
its office at 335 Madison Avenue, New York, New York 10017, or to such account
as Lender may designate, together with interest accrued thereon as provided
below, on or before the Due Date, the principal amount of each Borrowing
("Borrowing") shown on the schedule of Borrowings at the end of this note or on
any continuation of it or on its books and records ("Schedule"). Lender is
hereby authorized to enter on the Schedule the date, amount, interest rate
agreed upon between Borrower and Lender and Due Date of each Borrowing made by
Lender to Borrower, the aggregate outstanding principal amount of which shall
not exceed Twelve Million U.S. Dollars (U.S. $12,000,000.00)
For each Borrowing the "Due Date" shall be the first to occur of the following:
the date shown on the Schedule or March 31, 1997, unless extended in writing by
two authorized officers of Lender.
As used in this note, (i) "LIBOR" shall mean the per annum rate of interest, as
determined by Lender in its sole judgment, at which U.S. Dollar deposits in an
amount equal to the principal of such Borrowing shall be offered for a period
equal to the Interest Period to prime banks in the London interbank market
approximately at 11 a.m. London time two Business Days prior to the date
requested for a Borrowing or for which LIBOR is to be determined, whether or
not Borrower shall have notice thereof; (ii) with respect to any Borrowing,
"Interest Period" shall mean a period, and each successive period thereafter,
of 1, 3 or 6 months as agreed between Lender and Borrower, commencing on the
date the Borrowing is made or to be made; (iii) "Business Day" shall mean any
day on which commercial banks are not authorized or required to close in New
York City and, with respect to a Borrowing on which interest accrues based on
LIBOR, a day on which dealings in U.S. Dollar deposits are also carried out in
the London interbank market; and (iv) "Base Rate" shall mean those rates of
interest fixed from time to time by the management of Bayerische Vereinsbank
AG, New York Branch as its "Base Rate" for the use of its loan officers in
setting interest rates for borrowings, whether or not Borrower shall have
notice thereof.
Interest shall accrue on the outstanding principal amount of each Borrowing, to
the extent permitted by applicable law, from the date such Borrowing is made
until the date such Borrowing shall become payable, at the fluctuating or fixed
rate per annum specified on the Schedule, and thereafter until payment in full
at the rate per annum three percent above the Base Rate, computed on the basis
of a 360-day year and the actual number of days elapsed. Interest shall be
payable with respect to each Borrowing on its Due Date, on the last Business
Day of every third month of each Interest Period longer than 3 months, on the
<PAGE> 16
last day of each Interest Period and whenever else the principal shall become
payable.
The principal of a Borrowing may be paid before it is due only if Lender shall
have given its prior written consent and if Borrower shall also pay accrued
interest and any other amounts owed to Lender in respect of the Borrowing and
shall reimburse Lender for any fee, cost, expense or loss Lender shall incur or
suffer because of such early payment.
Borrower represents that (a) it has full power and authority, not restricted by
any law or governmental regulation, to execute and deliver this note and to
perform hereunder; (b) this note evidences its valid and legally binding
obligation, enforceable in accordance with its terms; and (c) its execution,
delivery and performance of this note do not and will not contravene any
contractual restriction binding on or affecting it.
BORROWER ADMITS THAT LENDER HAS NOT COMMITTED ITSELF TO EXTEND ANY CREDIT TO
BORROWER OR TO DO SO ON ANY SPECIFIC TERMS OR AT ANY PARTICULAR INTEREST RATE,
MARGIN OR BASIS, THAT LENDER SHALL HAVE NO OBLIGATION TO MAKE ANY NEW BORROWING
OR TO RENEW ANY BORROWING HEREUNDER AT ANY TIME, ON ANY SPECIFIC TERMS OR AT ANY
PARTICULAR INTEREST RATE, MARGIN OR BASIS, AND THAT LENDER MAY DECLINE TO MAKE
OR RENEW A REQUESTED BORROWING OR OFFER TO DO SO ON ANY TERMS OR AT ANY
INTEREST RATE, MARGIN OR BASIS WITH OR WITHOUT SUFFICIENT REASON WITHOUT ANY
LIABILITY ARISING THEREFOR. BORROWER WILL NOT BASE ANY BUSINESS DECISION UPON
ANY UNDERSTANDING THAT IS INCONSISTENT WITH THE FOREGOING ADMISSION OR CONTRARY
TO IT.
Borrower agrees that so long as this note remains outstanding Borrower shall
furnish Lender: (i) as soon as possible but in any case within 90 days after
the end of each of its fiscal-years, audited statements of its financial
condition (including at least a balance sheet and statement of income for each
fiscal year; and (ii) promptly after filing thereof, copies of all 10-Qs, 10-Ks
and any other reports that Borrower may file with the Securities and Exchange
Commission.
If any of the following events shall occur, then, upon Lender's notice, every
obligation of Borrower under this note shall become immediately payable:
(a) any representation made by Borrower to Lender shall have been false or
misleading in any material respect; or
(b) Borrower shall fail to pay to Lender any sum when and as due hereunder or
to comply with any covenant contained herein; or
(c) Borrower shall fail to pay any indebtedness when and as due and payable or
shall default with respect to any evidence of indebtedness or any obligation
for borrowed money or the deferred purchase price of property, or in the
performance of any other obligation incurred in connection with any such
indebtedness, if the effect of such default is to accelerate the maturity of
such evidence of indebtedness or obligation or to require the prepayment
thereof or to permit the holder or obligee thereof (or a trustee on behalf of
such holder or obligee) to cause any such indebtedness to become due prior to
its stated maturity; or
2
<PAGE> 17
(d) (i) Borrower generally shall not pay its debts as they become due, become
insolvent, suspend its usual business, or cease to exist; (ii) Borrower shall
engage in any procedure intended to provide it with relief from its obligations
to its creditors generally or to a group of them holding more than half
Borrower's outstanding obligations to pay money, including but not limited to
making an assignment, commencing a legal proceeding or entering into an
agreement; (iii) any such procedure shall be commenced against Borrower; or
(iv) Borrower shall take any action to effect any event described in clauses
(i), (ii) or (iii); or
(e) (i) Computer 2000 AG, Germany shall at any time own less than a majority
of the outstanding voting shares of Borrower, either directly or indirectly;
(ii) the Kreditauftrag from Computer 2000 AG in favor of Lender shall cease to
be effective; (iii) an event of default shall occur under any agreement between
Computer 2000 AG and Bayerische Vereinsbank AG; or
(f) there shall have been any other material, adverse change in Borrower's
business or operations, or Borrower's condition or affairs shall change such
that, in Lender's opinion, its credit risk is materially increased.
This note shall be governed by, and construed under, the laws of the State of
New York applicable to agreements made and performed in that State. In
connection with any dispute which may arise hereunder, Borrower hereby
irrevocably submits to the jurisdiction of any court located in the County of
New York, waives any objection to the laying of venue therein, and waives any
right to trial by jury.
Borrower waives demand, presentment, protest, notice of dishonor and all forms
of notice required to hold Borrower liable on this note. Borrower shall
reimburse Lender upon request for expenses, including reasonable attorney's
fees and disbursements, incurred in connection with the enforcement of, or
maintenance of its rights under, this note. Lender and its agents and
employees shall not be liable to Borrower for any loss or damage caused by any
act or omission by any of them unless caused by their gross negligence or
wilful misconduct. Borrower has not relied upon any oral representation of
Lender in giving this note. Should any provision in this note be
unenforceable, the other provisions shall not thereby be affected.
This note amends and restates in its entirety Borrower's promissory note, dated
as of February 20, 1996, as amended (the "Original Note"). Upon execution and
delivery of this note to Lender, the Original Note shall be cancelled and
returned to Borrower and all obligations represented thereby shall continue to
be represented by this note.
AmeriQuest Technologies, Inc., Borrower
By: /s/ Dennis C. Fairchild By:
-------------------------------- -------------------------------
CFO
- ------------------------------------ ----------------------------------
Title Title
3
<PAGE> 1
EXHIBIT 10.17
COMPUTER
2000
Computer 2000 AG Postfach 70 01 65 - 91301 Munchen VORSTAND
Arthur Andersen
Mr. Scott A. Gilbert
633 West Fifth Street
Los Angeles, CA 90071-2008
USA
August 1st, 1996
and
AmeriQuest Technologies, Inc.
Mr. Dennis Fairchild
Chief Financial Officer
3 Imperial Promenade Suite 300
Santa Ana, California 92707
FILING OF AMERIQUEST FORM 10-Q FOR THE PERIOD ENDING JUNE 30TH, 1996
Gentlemen:
In connection with the above mentioned filing, we herby confirm that we are
irrevocably willing to provide and/or secure, directly or indirectly, interim
financing for AmeriQuest until September 30th, 1997 up to a maximum amount of
US $66 million.
Furthermore, we have made available for AmeriQuest a Computer 2000 AG facility
for the issuance of the guaranties related to the purchase of goods and
services up to a maximum amount of US $40 million.
COMPUTER 2000 AG
/s/ Dr. Harry Krischik /s/ Manfred Gunzel
- ----------------------------------- ------------------------------
Dr. Harry Krischik Manfred Gunzel
Co-President and Member Co-President and Member
of the Executive Board of the Executive Board
<PAGE> 2
COMPUTER
2000
To: The Board of Directors
of AmeriQuest Technologies, Inc.
to the attention of Dr. Harry Krischik
6100 Hollywood Boulevard, 7th Floor
Hollywood, Florida 33024
Re Capital Obligation
Gentlemen:
This will confirm the obligation of Computer 2000 AG to provide
AmeriQuest Technologies, Inc. with additional financing early in calendar 1997
in the amount of at least USD 30 million. As you know, Computer 2000 currently
proposes that AmeriQuest commence as soon as practicable a rights offering to
all AmeriQuest stockholders in which Computer 2000 would enter into a stand-by
agreement to purchase at least USD 30 million in the offering, to the extent
that purchases are not made by other stockholders. In the unanticipated event
that it is decided not to proceed with the rights offering, Computer 2000 will
be obligated to provide, in the same time frame, at least USD 30 million in
other equity or debt financing. Computer 2000 intends that the foregoing
constitutes its binding obligation and understands that you will rely on it in
your corporate planning for this fiscal year and in connection with the
preparation of your annual report on Form 10-K for the fiscal year ended
September 30, 1996 and in other filings with the Securities Exchange Commission
and that your independent accountants will rely on it in connection with their
report on your financial statements for such fiscal year.
COMPUTER 2000 AG
By: /s/ Manfred Gunzel
---------------------------
Manfred Gunzel
Member of the Executive Board
<PAGE> 3
FENWICK & WEST LLP
A LIMITED LIABILITY PARTNERSHIP
INCLUDING PROFESSIONAL CORPORATIONS
2ND FLOOR TWO PALO ALTO SQUARE SUITE 650
262 SECOND STREET PALO ALTO, CALIFORNIA 94306 1920 N STREET NORTHWEST
SAN FRANCISCO, CA 94105 TELEPHONE (415) 494-0600 WASHINGTON, D.C. 20036
(415) 281-1330 FACSIMILE (415) 494-1417 (202) 463-6300
November 15, 1996
Mr. Scott Gilbert
Arthur Andersen LLP
633 West Fifth
Los Angeles, CA 90071
Re: Computer 2000 AG/AmeriQuest Technologies, Inc.
----------------------------------------------
Dear Scott:
Enclosed is a copy of the capital obligation letter I received today
from Computer 2000 AG with the instructions that I send you this copy on
Computer 2000 AG's behalf. This will confirm my telephone conversation with you
in which I stated to you that Computer 2000 AG has indicated to me that it
understands this letter to constitute its binding obligation and that it is my
view that Computer 2000 AG is bound thereby.
Very truly yours,
/s/ Edwin N. Lowe
--------------------------------
Edwin N. Lowe
ENL/cw
Enclosures
cc: Dennis Fairchild
Martin Loeffler
<PAGE> 1
EXHIBIT 10.19
AGREEMENT OF SUBSUBLEASE
between
AMERIQUEST TECHNOLOGIES, INC.
Subsublandlord
and
SYNDICATED OFFICE SYSTEMS, INC.
and
TENET HEALTHCARE CORPORATION
formerly known as
National Medical Enterprises, Inc.
Subsubtenant
Premises:
A portion of
MACARTHUR PLACE
3 Imperial Promenade
Santa Ana, California
<PAGE> 2
<TABLE>
<S> <C>
1. Subsubleasing of Premises................................................................1
2. Term.....................................................................................1
3. Cancellation Rights......................................................................3
4. Rents....................................................................................3
5. Condition of the Premises................................................................5
6. Incorporation of the Master Lease........................................................5
7. Covenant of Quiet Enjoyment..............................................................9
8. Assignment and Undersubletting...........................................................9
9. Alterations.............................................................................10
10. Notices.................................................................................11
11. Parking.................................................................................11
12. Signage.................................................................................12
13. Master Landlord's Consent...............................................................12
14. Miscellaneous...........................................................................13
15. Participation Agreement; Agreement Regarding Engineering and
Construction Services...................................................................14
16. Binding Effect..........................................................................15
</TABLE>
<PAGE> 3
EXHIBIT A3
<PAGE> 4
THIS AGREEMENT OF SUBSUBLEASE (this "Subsublease") is made as of the 18th
day of January, 1996, between AMERIQUEST TECHNOLOGIES, INC., a Delaware
corporation presently having an office address at 3 Imperial Promenade, Suite
300, Santa Ana, California ("Subsublandlord") and Syndicated Office Systems,
Inc., and Tenet Healthcare Corporation, formerly known as National Medical
Enterprises, Inc. a Delaware corporation, presently having an office at 3
Imperial Promenade, Suite 1100, Santa Ana, California (collectively,
"Subsubtenant").
W I T N E S S E T H:
WHEREAS Brookfield Imperial, Inc., a California corporation is the
successor in interest to BCE Development Inc. ("Master Landlord") under that
certain lease dated June 27, 1989, as amended by amendments thereto dated
October 24, 1991 and September 23, 1992 (as so and hereafter amended, the
"Master Lease") and subsequently subleased to AmeriQuest Technologies, Inc., by
the Austin Company ("Sublandlord") dated December 5, 1994, demised portions (the
"Premises") of the building known as 3 Imperial Promenade, Suites 200 which
consists of 28,317 rentable square feet and 300 which consists of 26,663
rentable square feet, 3 Imperial Promenade, Santa Ana, California (the
"Building"). (All capitalized terms not otherwise defined herein shall have the
meaning given them in the Master Lease.) The Premises is depicted as "Exhibit
A1" for Suite 200 and "Exhibit A2" for Suite 300.
WHEREAS Subsublandlord desires to subsublease to Subsubtenant, and
Subsubtenant desires to subsublease from Subsublandlord, the Premises on the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, it is mutually agreed as follows:
1. Subsubleasing of Premises.
Subsublandlord hereby subsubleases to Subsubtenant, and Subsubtenant
hereby hires from Subsublandlord, all of the Premises.
2. Term.
The term of this Subsublease shall commence on May 1, 1996, for Suite 200
and March 1, 1997 for Suite 300 (the "Commencement Date") and shall end on March
31, 2006 or on such earlier date upon which such term shall expire or be
terminated pursuant to any of the conditions or covenants of this Subsublease or
pursuant to law; provided, however, that if Subsublandlord is unable to deliver
possession of the Premises to Subsubtenant on the Commencement Date set forth
above because, either Sublandlord or the Master Landlord has not consented to
this Subsublease, Subsublandlord shall not be subject to any liability for its
failure to give possession and the validity of this Subsublease shall not be
impaired, nor shall the same be construed
1
<PAGE> 5
to extend the term of this Subsublease, and the Commencement Date shall be that
date after receipt by Subsublandlord of the Master Landlord's consent and
delivery of possession of the Premises to Subsubtenant. Notwithstanding the
foregoing, Subsublandlord shall use its best reasonable efforts to vacate Suite
200 by March 15, 1996 so Subsubtenant shall have the right to early access to
Suite 200 for tenant improvements, wiring, set-up and testing forty five (45)
days prior to the Commencement Date. During the forty five (45) day period,
Subsubtenant shall install partitions, which are mutually acceptable to
Subsubtenant and Subsublandlord, (consent by Subsublandlord shall not be
unreasonably withheld) at the top and bottom of the common stairway connecting
the third floor reception area with the second floor. The costs of the
partitions shall be reasonable, and shared equally by Subsublandlord and
Subsubtenant. Subsubtenant and Subsublandlord will work toward a mutually
satisfactory schedule which has been agreed to be March 15, 1996 so to allow
Subsublandlord reasonable time to relocate out of Suite 200 and allow
Subsubtenant to do the proposed tenant improvement work. In addition,
Subsublandlord shall use its best reasonable efforts to vacate Suite 300 so
Subsubtenant shall have the right to early access to Suite 300 for tenant
improvements, wiring, set-up and testing thirty (30) days prior to the
Commencement Date, which shall be January 29th, 1997.
In order to accommodate Subsubtenant's special needs, prior to the
Commencement Date Subsublandlord shall use its reasonable best efforts to make
portions of the Premises available for the installation of tenant Improvements
provided Subsubtenant complies with Section 9.2 below.
Subsublandlord will continue to have reasonable access and use of the
existing computer room in Suite 200 until Subsubtenant occupies Suite 300. There
will be no charge to Subsublandlord for the use of the computer room, which use
shall cease 30 days prior to Subsubtenant occupying Suite 300. Subsublandlord
shall provide keypad access at the computer room door, stairwell and at each end
of the corridor which accesses the computer room. If the proposed keypad system
does not meet City of Santa Ana codes, then Subsublandlord and Subsubtenant
shall work toward a mutually agreeable solution. Should Subsublandlord no longer
use the computer room primarily for computer purposes, then Subsubtenant shall
assume the space. The computer room is outlined and indicated as "Exhibit A3".
Subsubtenant reserves the right to access the computer room with prior
reasonable notice to Subsublandlord for assessing Subsubtenant future
improvements.
Subsublandlord and Subsubtenant covenant and agree that while
Subsublandlord maintains and operates its computer room on the Second (2nd)
Floor, Subsublandlord shall comply with the insurance provisions of Section 22
of the Master Lease as if Subsublandlord were the Tenant under the Master Lease
and shall (1) name Subsubtenants as an additional insured but only with respect
to liability arising out of Subsublandlord's use, operation and occupancy of the
computer room, (2) contain a cross-liability provision for Subsubtenant's
benefit, and (3) contain a provision that the insurance provided by
Subsublandlord under Section 22 of the Master Lease shall be primary and
non-contributing with any other insurance available to Subsubtenant. Further,
Subsublandlord shall provide a business interruption and loss of income policy
2
<PAGE> 6
for the sole and exclusive benefit of Subsubtenant, during all periods in which
Subsublandlord occupies the 2nd floor computer room. With respect to the space
occupied by Subsubtenant under this Subsublease, Subsubtenant shall comply with
Section 22 of the Master Lease as though Subsubtenant were the Tenant under the
Master Lease.
3. Cancellation Rights.
Provided Subsubtenant is not then in breach of this Subsublease,
Subsubtenant may elect to terminate this Subsublease on September 30, 2000 by
delivering written notice of that intent to terminate ("Termination Notice") to
Subsublandlord on or before September 30, 1999. The Termination Notice shall
only be effective if, concurrently with the Termination Notice, Tenant pays
Subsublandlord $1,100,000.00 ("Termination Payment"). The Termination Payment
shall be in addition to and not in lieu of the Fixed Rent and all other payments
(except payments for damages under Paragraph 25(c) of the Master Lease)
Subsubtenant is obligated to pay under the Subsublease during the period up to
September 30, 2000; provided, however, that on the date the Subsublease
terminates under this paragraph, Subsubtenant shall be released from
Subsubtenant's obligations to pay Fixed Rent, Additional Rent, or other rent
which arise under this Subsublease subsequent to that date (other than
obligations under indemnity provisions). Nothing contained in this paragraph
shall be construed to release Subsubtenant from any of its obligations which
arise under this Subsublease upon the termination of the Subsublease or the
expiration of the Term, including without limitation those tenant obligations
which arise under Paragraphs 14 and 33 of the Master Lease.
4. Rents.
4.1 Subsubtenant shall pay to Subsublandlord Fixed Rent at the
rate of $1.55 per square foot of the Premises per month which amount is
$43,891.35 for Suite 200 and $41,327.65 for Suite 300 ("Fixed Rent"), with the
first full month's Fixed Rent for suite 200 only payable upon execution of this
Subsublease with the first full month's Fixed Rent for suite 300 only upon
occupancy and with each subsequent month's Fixed Rent payable on the first day
of each month following the Commencement Date; provided, however, that if the
Commencement Date is other than the first day of a month (a) the first payment
due shall be calculated on a pro-rata basis considering the portion of the month
falling on or after the Commencement Date and (b) the payment due on the first
day of any month in which shall occur any anniversary of the Commencement Date
shall be calculated on a pro-rata basis considering the rate of fixed rent
applicable to each portion of such month. Subsublandlord shall abate the Fixed
Rent payments due for months two (2) through eight and one half (8 1/2) of this
Subsublease for Suite 200 and Suite 300, respectively, provided that
Subsubtenant is not in default with respect to any of its obligations under this
Subsublease at the
3
<PAGE> 7
commencement of any such month. The square footage of the Premises shall be as
calculated by the Master Landlord under the Master Lease.
4.2 In addition to the Fixed Rent, Subsubtenant shall pay monthly
commencing in January, 1997 for Suite 200 and January 1998 for Suite 300 all
incremental expenses referred to in the Master Lease as "Operating Expenses" in
excess of those amounts calculated for calendar year 1996, based on the
assumption that such 1996 Operating Expenses will be the base year for Suite 200
and on the assumption that such 1997 Operating Expenses will be the base year
for Suite 300. Operating Expenses are based on the higher of (i) a ninety-five
percent (95%) occupancy rate, or (ii) the actual occupancy rate. The intent of
the parties under this provision is that Subsublandlord shall be responsible
during the Term hereof for the proportionate share of Operating Expenses each
year of the Term up to but not in excess of the annual obligation therefor
relating to calendar year 1996 for Suite 200 and calendar year 1997 for Suite
300.
4.3 As used herein the term "Additional Rent" shall refer to all
sums of money which shall become due from and payable by Subsubtenant to
Subsublandlord hereunder, other than Fixed Rent, and the term "Rents" shall
refer to Fixed Rent and Additional Rent. All Rents shall be payable in lawful
money of the United States at such place and to such person as Subsublandlord
shall from time to time designate.
4.4 Subsubtenant shall promptly pay all Rents as and when the same
shall become due and payable without set-off, offset or deduction of any kind
whatsoever except as otherwise provided for herein and, in the event of
Subsubtenant's failure to pay any Additional Rent when due, Subsublandlord shall
have all of the rights and remedies provided for herein or at law or in equity
in the case of non-payment of Fixed Rent.
4.5 Subsublandlord's failure during the term of this Subsublease
to prepare and deliver any statements or bills required or permitted to be
delivered to Subsubtenant hereunder, or Subsublandlord's failure to make a
demand under this Subsublease, shall not in any way be deemed to be a waiver of,
or cause Subsublandlord to forfeit or surrender, its rights to collect any rents
which may have become due pursuant to this subsublease during the term hereof.
Subsubtenant's liability for rents accruing during the term of this Subsublease
shall survive the expiration or sooner termination of this Subsublease.
4.6 Subsubtenant shall have the right, subject to obtaining all
reviews, approvals and consents required by the Master Lease, to perform certain
Subsubtenant improvements to the Premises such as partitioning, doors, floor
coverings (the "Subsubtenant Improvements"). Subsublandlord shall provide
subsubtenant a tenant improvement allowance of $6.00 per rentable square foot
for the Premises subsubleased by Subsubtenant, paid by Subsublandlord to
Subsubtenant within 30 days of Subsubtenant's occupancy of Suite 200 and Suite
300, respectively.
4
<PAGE> 8
5. Condition of the Premises.
Subsubtenant represents that it has examined (or waived
examination of) the Premises. Subsublandlord has not made and does not make any
representations or warranties as to the physical condition of the Premises
(including any latent defects in or to the Premises), the uses to which the
Premises may be put, or any other matter or thing affecting or relating to the
Premises, except as specifically set forth in this Subsublease. Subsubtenant
agrees to accept the Premises in their "as is" condition as of the date hereof
as the same may be affected by reasonable wear and tear after the date hereof,
and (b) Subsublandlord shall have no obligation whatsoever to alter, improve,
decorate or otherwise prepare the Premises for Subsubtenant's occupancy.
However, notwithstanding the above, Subsublandlord shall use best effort to
remove all furniture, personal fixtures and trash from the Premises upon
vacating the Premises.
6. Incorporation of the Master Lease and Sublease.
6.1 Subsublandlord represents that a true and complete copy of the
Master Lease and Sublease is attached hereto as Exhibit B. Subsublandlord shall
not voluntarily surrender the Master Lease and Sublease or amend the same in a
manner adverse to Subsubtenant. If the Master Lease and Sublease shall terminate
for any reason then this Subsublease shall also terminate without liability of
either party to the other on account thereof; provided, however, that if such
termination of the Master Lease and Sublease shall have arisen out of
(a) any default by Subsublandlord as subtenant thereunder not
arising out of any default by Subsubtenant as Subsubtenant hereunder, or
(b) a voluntary surrender by Subsublandlord in violation of
the preceding sentence, then such termination shall be deemed to be a violation
of Section 7 hereof and Subsublandlord shall be liable to Subsubtenant to the
extent provided by applicable law on account thereof. This Subsublease is
expressly subject to all of the obligations of Subsublandlord as Subtenant under
the Master Lease.
6.2 Except as otherwise expressly provided in, or otherwise
inconsistent with, this Subsublease, the provisions of the Master Lease listed
below (the "Incorporated Provisions") are hereby incorporated in this
Subsublease by reference with the same force and effect as if set forth at
length herein, except that unless the context requires otherwise,
(i) references in such provisions to Landlord shall be deemed
to refer to Subsublandlord,
(ii) references in such provisions to Tenant shall be deemed
to refer to Subsubtenant,
5
<PAGE> 9
(iii) references in such provisions to the Premises or the
Demised Premises shall be deemed to refer to the Premises hereunder,
(iv) references in such provisions to other Incorporated
Provisions shall be deemed to refer to such Incorporated Provisions as
incorporated herein,
(v) references in such provisions to superior lease shall be
deemed to refer to leases to which the Master Lease is subordinate and
references in such provisions to superior mortgages shall refer to mortgages to
which the Master Lease is subordinate,
(vi) references in such provisions to subleases, subletting,
or subtenants shall be deemed to refer to undersubsubleases, undersubsubletting,
and undersubsubtenants,
(vii) whenever, pursuant to any of the Incorporated
Provisions as incorporated herein, Subsubtenant is required to furnish
insurance, indemnification or other similar protection to or for Subsublandlord,
or to take some act as designated or directed by Subsublandlord or to the
satisfaction of Subsublandlord, Subsubtenant shall be required to furnish the
same to or for Sublandlord, Master Landlord and Subsublandlord, or to take the
same as designated or directed by Master Landlord, Sublandlord, or
Subsublandlord or to the satisfaction of Master Landlord, Sublandlord or
Subsublandlord,
(viii) whenever, pursuant to any of the Incorporated
Provisions as incorporated herein, Subsubtenant is required to obtain the
consent or approval of Subsublandlord to or with respect to any act, omission or
thing (e.g. to any under subsublease or assignment or to the making of any
alterations, installations, additions or improvements), Subsubtenant shall be
required to obtain the consent or approval of Master Landlord, Sublandlord and
Subsublandlord to or with respect to such act, omission or thing. Additionally,
any such consent by Sublandlord and Subsublandlord shall not unreasonably be
withheld or delayed.
(ix) whenever, pursuant to any of the Incorporated Provisions
as incorporated herein, Subsubtenant grants any release, waiver or similar thing
to Subsublandlord, Subsubtenant shall be deemed to have granted the same to
Master Landlord and Sublandlord,
(x) whenever, pursuant to any of the Incorporated Provisions
as incorporated herein, Subsubtenant grants Subsublandlord any right of entry,
access or use of the Premises, Subsubtenant shall be deemed to have granted such
right to Master Landlord and Sublandlord,
(xi) time periods provided for in the Incorporated Provisions
shall be shortened or lengthened, as the case may be, as necessary so that
actions or omissions relating thereto may be coordinated with the corresponding
actions or omissions under the Master Lease or performed within the time
required by the Master Lease.
6
<PAGE> 10
The Incorporated Provisions of the Master Lease are all of the provisions
thereof except for Sections 56 and 57 rights to which are reserved by
Sublandlord.
6.3 Notwithstanding anything to the contrary contained in this
Subsublease (including any of the Incorporated Provisions as herein
incorporated), Subsublandlord shall not be obligated
(i) to provide any of the services that Master Landlord has
agreed to in the Master Lease to provide or is required by law to provide, or
(ii) to make any of the repairs or restorations that Master
Landlord has agreed in the Master Lease to make or is required by law to make,
or
(iii) to comply with any laws or requirements of public
authorities, or
(iv) to take or to refrain from taking any other action that
Master Landlord has agreed in the Master Lease to take or to refrain from taking
or is required by law to take or to refrain from taking (including, in either
case, any obligations with respect to giving consents, approvals, etc.), or
(v) to perform any obligation that Master Landlord has agreed
in the Master Lease to perform, and Subsublandlord shall have no liability to
Subsubtenant on account of any failure of Master Landlord (or Sublandlord) to
provide, make, comply with, take, refrain from taking, or perform any of the
foregoing. With reference to the foregoing, Subsublandlord agrees:
(a) upon Subsubtenant's request, to use reasonable
efforts, at Subsubtenant's expense (such expense to be prepaid by Subsubtenant
prior to Subsublandlord commencing or continuing to act under this clause (a)),
to (x) compel Master Landlord to provide, make, comply, take, refrain from
taking or perform the same or (y) recover damages on account of Master
Landlord's failure to do so, including within such reasonable efforts the
commencement and prosecution, at Subsubtenant's expense, of an action at law or
in equity, and
(b) that, if any right or remedy of Subsublandlord or any
duty or obligation of Master Landlord or Sublandlord in any case under any of
the Incorporated Provisions is subject to or conditioned upon Subsublandlord's
making any demand upon Master Landlord or giving any notice, request or
statement to Master Landlord or taking any other action then, if Subsubtenant
shall so request, Subsublandlord, at Subsubtenant's expense (such expense to be
prepaid by Subsubtenant prior to Subsublandlord commencing or continuing to act
under this clause (b)), shall make such demand, give such notice, request or
statement or take such other act.
Subsubtenant shall defend, indemnify and hold harmless Subsublandlord from and
against any and all loss, cost, damage and expense incurred by Subsublandlord
under or in connection with (1) any such efforts and/or such action, proceeding,
or arbitration
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including reasonable attorneys fees, pursuant to clause (a) above, or (2) any
such demand, notice, request, statement or act, pursuant to clause (b) above.
6.4 Whenever Subsubtenant desires to do any act or thing which
requires the consent or approval of Subsublandlord under any of the Incorporated
Provisions as incorporated herein:
(a) Subsubtenant shall not do such act or thing without first
having obtained the consent or approval of Master Landlord, Sublandlord and
Subsublandlord;
(b) Subsublandlord's right to withhold consent or approval
shall be independent of Master Landlord's right. However, such consent shall not
unreasonably be withheld or delayed; and
(c) without limiting Subsublandlord's right to withhold
consent or approval in any instance and notwithstanding any Incorporated
Provisions or provision of law requiring Subsublandlord to act reasonably,
Subsublandlord shall be entitled, without liability to Subsubtenant on account
thereof, to withhold consent or approval whenever and for so long as Master
Landlord and/or Sublandlord shall withhold its consent or approval, regardless
of whether or not Master Landlord and/or Sublandlord is entitled to withhold
such consent or approval and regardless of whether Master Landlord and/or
Sublandlord may have liability to Subsublandlord or Subsubtenant on account
thereof; and
(d) Subsubtenant shall not request Master Landlord's consent
or approval or the consent or approval of Sublandlord directly; unless
Subsublandlord shall have determined to withhold its consent or approval, the
provisions of Section 6.3 above shall be applicable to the obtaining of Master
Landlord's consent or approval; neither Subsublandlord's forwarding
Subsubtenant's request to Master Landlord and/or Sublandlord nor
Subsublandlord's other efforts to obtain Master Landlord's or Sublandlord's
consent or approval shall constitute Subsublandlord's consent or approval, and
the same shall be without prejudice to Subsublandlord's right to withhold
consent or approval.
6.5 Notwithstanding any other provision of this Subsublease,
Subsubtenant shall perform all of its obligations hereunder at such time, by
such dates or within such periods as shall be required to avoid any default
under the Master Lease from continuing beyond the period for notice and grace
provided for in the Master Lease; provided, however, that in no event shall this
Section 6.5 extend the time, date or period by or within which Subsubtenant is
required to perform.
6.6 Subsubtenant shall indemnify Subsublandlord from any loss,
cost, damage or expense (including reasonable attorneys fees) arising out of any
failure by Subsubtenant to perform any of its obligations under this
Subsublease, including any loss, cost, damage or expense which may result from
any default under or termination of the Master Lease arising by reason of any
such failure.
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7. Covenant of Quiet Enjoyment.
So long as Subsubtenant pays all of the Fixed Rent and Additional
Rent hereunder, and performs all of Subsubtenant's other obligations hereunder,
Subsubtenant shall peaceably and quietly have, hold and enjoy the Premises
subject, nevertheless, to the obligations of this Subsublease and to the Master
Lease, and to any leases, mortgages and other rights and encumbrances superior
in priority to this Subsublease.
8. Assignment and Undersubsubletting.
8.1 Except as provided by and in accordance with the procedure
set forth in Section 26 of the Incorporated Provisions as incorporated herein;
(a) this Subsublease shall not be assigned, encumbered or
otherwise transferred;
(b) the Premises shall not be undersubsublet by Subsubtenant
in whole or in part, and
(c) the Premises shall not be suffered or permitted to be used
or occupied by any person other than Subsubtenant, or an affiliate of
Subsubtenant in whole or in part, without the prior written consent of Master
Landlord, Sublandlord and Subsublandlord in each instance. Any such consent,
assignment, encumbrance or other transfer, and any such undersubsublease, use or
occupancy shall be subject to all of the Incorporated Provisions.
(1) Subsublandlord's right to withhold consent or approval
shall be independent of Master Landlord's and Sublandlord's right and, without
limiting Subsublandlord's right to withhold consent or approval for any other
reason, it is specifically agreed that (i) when requesting Subsublandlord's
consent, Subsubtenant shall, with the exception of an affiliate of
Subsubtenants, submit detailed financial information regarding the proposed
assignee or undersubsubtenant, and (ii) Subsublandlord may reasonably withhold
consent or approval if Subsublandlord is not satisfied with the financial
strength of the proposed assignee or undersubsubtenant;
(2) without limiting Subsublandlord's right to withhold
consent or approval in any instance or notwithstanding any Incorporated
Provision or provision of law requiring Subsublandlord to act reasonably,
Subsublandlord shall be entitled, without liability to Subsubtenant on account
thereof, to withhold consent or approval whenever and for so long as Master
Landlord or Sublandlord shall withhold its consent or approval, regardless of
whether or not Master Landlord or Sublandlord is entitled to withhold such
consent or approval and regardless of whether Master Landlord or Sublandlord may
have liability to Subsublandlord or Subsubtenant on account thereof; and
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(3) Subsubtenant shall not request Master Landlord's consent
or approval or Sublandlord's consent or approval directly; unless Subsublandlord
shall have determined to withhold its consent or approval, the provisions of
Section 6.3 above shall be applicable to the obtaining of Master Landlord's
consent or approval; neither Subsublandlord's forwarding Subsubtenant's request
to Master Landlord or Sublandlord nor Subsublandlord's other efforts to obtain
Master Landlord's consent or approval shall constitute Subsublandlord's consent
or approval, and the same shall be without prejudice to Subsublandlord's right
to withhold consent or approval; unless Subsublandlord shall have determined to
withhold its consent or approval, the provisions of Section 6.3 above shall be
applicable to the obtaining of Master Landlord's consent or approval.
8.2 Any undersubsublease shall be subject and subordinate to this
Subsublease. No assignment shall be valid or effective unless and until the
assignee shall have delivered to Subsublandlord an instrument, in form
reasonably satisfactory to Subsublandlord, pursuant to which the assignee
assumes the due observance and performance of all of the obligations of
Subsubtenant hereunder.
8.3 No assignment or undersubsublease shall release the
Subsubtenant named herein or any of its successors from any liability hereunder.
If this Subsublease is assigned or the Premises or any part thereof are
undersubsublet in violation of this Subsublease, Subsublandlord may collect
rents from or accept performance from the assignee or undersubsubtenant and no
such collection or acceptance shall effect any such release.
9. Alterations.
9.1 Notwithstanding the incorporation herein of Section 14 of the
Master Lease, except as provided in this Section 9.1, Subsublandlord shall not
have the right to require Subsubtenant to remove alterations, installations,
additions or improvements from the Premises; provided, however, that
Subsubtenant shall be required to remove from the Premises any of such items
made or installed by it which, pursuant to the Master Lease, Sublandlord and/or
Subsublandlord is required to remove. Subsublandlord shall forward to
Subsubtenant any notice received from Master Landlord requiring removal of any
of such items and any such notice shall be binding on Subsubtenant, regardless
of when received by it. Subsubtenant's removal obligations pursuant to this
Section 9.1 shall also include all related restoration as required by Sections
13 and 14 of the Master Lease or any other applicable provision thereof.
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<PAGE> 14
9.2 Subsubtenant shall, with the exception of minor modifications,
(such as, the installation of pictures, voice/data cable, etc.), not commence or
prosecute any alterations, installation, addition or improvements unless, in
addition to having complied with all other provisions of this Subsublease and
the Incorporated Provisions as incorporated herein, Subsubtenant shall have
furnished to Subsublandlord (a) a fixed price general contract covering the
same, and (b) payment and performance bonds in favor of Subsublandlord,
Subsublandlord and the Master Landlord guaranteeing lien free completion of the
work in form, amount and issued by a surety satisfactory to Subsublandlord in
its reasonable judgment. Additionally, consent by Sublandlord, and
Subsublandlord shall not unreasonably be withheld or delayed.
10. Notices.
Any notice, statement, demand, consent, approval, advice or other
communication required or permitted to be given, rendered or made by either
party to the other, pursuant to this Sublease or pursuant to any applicable law
or requirement of public authority (collectively, "Notice") shall be in writing
and shall be deemed to have been properly given, rendered or made only if sent
by personal delivery, receipted by the party to whom addressed, or by registered
or certified mail, return receipt requested, posted in a United States post
office station or depository in the continental United States, addressed
(i) to Subsubtenant at its address first above written,
Attention: Mr. Arnold Robin, President , Syndicated Office Systems, 3 Imperial
Promenade, Suite 1100, Santa Ana, California 92707,
(ii) to Subsublandlord, Attention: Mr. Mark Malford, Chief
Operating Officer, AmeriQuest Technologies, Inc., 3 Imperial Promenade, Suite
300, Santa Ana, California 92707.
Either party may, by Notice actually received, designate (i) a different address
in the United States for Notices intended for it, and (ii) require the other
party to provide a copy of any Notices to any other person at any other address
in the United States.
11. Parking.
Subject to the provisions of Section 40 of the Master Lease
pertaining to the parking rights granted to Subsublandlord, Subsubtenant shall
have the right to utilize all of the parking spaces allocated to Subsublandlord
under Section 1(k) of the Master Lease (the "Allocated Spaces"), and
Subsublandlord shall transfer to Subsubtenant on or prior to the Commencement
Date the proportionate share of parking cards for Suite 200, which shall include
13 reserved parking spaces, identified as numbers 67 through 73 inclusive, and
49 through 54, until Subsubtenant's occupancy of Suite 300 then all of the
parking cards, which shall include 12 reserved parking spaces, identified as
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<PAGE> 15
number 55 through 66, inclusive, shall be transferred and/or any other access
devices for the same to the extent provided to Subsublandlord by Master
Landlord.
Notwithstanding any provisions to the contrary herein or in the
Master Lease, Subsubtenant shall have the right to use the Allocated Spaces free
of any additional charge until March 31, 2000. Thereafter, Subsubtenant shall
pay to Subsublandlord, on a monthly basis, as Additional Rent, $25 per space for
the balance of the Term of this Subsublease. Nothing contained in the Paragraph
11 shall be construed as Master Landlord's agreement to provide any parking to
Sublandlord, Subsublandlord, or Subsubtenant free of charge or at a discount.
12. Signage.
Subsubtenant shall be entitled to Subsublandlord's signage rights
as set forth in Section 55 of the Master Lease, subject to the review and
approval of such signage by the Master Landlord and the City of Santa Ana. The
cost of removal of the existing signage, together with the costs of all
Subsubtenant's signage and installation, maintenance and ultimate removal
thereof shall be at Subsubtenant's sole expense. In addition, Subsubtenant shall
have the right to the top name on the monument sign on the corner of Imperial
Promenade and Regency Boulevard.
13. Master Landlord's and Sublandlord's Consent.
As an inducement to the Master Landlord and Sublandlord to
consent to this Subsublease, and as required by Section 26(d) of the Master
Lease, Subsublandlord and Subsubtenant each agree as follows:
(a) This Subsublease shall be subject and subordinate to the
Master Lease and the Sublease and to all mortgages recorded against the Building
and underlying land prior to the date hereof;
(b) Master Landlord and Sublandlord may enforce the provisions of
this Subsublease, including the collection of rent;
(c) In the event of termination of the Master Lease for any
reason, including without limitation, a voluntary surrender by Sublandlord or
Subsublandlord, or in the event of any re-entry or repossession of the Premises
by Master Landlord, Master Landlord may, at its option, either
(i) terminate the Subsublease or;
(ii) take over all of the right, title and interest of
Subsublandlord, as subsublessor, under this Subsublease, in which case
Subsubtenant shall attorn to Master Landlord, provided that Master Landlord
shall not (1) be liable for any previous act or omission of Subsublandlord under
this Subsublease; (2) be subject to any
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defense or offset previously accrued in favor of Subsubtenant against
Subsublandlord; or (3) be bound by any previous payment by Subsubtenant of more
than one month's rent.
14. Miscellaneous.
(a) The obligations of Subsublandlord hereunder accruing at any
time shall be binding only upon the owner, at that time, of the leasehold estate
under the Master Lease, and each purchaser or transferee of such leasehold
estate shall be deemed to have assumed the obligations of Subsublandlord
hereunder accruing during the period of its ownership. Subsublandlord's
liability under this Subsublease and any other liability of Subsublandlord
relating or with respect to the Premises shall be limited to Subsublandlord's
leasehold estate under the Master Lease and any judgment entered against
Subsublandlord on or with respect to such liability may be enforced only against
such leasehold estate, any other recourse being expressly waived by
Subsubtenant.
(b) Subsublandlord shall have no liability to Subsubtenant on
account of any failure or refusal by Master Landlord to grant any approval or
consent. Moreover, Subsublandlord shall have no liability to Subsubtenant on
account of any failure or refusal by Subsublandlord to grant any approval or
consent. In any instance in which Subsublandlord is required by any provision of
this Subsublease (including any of the Incorporated Provisions as incorporated
herein) or applicable law to not unreasonably withhold consent or approval,
Subsubtenant's sole remedy shall be an action for specific performance or
injunction requiring Subsublandlord to grant such consent or approval, all other
remedies which would otherwise be available being hereby waived by Subsubtenant.
(c) Subsubtenant represents and warrants to Subsublandlord that
Subsubtenant has dealt with no broker, agent or finder in connection with this
Subsublease other than C.B. Commercial, and Subsublandlord represents and
warrants to Subsubtenant that Subsublandlord has dealt with no broker, agent or
finder in connection with this Subsublease other than John Gillespie (all two
(2) together, the "Recognized Brokers") and Subsubtenant and Subsublandlord each
hereby agree to indemnify the other against any claim for commission or other
compensation in connection with this Subsublease made against the other party by
any broker, agent or finder other than the Recognized Brokers, including
attorneys fees incurred by such other party in the defense of any such claim.
CB Commercial as representative of Subsubtenant shall be paid a commission by
Subsublandlord equal to 3% of the Fixed Rent as defined in Paragraph 4.1 of the
Subsublease for the entire term based on the Premises subsubleased by
Subsubtenant. In addition, John Gillespie, as representative of Subsublandlord,
shall be paid a commission of 1.5% of the Fixed Rent as defined in Paragraph 4.1
of the Subsublease for the entire term based on the Premises subsubleased by the
Subsubtenant. The commission shall be due one-half at execution of the
subsublease
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<PAGE> 17
and one-half prorated upon occupancy of Suite 200 and Suite 300 outlined in
Paragraph 2. Commission agreements between; Subsublandlord and C.B. Commercial
dated January 25, 1996, and Subsublandlord and John Gillespie dated January 25,
1996, have been executed by Subsublandlord. Should Subsublandlord not pay the
commission within 15 days of the commission due date, Subsubtenant, has the
right to pay C.B. Commercial and John Gillespie directly and offset such payment
against the amount of Rent payable under the Subsublease.
(d) Except as provided in Section 4, this Subsublease contains the
entire agreement between the parties and all prior negotiations and agreements
are merged in this Subsublease. Any agreement hereafter made shall be
ineffective to change, modify or discharge this Subsublease in whole or in part
unless such agreement is in writing and signed by the parties hereto. No
provision of this Subsublease shall be deemed to have been waived by
Subsublandlord or Subsubtenant unless such waiver be in writing and signed by
Subsublandlord or Subsubtenant, as the case may be. The covenants and agreement
contained in this Sublease shall bind and inure to the benefit of Subsublandlord
and Subsubtenant and their respective permitted successors and assigns.
(e) In the event that any provision of this Subsublease shall be
held to be invalid or unenforceable in any respect, the validity, legality or
enforceability of the remaining provisions of this Subsublease shall be
unaffected thereby.
(f) Capitalized terms used herein shall have the same meanings as
are ascribed to them in the Master Lease, unless otherwise expressly defined
herein.
(g) The submission of this document by Subsublandlord to
Subsubtenant shall not constitute an offer by Subsublandlord and Subsublandlord
shall not be bound in any way unless and until this Subsublease is executed and
delivered by both parties.
15. Participation Agreement; Agreement Regarding Engineering and
Construction Services.
Subsublandlord and Subsubtenant acknowledge that Sublandlord has
entered into the following two agreements with Master Landlord; (1)
Participation Agreement dated as of June 27, 1989, pertaining to the transfer,
assignment and conveyance to Subsublandlord of an appreciated value interest (as
defined therein) in the Building, and (2) Agreement dated as of June 27, 1989,
wherein Sublandlord is granted the right to negotiate for and/or perform certain
engineering and construction related services in connection with the Building
(collectively, the "Unrelated Agreements"). Subsubtenant and Subsublandlord
acknowledge and agree that neither shall have any right or interest in any
respect whatsoever in the Unrelated Agreements arising from this entry into this
Subsublease or otherwise.
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16. Binding Effect.
This Subsublease shall be binding on the parties hereto only upon
full execution and delivery of this Subsublease by both Subsublandlord and
Subsubtenant's and acknowledgment by Master Landlord. Syndicated Office Systems,
Inc. and Tenet Healthcare Corporation shall be jointly and severally liable for
Subsubtenant's obligations under this Subsublease.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
of Subsublease as of the day and year first above written.
SUBSUBLANDLORD
AMERIQUEST TECHNOLOGIES, INC.
By:
---------------------------------
Its:
--------------------------------
SUBSUBTENANT:
SYNDICATED OFFICES SYSTEMS, INC
By:
---------------------------------
Its:
--------------------------------
TENET HEALTHCARE CORPORATION
By:
---------------------------------
Its:
--------------------------------
15
<PAGE> 1
EXHIBIT 10.20
LEASE
1. PARTIES: This lease is made and effective as of July 8, 1992,
by and between HORIZON ASSOCIATES JOINT VENTURE, (hereinafter "Landlord"), and
ROSS WHITE ENTERPRISES, INC., d/b/a NATIONAL COMPUTER DISTRIBUTORS,
(hereinafter "Tenant").
2. PROPERTY: Landlord hereby leases to Tenant and Tenant hereby
takes from Landlord, Suite 700 located on the seventh floor at 6100 Hollywood
Boulevard, Hollywood, Florida 33024, for the term and subject to the provisions
of this lease, being 15,887 rentable square feet, and 15,251 usable square
feet, together with all fixtures, equipment, improvements, installations and
appurtenances which at the commencement of, or during the term of this lease,
are attached thereto, referred to as "Premises" and shown on the floor plan
attached as Exhibit "A", in the building occupying the land described as Parcel
"A" of Development East Plat, Plat Book 122, page 23, Broward County Public
Records. The building and land are sometimes collectively referred to as the
property.
3. TERM:
(a) The initial term of this lease is five (5) years.
The targeted commencement date is September 1, 1992. However, if the actual
commencement date, as defined in 3(b) below, does not occur by October 31,
1992, then and in that event, Tenant shall have the option to defer occupancy
until February 1, 1993. If the actual commencement date does not occur by
February 1, 1993, Tenant shall have the option to cancel this lease. Tenant
shall have five options to extend the lease for two year periods upon the terms
set forth in Article 4. Tenant will provide Landlord, in writing, with ninety
(90) days notification prior to expiration of the initial term (or prior to the
expiration of the then-current renewal term) of its intent to exercise the
initial renewal option, or subsequent renewal option(s), as the case may be.
(b) The actual commencement date shall be the earliest of
(i) the date a certificate of occupancy for the Premises is issued, and
Landlord has substantially performed the work set forth on Exhibit "C", except
that unfinished items of a minor, decorative nature shall not constitute
noncompliance by Landlord, or (ii) the date Tenant first occupies the Premises.
Notwithstanding the foregoing, if the premises are ready, or a certificate of
occupancy is issued prior to September 1, 1992, Tenant shall not be obligated
to occupy the premises until September 1, 1992.
(c) For purposes of determining the date when the
Premises are ready for occupancy, there shall not be considered the duration of
any delay caused by: (i) changes in the work to be performed by Landlord, which
changes have been requested by Tenant after the approval by Landlord and Tenant
of "Tenant Construction Plans" as hereinafter defined; (ii) delays, not caused
by Landlord either directly or indirectly, in furnishing materials or procuring
labor required by Tenant for installations or work in the Premises which are
not encompassed within standard Tenant work, as hereinafter defined; (iii) or
(iv) the performance of any work or activity in the premises by Tenant or any
of its employees, agents or contractors. The Premises shall be deemed ready
for occupancy, and rent shall be due from the date the Premises would have been
ready, but for the causes described in this subparagraph (c).
(d) When the actual commencement date is established,
Landlord and Tenant shall promptly sign the memorandum of commencement and
expiration dates attached as Exhibit "B".
4. BASE RENT; ANNUAL OPERATING COSTS; LEASE TAX; SECURITY
DEPOSIT; SUMMARIES:
(a) Payment: Tenant shall pay to Landlord at 6100
Hollywood Boulevard, Suite 206, Hollywood, Florida 33024, as rent under this
lease, the total of (i) base rent (as defined in Article 4(b)); (ii) Tenant's
proportionate share of annual operating costs (as defined in Articles 4(c) and
4(d)); and (iii) all other sums payable by Tenant to Landlord pursuant to the
provisions of this lease. The amounts due and payable under subparagraph (d)
are deemed "Additional Rent," and collectively with the "Base Rent," are
hereinafter referred to as "Rent."
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(b) BASE RENT: The base rent shall be $7.10 per square foot,
during the initial five (5) year term hereof; $10.00 per square foot during the
sixth year, if the first renewal option is exercised; $10.50 per square foot
during the seventh year, if the first renewal option is exercised; $11.02 per
square foot during the eighth year, if the second renewal option is exercised;
$11.57 per square foot during the ninth year if the second renewal option is
exercised; $12.14 per square foot during the tenth year, if the third renewal
option is exercised; $12.74 per square foot during the eleventh year, if the
third renewal option is exercised; $13.37 per square foot during the twelfth
year, if the fourth renewal option is exercised; $14.03 per square foot during
the thirteenth year, if the fourth renewal option is exercised; $14.73 per
square foot during the fourteenth year, if the fifth renewal option is
exercised; and $15.46 per year during the fifteenth year, if the fifth renewal
option is exercised.
(i) intentionally omitted.
(ii) intentionally omitted.
(iii) If the term begins on a day other than September 1,
1992, Base Rent from the actual commencement date until the first day of the
following month shall be prorated.
(c) TENANT'S PROPORTIONATE SHARE: The square footage of the
Premises is deemed to be 15,887 rentable square feet. The square footage of
the building is deemed to be 97,000 square feet, and Tenant's proportionate
share refers to the percentage relationship between the foregoing, namely
16.38%. It is understood, however, that if the size of the building is
increased, if other buildings are erected on the Property, or if any other
event occurs which would decrease Tenant's proportionate share, such event will
be reflected in the above calculation. In no event may Tenant's proportionate
share be increased.
(d) ANNUAL OPERATING COSTS:
(i) For and during the first two years of this lease,
Tenant shall only pay at the rate of $5.50 per square foot, as and for Tenant's
total obligation for its proportionate share of annual operating costs, despite
the fact that Tenant's actual share of annual operating costs may exceed $5.50
per square foot. Attached as Exhibit "E" is Landlord's supporting
documentation as to this $5.50 per square foot figure.
(ii) The term "Annual Operating Costs" means the actual
costs to Landlord of operating and maintaining the Property including, without
limitation, all improvements thereto, and fixtures and equipment thereon during
each year of this lease (and any renewals or extensions thereof), including
1992. Such costs include, by way of example rather than of limitation, (1)
charges and fees for, and taxes on water, sewer and electricity, (2) elevator
service, janitorial service, trash removal, cleaning, restriping, maintaining
and repairing all walkways, roadways, and parking areas; and maintenance of all
landscaped areas; (3) charges for required governmental permits; (4) wages,
salaries and benefits of employees of Landlord or any management company
engaged by Landlord, excluding executives and managerial employees of such
entities, in connection with the building; (5) the cost of premiums for hazard,
liability, workers' compensation and other insurance upon the property,
excluding premium increases caused by hazardous or other unusual use of the
property by other tenants or Landlord; (6) service contracts with independent
contractors; (7) professional fees including legal and accounting fees; (8)
repairs, replacements and improvements to the property which are appropriate
for the continued operation of the building as a first class office building;
(9) all real estate taxes and assessments (other than lease taxes as defined in
Article 4(f) of this lease); and (10) the cost of all other items which, under
standard accounting practices, constitute operating or maintenance costs which
are attributable to the property. The term Annual Operating Costs shall not
include: (a) debt service on the acquisition costs of the building, parking and
other common facilities; (b) capital expenditures for expansion of the
building, parking or other common facilities; (c) capital expenditures for
replacement of original building systems (including heating, air conditioning,
ventilation, electrical plumbing, mechanical and elevators), except to
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the extent intended and resulting in verifiable reductions in the cost of
operating the building, parking and other common facilities; (d) capital
expenditures for remodeling or refurbishment of the building, parking and other
common facilities, to a materially higher standard than existed as of the date
of this lease; (e) Landlord's financing costs, including interest, points and
other forms of loan fees; (f) expenditures by Landlord for tenant improvements;
(g) disproportionate usage of utilities or wear and tear to common facilities
by other tenants (h) legal expenses in connection with matters not related to
the administrative responsibilities of Landlord under this lease; and (i)
depreciation on the building or equipment; income taxes, salaries of Landlord's
officers; and commissions payable to brokers.
(iii) As of December 31 of the third year of this lease
(i.e. December 31, 1994), (and as of December 31 of every year thereafter), or
as soon after December 31 as is possible, Landlord shall compute and provide
Tenant with a statement of the actual annual operating costs for the third year
of this lease (and for subsequent years), and with supporting documents
reasonably satisfactory to Tenant. If Tenant's proportionate share of the
actual annual operating costs for 1994 (and subsequent years) exceeds Tenant's
proportionate share of the annual operating costs paid by Tenant for 1994 (and
subsequent years), Tenant shall pay the difference to Landlord in one lump sum,
along with the next payment of Base Rent due and payable. If Tenant's
proportionate share of the actual annual operating costs for 1994 (and
subsequent years) is less than Tenant's proportionate share of the annual
operating costs paid by Tenant for 1994 (and subsequent years), Landlord shall
credit the difference to Tenant as an offset against the next payment of Base
Rent due and payable. Until actual annual operating costs for any given year
are determined, Tenant shall pay annual operating costs for and during that
given year based on the most recently computed annual operating costs figure.
Notwithstanding the foregoing, Tenant shall not be liable for any increases in
1994 operating costs attributable to that pro-rata period of time during 1994
which constitutes the second year of this lease (e.g. if the commencement date
is September 1, 1992, then the second year expires on August 31, 1994, and
Tenant will be responsible for increases in operating costs only for the
pro-rata period after August 31, 1994). Further notwithstanding the foregoing,
operating costs increases charged to Tenant after the first two years of this
lease shall not exceed 5% per year, regardless of the actual increases.
(e) DISPUTES: Any statement of actual annual operating costs
furnished to Tenant by Landlord under 4(d) shall constitute a final
determination of same, unless Tenant, within 30 days after the statement is
furnished, gives notice to Landlord that Tenant disputes the correctness of the
statement, specifying the basis for such assertion. Pending resolution of such
dispute, Tenant shall pay the annual operating costs to Landlord, in accordance
with the statement. Landlord agrees, upon written request and during normal
business hours, to make available for Tenant's reasonable inspection (including
inspection by Tenant's accountants), at Landlord's office, Landlord's books and
records relevant to any items in dispute. If errors are determined to exist in
accordance with generally accepted accounting principles, revisions to the
statement shall be made accordingly.
(f) LEASE TAX: Tenant shall pay to Landlord the tax imposed by
F.S. 212.031 (or any successor statute) upon the rent, along with and included
in every monthly payment of rent. Other than any income or inheritance tax,
Tenant shall pay any additional local, state or federal tax imposed upon
Tenant's use and occupancy of the Premises, and upon the rent payable
hereunder.
(g) SECURITY DEPOSIT: Simultaneously upon the execution hereof,
and in addition to all sums mentioned elsewhere in this lease, Tenant shall
deliver and pay to Landlord a security deposit in the amount of $16,681.35, as
security for Tenant's faithful performance of each and every provision of this
lease. This security deposit is not advance rent, and will not be applied
towards rent, except at Landlord's sole discretion and option. Nor is this a
provision for or limitation upon damages, in the event Tenant breaches this
lease by vacating prior to the end of the term, or otherwise breaches this
lease. These funds shall not be interest-bearing to Tenant, and may be
commingled by Landlord. Upon the expiration of the term, and in the event
Tenant has faithfully and timely complied with and discharged all of its
covenants and obligations, these funds shall be returned to Tenant within ten
days of the last day of the term.
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<PAGE> 4
(h) SUMMARY OF MONTHLY PAYMENTS:
<TABLE>
<S> <C>
$ 9,399.81 representing Base Rent of $7.10 per square foot during years 1-5
$ 7,281.54 representing Tenant's proportionate share of operating costs during years 1-2
$ 1,000.88 representing the tax on the foregoing
----------
$17,682.23
</TABLE>
(i) SUMMARY OF PAYMENTS DUE UPON EXECUTION OF LEASE:
<TABLE>
<S> <C>
$16,681.35 security deposit
$ 9,399.81 base rent for first month of lease (targeted to be September, 1992)
$ 7,281.54 operating expenses for first month of lease (targeted to be September, 1992)
$ 1,000.88 tax on first month's rent and operating expenses
----------
$34,336.58
</TABLE>
5. COVENANT TO PAY RENT AND ADDITIONAL RENT; LATE CHARGE: Tenant
shall, without demand, setoff or deduction, pay the Base Rent, operating costs,
and all other sums due under this lease, at the times and in the manner
required. If any payment is overdue for 15 days, a late charge of 5% shall be
charged by Landlord, together with interest from the date when the payment was
due, at 15%. Nothing herein shall be construed as waiving any rights of
Landlord resulting from any default by Tenant, by reason of Landlord's
assessing or accepting any such late payment, late charge, or interest, and the
late charge and interest assessed herein are separate from and in addition to
any other remedies of Landlord after default by Tenant.
6. USE: The Premises are to be used by Tenant for general office
purposes only.
7. ASSIGNMENT AND SUBLETTING: In entering into this lease,
Landlord has relied upon the integrity, reputation and creditworthiness of
Tenant. Accordingly, Tenant shall not assign this lease or sublet the Premises
or any part thereof, or permit any other person or entity to occupy the
Premises, without first obtaining Landlord's written consent, which consent
will not be unreasonably withheld. However, neither Landlord's consent, nor
any assignment or subletting, shall release Tenant from liability for the
performance of all the terms, covenants and conditions of this lease.
Furthermore, no assignment or sublease will be valid unless the
assignee/subtenant executes and delivers to Landlord an assumption of liability
agreement, in form satisfactory to Landlord.
8. IMPROVEMENT OF THE PREMISES:
(a) LANDLORD'S PRELIMINARY SPACE PLAN: Landlord has
delivered to Tenant a floor plan (Exhibit "A"). Tenant shall designate in
writing a single individual to meet with Landlord at the Premises as Tenant's
representative in connection with this Article 8, and said representative shall
have the authority to legally bind Tenant.
(b) TENANT'S CONSTRUCTION PLANS: Tenant shall have
prepared, using the architect or engineer designated by Landlord, at Landlord's
expense, and not later than July 8, 1992, construction plans prepared by such
architect or engineer, which plans shall be deemed a part of this lease.
Tenant's Construction Plans shall designate, among other things, the locations
of and specifications for all plumbing, electrical and mechanical equipment to
be installed in the Premises, all partitions, doors,
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<PAGE> 5
lighting fixtures, electric receptacles and switches, telephone outlets and
special air conditioning, floor coverings and other improvements to be
installed by Landlord.
(c) CERTAIN CHANGES: Tenant shall pay to Landlord on
demand the reasonable amount of Landlord's architectural and engineering fees
(i) resulting from any changes made in Tenant's floor plan or Tenant's
construction plans (hereinafter collectively referred to as Tenant's
Construction Plans), at Tenant's request; or (ii) necessitated as a result of
changes in Tenant's Construction Plans made after Landlord shall have released
them to its contractor.
(d) RESTRICTED CHANGES: Should Tenant desire to make
changes to any approved plans which are so substantial as to cause postponement
of the commencement date, without prejudice to the provisions of Article 3(b)
hereof, Landlord shall have the right to refuse to permit the making of such
changes unless and until Tenant shall have committed in writing, in a manner
reasonably satisfactory to Landlord, to pay Landlord on the date rent would
have commenced in the absence of such delay, a sum of money equivalent to the
rent for the Premises for the period during which Tenant would have been
obligated to pay rent to Landlord had the commencement date not been so
delayed. Furthermore, no change requested by Tenant, whether or not
substantial, shall be effective unless and until (in addition to any other
conditions as herein specified) Landlord and Tenant agree in writing as to the
additional cost to Tenant on account thereof.
(e) COMPLETION BY LANDLORD; CHANGES: Landlord shall, in
a good and workmanlike manner, cause the Premises to be improved and completed
in accordance with the Floor Plan (Exhibit "A") and Tenant Work Workletter
(Exhibit "C"). Landlord reserves the right, however: (i) to make substitutions
of material of equivalent grade and quality when and if any specified material
is not readily and reasonably available, and (ii) to make changes necessitated
by conditions met in the course of construction, provided that Tenant's
approval of any substantial change shall first be obtained (which approval
shall not be unreasonably withheld or delayed, so long as there shall be
general conformity with the Floor Plan).
(f) TENANT WORK (EXHIBIT "C")/ADDITIONAL WORK: In the
completion and preparation of the Premises in accordance with the Floor Plan
(Exhibit "A"), Landlord agrees to perform at its own expense those items of
work set forth on Exhibit "C" (Tenant Work Workletter). Any work to be
performed by Landlord in addition to or in substitution of Exhibit "C" is
referred to as Additional Work. All Additional Work shall be
furnished/performed by Landlord, at Tenant's sole expense, based on "Landlord's
Cost." Landlord's Cost means Landlord's out-of-pocket or purchase price for
materials, labor and services including any reasonable contractor's fee for the
contractor's overhead and profit, and charges for cutting, patching, cleaning
up and removal of waste and debris, plus architects' and engineers' fees, plus
the product obtained by multiplying all of the foregoing (as reduced by
appropriate credits) by fifteen percent (15%) for Landlord's expenses and
profit in handling any substitution; provided, however, that in no event may
Tenant be required to pay more than the prevailing cost in Broward County,
Florida, for similar work.
(g) PAYMENT FOR ADDITIONAL WORK: Tenant shall pay
Landlord for all Additional Work from time to time during the progress of the
work, within fifteen (15) days after Landlord gives Tenant an invoice therefor.
Upon presentation of the final invoice, the total Landlord's cost shall be
subject to verification by Tenant, and Tenant shall have reasonable access to
Landlord's cost records. In the event Tenant fails to reimburse Landlord as
provided herein, interest shall commence to accrue upon Landlord's cost, as of
the due date, at the maximum rate permitted by law, and the total payment
required hereby shall be deemed additional rent.
(h) ACCESS, ACCEPTANCE OF WORK: Landlord shall afford
Tenant access to the Premises, at reasonable times prior to the commencement
date, and at Tenant's sole risk, for the purpose of inspecting the performance
of "Tenant Work," and any Additional Work, and Tenant shall advise Landlord
promptly of any objection to the performance of such work. Landlord shall
promptly undertake the correction of any defective work. On the commencement
date, all Tenant Work or Additional Work not objected to by Tenant shall be
deemed satisfactory. The foregoing presumption shall not apply,
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<PAGE> 6
however: (i) to Tenant Work or Additional Work not actually completed by
Landlord, which Landlord agrees shall be completed within 30 days; or (ii) to
latent defects in such Tenant Work, or Additional Work, which could not
reasonably have been discovered, provided Tenant notifies Landlord thereof
within three months after occupancy.
9. ALTERATIONS: No alterations or additions shall be made to the
Premises without Tenant first submitting a description thereof to Landlord, and
obtain Landlord's written approval, which will not be unreasonably withheld.
All alterations/additions made by Tenant, and all fixtures permanently attached
to the Premises shall become the property of Landlord, and remain at the
Premises or, at Landlord's option, after written notice to Tenant, any or all
of the foregoing shall be removed at Tenant's expense at the termination of
this lease, and Tenant shall repair all damage to the Premises caused by said
installation/removal. At the time of Landlord's approval, Landlord shall
notify Tenant if the improvements must be removed at the termination of this
lease. Tenant shall not place any sign or advertising matter on the Premises
without the prior written consent of Landlord (except for the permitted
signage, Article 36 infra). Tenant shall not place equipment that weighs more
than the safe carrying capacity of the building.
10. RULES AND REGULATIONS: The rules and regulations attached as
Exhibit "D," and such reasonable additions/modifications as may be made by
Landlord upon written notice to Tenant, are a part of this lease, and Tenant
covenants to faithfully observe said rules and regulations.
11. FIRE OR OTHER CASUALTY: If the building is so damaged by fire
or other casualty that the Premises are rendered unfit for occupancy (whether
or not the Premises are damaged), then, at either party's option, the term of
this lease, upon written notice from such party given within 30 days after the
occurrence of such damage, shall terminate as of the date of the fire or other
casualty. In such case, Tenant shall pay the rent apportioned to the time of
such termination, and Landlord may enter upon and repossess the premises
without further notice. If neither party elects to terminate the term of this
lease, Landlord will repair the building, and Landlord may enter and possess
the Premises for that purpose. While Tenant is deprived of the Premises, rent
shall be suspended in proportion to the number of square feet of the Premises
rendered untenantable. If the Premises or the building shall be damaged so
that such damage does not render the Premises unfit for occupancy, Landlord
will repair whatever portion of the Premises or of the building that may have
been damaged, and Tenant will continue in possession, and rent will be
apportioned or suspended to the extent that the Premises are partially
untenantable as a result of the damage. In the event Landlord elects to repair
or rebuild the Premises pursuant to this paragraph, Tenant agrees to furnish
Landlord with all insurance proceeds which Tenant recovers for damage to the
Premises, excluding improvements paid for by Tenant. The reconstruction of the
Premises beyond Exhibit "C" shall be Tenant's sole responsibility, at Tenant's
option. Despite any other provisions of this Article 11, if any damage is
caused by or results from the gross negligence of Tenant, those claiming under
Tenant, or their employees or invitees, rent shall not be suspended or
apportioned, and Tenant shall pay, as additional rent upon demand, the cost of
any repairs, made or to be made, as a result of such damage. Any lack of
telephone service (except any lack of telephone service caused by or the fault
of Southern Bell), any lack of air conditioning, and any lack of electricity
(except any lack of electricity caused by or the fault of Florida Power &
Light) that continues for more than five working days shall render the Premises
unfit for occupancy, and shall entitle Tenant to the abatement of rent in
16(c).
12. ACCESS TO PREMISES: Landlord shall have the right to enter and
pass through the Premises, to make any repairs, or due to any emergency
affecting the Premises or any other part of the building or property. Tenant
shall provide Landlord with a key to the Premises, and shall not change its
locks or keys without Landlord's prior written consent, and without delivering
to Landlord a key for said locks. At any reasonable time, Landlord may, upon
reasonable notice to Tenant, enter the Premises with a prospective Tenant,
purchaser, mortgagee, investor, or similar party, and exhibit the Premises to
said party. All of the foregoing access (except emergency access) shall be
during normal business hours only. Furthermore, no access whatsoever shall be
permitted to the computer areas (including cleaning personnel).
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<PAGE> 7
13. INSURANCE:
(a) Tenant will not commit any act or permit any act to
be committed, as a result of which either any policy of insurance on the
property shall become void or suspended, or the insurance risk on the building
shall be rendered more hazardous.
(b) Tenant shall maintain, at its expense, and at all
times during the term of this lease, a comprehensive general public liability
policy insuring against loss or liability in connection with bodily injury,
death, and property damage in or upon the Premises or the remainder of the
property, and arising out of the use of same by Tenant or its agents,
employees, invitees, visitors, and guests, with limits or not less than One
Million Dollars ($1,000,000.00). It is agreed and understood that the policy
required hereby shall apply as the primary source of recovery, without regard
to legal liability for loss. Such policy shall name Landlord as an additional
insured. A duplicate of said policy shall be promptly delivered to Landlord,
and not less than 20 days prior to the expiration of said policy, Tenant shall
deliver to Landlord a paid receipt for the renewal premium. If Tenant fails to
perform its obligations hereunder, Landlord may (but shall not be obligated to)
perform same, and the cost shall be additional rent immediately due and
payable.
(c) Landlord shall maintain fire/hazard coverage upon the
building. The cost of the premium for such insurance shall be deemed, for
purposes of Article 4 of this lease, to be a cost of operating and maintaining
the property.
14. CONDITION OF PREMISES: Upon the termination of this lease,
Tenant shall leave the Premises, and during the term will maintain same, in the
same order and condition as existed at the commencement date, ordinary wear and
tear, damage by fire or other casualty (which fire or other casualty has not
occurred through the negligence of Tenant, or those claiming under or through
Tenant), and repairs to be performed by Landlord under Article 16, alone
excepted. Tenant will use every reasonable precaution against fire and will
give Landlord prompt notice of any damage to or accident upon the Premises.
15. COMPLIANCE WITH LAWS: Tenant agrees to comply promptly with
all laws and requirements of any federal, state, county, or municipal
authorities, or of the Board of Fire Underwriters, or of any insurance company,
with respect to the Premises.
16. SERVICES:
(a) Landlord agrees that it shall, at its expense, unless
otherwise stated:
(i) HVAC: Furnish heat, ventilation and air
conditioning to the Premises, Monday through Friday from 7:00 A.M. to 7:00
P.M., and Saturdays from 7:00 A.M. to 1:00 P.M., excepting New Year's Day,
Memorial Day, Fourth of July, Labor Day, Thanksgiving Day and Christmas Day.
Heat, ventilation and air conditioning required by Tenant at other times shall
be supplied upon 24 hours' notice, and shall be paid for by Tenant at $10.00
per hour. Tenant agrees to cooperate fully with Landlord and to abide by all
regulations reasonably prescribed for the proper functioning and protection of
the heating, ventilating and air conditioning system. The foregoing heating,
ventilating and air conditioning services shall be subject to any statute,
ordinance, rule or regulation for energy conservation which may be promulgated
by any governmental agency.
(ii) Elevators: Provide passenger elevator
service at all times.
(iii) Access: Furnish access to the Premises at all
times, subject to compliance with reasonable security measures.
(iv) Janitorial: Provide janitorial service in
accordance with Exhibit "F"; any additional janitorial service desired by Tenant
shall be contracted for by Tenant directly with Landlord's janitorial agent at
Tenant's expense. No trash removal services will be provided for a quantity
not
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customary for normal office use. Tenant recognizes that Landlord has control
over the actions of janitorial persons; accordingly, Landlord shall be liable
for any loss, theft or damage to Tenant's property by reason of any janitors'
acts.
(v) Structural Repairs: Make all required
structural repairs; all required repairs to mechanical, HVAC, electrical and
plumbing systems (excluding repairs to any non-standard fixtures or other
improvements installed at the request of Tenant, requiring maintenance of a
type not customarily provided by Landlord to office tenants of the building),
and all repairs to exterior windows and glass. In the event that any repair is
required because of the gross negligence or abuse of Tenant or its agents,
employees, or invitees, Landlord may make such repair and add the cost thereof
to the next installment of rent, unless Landlord shall have actually recovered
such cost through insurance proceeds. If Tenant fails to reimburse Landlord
with the next rent installment, interest shall accrue on said amount at the
maximum rate permitted by law, and said amount shall be deemed additional rent.
(vi) Water: Provide hot and cold water, for
drinking and sanitary purposes, at each floor.
(vii) Public Areas: Maintain the public areas in
clean and good working order.
(viii) Electricity: Furnish to Tenant electric
energy as required, but not exceeding the specifications in Exhibit "C".
Landlord shall not be liable for failure or defects in the supply of
electricity furnished to the Premises by reason of any requirement, act or
omission of Florida Power & Light, or for any other reason not attributable to
Landlord.
(b) Special Equipment: Tenant shall not install any
equipment or use the Premises in a manner which would necessitate any changes,
replacements or additions to any of the heating, ventilating, air conditioning,
electric, sanitary, elevator or other systems serving the Premises or building;
or to any of the services required of Landlord. The foregoing shall not apply
to additional air conditioning required for Tenant's computers. Any machine or
equipment causing noise or vibration reasonably objectionable shall, at
Tenant's expense, promptly be placed and maintained by Tenant in settings of
cork, rubber or spring-type vibration eliminators, or subjected to other
measures sufficient to reduce such noise or vibration.
(c) Interruption of Service: If the operation of the
elevators, heating, ventilation, air conditioning or any other service is
suspended due to war, accident, inability to obtain repairs, strikes, inability
to obtain supplies, or other causes beyond Landlord's control, same shall not
be a breach of this lease by Landlord. However, in the event elevator or air
conditioning service is suspended for more than 5 working days, Tenant shall
receive an abatement of rent for any time beyond the 5th day that the elevators
or air conditioning service is suspended.
17. NOTICE OF BREAKAGE, FIRE, THEFT: Tenant shall give Landlord
written notice, within 24 hours, of any (a) accident or breakage or defects in
window glass, wires, plumbing, heating, ventilating, air conditioning, or
elevators; (b) fire or other casualty, or (c) theft.
18. RELEASE OF LANDLORD: To induce Landlord to enter into this
lease, and inasmuch as Tenant agrees to maintain and look to its own insurance
coverage in the event of any injury or property damage, Tenant hereby agrees
that except for Landlord's willful misconduct, Landlord shall not be held
responsible for, and is hereby expressly relieved from all liability for
injury, loss, or damage to any person or property of Tenant or of any other
person. Tenant recognizes that Landlord has no control whatsoever over the
acts of third persons, including criminal acts. No representations have been
made as to the safety or security of the building. Tenant further agrees to
indemnify, defend, and hold Landlord harmless from and against all claims by
any employee or invitee of Tenant, made on account of such injury, loss or
damage, including but not limited to the reasonable attorney's fees and
expenses of litigation incurred in connection with defending any such claims.
19. intentionally omitted.
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20. REMEDIES OF LANDLORD:
If Tenant (i) does not pay in full within 15 days after
receipt of written notice of default, as is set forth in subparagraph (D)
below, any installment of rent (whether Base Rent or Additional Rent), or any
other charge or monetary obligation; (ii) violates, fails to perform, or
otherwise breaks any material term, provision or condition of this lease, or
any other obligation imposed upon Tenant; or (iii) abandons the Premises:
(A) Then, in any such event, the entire amount of
rent and charges for the balance of the term shall be immediately due and
payable and in arrears, and Tenant's right to occupy the Premises shall
terminate, without any right on the part of Tenant to reinstate by payment of
any sum, or by performance of any obligation.
(B) In the event of Tenant's bankruptcy, Tenant
hereby stipulates that Landlord shall have immediate relief from the automatic
stay, or alternatively, Tenant shall provide Landlord with adequate assurance
of Tenant's future performance of all of the terms, conditions and covenants of
this lease, including but not limited to the assumption of the lease, and the
immediate curing of any back-due rent and other payments.
(C) Upon recovering the Premises, Landlord may
lease all or part thereof, and Tenant shall be liable for any deficiency, plus
the costs and expenses of reletting and of making reasonably necessary repairs
and alterations to the Premises.
(D) No default in any payment by Tenant shall be
deemed to have occurred unless and until Landlord provides Tenant with 15 days
written notice specifying the default. Any notice by Landlord to Tenant under
this subparagraph (D) shall be deemed to have been received by Tenant two days
after being send via certified mail, regardless of whether the receipt is
signed. Provided, however, that Tenant shall not be entitled to such notice
and grace period more than twice in any 12 month period, and further provided
that this subparagraph (D) is in addition to the late charge imposed by Article
5.
(E) Tenant agrees to collaterally assign to
Landlord, as security for the performance of Tenant's obligations hereunder,
all of Tenant's rights, title, and interest in and to all furniture, fixtures,
and equipment brought on the premises. This shall be in the form of a UCC-1
and chattel mortgage. All recording expenses and the like shall be borne by
Landlord. Tenant shall provide Landlord with a sufficient description of said
furniture, fixtures, and equipment, including serial numbers, and shall update
the description if additional or different furniture, fixtures, and equipment
are brought on the premises. To the extent required by Tenant's lenders,
Landlord will subordinate its lien under this paragraph 20(E).
21. REMEDIES CUMULATIVE; ATTORNEY'S FEES: All remedies available
to Landlord under this lease are cumulative and concurrent. No termination of
Tenant's right to occupy the Premises, or taking possession of the Premises by
Landlord, or the reletting of same, shall deprive Landlord of any remedies or
causes of action against Tenant for rent, for charges or for damages, nor shall
the bringing of any action, nor the resort to any other remedy or right, be
construed as a waiver or release of any other rights, remedies, or causes of
action. The failure of either party to insist upon strict and/or prompt
performance of the terms of this lease, and the acceptance of such performance
thereafter, shall not be construed as a waiver of such party's right to
thereafter enforce same strictly. In the event of any litigation, the losing
party shall pay the prevailing party's reasonable attorney's fees, court costs,
and reasonable expenses of litigation. Tenant's tender and Landlord's physical
acceptance (and endorsement and deposit, as the case may be) of partial rent
and other charges shall in no way eliminate Tenant's obligation to pay all rent
and other charges due, nor shall same constitute a waiver by Landlord or
preclude Landlord from an action for eviction, damages, or both, based, in
whole or in part, on nonpayment of late charges, nor shall same in any way
constitute an accord and satisfaction between the parties, or a novation of
this lease. No legend or memo on the front or back of any check, and no
letter, note or memo accompanying any check, and Landlord's physical acceptance
(and endorsement and
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deposit, as the case may be), shall in any constitute an accord and
satisfaction between the parties, a waiver by Landlord, or a novation of this
lease, when the amount tendered by Tenant is less than the amount due under
this Lease.
22. LEASE SUBORDINATED: This lease is subordinate at all times to
any mortgage or any encumbrance on Landlord's interest in the Premises. At
Tenant's request, Landlord will request a Non-Disturbance Agreement from
American Bank of Hollywood, in favor of Tenant.
23. CONDEMNATION: If the whole or a substantial part of the
building is taken or condemned for public use, Tenant shall have no claim
against Landlord, and shall have no claim to any portion of the amount that may
be awarded to Landlord as damages or paid as a result of such condemnation,
including any right of Tenant to damages for loss of its leasehold. All rights
of Tenant to damages therefor are hereby assigned by Tenant to Landlord. The
foregoing shall not, however, deprive Tenant of any separate award for moving
expenses, business dislocation damages, or for any other award which would not
reduce the award payable to Landlord. Upon the date the right to possession
vests in the condemning authority, this lease shall cease and terminate with
rent adjusted to such date, and Tenant shall have no claim against Landlord for
the value of any unexpired term of this lease.
24. NOTICES: All notices required to be given by Landlord to
Tenant shall be sent via certified mail, return receipt requested, to Tenant at
the Premises. All notices required to be given by Tenant to Landlord shall be
sent via certified mail, return receipt requested, to Landlord at 6100
Hollywood Boulevard, Suite 206, Hollywood, Florida 33024, with a copy to
Michael P. Gable, 4000 Hollywood Boulevard, Suite 485 South, Hollywood, Florida
33021-6744, or such other persons as Landlord designates in writing.
25. DEFINITION OF LANDLORD: Landlord is deemed as HORIZON
ASSOCIATES JOINT VENTURE, and its successors, assignees, vendees, and the heirs
and personal representatives of any individual successors, assignees or
vendees. No officer, director, manager, or employee/agent of Landlord, or of
any partner of Landlord, shall be subject to any individual liability
hereunder.
26. DEFINITION OF TENANT: Tenant includes NATIONAL COMPUTER
DISTRIBUTORS and its successors, assignees, and vendees, subject to Article 7.
No officer, director, manager, or employee/agent of Tenant shall be subject to
any individual liability hereunder, except for fraud, or conveyances to hinder
or delay Landlord as a creditor.
27. ESTOPPEL: At Landlord's request, Tenant shall sign an estoppel
letter setting forth the amounts of rent paid/due, commencement and termination
dates, and such other matters as are customarily contained in estoppel letters.
28. SEVERABILITY: No adjudication by any court or governmental
agency that any provision or portion of any provision of this lease is invalid
or unenforceable shall affect the validity or enforceability of the remainder
of that provision, or of any other provision of this lease, which shall remain
valid and enforceable to the fullest extent allowed by law.
29. NAME OF BUILDING; CAPTIONS; INTERPRETATIONS/EXHIBITS: The
building may be designated by any name Landlord chooses, upon 60 days notice.
Captions in this lease are for convenience only, and are not to be used in
interpreting this lease. There shall be no interpretation of this lease in
favor of either party by virtue of its preparation by Landlord. Every exhibit
attached to this lease is hereby made a part of this lease.
30. BROKERS: Tenant represents that it has not dealt with any real
estate brokers in the negotiation or execution of this lease, other than ANF
Group, Inc., and Property Trust Realty, Inc. Tenant shall indemnify Landlord
against the claims of any other brokers claiming to have dealt with Tenant.
Landlord shall be responsible for the payment of any commission due ANF Group,
Inc., and Property Trust Realty, Inc., and shall indemnify Tenant against the
claims of any other brokers claiming to have dealt with Landlord.
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31. WAIVER OF JURY TRIAL: The parties waive trial by jury in any
litigation, including counterclaims, arising out of or in any way connected
with this lease, their relationship as Landlord and Tenant, and Tenant's use
and occupancy of the Premises.
32. ENTIRE AGREEMENT: This lease and the attached exhibits
constitute the entire agreement between Landlord and Tenant. There are no
representations or understandings other than those set forth herein. No
subsequent understanding or modification to this lease shall be binding upon
Landlord or Tenant unless reduced to writing and signed by that party.
33. GOVERNING LAW: This lease shall be governed by Florida law.
Venue for any action shall be Broward County, Florida.
34. TIME: Time is of the essence with respect to the performance
of all the provisions hereof.
35. MISCELLANEOUS PROVISIONS: The following provisions supersede
the preceding provisions, to the extent inconsistent herewith.
(a) SIGNAGE: Tenant will be permitted to install its
corporate name (NCD) on the uppermost face of the east
and west sides of the building at Tenant's expense. No
other signage will be permitted on the building. The
foregoing is subject to approval by the City of
Hollywood, and compliance with applicable City Code
provisions.
(b) ELEVATOR SERVICE: On any floor that Tenant occupies in
its entirety, all elevators shall be programmed by
Landlord to lock off for Tenant accessibility only.
(c) EMERGENCY POWER: The building generator shall be
engineered to provide Tenant with back-up power in the
event of a power failure, to certain areas depicted in the
electrical plans. (Specifically computer room and sales
area).
(d) PARKING: Tenant shall be entitled to free on-site
parking throughout the term of the lease and any
extensions. One parking space for every 1,000 square
feet of office space leased shall be reserved undercover,
to be installed prior to the Certificate of Occupancy,
in a mutually acceptable location (as per Exhibit "G").
(e) EXPANSION OPTION: Within one (1) year of the lease
commencement date, Tenant shall have the right to expand
into any or all of the 6th floor of the building. The
rental rate for any and all expansion space shall be
$13.00 per square foot, including operating costs. If,
after one year, no expansion take place, Tenant shall
have one (1) additional year within which to expand into
50% of the 6th floor. If within the first year, Tenant
expands into at least 50% of the 6th floor, then Tenant
shall have the next ensuing year within which to expand
into the balance of the 6th floor. Notwithstanding
anything to the contrary, the term, with respect to any
and all expansion space, shall expire when the term for
the original space expires, in accordance with 3(a).
Tenant shall have the aforesaid time periods within which
to exercise its options (not within which to occupy the
expansion space). With respect to the first year
expansion option, space up to 7,500 feet shall be
provided by Landlord within 90 days. If Tenant opts to
take more than 7,500 feet, Landlord shall have 120 days
to provide occupancy. Attached hereto is Exhibit
"C-1" is a workletter describing the Tenant Improvements
for the 6th floor.
11 of 12
<PAGE> 12
36. QUIET ENJOYMENT: Upon compliance with all of its obligations
hereunder, Tenant shall have the quiet enjoyment of the premises.
37. EXCLUSIVITY: No other wholesale computer distributor shall be
permitted to occupy space in the building.
38. MAINTENANCE/CONDITION: Landlord will maintain the building as
a first class office building, in the same condition as existed at the
commencement of the lease, reasonable wear and tear excepted.
IN WITNESS WHEREOF, the parties have executed this lease.
LANDLORD:
HORIZON ASSOCIATES JOINT VENTURE
By: HORIZON-ANF, INC., General Partner
/s/ By /s/ Nelson Fernandez 7-8-92
- -------------------------------- ------------------------- ---------
First Witness as to Landlord Nelson Fernandez, Date
Secretary/Treasurer
/s/ Kimberly
- --------------------------------
Second Witness as to Landlord
TENANT:
ROSS WHITE ENTERPRISES, INC.
d/b/a NATIONAL COMPUTER DISTRIBUTORS,
/s/ By: /s/ Gregory A. White 7-8-92
- -------------------------------- ----------------------------------
First Witness as to Tenant Gregory A. White, Date
President
/s/ Kimberly
- --------------------------------
Second Witness as to Tenant
12 of 12
<PAGE> 13
EXHIBIT D - RULES/REGULATIONS
1. The walkways, roadways, driveways, entrances, lobbies,
passages, elevators and stairways shall not be obstructed by Tenant or used by
Tenant for any purpose other than egress from and to the building and Tenant's
offices. The parking areas shall be used only for the parking of automobiles
of Tenant, its agents, employees and invitees while actually present on the
Premises. Landlord shall in all cases retain right to control or prevent
access to all of the aforesaid area of all persons whose presence, in the
reasonable judgment of Landlord, shall be prejudicial to the safety, peace,
character, or reputation of the Building, the property located therein or of
any of the tenants. Landlord shall in no case be liable for damages for the
admission or execution of any person from the Building.
2. The toilet rooms, water closets, sinks, faucets, plumbing or
other service apparatus of any kind shall not be used by Tenant for any purpose
other than those for which they were installed, and no sweepings, rubbish,
rags, ashes, chemicals or other refuse or injurious substances shall be placed
therein or used in connection therewith by Tenant or left by Tenant in the
lobbies, passages, elevators or stairways. Nothing shall be thrown by Tenant
or Tenant's employees nor be allowed by them to drop out of the windows or
doors, or down the passages of the Building.
3. Nothing shall be placed by Tenant on the outside of the
Building or on its window sills or projections. Skylights, windows, doors and
transoms shall not be covered or obstructed by Tenant, and no window shades,
blinds, curtains, screens, storm windows, awnings or other materials shall be
installed or placed on any of the windows or in any of the window spaces,
except as approved in writing by Landlord.
4. No signs, lettering insignia, advertisement or notice shall be
inscribed, painted, installed or placed on any window space or any other part
of the outside or inside of the Building, unless first approved in writing by
Landlord, at Tenant's expense. In all instances, such names shall be of design
and form first approved by Landlord.
5. Tenant shall not place additional locks upon any doors. The
janitor and the manager of the Building may at all times keep a pass key, and
he and other agents of the Landlord shall at all reasonable times be allowed
admittance to the leased Premises for purposes permitted in Tenant's lease
(provided Tenant's quiet enjoyment is not unnecessarily or unduly disturbed).
Upon surrendering possession of the Premises at the termination of this Lease,
Tenant shall deliver to Landlord all keys for the Premises.
6. The delivery of towels, ice, water, beverages, newspapers, and
other supplies will be permitted only under the direction, control and
supervision of Landlord. No bicycles or similar vehicles will be allowed in
the Building.
7. Tenant shall not do or commit, or suffer to be done or
committed, any act or thing whereby, or in consequence whereof, the rights of
other tenants will be obstructed or interfered with, or other tenants will in
any other way be injured or annoyed, or whereby the Building will be damaged.
Tenant shall not suffer or permit the Premises or any part thereof to be used
in any manner or anything be done therein or suffer or permit anything to be
brought into or kept in the Premises which, in the judgment of Landlord, shall
in any way impair or tend to impair the character, reputation or appearance of
the Building as a first-class office building. Tenant shall not use or keep or
permit to be used or kept in the Building any matter having an offensive odor,
nor any ether, naphtha, phosphorous, benzol, kerosene, gasoline, benzine,
camphene, fuel or other explosive or highly flammable material. Tenant shall
neither bring, keep or use in the Building any chemical agent except as the
same may be components or commercial products normally used or consumed by
occupants of office buildings. No birds, fish or other animals shall be
brought into or kept or about the Premises.
<PAGE> 14
8. In order that the Premises may be kept in a good state of
preservation and cleanliness, Tenant shall during the continuance of its
possession permit Landlord's employees and contractors and no one else to clean
the Premises. Landlord shall provide Tenant with a certificate of Landlord's
janitorial service's insurance. Tenant shall see each day that the windows are
closed, lights are turned off, and the doors securely locked before leaving the
Premises.
9. If Tenant desires to introduce signaling telegraphic,
telephonic, protective alarm or other wires, apparatus or devices, Landlord
shall direct where and how the same are to be placed, and except as so
directed, no installation, boring or cutting shall be permitted. Landlord
shall have the right to prevent and to cut off the transmission of excessive or
dangerous current of electricity or annoyances into or through the Building or
Premises and to require the changing of wiring connections or layout at
Tenant's expense, to the extent that Landlord may deem necessary, and further
to require compliance with such reasonable rules as Landlord may establish
relating thereto, and in the event of non-compliance with the requirements or
rules, Landlord shall have the right immediately to cut wiring or to do what it
considers necessary to remove the danger, annoyance or electrical interference
with apparatus in any part of the Building. All wires installed by Tenant must
be clearly tagged at the distributing boards and junction boxed and elsewhere
required by Landlord, with the number of the office to which said wires lead,
and the purpose for which the wires respectively are used, together with the
name of the concern, if any, operating same.
10. A directory on a bulletin board on the ground floor will be
provided by Landlord, on which the name of the Tenant may be placed. The size
of the name so listed and the location of the directory shall be at Landlord's
reasonable discretion.
11. No furniture of Tenant will be received in the building, or
carried up or down in the elevators or stairways, except during such hours as
shall be designated by Landlord, and Landlord in all cases shall also have the
exclusive right to prescribe the method and manner in which the same shall be
brought in or taken out of the Building. Landlord shall in all cases have the
right to exclude from the Building heavy furniture, safes and other articles
which may be hazardous or to require them to be located at designated places in
the Premises. The cost of repairing any damage to the Building caused by
taking in or out furniture, safes or any articles or any damage caused while
the same shall be in the Premises, shall be paid by Tenant.
12. Without Landlord's written consent, nothing shall be fastened
to, nor shall holes be drilled or nails or screws driven into walls or
partitions; nor shall walls or partition be painted, papered or otherwise
covered or moved in any way or marked or broken; nor shall any connection be
made to electric wires for running fans or motors or other apparatus, devices
or equipment, nor shall machinery of any kind other than customary small
business machines (personal computer equipment, fax machine, microwave and copy
machine) be allowed in the Premises; nor shall Tenant use any other method of
heating, ventilating, air conditioning, or air cooling than that provided by
Landlord. Telephones, switchboards and telephone wiring and equipment shall be
placed only where designated by Landlord. No mechanics shall be allowed to
work in or about the Building other than those employed by Landlord without the
written consent of Landlord first having been obtained. The foregoing
paragraph excludes pictures and similar decorations, and Tenant's refrigerator
and icemaker.
13. Landlord shall, in no case, be responsible for the admission
or exclusion of any person to or from the Building for access to the Premises.
In cases of invasion, hostile attack, insurrection, mob violence, riot, public
excitement or other commotion, explosion, fire or any casualty, Landlord
reserves the right to bar or limit access to the Building for the safety of
occupants or protection of property.
14. Landlord reserves the right to rescind, suspend or modify any
rules or regulations and to make such other reasonable rules or regulations as,
in Landlord's reasonable judgment, may from time to time be needful for the
safety, care, maintenance, operation and cleanliness of the Building as a first
class building, or for the preservation of good order therein. Notice of any
action by Landlord referred to in
<PAGE> 15
this paragraph, given to Tenant, shall have the same force and effect as if
originally made a part of the foregoing Lease. New rules or regulations will
not, however, be unreasonably inconsistent with the proper use and enjoyment of
the Premises by Tenant under this Lease.
15. The use of rooms as sleeping quarters is prohibited at all
times.
16. Tenant shall keep the windows and doors of the Premises,
including those openings on corridors and all doors between rooms or spaces
entitled to receive heating, ventilating or air conditioning service and rooms
and spaces not entitled to receive such service, closed during the respective
times that the heating, ventilating or air conditioning system is operating, in
order to conserve the service and effectiveness of the heating, ventilating or
air conditioning system as the case may be. Tenant shall comply with all
reasonable rules and regulations from time to time promulgated by Landlord to
conserve such services.
17. Landlord reserves the right to require that the Premises or
any portion thereof shall not be used by Tenant or others for an employment
agency, or for securing employees other than those to be employed on the
Premises, or for the payment of salaries or wages to employees or persons who
are not actually employed in the Building, nor for any other purposes except
that specified in the Lease.
<PAGE> 16
ADDENDUM
To that certain lease between HORIZON ASSOCIATES JOINT VENTURE as
Landlord, and ROSS WHITE ENTERPRISES, INC. d/b/a NATIONAL COMPUTER
DISTRIBUTORS, INC. as Tenant.
WHEREAS, Article 35(a) of the lease permits Tenant to install certain
signage on the building at its expense, subject to approval by the City of
Hollywood, and compliance with applicable city code provisions, and
WHEREAS, the parties wish to memorialize the fact that the signage
will conform to the attached exhibit, and that Tenant will indemnify and hold
Landlord harmless from any and all property damage and personal injury in any
manner connected with, related to, or arising from said signage, including but
not limited to installation, maintenance and removal thereof,
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally
bound, the parties agree as follows:
1. The foregoing recitals are true, correct, and incorporated
herein.
2. Tenant hereby agrees to and shall fully indemnify and hold
Landlord harmless from and against any and all property damage whatsoever, and
personal injury whatsoever, in any manner connected with, related to, or
arising from said signage, including but not limited to the installation,
maintenance and removal thereof, regardless of the cause of any such damage or
injury, and regardless of any negligence on Landlord's part, it being
understood that Landlord is relying on Tenant for all matters pertaining to the
installation, maintenance and removal of the signage.
3. This agreement shall survive the expiration of the term of the
lease, if the signage is not removed prior thereto, and if Tenant has not
performed any of its obligations hereunder, this agreement shall survive until
all of its obligations are performed.
4. This indemnification and hold harmless includes the defense of
any litigation or demands, and the payment of any awards or judgments,
including principal interest, costs, and attorney's fees.
LANDLORD:
Horizon Associates Joint Venture
By: Horizon-ANF, Inc., General Partner
By: /s/ Nelson Fernandez, 7-5-92
-----------------------------------
Nelson Fernandez, Date
Secretary/Treasurer
TENANT:
Ross White Enterprises, Inc.
d/b/a National Computer Distributors,
Inc.
By: /s/ Thomas E. Ross 7-8-92
-----------------------------------
Thomas F. Ross Date
Vice President
<PAGE> 17
ADDENDUM TO LEASE
WHEREAS, HORIZON ASSOCIATES JOINT VENTURE as Landlord, and ROSS WHITE
ENTERPRISES, INC. d/b/a NATIONAL COMPUTER DISTRIBUTORS, INC. as Tenant executed
the preceding Lease as of July 8, 1992, and
WHEREAS, paragraph 35(e) provides for an expansion option with
respect to the sixth floor, and
WHEREAS, via this Addendum, Tenant wishes to exercise, and the
parties wish to formalize the terms and conditions of said option, and of the
parties' obligations regarding the expansion space,
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally
bound, the parties agree as follows:
1. The foregoing recitals are true, correct and incorporated
herein. All references herein to paragraphs are to the paragraphs as they
appear in the underlying lease.
2. Tenant hereby exercises its option to expand into the entire
sixth floor, being 15,418 rentable square feet.
3. The targeted occupancy/commencement date is January 1, 1994.
4. For the first sixth months of occupancy, Tenant shall pay base
rent and operating costs at the total rate of $6.50 per square foot per year,
plus tax on the foregoing. This supersedes paragraph 35(e) to the extent
inconsistent therewith. After the first six months, and for the remainder of
the duration of the original five year term of this lease, Tenant shall pay
base rent at the rate of $7.50 per square foot per year. Tenant's
proportionate share of annual operating costs for this expanded space after the
first six months, and lease tax for this expanded space after the first six
months, shall be paid in accordance with paragraphs 4(d) and 4(f),
respectively, to-wit $5.50 per square foot per year until August 31, 1994.
Thereafter, Tenant's proportionate share of annual operating costs shall be
adjusted in accordance with 4(d)(iii). Beyond the duration of the original
five year term of this lease, i.e. for and during any and all renewal option
periods, base rent shall be paid in accordance with the rates in 4(b), and
annual operating costs shall be paid and adjusted in accordance with the
formula in 4(d).
5. Landlord shall construct and install, at Tenant's expense but
at Landlord's cost, as
1 of 2
<PAGE> 18
defined in paragraph 8(f), the special tenant work shown on the architectural
floor plan dated 10/21/93. Tenant shall pay Landlord for these items upon
Landlord's substantial completion thereof. However, the standard tenant
improvements shall be constructed at Landlord's expense.
6. Except to the extent, if any, modified above, all other terms,
conditions and provisions of the lease shall be binding on and applicable to
the expansion space, as if the expansion space were originally included in the
underlying lease.
7. So as to eliminate any confusion or misunderstanding, a
summary of payments for January, 1994 (assuming the expansion space is
completed as of January, 1994) is as follows:
<TABLE>
<S> <C>
$ 9,399.81 base rent of $7.10 per square foot per year for Suite 700
7,281.54 Tenant's proportionate share of operating costs for Suite 700
1,000.88 tax on the foregoing
8,351.41 base rent and operating costs totaling $6.50 per square foot per year for
the sixth floor for the first six months
501.08 tax on the foregoing
----------
$26,534.72 Total due January 1, 1994
</TABLE>
/s/ Thomas F. Ross LANDLORD:
- ---------------------------------------- Horizon Associates Joint Venture
Signature of first witness as to Landlord By: Horizon-ANF, Inc., General Partner
/s/ Thomas F. Ross By: /s/ Nelson Fernandez 10/25/96
- ---------------------------------------- ---------------------------------
Typewritten name of first witness Nelson Fernandez, Date
as to Landlord Secretary/Treasurer
/s/ Audrey A. Hynes
- ----------------------------------------
Signature of second witness as to Landlord
/s/ Audrey A. Hynes
- ----------------------------------------
Typewritten name of second witness as
to Landlord
/s/ Thomas F. Ross TENANT:
- ---------------------------------------- Ross White Enterprises, Inc.
Signature of first witness as to Tenant d/b/a National Computer
Distributors, Inc.
/s/ Thomas F. Ross By: /s/ Gregory A. White 10-25-93
- ---------------------------------------- --------------------------------
Typewritten name of first witness as to Gregory A. White, Date
Tenant President
/s/ Audrey A. Hynes
- ----------------------------------------
Signature of second witness as to Tenant
/s/ Audrey A. Hynes
- -----------------------------------------
Typewritten name of second witness as to Tenant
2 of 2
<PAGE> 19
HORIZON ASSOCIATES JOINT VENTURE
6100 HOLLYWOOD BOULEVARD, SUITE 206
HOLLYWOOD, FLORIDA 33024
February 28, 1994
Mr. Gregory White
National Computer Distributors
6100 Hollywood Boulevard, Suite 700
Hollywood, Florida 33024
RE: SUITE 500, EXPANSION SPACE ON FIFTH FLOOR, HORIZON ONE
Dear Greg:
Below, I have attempted to summarize our conversations regarding your expansion
into suite 500. Please review the issues outlined below and if you agree with
them, please acknowledge so with your signature in the space provided.
1) NCD shall lease suite 500, containing approximately 3,963 rentable
s.f. for two concurrent periods; the first shall begin May 1, 1994 and
end on October 31, 1995; and the second shall begin November 1, 1995
and end on September 30, 1997.
2) HAJV shall renovate suite 500 in accordance with the specifications to
be agreed upon by both parties. Both parties shall make their most
diligent effort to complete such renovations by April 30, 1994. HAJV
shall pay no more than $3.80 per usable s.f. ($12,980.80) of the total
cost of such renovation. NCD shall pay the balance of the
construction cost in equal monthly payments during the first period of
lease.
3) NCD shall pay to HAJV $2,700.00 per month as rent during the first
period plus 1/18th of the additional build out described above.
During the second period NCD shall pay $5,217.95 per month. Neither
of these amounts include sales tax which is in addition to these
amounts.
4) At the expiration of these two periods described above, NCD shall have
the option to extend the term in accordance with the terms and
conditions described in the original lease agreement.
This document shall become part of the original Lease Agreement, dated July 8,
1992, signed by these to parties. This expansion space shall be governed by
the same terms and conditions contained in that particular Lease, except for
the modifications made above.
Agreed to this 28th day of February 1994:
/s/ Nelson Fernandez /s/ Ross White
- ------------------------------------------ ----------------------------
Horizon Associates Joint Venture, Landlord Ross White Enterprises,
Horizon ANF, Inc., General Partner Inc., Tenant
Nelson Fernandez, Secretary/Treasurer d/b/a National Computer
Distributors, Inc.
Gregory White, President
<PAGE> 1
EXHIBIT 10.21
LEASE AGREEMENT
THIS AGREEMENT, MADE THE 1st day of January, one thousand nine hundred and
ninety four (1994), by and between Bowe 3 Partners and existing under the laws
of Pennsylvania, (hereinafter called Lessor), or the one part, and Robec, Inc.
d/b/a Robec Distributors (hereinafter called Lessee), of the other part.
WITNESSETH THAT: Lessor does hereby demise and let unto Lessee all that certain
property consisting of the 105,000 square feet office and warehouse facility on
Privet Road in Horsham, PA. The property is located at 425 Privet Road,
Horsham, PA. in the Township of Horsham State of Pennsylvania, to be used and
occupied as office and distribution center for the distribution of computers
and accessories and for no other purpose, for the term of 3 years beginning the
1st day of January one thousand nine hundred and ninety four (1994) and ending
the 31st day of December one thousand nine hundred and ninety six (1996), for
the minimum rental of $522,000 Per Year, renegotiable 1/1/97 for a maximum
increase of 10% of the previous base rent, and every three years thereafter,
payable in monthly installments in advance during the said term of this lease,
or any renewal hereof, in sums of $43,500.00 on the first day of each month,
rent to begin from the 1st day of January, 1994, the first installment to be
paid at the time of signing the lease.
If Lessor is unable to give Lessee possession of the demised premises, as
herein provided, by reason of the holding over of a previous occupant, or by
reason of any cause beyond the control of the Lessor, the Lessor shall not be
liable in damages to the Lessee therefore, and during the period that the
Lessor is unable to give possession, all rights and remedies of both parties
hereunder shall be suspended.
(a) Lessee agrees to pay as rent in addition to the minimum rental
herein reserved any and all sums which may become due by reason of the failure
of Lessee to comply with all the covenants of this lease and pay any and all
damages, costs and expenses which the Lessor may suffer or incur by reason of
any default of the Lessee or failure on his part to comply with the covenants
of this lease, and each of them, and also any and all damages of the demised
premises caused by any act or neglect of the Lessee.
(b) Lessee further agrees to pay as rent in addition to the minimum
rental herein reserved all taxes assessed or imposed upon the demised premises
and/or the building of which the demised premises is a part during the term of
this lease. All taxes will be prorated to tenants proportional to the rental
payment.
(c) Lessee further agrees to pay to Lessor as additional rent all
fire insurance premiums upon the demised premises and/or the building of which
the demised premises is a part.
<PAGE> 2
(d) Lessee further agrees to pay as additional rent all utilities,
including but not limited to heat, coal, water, and sanitary charges, and all
charges for repairs to said equipment for such services on the premises, whether
such repairs are made necessary by ordinary ware and tear, freezing, hot water,
accident or other causes, immediately when the same become due.
(e) Lessee further agrees to pay as additional rent equally with the
other tenants for common expenses including but not limited to outside lighting,
grass cutting, snow removal, improvements such as parking lots, sewer system,
plus Fire Casualty and General Liability Insurance.
All rents shall be payable without prior notice or demand at the office of
Lessor in at 1233 Valley Forge Road, Lansdale, PA or at such other place as
Lessor may from time to time designate by notice in writing.
Lessee covenants and agrees that he will without demand
(a) Pay the rent and all other charges herein reserved as rent on the days
and times and at the place that the same are made payable, without fail, and if
Lessor shall at any time or times accept said rent or rent charges after the
same shall have become due and payable, such acceptance shall not excuse delay
upon subsequent occasions, or constitute or be construed as a waiver of any of
Lessor's rights. Lessee agrees that any charge or payment herein reserved,
included or agreed to be treated or collected as rent and/or any other charges
or taxes, expenses, or costs herein agreed to be paid by the Lessee may be
proceeded for and recovered by the Lessor by distraint of other process in the
same manner as rent due and in arrears.
(b) Keep the demised premises clean and free from all ashes, dirt and other
refuse matter; replace all glass windows, doors, etc., broken; keep all waste
and drain pipes open; repair all damage to plumbing and to the premises in
general; keep the same in good order and repair as they now are, reasonable
wear and tear and damage by accidental fire or other casualty not occurring
through negligence of Lessee or those employed by or acting for Lessee alone
excepted. The Lessee agrees to surrender the demised premises in the same
condition in which Lessee has herein agreed to keep the same during the
continuance of this lease.
(c) Comply with any requirements of any of the constituted public
authorities, and with the terms of any State or Federal statute or local
ordinance or regulation applicable to Lessee or his use of the demised
premises, and save Lessor harmless from penalties, fines, costs or damages
resulting from failure to do so.
(d) Use every reasonable precaution against fire.
(e) Comply with rules and regulations of Lessor promulgated as hereinafter
provided.
(f) Peaceably deliver up and surrender possession of the demised premises to
the Lessor at the expiration or sooner termination of this lease, promptly
delivering to Lessor at his office all keys for the demised premises.
(g) Give to Lessor prompt written notice of any accident, fire or damage
occurring on or to the demised premises.
(h) Lessee shall be responsible for the condition of the pavement, curb,
cellar doors, awnings and other erections in the pavement during the term of
this lease; shall keep the pavement free from snow and ice; and shall be and
hereby agrees that Lessee is solely liable for any accidents, due or alleged to
be due to their defective condition, or to any accumulations of snow and ice.
Lessee covenants and agrees that he will do none of the following things
without the consent in writing of Lessor first had and obtained:
(a) Occupy the demised premises in any other manner or for any other purpose
<PAGE> 3
than as above set forth.
(b) Assign, mortgage or pledge this lease or under-let or sub-lease the
demised premises, or any part thereof, or permit any other person, firm or
corporation to occupy the demised premises, or any part thereof; nor shall any
assignee or sub-lessee assign, mortgage or pledge this lease or such sub-lease,
without an additional written consent by the Lessor, and without such consent
no such assignment, mortgage or pledge shall be valid. If the Lessee becomes
embarrassed or insolvent, or makes an assignment for the benefit of creditors,
or if a petition in bankruptcy is filed by or against the Lessee or a bill in
equity or other proceeding for the appointment of a receiver for the Lessee if
filed, or if the real or personal property of the Lessee shall be sold or
levied upon by any Sheriff, Marshall or Constable, the same shall be a
violation of this covenant.
(c) Place or allow to be placed any stand, booth, sign or show case upon the
doorsteps, vestibules or outside salls or pavements or said premises, or paint,
place, erect or cause to be painted, placed or erected any sign, projection or
device on or in any part of the premises. Lessee shall remove any sign,
projection or device painted, placed or erected, if permission has been granted
and restore the walls, etc., to their former conditions, at or prior to the
expiration of this lease. In case of the breach of this covenant (in addition
to all other remedies given to Lessor in case of breach of any conditions or
covenants of this lease) Lessor shall have the privilege of removing said
stand, booth, sign, show case, projection or device, and restoring said walls,
etc., to their former condition, and Lessee, at Lessor's option, shall be
liable to Lessor for any and all expenses so incurred by Lessor.
(d) Make any alterations, improvements, or additions to the demised
premises. All alterations, improvements, additions or fixtures, whether
installed before or after the execution of this lease, shall remain upon the
premises at the expiration or sooner determination of this lease and become the
property of Lessor, unless Lessor shall, prior to the determination of this
lease, have given written notice to Lessee to remove the same, in which event
Lessee will remove such alterations, improvements and additions and restore the
premises to the same good order and condition in which they now are. Should
Lessee fail so to do, Lessor may do so, collecting, at Lessor's option, the
cost and expense thereof from Lessee as additional rent.
(e) Use or operate any machinery that, in Lessor's option, the cost and
expense thereof from Lessee as additional rent.
(f) Place any weights in any portion of the demised premises beyond the safe
carrying capacity of the structure.
(g) Do or suffer to be done, any act, matter or thing objectionable to the
fire insurance companies whereby the fire insurance or any other insurance now
in force or hereafter to be placed on the demised premises, or any part thereof,
or on the building of which the demised premises may be a part, shall become
void or suspended, or whereby the same shall be rated as a more hazardous risk
than at the date of execution of this lease, or employ any person or persons
objectionable to the fire insurance companies or carry or have any benzine or
explosive matter of any kind in and about the demised premises. In case of a
breach of this covenant (in addition to all other remedies given to Lessor in
case of the breach of any of the conditions or covenants of this lease) Lessee
agrees to pay to Lessor as additional rent any and all increase or increases of
premiums on insurance carried by Lessor on the demised premises, or any part
thereof, or on the building of which the demised premises may be a part, caused
in any way by the occupancy of Lessee.
(h) Remove, attempt to remove or manifest an intention to remove Lessee's
goods or property from or out of the demised premises otherwise than in the
ordinary and usual course of business, without having first paid and satisfied
Lessor for all rent which may become due during the entire term of this lease.
(i) Vacate or desert said premises during the term of this lease, or permit
the same to be empty and unoccupied.
<PAGE> 4
Lessee covenants and agrees that Lessor shall have the right to do the
following things and matters in and about the demised premises:
(a) At all reasonable times by himself or his duly authorized agents to go
upon and inspect the demised premises and every part thereof, and/or at his
option to make repairs, alterations and additions to the demised premises or
the building of which the demised premises is a part.
(b) At any time or times and from time to time to make such rules and
regulations as in his judgment may from time to time be necessary for the
safety, care and cleanliness of the premises, and for the preservation of good
order therein. Such rules and regulations shall, when noticed thereof is given
to Lessee, form and part of this lease.
(a) To display a "For Sale" sign at any time, and also, after notice from
either party of intention to determine this lease, or at any time within three
months prior to the expiration of this lease, a "For Rent" sign, or both "For
Rent" and "For Sale" signs; and all of said signs shall be placed upon such
part of the premises as Lessor may elect and may contain such matter as Lessor
shall require. Prospective purchasers or tenants authorized by Lessor may
inspect the premises at reasonable hours at any time.
(d) The Lessor may discontinue all facilities furnished and services
rendered, or any of them, by Lessor, not expressly covenanted for herein, it
being understood that they constitute no part of the consideration for this
lease.
(a) Lessee agrees to be responsible for and to relieve and hereby relieves
Lessor from all liability by reason of any injury or damage to any person or
property in the demised premises, whether belonging to the Lessee or any other
person, caused by any fire, breakage or leakage in any part or portion of the
demised premises, or any part or portion of the building of which the demised
premises is a part, or from water, rain or snow that may leak into, issue or
flow from any part of the said premises, or of the building of which demised
premises is a part, or from the drains, pipes, or plumbing work of the same, or
from any place or quarter, whether such breakage, leakage, injury of damage be
caused by or result from the negligence of Lessor or his servants or agents or
any person or persons whatsoever.
(b) Lessee also agrees to be responsible for and to relieve and hereby
relieves Lessor from all liability by reason of any damage or injury to any
person or thing which may arise from or be due to the use, misuse or abuse of
all or any of the elevators, hatches, openings, stairways, hallways, of any
kind whatsoever, which may exist or hereafter be erected or constructed on the
said premises, or from any kind of injury which may arise from any other cause
whatsoever on the said premises or the building of which the demised premises
is a part, whether such damage, injury, use, misuse or abuse be caused by or
result from the negligence of Lessor, his servants or agents or any other
person or persons whatsoever.
(a) In the event that the demised premises is totally destroyed or so damaged
by fire or other casualty not occurring through fault or negligence of the
Lessee or those employed by or acting for him, that the same cannot be repaired
or restored within a reasonable time, this lease shall absolutely cease and
determine, and the rent shall abate for the balance of the term.
(b) If the damage caused as above be only partial and such that the premises
can be restored to their then condition within a reasonable time, the Lessor
may, at his option, restore the same with reasonable promptness, reserving the
right to enter upon the demised premises for the purpose. The Lessor also
reserves the right to enter upon the demised premises whenever necessary to
repair damage caused by fire or other casualty to the building of which the
demised premises is a part, even though the effect of such entry be to render
the demised premises or a part thereof untenantable. In either event, the rent
shall be apportioned and suspended during the time the Lessor is in possession,
taking into account the proportion of the demised premises rendered untenant-
<PAGE> 5
able and the duration of the Lessor's possession. If a dispute arises as to
the amount of rent due under this clause, Lessee agrees to pay the full amount
claimed by Lessor. Lessee shall, however, have the right to proceed by law to
recover the excess payment, if any.
(c) Lessor shall make such election to repair the premises or terminate this
lease by giving notice thereof to Lessee at the leased premises within thirty
days from the day lessor received notice that the demised premises had been
destroyed or damaged by fire or other casualty.
(d) Lessor shall not be liable for any damage, compensation or claim by
reason of inconvenience or annoyance arising from the necessity of repairing
any portion of the building, the interruption in the use of the premises, or
the termination of this lease by reason of the destruction of the premises.
(e) The Lessor has let the demised premises in their present condition and
without any representations on the part of the Lessor, his officers, employees,
servants and/or agents. It is understood and agreed that Lessor is under no
duty to make repairs or alterations at the time of letting or at any time
thereafter.
(a) No contract entered into or that may be subsequently entered into by
Lessor with Lessee, relative to any alterations, additions, improvements or
repairs, nor the failure of Lessor to make such alterations, additions,
improvements or repairs as required by any such contract, nor the making of
Lessor or his agents or contractors of such alterations, additions,
improvements or repairs shall in any way affect the payment of the rent or said
other charges at the time specified in this lease.
(b) It is hereby covenanted and agreed, any law, usage or custom to the
contrary notwithstanding, that Lessor shall have the right at all times to
enforce the covenants and provisions of this lease in strict accordance with
the terms hereof, notwithstanding any conduct or custom on the part of the
Lessor in refraining from so doing at any time or times; and, further, that the
failure of Lessor at any time or times to enforce his rights under said
covenants and provisions strictly in accordance with the same shall not be
construed as having created a custom in any way or manner contrary to the
specific terms, provisions and covenants of this lease or as having in any way
or manner modified the same.
(c) This lease is granted upon the express condition that Lessee and/or the
occupants of the premises herein leased, shall not conduct themselves in a
manner which the Lessor in his sole opinion may deem improper or objectionable,
and that if at any time during the term of this lease or any extension or
continuation thereof, Lessee or any occupier of the said premises shall have
conducted himself, herself or themselves in a manner which Lessor in his sole
opinion deems improper or objectionable, Lessee shall be taken to have broken
the covenants and conditions of this lease, and Lessor will be entitled to all
of the rights and remedies granted and reserved herein for the Lessee's failure
to observe any of the covenants and conditions of this lease.
(d) In the event of the failure of Lessee promptly to perform the covenants
of Section 8(b) hereof, Lessor may go upon the demised premised and perform
such covenants, the cost thereof, at the sole option of Lessor, to be charged
to Lessee as additional and delinquent rent.
If the Lessee
(a) Does not pay in full when due any and all installments of rent and/or any
other charge or payment herein reserved, included, or agreed to be treated or
collected as rent and/or any other charge, expense, or cost herein agreed to be
paid by the Lessee, or
(b) Violates or fails to perform or otherwise breaks any covenant of agreement
herein contained; or
(c) Vacates the demised premises or removes or attempts to remove or
manifests an intention to remove any goods or property therefrom otherwise than
in the ordinary and usual course of business without having first paid and
<PAGE> 6
satisfied the Lessor in full for all rent and other charges then due or that
may thereafter become due until the expiration of the then current term, above
mentioned
Then and in any or either of said events, there shall be deemed to be
a breach of this lease, and thereupon ipso facto and without entry or other
action by Lessor;
(1) The rent for the entire unexpired balance of the term of this
lease, as well as all other charges, payments, costs and expenses herein agreed
to be paid by the Lessee, or at the option of Lessor any part thereof, and also
all costs and officers' commissions including watchmen's wages and further
including the five percent chargeable by Act of Assembly to the Lessor, shall,
in addition to any and all installments of rent already due and payable and in
arrears and/or any other charge or payment herein reserved, included or agreed
to be treated or collected as rent, and/or any other charge, expense or cost
herein agreed to be paid by the Lessee which may be due and payable and in
arrears, be taken to be due and payable and in arrears as if by the terms and
provisions of this lease, the whole balance of unpaid rent and other charges,
payments, taxes, costs and expenses were on that date payable in advance; and
if this lease or any part thereof is assigned, or if the premises or any part
thereof is sub-let, Lessee hereby irrevocably constitutes and appoints Lessor
Lessee's agent to collect the rents due by such assignee or sub-lessee and
apply the same to the rent due hereunder without in any way affecting Lessee's
obligation to pay any unpaid balance due hereunder;
(2) This lease and the term hereby created shall determine and become
absolutely void without any right on the part of the Lessee to save the
forfeiture by payment of any sum due or by other performance of any condition,
term or covenant broken; whereupon, Lessor shall be entitled to recover damages
for such breach in an amount equal to the amount of rent reserved for the
balance of the term of this lease, less the fair rental value of the said
demised premises, for the residue of said term.
In the event of any default as above set forth in Section 14, the Lessor,
or anyone acting on Lessor's behalf, at Lessor's option;
(a) may without notice or demand enter the demised premises, breaking
open locked doors if necessary to effect entrance, without liability to action
for prosecution or damages for such entry or for the manner thereof, for the
purpose of distraining or levying and for any other purposes, and take
possession of and sell all goods and chattels at auction, on three days' notice
served in person on the Lessee or left on the premises, and pay the said Lessor
out of the proceeds, and even if the rent be not due and unpaid, should the
Lessee at any time remove or attempt to remove goods and chattels from the
premises without leaving enough thereon to meet the next periodical payment,
Lessee authorizes the Lessor to follow for a period of ninety days after such
removal, take possession of and sell at auction, upon like notice, sufficient
of such goods to meet the proportion of rent accrued at the time of such
removal; and the Lessee hereby releases and discharges the Lessor, and his
agents, from all claims, actions, suits, damages, and penalties, for or by
reason or on account of any entry, distraint, levy, appraisement or sale;
and/or
(b) may enter the premises, and without demand proceed by distress and
sale of the goods there found to levy the rent and/or other charges herein
payable as rent, and all costs and officers' commissions, including watchmen's
wages and sums chargeable to Lessor, and further including a sum equal to 5% of
the amount of the levy as commissions to the constable or other person making
the levy, shall be paid by the Lessee, and in such case all costs, officers'
commission and other charges shall immediately attach and become part of the
claim of Lessor for rent, and any tender of rent without said costs, commission
and charges made after the issue of a warrant of distress shall not be
sufficient to satisfy the claim of the Lessor. Lessee hereby expressly waives
in favor of Lessor the benefit of all laws now made or which may hereafter be
<PAGE> 7
made regarding any limitation as to the goods upon which, or the time within
which, distress is to be made after removal of goods, and further relieves the
Lessor of the obligations of proving or identifying such goods, it being the
purpose and intent of this provision that all goods of Lessee, whether upon the
demised premises or not, shall be liable to distress for rent. Lessee waives in
favor of Lessor all rights under the Act of Assembly of April 6, 1951, P.L. 69,
and all supplements and amendments thereto that have been or may hereafter be
passed, and authorizes the sale of any goods distrained for rent at any time
after five days from said distraint without any appraisement and/or
condemnation thereof.
(c) The Lessee further waives the right to issue a Writ of Replevin
under the Pennsylvania Rules of Civil Procedure, No. 1071 &c. and Laws of the
Commonwealth of Pennsylvania, or under any other law previously enacted and now
in force, or which may be hereafter enacted, for the recovery of any articles,
household goods, furniture, etc., seized under a distress for rent or levy upon
an execution for rent, damages or otherwise; all waivers hereinbefore mentioned
are hereby extended to apply to any such action; and/or
(d) may lease said premises or any part or parts thereof to such person
or persons as may in Lessor's discretion seem best and the Lessee shall be
liable for any loss of rent for the balance of the then current term.
If rent and/or any charges hereby reserved as rent shall remain unpaid on
any day when the same ought to be paid, Lessee hereby empowers any
Prothonotary, Clerk or Court or attorney of any Court of Record to appear for
Lessee in any and all actions which may be brought for rent and/or the charges,
payments, costs and expenses reserved as rent, or agreed to be paid by the
Lessee and/or to sign for Lessee an agreement for entering in any competent
Court an amicable action or actions for the recovery of rent or other charges,
payments, costs and expenses, and in said suites or in said amicable action or
actions to confess judgment against Lessee for all or any part of the rent
specified in this lease and then unpaid including, at Lessor's option, the rent
for the entire unexpired balance of the term of this lease, and/or other
charges, payments, costs and expenses reserved as rent or agreed to be paid by
the Lessee, and for interest and costs together with any attorney's commission
of 5%. Such authority shall not be exhausted by one exercise thereof, but
judgment may be confessed as aforesaid from time to time as often as any of
said rent and/or other charges, payments, costs and expenses, reserved as rent
shall fall due or be in arrears, and such powers may be exercised as well after
the expiration of the original term and/or during any extension or renewal of
this lease.
When this lease shall be determined by condition broken, either during
the original term of this lease or any renewal or extension thereof, and also
when and as soon as the term hereby created or any extension thereof shall have
expired, it shall be lawful for any attorney as attorney for Lessee to file an
agreement for entering in any competent Court an amicable action and judgment
in ejectment against Lessee and all persons claiming under Lessee for the
recovery by Lessor of possession of the herein demised premises, for which this
lease shall be his sufficient warrant, whereupon, if Lessor so desires, a writ
of Execution or of Possession may issue forthwith, without any prior writ or
proceedings whatsoever, and provided that if for any reason after such action
shall have been commenced the same shall be determined and the possession of
the premises hereby demised remain in or be restored to Lessee, Lessor shall
have the right upon any subsequent default or defaults, or upon termination of
this lease as hereinbefore set forth, to bring one or more amicable action or
actions as hereinbefore set forth to recover possession of the said premises.
In any amicable action of ejectment and/or for rent in arrears, Lessor
shall first cause to be filed in such action an affidavit made by him or
someone acting for him setting forth the facts necessary to authorize the entry
of
<PAGE> 8
judgment, of which facts such affidavit shall be conclusive evidence and if a
true copy of this lease (and of the truth of the copy such affidavit shall be
sufficient evidence) be filed in such action, it shall not be necessary to file
the original as a warrant of attorney, any rule of Court, custom or practice to
the contrary notwithstanding.
Lessee expressly agrees that any judgment, order or decree entered against him
by or in any Court or Magistrate by virtue of the powers of attorney contained
in this lease, or otherwise, shall be final, and that he will not take an
appeal, certiorari, writ of error, exception or objection to the same, or file
a motion or rule to strike off or open or to stay execution of the same, and
releases to Lessor and to any and all attorneys who may appear for Lessee all
errors in the said proceedings, and all liability therefor. Lessee expressly
waives the benefits of all laws, now or hereafter in force, exempting any goods
on the demised premises, or elsewhere from distraint, levy or sale in any legal
proceedings taken by the Lessor to enforce any rights under this lease. Lessee
further waives the right of inquisition on any real estate that may be levied
upon to collect any amount which may become due under the terms and conditions
of this lease, and does hereby voluntarily condemn the same and authorizes the
Prothonotary or Clerk of Court to issue a Writ of Execution or other process
upon Lessee's voluntarily condemnation, and further agrees that the said real
estate may be sold on a Writ of Execution or other process. If proceedings
shall be commenced by Lessor to recover possession under the Acts of Assembly,
either at the end of the term or sooner termination of this lease, or for
nonpayment of rent or any other reason Lessee specifically waives the right to
the three months' notice and/or the fifteen or thirty days' notice required by
the Act of April 6, 1951, P.L. 69, and agrees that five days' notice shall be
sufficient in either or any other case.
The right to enter judgment against Lessee and to enforce all of the other
provisions of this lease hereinabove provided for may, at the option of any
assignee of this lease, be exercised by any assignee of the Lessor's right,
title and interest in this lease in his, her or their own name, notwithstanding
the fact that any or all assignments of the said right, title and interest may
not be executed and/or witnessed in accordance with the Act of Assembly of May
28, 1715, 1 Sm. L. 90, and all supplements and amendments thereto that have
been or may hereafter be passed and Lessee hereby expressly waives the
requirements of said Act of Assembly and any and all laws regulating the manner
and/or form in which such assignments shall be executed and witnessed.
All of the remedies hereinbefore given to Lessor and all rights and remedies
given to him by law and equity shall be cumulative and concurrent. No
determination of this lease or the taking or recovering of the premises shall
deprive Lessor of any of his remedies or actions against the Lessee for rent
due at the time or which, under the terms hereof, would in the future become
due as if there has been no determination, nor shall the bringing of any action
for rent or breach of covenant, or the resort to any other remedy herein
provided for the recovery of rent be construed as a waiver of the right to
obtain possession of the premises.
In the event that the premises demised or any part thereof is taken or
condemned for a public or quasi-public use, this lease shall, as to the part so
taken, terminate as of the date title shall vest in the condemnor, and rent
shall abate in proportion to the square feet of leased space taken or condemned
or shall cease if the entire premises be so taken. In either event the Lessee
waives all claims against the Lessor by reason of the complete or partial
taking of the demised premises, and it is agreed that the Lessee shall not be
entitled to any notice whatsoever of the partial or complete termination of
this lease by reason of the aforesaid.
<PAGE> 9
This Agreement of lease and all its terms, covenants and provisions are and
each of them is subject and subordinate to any lease or other arrangement or
right to possession, under which the Lessor is in control of the demised
premises, to the rights of the owner or owner's of the demised premises and of
the land or buildings of which the demised premises are a part, to all rights
of the Lessor's landlord and to any and all mortgages and other encumbrances
now or hereafter placed upon the demised premises or upon the land and/or the
buildings containing the same; and Lessee expressly agrees that if Lessor's
tenancy, control, or right to possession shall terminate either by expiration,
forfeiture or otherwise, then this lease shall thereupon immediately terminate
and the Lessee shall, thereupon, give immediate possession; and Lessee hereby
waives any and all claims for damages or otherwise by reason of such
termination as aforesaid.
It is hereby mutually agreed that either party hereto may terminate this lease
at the end of said term by giving to the other party written notice thereof at
least sixty (60) days prior thereto, but in default of such notice, this lease
shall continue upon the same terms and conditions in force immediately prior to
the expiration of the term hereof as are herein contained for a further period
of ninety (90) days and so on from quarter to quarter unless or until
terminated by either party hereto, giving the other sixty (60) days written
notice for removal previous to expiration of the then current term; PROVIDED,
however, that should this lease be continued for a further period under the
terms hereinabove mentioned, any allowances given Lessee on the rent during the
original term shall not extend beyond such original term and further provided,
however, that if Lessor shall have given such written notice prior to the
expiration of any term hereby created, of his intention to change the terms and
conditions of this lease, and Lessee shall not within sixty (60) days from such
notice notify Lessor of Lessee's intention to vacate the demised premises at
the end of the then current term, Lessee shall be considered as Lessee under
the terms and conditions mentioned in such notice for a further term as above
provided, or for such further term as may be stated in such notice. In the
event that Lessee shall give notice, as stipulated in this lease, of intention
to vacate the demised premises at the end of the present term, or any renewal
or extension thereof, and shall fail or refuse so to vacate the same on the
date designated by such notice, then it is expressly agreed that Lessor shall
have the option either (a) to disregard the notice so given as having no
effect, in which case all the terms and conditions of this lease shall continue
thereafter with full force precisely as if such notice had not been given, of
(b) Lessor may, at any time within thirty days after the present term or any
renewal or extension thereof, as aforesaid, give the said Lessee ten days'
written notice of his intention to terminate the said lease; whereupon the
Lessee expressly agrees to vacate said premises at the expiration of the said
period of ten days specified in said notice. All powers granted to Lessor by
this lease may be exercised and all obligations imposed upon Lessee by this
lease shall be performed by Lessee as well during any extension of the original
term of this lease as during the original term itself.
All notices required to be given by Lessor to Lessee shall be sufficiently
given by leaving the same upon the demised premises, but notices given by
Lessee to Lessor must be given by registered mail, and as against Lessor the
only admissible evidence that notice has been given by Lessee shall be a
registry return receipt signed by Lessor or his agent.
It is expressly understood and agreed by and between the parties hereto that
this lease and the riders attached hereto and forming a part hereof set forth
all the promises, agreements, conditions and understandings between Lessor or
his Agents and Lessee relative to the demised premises, and that there are no
promises, agreements, conditions or understandings, either oral or written,
<PAGE> 10
between them other than are herein set forth. It is further understood and
agreed that, except as herein otherwise provided, no subsequent alteration,
amendment, change or addition to this lease shall be binding upon Lessor or
Lessee unless reduced to writing and signed by them.
All rights and liabilities herein given to, or imposed upon, the respective
parties hereto shall extend to and bind the several and respective heirs,
executors, administrators, successors and assigns of said parties; and if there
shall be more than one Lessee, they shall all be bound jointly and severally by
the terms, covenants and agreements herein, and the work "Lessee" shall be
deemed and taken to mean each and every person or party mentioned as a Lessee
herein, be the same one or more; and if thee shall be more than one Lessee, any
notice required or permitted by the terms of this lease may be given by or to
any one thereof, and shall have the same force and effect as if given by or to
all thereof. The words "his" and "him" wherever stated herein shall be deemed
to refer to the "Lessor" and Lessee" whether such Lessor or Lessee be singular
or plural and irrespective of gender. No rights, however, shall inure to the
benefit of any assignee of Lessee unless the assignment to such assignee has
been approved by Lessor in writing as aforesaid.
Any headings preceding the text of the several paragraphs and sub-paragraphs
hereof are inserted solely for convenience of reference and shall not
constitute a part of this lease, nor shall they affect its meaning,
construction or effect.
30. Lessee agrees to pay or cause to be paid when due, all charges for all
gas, electricity, heat, telephone and other services or utilities used,
rendered or supplied to, upon or in connection with the said premises
throughout the term and to indemnify Lessor and save it harmless against
claims, liability, damages or expense on such account. Lessee shall pay all
charges directly to the provider of the service or utility involved, unless
lessor directs the same be paid to lessor, except that any charge covering a
period commencing before or terminating after the term shall be paid directly
to lessor.
IN WITNESS WHEREOF, the parties hereto have executed these presents the
day and year first above written, and intend to be legally bound thereby.
SEALED AND DELIVERED IN THE PRESENCE OF:
/s/ /s/ (SEAL)
- --------------------------------- ------------------------------
Robec, Inc. (SEAL)
- --------------------------------- ------------------------------
(SEAL)
- --------------------------------- ------------------------------
Attest: /s/ Deborah K. Piotrowski By: (SEAL)
--------------------------- ----------------------------
<PAGE> 11
FIRST AMENDMENT OF LEASE BETWEEN BOWE 3 PARTNERS and
AMERIQUEST TECHNOLOGIES, INC.
THIS FIRST AMENDMENT OF LEASE is made this 10th day of September, 1996 by
and between BOWE 3 PARTNERS, a Pennsylvania general partnership (hereinafter
called "Lessor"), and AMERIQUEST TECHNOLOGIES, INC., a Delaware Corporation
("Lessee").
WHEREAS, by Lease Agreement dated January 1, 1994 (hereinafter called
"Lease"), Lessor did lease to Robec, Inc.. (which was acquired by Lessee on
November 13, 1995 as a wholly-owned subsidiary and then merged with and into
Lessee on July 31, 1996), a property consisting of approximately 105,000 square
feet of office and warehouse space (hereinafter called "Desmised Premises") for
a period of three years and terminating December 31, 1996; and
WHEREAS, Lessor and Lessee now both desire to extend the term of the
Lease.
NOW, THEREFORE, the parties hereto intending to be legally bound, hereby
agree as follows:
1. The Lease is hereby amended to provide for the continuance of the rental of
the Demised Premises for an additional period of thirteen (13) months with
the date of termination to be January 31, 1998 (hereinafter called "Initial
Extension").
2. After the Initial Extension, the Lease will remain in effect on a
month-to-month basis as long as the Lessor and or the Lessee do not notify
the other by written notice that they desire to terminate the Lease. Such
notice must be given by either the Lessor or the Lessee to the other at
least six (6) months prior to the termination of the Lease.
3. In the event that the Lessee notifies the Lessor that Lessee is going to
terminate the Lease, the Lessor shall be allowed to show the Demised
Premises to potential tenants from the time the lease cancellation notice
is received by the Lessor until the termination of the Lease during normal
business hours of the Lessee provided such tours are escorted by designated
personnel of Lessee.
4. Notice of termination of the Lease by the Lessee must be sent by certified
mail to: G Wesley McKinney, P.O.Box 97, Middlebury Center, PA 16935.
5. Notice of termination of the Lease by the Lessor must be sent by certified
mail to AmeriQuest Technologies, Holger Heims, Corporate Secretary, 6100
Hollywood Blvd, Ste '700, Hollywood, FL 33024.
6. All rents shall be payable without notice or demand at the office of the
Lessor at: 700 Kyle Lane, Lower Gwynedd, PA 19002, Attention: Carrie
Beckett.
7. Except as modified herein, all other terms, conditions, covenants and
provisions of the Lease shall remain in full force and effect. To the
extent of any inconsistencies between this First Amendment of Lease and the
Lease, this First Amendment of Lease shall control.
IN WITNESS WHEREOF, the parties hereto have hereunder set their hands and seals
the day and the year first above written.
AMERIQUEST TECHNOLOGIES, INC:
Attest: /s/ Ray Ridge By: /s/
--------------------------- -----------------------------
BOWE 3 PARTNERS
Attest: /s/ By: Robert S. Beckett, Partner
---------------------------- ------------------------------
<PAGE> 1
EXHIBIT 10.22
BASIC LEASE INFORMATION
LANDLORD: Tradeport Partners, a Georgia Joint Venture
ADDRESS OF LANDLORD: 5901 - B Peachtree Dunwoody Road N.E., Suite 555,
Atlanta, Georgia
c/o Laing Properties, Inc. Atlanta, GA 30328
CONTACT: John Sims
TELEPHONE: 404/551/3453
TENANT: Ameriquest Technologies, Inc., a corporation of
the State of Delaware
ADDRESS OF TENANT: 3105 Sweetwater Road, Suite 215,
Lawrenceville, GA 30244
CONTACT: Thomas Ross
TELEPHONE: 305/967-2397, extension 6299
Paragraph 4
COMMON AREA MAINTENANCE: Nine hundred ninety-four and 84/100 dollars
per month ($994.84)
Paragraph 6
SECURITY DEPOSIT: Fifteen thousand and 00/100 dollars ($15,000.00)
Paragraph 10
USE: Warehousing and distribution of computers
APPROXIMATE # OF EMPLOYEES: Thirty five (35)
Paragraph 33
BROKER REPRESENTING LANDLORD: Laing Marketing Company
BROKER REPRESENTING TENANT: Trammell Crow Company
Paragraph 34
PARKING SPACE REQUIREMENT: Forty (40) parking spaces
Paragraph 35
CONSTRUCTION OF PREMISES: N/A
THE FOREGOING BASIC LEASE INFORMATION IS HEREBY INCORPORATED INTO AND MADE PART
OF THIS LEASE EACH REFERENCE IN THIS LEASE TO ANY OF THE BASIC LEASE
INFORMATION SHALL MEAN THE RESPECTIVE INFORMATION HEREIN ABOVE SET FORTH AND
SHALL BE CONSTRUED TO INCORPORATE ALL OF THE TERMS PROVIDED UNDER THE
PARTICULAR LEASE PARAGRAPH PERTAINING TO SUCH INFORMATION IN THE EVENT OF ANY
CONFLICT BETWEEN ANY BASIC LEASE INFORMATION AND THE LEASE, THE LATTER SHALL
CONTROL.
Acknowledgement by Tenant: /s/ Greg A. White, President
-------------------------------------------------
Acknowledgement by Landlord: /s/ ?
-----------------------------------------------
ii
<PAGE> 2
COMMERCIAL LEASE AGREEMENT
THIS LEASE is made this 22nd day of November, 1994, by and between
Tradeport Partners, a Georgia Joint Venture, (hereinafter called "Landlord")
and Ameriquest Technologies, Inc., a Corporation of the State of Delaware,
(hereinafter called "Tenant").
1. PREMISES
The Landlord, for and in consideration of the rents, covenants,
agreements and stipulations hereinafter mentioned, reserved and contained, to
be paid, kept and performed by the Tenant, has leased and rented, and by these
presents does lease and rent unto the Tenant, and the Tenant hereby agrees to
lease and take upon the terms which hereinafter appear, the following described
space (herein called the "Premises")
PROJECT: Tradeport Distribution Center
ADDRESS: 3105 Sweetwater Road
CITY: Lawrenceville
COUNTY: Gwinnett
STATE: Georgia
BUILDING: Two hundred (200)
FLOOR:
SUITE: 215
APPROXIMATE RENTABLE SQUARE FEET: 79,587 RSF
Premises are more particularly shown on Exhibit "A" and hereby made a part
hereof.
2. TERM
To have and to hold the same for the term to commence on the February
15, 1995, and ending on the February 14, 2000, at midnight unless sooner
terminated as hereinafter provided. In the event the Premises are not
available for occupancy by Tenant February 15, 1995, the Commencement Date
shall adjust to such a date that the Premises are substantially completed and
available for occupancy by Tenant, but in no event shall commencement date be
after April 1, 1995.
3. RENTAL
The Tenant agrees to pay to the Landlord promptly on the first day of
each month in advance, during the term of this Lease, a monthly rental of the
following:
February 15, 1995 to February 14, 1996 @ $21,554.81 per month
February 15, 1996 to February 14, 1997 @ $22,417.01 per month
February 15, 1997 to February 14, 1998 @ $23,313.69 per month
February 15, 1998 to February 14, 1999 @ $24,246.23 per month
February 15, 1999 to February 14, 2000 @ $25,216.08 per month
Payments received after the fifteenth (15th) day of the month may be
assessed an additional five percent (5%) charge as agreed liquidated damages
due Landlord. Acceptance by Landlord of a rental payment in an amount less
than that which is currently due shall in no way affect Landlord's rights under
this Lease and in no way be an accord and satisfaction.
4. COMMON AREA MAINTENANCE EXPENSE
Landlord shall maintain and keep clean all common areas of the site
shown on Exhibit "B" which is attached hereto and made a part hereof including
grounds, landscaping drives, parking and loading areas. Tenant shall reimburse
Landlord for Tenant's share of the cost of maintaining the common areas of the
Building.* Tenant shall pay Landlord an amount as specified in the Basic Lease
Information per month along with the monthly rental.
* Pursuant to Exhibit "C", Special Stipulations, #43.
5. TAX AND INSURANCE ESCALATION EXPENSES
Tenant shall pay to Landlord upon demand, as additional rental during
the term of this Lease and any extension or renewal thereof, the prorated
amount by which all real property taxes (including but not limited to ad
valorem taxes, special assessments and governmental charges) and property
insurance premiums (including but not limited to any property liability or
umbrella policies held by Landlord) on the Premises for each calendar year that
exceeds all real property taxes and property insurance premiums on the Premises
for the first calendar year during the lease term or the first year in which
the building is assessed as a completed improvement, whichever occurs later.
The estimated costs for any such year applicable to the Premises shall be
determined by proration on the basis that the rentable floor area of the
Premises bears the rentable floor area of the entire Building.
6. ADVANCE RENT AND SECURITY DEPOSIT
Upon execution of this Lease, Tenant will pay to Landlord the first
month's rental plus a security deposit as specified in the Basic Lease
Information. Such deposit is refundable to Tenant within thirty (30) days
following satisfactory completion of all terms of this Lease and provided that
no defective conditions, other than normal wear and tear, are left unrepaired
by Tenant and that Tenant does not owe Landlord any debts. Any portion of said
deposits not required to reimburse Landlord for Landlord's expense in repairing
defective conditions caused by Tenant or for paying amount owed by Tenant to
Landlord, shall be refunded to the Tenant as provided above.
7. CONSTRUCTION OF THIS AGREEMENT
No failure of Landlord to exercise any power given Landlord hereunder,
or to insist upon strict compliance by Tenant with this obligation hereunder,
and no custom or practice of the parties at variance with the terms hereof
shall constitute a waiver of Landlord's right to demand exact compliance with
the terms hereof. Time is of the essence of this Agreement.
8. DEFINITIONS
"Landlord" as used in this shall include it's heirs, representatives,
assigns and successors in title to Premises. "Tenant" shall include it's heirs
and representatives, and if this Lease shall be validly assigned or sublet
shall include also Tenant assignees or sublessees, as to Premises covered by
such assignment or sublease. "Landlord" and "Tenant" include male and female,
singular and plural, corporation, partnership or individual, as may fit the
particular parties.
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9. UTILITIES AND SERVICES
Tenant shall pay water, sewer, gas, electricity, fuel, light, heat,
power bills, garbage pickup, janitorial services and sprinkler system service
charges (if any) for leased Premises, or used by Tenant in connection
therewith. If Landlord elects to provide any of the above services, Tenant
shall promptly reimburse Landlord for Tenants actual or pro-rata cost of the
services provided.
10. USE OF PREMISES
Premises shall be used for the purpose as specified in the Basic Lease
Information and no other without the written consent of the Landlord. Premises
shall not be used for any illegal purposes; nor in any manner to create any
nuisance or trespass; not in any manner to vitiate the insurance or increase the
rate of insurance on Premises.
11. ABANDONMENT OF LEASED PREMISES
Tenant agrees not to abandon or vacate leased Premises during the period
of this Lease, and agrees to use said Premises for the purpose herein leased
until the expiration hereof.
12. REPAIRS BY LANDLORD
The Landlord agrees to keep in good repair the roof, foundations and
exterior walls of the Building on the Premises and underground utility and
sewer pipes outside of the exterior walls of said Building; provided, however,
the Landlord shall not be responsible for the repair of glass and exterior
doors and any and all repairs rendered necessary by the negligence of Tenants,
its agents, employees, or invitees. Landlord gives to Tenant exclusive control
of Premises and shall be under no obligation to inspect said Premises. Tenant
shall promptly report in writing to Landlord any defective condition known to
it which Landlord is required to repair, and failure to so report such defects
shall make Tenant responsible to Landlord for any Liability incurred by
Landlord by reason of such defects.
13. REPAIRS BY TENANT
(a) Tenant accepts the leased Premises in their present condition
per Exhibit "A" - Floor Plan - attached hereto and made a part hereof and as
suited for the uses intended by Tenant. Tenant shall, throughout the initial
term of this Lease and all renewals thereof, at its expense, maintain in good
order and repair the leased Premises, including the Building, heating and air
conditioning equipment (including but not limited to replacement of parts,
compressors, air handling units and heating units) and other improvements
located thereon, except those repairs expressly required to be made by Landlord.
In the event Tenant fails to make said repairs, then Landlord may, but shall not
be obligated to, make such repairs, in which event Tenant shall promptly
reimburse Landlord for all expenses incurred thereby. Tenant agrees to return
said Premises to Landlord at the expiration, or prior termination, of this Lease
in as good condition and repair as when first received, natural wear and tear,
damage by storm, fire, lightning, earthquake or other casualty alone excepted.
Aside from the aforesaid repairs, Tenant shall not make any alternations or
improvements to the Premises without the prior written consent of Landlord.
(b) Tenant shall maintain in force at all times a maintenance
contract for the heating, ventilation and air conditioning equipment acceptable
to Landlord.
14. INSURANCE AND WAIVER OF SUBROGATION
(a) Landlord shall maintain, during the full term of this Lease,
fire and extended coverage insurance upon the entire property in an amount
sufficient to repair replace the Building in case of damage or destruction from
perils normally covered by said insurance.
(b) Tenant shall, during the full term of this Lease, maintain
insurance insuring both Tenant and Landlord, as their interest may appear, from
bodily injury and property damage claims occurring because of Tenant's use or
occupancy of the demised Premises. Said insurance coverage shall be no less
than one million dollar limit for bodily injury liability and two hundred fifty
thousand dollar limit for property damage liability. Tenant shall, upon
request, furnish Landlord with evidence of said insurance coverage and the
policy so provided shall contain, among other things, a provision which provides
that no cancellation, reduction in amount or material change in coverage thereof
shall be effective until at lease thirty (30) days after receipt of written
notice thereof to Landlord.
(c) If the property insurance premiums on the Building in which the
leased Premises are located are increased due to Tenant's use of the Premises,
then Tenant shall pay such increase which is attributable to such use as
additional rent.
(d) Landlord and Tenant mutually waive any rights of recovery that
either party may or would have against the other that are or would normally be
covered by either a fire and extended coverage insurance policy issued to the
Landlord or an owner's fire and extended coverage perils policy (property damage
insurance) issued to Tenant subject to Paragraph 14(b) hereof as to Landlord's
insurable interests as insured by Tenant's liability and property damage
insurance.
15. DESTRUCTION OF, OR DAMAGE TO PREMISES
If the Premises are totally destroyed by storm, fire, lightning,
earthquake or casualty or if the Premises should be so damaged so that
rebuilding or repairs cannot be accomplished within one hundred ninety (190)
working days after the date of written notification to Tenant of this
destruction, then this Lease shall terminate as of the date of such notification
and rental shall be accounted for as between Landlord and Tenant as of that
date. If Premises are damaged but not wholly destroyed by any such casualties,
rental shall abate in such proportions as use of Premises has been destroyed,
and Landlord shall restore Premises to substantially the same condition as
before damage as speedily as practicable upon full rental shall recommence.
16. INDEMNITY
Tenant agrees to indemnify and save harmless the Landlord against all
claims for damages to persons or property by reason of the use or occupancy of
the leased Premises, and all expenses incurred by Landlord because thereof,
including attorney's fees and court costs.
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17. GOVERNMENTAL ORDERS
Tenant agrees, at his own expense, to promptly comply with all
requirements of any legally constituted public authority made necessary by
reason of Tenant's occupancy of said Premises. Landlord agrees to promptly
comply with any such requirements if not made necessary by reason of Tenant's
occupancy. It is mutually agreed, however, between Landlord and Tenant, that if
in order to comply with such requirements, the cost to Landlord or Tenant, as
the case may be, shall exceed a sum equal to one year's rent, then Landlord or
Tenant who is obligated to comply with such requirements is privileged to
terminate this Lease by giving written notice of termination to the other party,
by registered mail, which termination shall become effective ninety (90) days
after receipt of such notice, and which notice shall eliminate necessity of
compliance with such requirement by party giving such notice, unless party
receiving such notice of termination shall, before termination becomes
effective, pay to party giving notice all cost of compliance in excess of one
year's rent, or secure payment of said sum in a manner satisfactory to party
giving notice.
18. CONDEMNATION
If the whole of the leased Premises, or such portion thereof as will
make Premises unusable for the purposes herein leased, shall be condemned by
any legally constituted authority or taken by private purchase in lieu thereof
for any public use or purpose, then in either of said events the term hereby
granted shall cease for the time when possession thereof is taken by public
authorities, and rental shall be accounted for as between Landlord or Tenant to
recover compensation and damage caused by condemnation from the condemnor. It is
further understood and agreed that neither the Tenant nor Landlord shall have
any rights in any award made to the other by any condemnation authority.
19. ASSIGNMENT AND SUBLETTING
Tenant may not, without prior written consent which will not be
unreasonably withheld of Landlord, assign this Lease or any interest hereunder,
or sublease Premises or any part thereof, or permit the use of Premises by any
party other than Tenant. Consent to one or more assignments or sublease shall
not destroy or waive this provision. Subtenants and assignees shall become
directly liable to Landlord for all obligations of Tenant hereunder without
relieving Tenant's liability.
20. REMOVAL OF FIXTURES
Tenant may (if not in default hereunder), prior to the expiration of
this Lease or any extension thereof, remove all equipment which Tenant has
placed in the Premises; provided that Tenant shall not remove; (a) air
conditioning, air ventilation and heating fixtures; (b) lightning fixtures; (c)
dock levelers; and (d) carpeting. Upon removal of said fixtures and equipment
which Tenant is allowed to remove as set forth in the preceding sentence, Tenant
shall repair or bear the actual cost of all damage to Premises caused by such
removal.
21. CANCELLATION OF LEASE BY LANDLORD
It is mutually agreed that in the event the Tenant shall default in the
payment of rent herein reserved, when due, and fails to cure said default, or if
Tenant shall be in default in performing any of the terms or provisions of this
Lease other than the provision requiring the payment of rent, and fails to cure
such default within forty-five (45) days after the date of receipt of written
notice of default from Landlord, or if Tenant is adjudicated bankrupt, or if a
permanent receiver is appointed for Tenant's property and such receiver is not
removed within sixty (60) days after written notice from Landlord to Tenant to
obtain such removal or if, whether voluntarily or involuntarily, Tenant takes
advantage of any debtor relief proceeding under any present or future law,
whereby the rent or any part thereof, or is proposed to be, reduced or payment
thereof deferred, or if Tenant makes an assignment for benefit of creditors, or
if Tenant's effects should be levied upon or attached under process against
Tenant, not satisfied or dissolved within thirty (30) days after written notice
from Landlord to Tenant to obtain satisfaction thereof, then, and in any of said
events, Landlord at his option may at once, or within six (6) months thereafter
(but only during continuance of such default or condition), terminate this Lease
by written notice to Tenant, whereupon this Lease shall end. After an
authorized assignment or subletting of the entire Premises covered by this
Lease, the occurring of any of the foregoing defaults or events shall affect
this Lease only if caused by, or happening to, the assignee or sublessee. Any
notice provided in this paragraph may be given by Landlord, Tenant will at once
surrender possession of the Premises to Landlord and remove all of Tenant's
effects therefrom, using such force as may be necessary without being guilty of
trespass, forcible entry or detainer or other tort.
22. RELETTING BY LANDLORD
a) Landlord, as Tenant's agent, without terminating this Lease,
upon Tenant's failure to cure any default within the time permitted as set forth
in Paragraph 21 hereof, may at Landlord's option but not as Landlord's
obligation, enter upon and rent Premises at the best price obtainable by
reasonable effort, without advertisement and by the private negotiations and for
any term Landlord deems proper. Tenant shall be liable to Landlord for the
deficiency, if any, between Tenant's rent hereunder and the rent obtained by
Landlord on reletting.
b) The costs and damages incurred by Landlord in reletting Tenant's
space including but not limited to lease commissions, refurbishment cost and
attorney's fees shall be deducted from the rent obtained by Landlord in
determining the deficiency, if any, between Tenant's rent and the rent obtained
by Landlord upon reletting Tenant's space.
23. EXTERIOR SIGNS
Tenant shall place no signs upon the windows or the outside walls
or roof of the leased Premises except with the written consent of the Landlord.
Any and all signs placed on the within leased Premises by Tenant shall be
maintained in compliance with rules and regulations governing such signs and the
Tenant shall be responsible to Landlord for any damage caused by installation,
use, or maintenance of said signs, and Tenant agrees upon removal of said signs
to repair all damage incident to such removal.
24. ENTRY FOR CARDING
Landlord may card Premises "For Rent" or "For Sale" thirty (30) days
before the termination of this Lease. Landlord may enter the Premises at
reasonable hours to exhibit same to prospective or Tenants and to make repairs
required of Landlord under the terms hereof, or to make repairs to Landlord's
adjoining property, if any.
25. EFFECT OF TERMINATION OF LEASE
No termination of this Lease prior to the normal ending thereof, by
lapse of time or otherwise, shall affect Landlord's right to collect rent for
the period prior to termination thereof.
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26. MORTGAGE RIGHTS
Tenant's rights shall be subject to any bona fide mortgage or deed to
secure debt which is now, or may hereafter be placed upon the Premises by
Landlord including renewals, extensions and modifications thereto, and Tenant
agrees to execute and deliver such documentation as may be required by any such
subordination.
27. NO ESTATE IN LAND
This contract shall create the relationship of Landlord and Tenant
between the parties hereto; no estate shall pass out of Landlord. Tenant has
only a right of possession, use and enjoyment of Premises during the term of
this Lease which shall not be subject to levy and sale, and not assignable by
Tenant except by Landlord's written consent.
28. HOLDING OVER
If Tenant remains in possession of Premises after expiration of the term
hereof, with Landlord's acquiescence and without any express agreement of
parties, Tenant shall be a Tenant at will at rental rate in effect at end of
lease, and there shall be no renewals of this Lease by operation of law. All
applicable conditions of this lease shall remain in effect during any holdover
period.
29. ATTORNEY'S FEES AND HOMESTEAD
If any rent owing under this Lease is collected by or through an
attorney at law, Tenant agrees to pay actual and reasonable attorney's fees
incurred by Landlord. Tenant waives all homestead rights and exemptions which
he may have under any law as against any obligation owing under this Lease.
Tenant hereby assigns to Landlord his homestead and exemption.
30. TRANSFER
31. RIGHTS CUMULATIVE
All rights, powers and privileges conferred hereunder upon parties
hereto shall be cumulative but not restrictive to those given by law.
32. SERVICE OF NOTICE
Tenant hereby appoints as his agent to receive service of all
dispossessory or distraint proceedings and notices thereunder an all notices
required under this Lease, the person in charge of leased Premises at the time,
or occupying said Premises at the time, or occupying said Premises, and if no
person is in charge of or occupying said Premises, then such service or notice
may be made by attaching the same to the main entrance to said Premises. A copy
of all notices under this Lease shall also be sent to Tenant's last known
address, if different from said Premises.
33. STATEMENT OF ACCEPTANCE
After completion of the Premises in accordance with the terms of this
Contract, Tenant, prior to occupancy, will furnish Landlord with a written
statement confirming Tenant's acceptance of the Premises and confirming the
commencement date of the term of this Lease.
34. BROKERAGE COMMISSION
Tenant (except with respect to Broker designated in the Basic Lease
Information) and Landlord (except with respect to Broker designated in the Basic
Lease Information) each represents and warrants to the other that no broker,
agent, commission salesman or other person has represented the warranting party
in the negotiation of this Lease or the procurement of the Premises and that no
commission, fee or compensation of any kind is due and payable in connection
herewith to any broker, agent, commission salesman or other person. Each party
agrees to indemnify and hold the other harmless from and against any claim,
loss, damage, liability, cost and expense (including but not limited to
attorney's fees and cost of litigation) which the other shall suffer, incur or
be threatened with because of the claim of any broker, agent, commission
salesman or other person claiming by, through or under such party, whether or
not such claim is meritorious. Any party listed in parenthesis in the first
sentence of this Paragraph 34, and thus excluded from the above warranty, shall
be entitled to a commission, fee or other compensation only if it has entered
into a separate written agreement with Landlord or Tenant, as the case may be.
35. PARKING ARRANGEMENTS
Tenant shall have the right to use in common with other Tenants in the
Building the parking spaces provided by Landlord adjacent to the Building for
parking of Tenant's automobiles and those of its employees and visitors, subject
to the rules and regulations now or hereafter adopted by Landlord. Tenant shall
not use nor permit any of its employees, agents, or visitors to use any parking
spaces in an area owned by Landlord other than the parking area assigned to the
Building. If Landlord deems it advisable, Landlord may set aside a part of the
total parking field for use as a separate area for visitors. Landlord reserves
the right to adopt any regulations necessary to curtail unauthorized parking,
including the required use of parking permits or assigning to Tenant a specific
area in which tenant's employees shall be required to park. Tenant anticipates
that it shall require the amount of parking spaces stipulated in the Basic Lease
Information for its employees and parking in excess of that number shall not be
permitted without Landlord's approval. If such approval is granted that parking
shall be in such quantities and at such locations at Landlord may designate.
36. CONSTRUCTION OF PREMISES
Landlord, at Landlord's cost and expense, shall finish out leased
Premises as detailed on the attached construction plans. Said plans have been
approved by Tenant and are more particularly described in Exhibit "A" and in the
Basic Lease Information. If Tenant requires any change beyond those detailed in
Exhibit "A", then the additional cost of such work shall be done at Tenant's
sole cost and expense.
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37. RESTRICTIVE COVENANTS
The covenants established by Landlord to govern the operations of the
property are attached hereto and made a part of this Lease as Exhibit "D".
38. ENTIRE AGREEMENT
This Lease contains the entire agreement of the parties hereto and no
representations, inducements, promises or agreements, oral or otherwise, between
the parties not embodied herein, shall be of any force or effect.
39. ACCELERATION OF RENTALS
Landlord, upon notification to Tenant of its intention to do so (as
expressed by a notice sent certified mail, return receipt requested ([the
"Notice"]) may, upon a material default of the provisions of this Lease,
accelerate all remaining minimum or base rentals, percentage rentals, and all
other sums of money (hereinafter collectively, the "Rentals") that Tenant is
required to pay under this Lease, same to be come due and payable after the
Notice Period (as same is hereinafter defined) shall have expired without
payment in full to Landlord. Landlord and Tenant agree that this provision is a
term for liquidated damages, and the sums accelerated, which have not already
become due by the expiration of the Notice Period, shall be reduced to present
value, as of the date of said expiration. The "Notice Period" shall be fifteen
(15) days from Tenant's receipt of the Notice. Actual receipt of the Notice is
not required, all that is required to make the Notice effective is for the
Landlord to mail the Notice to the Tenant's last known address, as same has been
provided to Landlord by Tenant. If there is no actual acceptance or receipt of
the Notice, then the Notice shall be deemed to be expired on the eighteenth
(18th) day from the date of mailing of the Notice. If Landlord elects to
accelerate the Rentals, it shall undertake to seek another tenant for the
Premises, and credit any amounts received to the obligation of the Tenant for
Rentals, less the following:
a) reimbursement for all expenses incurred as a result of the
Tenant's failure to perform its other obligations under the Lease including
taxes, common area maintenance, (if any) Tenant's failure to make repairs and
comply with insurance and other requirements.
b) the cost of advertising the Premises and for real estate
broker's commission;
c) the cost of painting, repairing, alerting, dividing or
consolidating the Premises to accommodate the needs of any new tenant.
In the event the rights of the Landlord as expressed herein are
cumulative of any and all other rights expressed in the Lease, Tenant agrees
that it will remain liable for the Rentals from and after any action by Landlord
under a Proceeding Against Tenant Holding Over, or Distress Warrant, whether or
not Tenant retains the right to possession of the Premises.
40. SUBORDINATION
Unless any holder or beneficiary of any deed of trust or other security
instrument affecting the real property of which the Premises form a part
otherwise elect in writing, this Lease shall be subject and subordinate to any
such deeds of trust or other security instruments. In confirmation of the
subordination set forth in this Paragraph 40, (or, if any holder or beneficiary
of a deed of trust or other security instrument elects in writing, superiority)
Tenant shall, at Landlord's request, execute and deliver such further
instruments as may be desired by any holder or beneficiary of such deed of trust
or other security instrument.
41. COUNTERPARTS
This Lease may be executed in two or more counterparts, each of which
shall constitute an original, but when taken together shall constitute but one
Lease. Each counter part shall be effective if it bears the signatures of all
parties hereof; or so many counterparts as shall contain all of the signatures
of the parties hereto shall constitute one Lease, and shall be effective as
such.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals,
as of the day and year first above written.
Signed, sealed and delivered in TENANT: Ameriquest Technologies,
the presence of: Inc., a Corporation of the
state of Delaware
/s/
- -------------------------------- ----------------------------------
Witness
Name: /s/ Gregory A. White
- -------------------------------- -----------------------------
Notary Public
Title: President
----------------------------
Arrest: /s/ 12-21-94
---------------------------
Title:
---------------------------
[CORPORATE SEAL]
{Signature blocks continued on next page} [NOTARY STAMP]
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Signed, sealed and delivered in the LANDLORD: Tradeport Partners a Georgia
presence of: Joint Venture
By: Managing Venturer: Laing Tradeport
/s/ Patricia L. Lindley Inc., a Georgia Corporation
- -----------------------------------
Witness By: /s/ James ?
-------------------------------------
/s/ Christine M. Carroll
- ----------------------------------- Name:
Notary Public -----------------------------------
[SEAL]
Title:
----------------------------------
Attest: /s/ Robert R. Stubbs
---------------------------------
Title: Vice President & Secretary
----------------------------------
[CORPORATE SEAL]
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EXHIBIT "D"
TRADEPORT DISTRIBUTION CENTER
COVENANTS AND RESTRICTIONS
1. No additional locks shall be placed on the doors of the Premises by
Tenant, nor shall any existing locks be changed unless Landlord is
immediately furnished two keys thereto. Landlord will without charge
furnish Tenant with two keys for each lock existing upon the entrance
doors when Tenant assumes possession with the understanding that at
the termination of the Lease these keys shall be returned.
2. Tenant will refer all contractors, contractor's representatives and
installation technicians rendering any service on or to the Premises
for Tenant, to Landlord's approval and supervision before performance
of any contractual service. This provision shall apply to all work
performed in the Building including installation of telephones,
telegraph equipment, electrical devices and attachments and
installations of any nature affecting floors, walls, woodwork, trim,
windows, ceilings, equipment or any other physical portion of the
Building.
3. No Tenant shall at any time occupy any part of the Building as sleeping
or lodging quarters.
4. Tenant shall not place, install or operate on the Premises or in any
part of Building, an engine, stove or machinery, or conduct mechanical
operations or cook thereon or therein, or place or use in or about
Premises any explosives, gasoline, kerosene, oil acids, caustics, or
any other flammable, explosive, or hazardous material.
5. Landlord will not be responsible for lost or stolen personal property,
equipment, money or jewelry from Tenant's area regardless of whether
such loss occurs when area is locked against entry or not.
6. Safes and other unusually heavy objects shall be placed by the Tenant
only in such places as may be approved by Landlord.
7. None of the entries, passages, doors, or hallways shall be blocked or
obstructed, or any rubbish, litter, trash, or material of any nature
placed, emptied or thrown into these areas, or such areas be used at
any time except for access or egress by Tenant, Tenant's agents,
employees or invitees.
8. The water closets and other water fixtures shall not be used for any
purpose other than those for which they constructed. No person shall
waste water by interfering with the faucets or otherwise.
9. No vehicles or animals shall be brought into the Building.
10. No sign, tag, label, picture, advertisement, or notice shall be
displayed, distributed, inscribed, painted, or affixed by Tenant on
any part of the outside or inside of the Building or of the demised
Premises without the prior written consent of Landlord.
11. In the event Landlord should advance upon the request, or for the
account of the Tenant, any amount for labor, material, packing,
shipping, postage, freight or express upon articles delivered to the
demised Premises or for the safety, care, and cleanliness of the
demised Premises, the amount so paid shall be regarded as additional
rent and shall be due and payable forthwith to the Landlord from the
Tenant.
12. Tenant shall not do or permit to be done within the demised Premises
anything which would unreasonably annoy or interfere with the rights
of other Tenants of the Building.
13. During the ninety (90) days prior to the expiration of this Lease,
Landlord may show the demised Premises to prospective tenants and may
place upon the windows or doors thereon one or more "For Lease" signs
of reasonable dimensions.
14. There shall not be any outside storage of goods, materials or equipment
in the side, front or rear area of the Premises. Tenant agrees to keep
the area immediately in front of and behind the Premises clean and free
of all trash and debris.
15. The sidewalks, entry passages, corridors, halls and stairways shall not
be obstructed by tenants, or used by them for any purpose other than
those of ingress and egress. The floors and skylights and windows that
reflect or admit light into any place in the building in which the
Premises are located, shall not be covered or obstructed by tenants.
The water closets and other water apparatus shall not be used for any
other purpose than those for which they were constructed and no
sweepings, rubbish, or other obstructing substances shall be thrown
therein. Any damage resulting to them, or to associated systems, from
misuse, shall be borne by tenants who, or whose clerks, agents, or
servants, shall cause.
<PAGE> 9
16. Tenants and occupants shall observe and obey all parking and traffic
regulations as imposed by Landlord. Landlord in all cases retains the
power to designate "no parking" zones, traffic rights-of-way, and
general parking area procedures. Failure of Tenant to comply will
constitute a violation of this Lease.
17. If tenants desire blinds or window covering of any kind over the
windows, they must be of such shape, color and material as may be
prescribed by Landlord, and shall be erected only with Landlord's
written consent and at the expense of said tenants. No awnings shall
be placed on said building.
<PAGE> 1
EXHIBIT 10.23
STANDARD COMMERCIAL LEASE -------------------------------
(BUILDING TO BE CONSTRUCTED) EG #37
IL 1/80 -------------------------------
Drafted: January 3, 1995
-------------------------------
LEASE AGREEMENT
THIS LEASE AGREEMENT made and entered into by and between ELK GROVE
VILLAGE INDUSTRIAL PARK LTD., A Texas Limited Partnership d/b/a Elk Grove
Village Industrial Park Ltd. hereinafter referred to as "Landlord", and NCD, an
Ameriquest Company hereinafter referred to as "Tenant":
WITNESSETH:
1. Premises and Term. In consideration of the obligation of Tenant
to pay rent as herein provided, and in consideration of the other terms,
provisions and covenants hereof. Landlord hereby demises and leases to
Tenant, and Tenant hereby accepts and leases from Landlord, all that portion
(hereinafter referred to as the "premises") of certain real property situated
within the County of DuPage, State of Illinois, legally described in Exhibit
"A", and the buildings and improvements to be constructed thereon, said premises
being as outlined on the site plan contained in Exhibit "B", and including any
parking areas and truck loading areas specifically marked in red on said Exhibit
B for the exclusive use of Tenant, said Exhibits being attached hereto and
incorporated herein by reference, and all rights, privileges, easements,
appurtenances and immunities belonging to or in any way pertaining to the
premises.
TO HAVE AND TO HOLD the same for a term commencing on the "commencement
date", as hereinafter defined, and ending sixty (60) months thereafter, unless
sooner terminated pursuant to any provisions hereof; provided, however, that if
the commencement date is other than the first day of a calendar month, such term
shall extend for said number of months in addition to the remainder of the
calendar month following the "commencement date".
The "commencement date" shall be the date upon which the buildings and
other improvements erected and to be erected upon the premises shall have been
substantially completed in accordance with the plans and specifications of
Landlord as agreed upon by Landlord and Tenant in writing as provided
below (other than any exterior work which cannot be completed on such date
because of weather conditions or other causes beyond Landlord's reasonable
control provided such incompletion will not substantially interfere with
Tenant's use of the premises). Landlord shall give Tenant not less than ten
(10) days' notice in writing of the date upon which Landlord proposes to lender
said buildings and other improvements as substantially completed and ready for
occupancy as aforesaid. In the event that the buildings and other improvements
are not in fact substantially completed and ready for occupancy as aforesaid on
the date specified in such notice. Tenant shall notify Landlord in writing of
its objections within five (5) days after receipt of Landlord's notice.
Landlord shall have a reasonable time after delivery of such notice in which to
take such corrective action as Landlord deems necessary and shall notify Tenant
in writing as soon as it deems such corrective action, if any, has been
completed so that said buildings and other improvements are completed and ready
for occupancy.
Taking of possession by Tenant shall be deemed conclusively to establish
that said buildings and other improvements have been so completed in accordance
with the plans and specifications and that the premises are in good and
satisfactory condition, as of when possession was so taken (except for such
items Landlord is permitted to complete at a later date because of weather
conditions or other causes beyond Landlord's reasonable control, which items
shall be specified by Landlord to Tenant in writing). Tenant acknowledges that
no representations as to the repair of the premises have been made by Landlord,
unless such are expressly set forth in this lease.
Upon such "commencement date" Tenant shall execute and deliver to
Landlord a letter of acceptance of delivery of the premises, such letter to be
on Landlord's standard form therefor. In the event of any dispute as to when
and whether the work performed or required to be performed by Landlord has been
substantially completed, the certificate of an A.I.A registered architect or a
temporary or final certificate of occupancy issued by the local governmental
authority shall be conclusive evidence of such completion, effective on the date
of the delivery of a copy of any such certificate to Tenant.
The premises are to be constructed substantially in accordance with the
plans and specifications prepared for Landlord and agreed to by Tenant. If
Landlord and Tenant have not so agreed prior to the date hereof, they hereby
agree to use their best efforts to reach such agreement as soon as possible. If
Landlord and Tenant fail to agree upon the plans and specifications for the
premises within fifteen (15) days after the execution hereof, Landlord may, at
any time thereafter, submit to Tenant plans and specifications for the interior
of the premises similar to the plans and specifications customarily used by
Landlord or its agents (or if Landlord is a Trust, the agents of the
beneficiary) for buildings of a similar type and demand. In writing, that
Tenant agree to such plans and specifications. If Tenant fails within ten (10)
days thereafter to agree to such plans and specifications or submit any
revisions thereto which do not increase Landlord's cost of providing the same,
Landlord may, in addition to any other remedy granted Landlord hereunder in
case of a default by Tenant, elect at any time thereafter, upon notice to
Tenant, to either (i) complete the shall or such premises and any other work
which Landlord and Tenant have agreed to in writing, tendering possession to
Tenant upon substantial completion thereof, the date of such tender being
deemed to be the commencement date hereunder, and charge Tenant for the
additional costs of completing the electrical, plumbing, office partitions and
other similar tenant finish work, the plans and specifications for which have
not been agreed to by Landlord and Tenant, which amount shall be paid by
Tenant to Landlord as additional rent prior to such tenant finish work
commencing, or (ii) cancel this lease, effective fifteen (15) days after Tenant
receives such notice, without incurring any liability on account thereof and
the term hereby granted is expressly limited accordingly.
The cost of any changes and/or additions made to the buildings and
improvements at the request of Tenant after Landlord and Tenant have agreed on
the original plans and specifications, including but not limited to the actual
cost therefor, the cost of revisions in the plans and specifications and the
cost of any delays in construction resulting from any Tenant requested changes,
whether or not such changes are finally agreed to, together with twenty (20)
percent of such costs for Landlord's overhead and profits, shall be paid by
Tenant upon Landlord's presentation of a bill therefor and such amount shall be
treated as additional rent hereunder.
In addition to the letter of acceptance of delivery provided for above
and any estoppel certificate required under Paragraph 24D hereof, upon request
of Landlord at any time after the commencement date. Tenant shall execute and
deliver to Landlord's mortgagee a prospective mortgagee a sworn and
acknowledged estoppel certificate, in form reasonably satisfactory to
Landlord's mortgagee or prospective mortgagee, as the case may be, certifying
the matters set forth in Paragraph 24D and further certifying that Tenant
accepts the premises as being delivered in accordance with the above referred
to plans and specifications. To induce Landlord to enter into this lease and
to complete the premises in accordance with the above referred to plans and
specifications. Tenant hereby irrevocably appoints Landlord, or if Landlord is
a trust, Landlord's beneficiary as attorney-in-fact, for the Tenant with full
power and authority to execute and deliver in the name of the Tenant such
estoppel certificate if Tenant fails to deliver the same within ten (10) days
after Tenant's receipt of Landlord's request so to do: provided either (i) an
A.I.A. registered architect certifies that the premises have been substantially
completed in accordance with the plans and specifications as modified by
Landlord and Tenant in writing or (ii) a temporary or permanent certificate of
occupancy of the local governmental authority is issued for the premises. Such
estoppel certificate as executed by Landlord or Landlord's beneficiary, as the
case may be, on behalf of Tenant shall be fully binding on Tenant for the
benefit of such mortgagee or prospective mortgagee, unless, within five (5)
days after receipt by Tenant of a copy of the certificate executed by Landlord
or Landlord's beneficiary, as the case may be, on behalf of Tenant, Tenant
delivers to such mortgagee or prospective mortgagee a contrary certificate
setting forth the specific items in dispute and the facts supporting Tenant's
claim with supporting documents attached.
If Landlord shall be delayed in such substantial completion as a result
of: (i) Tenant's failure to agree to plans and specifications; (ii) Tenant's
request for materials, finishes or installations other than Landlord's standard:
(iii) Tenant's changes in plans; or (iv) delay in the performance or completion
of any work by a party employed by Tenant, the commencement date and the payment
of rent hereunder shall be accelerated by the number of days of such delay.
2. Base Rent and Security Deposit.
A. Tenant agrees to pay to Landlord for the premises in lawful money of the
United States rent for the entire term hereof at the rate of Twenty Four
Thousand Three Hundred Eighty and 20/100 Dollars ($24,380.20) per month, in
advance, except that the monthly installment which otherwise shall be due on the
commencement date related above, shall be due and payable on the date
Landlord:
---------------------------------
Tenant:
---------------------------------
<PAGE> 2
hereof. Thereafter, one such monthly installment shall be due and payable
without demand on or before the first day of each calendar month succeeding the
commencement date recited above during the demised term; further provided, that
the rental payment for any fractional calendar month at the commencement or end
of the lease term shall be prorated.
B. In addition, Tenant agrees to deposit with Landlord on the date hereof
the sum of Twenty Four Thousand Three Hundred Eighty and 20/100 Dollars
($24,380.20), which sum shall be held by Landlord, without obligation for
interest, as security for the full, timely and faithful performance of Tenant's
covenants and obligations under this lease, it being expressly understood and
agreed that such deposit is not an advance rental deposit or a measure of
Landlord's damages in case of Tenant's default. Upon the occurrence of any
event of default by Tenant, Landlord may, from time to time, without prejudice
to any other remedy provided herein or provided by law, use such fund to the
extent necessary to make good any arrears of rent or other payments due
Landlord hereunder, and any other damage, injury, expense or liability caused
by any event of Tenant's default; and Tenant shall pay to Landlord on demand
the amount so applied in order to restore the security deposit to its original
amount. Although the security deposit shall be deemed the property of
Landlord, any remaining balance of such deposit shall be returned by Landlord
to Tenant at such time after termination of this lease when Landlord shall have
determined that all Tenant's obligations under this lease have been fulfilled.
Subject to the other terms and conditions contained in this lease, if the
premises are conveyed by Landlord, said deposit may be turned over to
Landlord's, or its successor's grantee, and if so, Tenant hereby releases
Landlord, or its successor, as the case may be, from any and all liability with
respect to said deposit and its application or return.
3. Use. The demised premises shall be continuously used by Tenant, but
only for the purpose of receiving, storing, shipping and selling (other than at
retail) products, materials and merchandise made and/or distributed by Tenant
and for such other lawful purposes as may be incidental thereto. Tenant shall
at its own cost and expense obtain any and all licenses and permits necessary
for any such use. The parking of automobiles, trucks or other vehicles in the
areas not specifically designated on Exhibit B (unless such other areas are
designated by Landlord to be common parking areas) and the outside storage of
any property (including, without limitation, overnight parking of trucks and
other vehicles) are prohibited without Landlord's prior written consent.
Tenant shall comply with all governmental laws, ordinances and regulations
applicable to the use of the premises and its occupancy thereof, and shall
promptly comply with all governmental orders and directives for the correction,
prevention and abatement of any violations or nuisances in or upon, or
connected with, the premises, all at Tenant's sole expense. If, as a result of
any change in the governmental laws, ordinances and regulations, the premises
must be altered to lawfully accommodate Tenant's use and occupancy thereof,
such alterations shall be made only with the consent of Landlord, but the
entire cost thereof shall be borne by Tenant; provided, that, the necessity of
Landlord's consent shall in no way create any liability against Landlord for
failure of Tenant to comply, or alter the premises to comply, with such laws,
ordinances and regulations. Tenant shall not permit any objectionable or
unpleasant odors, smoke, dust, gas, noise or vibrations to emanate from the
premises, nor take any other action which would constitute a nuisance or would
disturb or endanger any other tenants of the building in which the premises are
situated or unreasonably interfere with such tenant's use of their respective
premises or permit any use which would adversely affect the reputation of the
building in which the premises are situated. Without Landlord's prior written
consent, Tenant shall not receive, store or otherwise handle any product,
material or merchandise which is explosive or highly flammable. Tenant will
not permit the premises to be used for any purpose (including, without
limitation, the storage of merchandise) in any manner which would render the
insurance thereon void or increase the insurance rate thereof, and Tenant shall
immediately cease and desist from such use, paying all cost and expense
resulting from such improper use.
4. Taxes.
A. Landlord agrees to pay all general and special taxes, assessments and
governmental charges of any kind and nature whatsoever (hereinafter collectively
referred to as "taxes") lawfully levied against the real property described in
Exhibit A, the building situated thereon and the grounds, parking areas,
driveways and alleys around the building. If for any real estate tax year
applicable to the term hereof (or any renewal or extension of such term),
Tenant's proportionate share of such taxes levied for such tax year shall
exceed the sum of Forty Thousand One Hundred Seventy Five and 25/100 Dollars
($40,175.25) ("Landlord's share"). Tenant shall pay to Landlord as additional
rent upon demand at the time the bill for each installment for such tax year
issues. The amount of such excess applicable to each installment less any
monthly payments paid by Tenant as provided below for such tax year. Upon the
issuance of the actual bills (as distinguished from any estimated bill) for
taxes to be paid in the calendar year in which the commencement date falls and
upon the issuance of such actual bills in each succeeding calendar year during
the term hereof. Tenant shall, upon Landlord's request, commencing with the
first day of the month next succeeding the date on which the taxes covered by
such bill are due without penalty and on the first day of each of the next
eleven months, pay as additional rent, and not as a deposit, one-twelfth
(1/12th) of the amount by which the taxes paid in such calendar year exceeded
Landlord's share. In addition, Tenant shall pay upon demand its proportionate
share of any fees, expenses and costs incurred by Landlord in protesting any
assessments, levies or the tax rate.
B. If at any time during the term of this lease, the present method of
taxation shall be changed so that in lieu of the whole or any part of any
taxes, assessments or governmental charges levied, assessed or imposed on real
estate and the improvements thereon, there shall be levied, assessed or imposed
on Landlord's capital levy or other tax directly on the rents received
therefrom and/or a franchise tax, assessment, levy or charge measured by or
based, in whole or in part, upon such rents for the present or any future
building or buildings on the premises, then all such taxes, assessments, levies
or charges, or the part thereof so measured or based, shall be deemed to be
included within the term "taxes" for the purposes hereof.
C. Any payment to be made pursuant to this Paragraph 4 with respect to
the real estate tax year in which this lease commences or terminates shall be
prorated.
5. Landlord's Repairs. Landlord shall at its expense maintain in good
repair, reasonable wear and tear excepted, only the foundation, roof and the
structural soundness of the exterior walls of the building. Tenant shall
immediately give Landlord written notice of any defect or need for repairs in
the foundation and exterior walls, after which Landlord shall have reasonable
opportunity to repair same or cure such defect. Landlord's liability with
respect to any defects, repairs or maintenance for which Landlord is responsible
under any of the provisions of this lease shall be limited to the cost of such
repairs or maintenance or the curing of such defect. The term "walls" as used
herein shall not include windows, glass or plate glass, doors, special store
fronts or office entries.
6. Tenant's Repairs. See Paragraph 31.
A. Tenant shall at its own cost and expense keep and maintain all
parts of the premises and the real estate on which the building is located,
including any areas shared in common with other tenants of the building, for
which Landlord is not expressly responsible under the terms of this lease, in
good condition, promptly making all necessary repairs and replacements, whether
ordinary or extraordinary, or structural or nonstructural, with materials and
workmanship of the same character, kind and quality as the original, including
but not limited to, windows, glass and plate glass, doors, skylights, any
special office entries, interior walls and finish work, floors and floor
coverings, downspouts, gutters, heating and air conditioning systems,
electrical systems and fixtures, sprinkler systems, dock boards, truck doors,
dock bumpers, paving, plumbing work and fixtures, termite and pest
extermination, regular removal of trash and debris, regular mowing of any
grass, trimming, weed removal and general landscape maintenance, including the
rail spur areas. Tenant as part of its obligations hereunder shall (i) keep the
parking areas, driveways, alleys and the whole of the premises in a clean and
sanitary condition; (ii) if the premises are served by a railroad switch or
spur track, maintain (or reimburse the railroad company for maintaining) any
railway switch or spur track and related facilities serving the real estate of
which the premises are a part (Tenant hereby agreeing to sign a joint
maintenance agreement with the railroad company servicing the premises, if
requested by the Landlord or railroad company), and (iii) without injury to the
roof, other horizontal surfaces of the building, downspouts, parking areas,
driveways and sidewalks, remove all snow and ice from same. Tenant will, as
far as possible, keep all such parts of the premises and the real estate on
which the building is located from deterioration due to ordinary wear and from
falling temporarily out of repair, and upon termination of this lease in any
way Tenant will yield up the premises to Landlord in good condition and repair,
loss by fire or other casualty covered by insurance to be maintained by
Landlord pursuant to paragraph 12A hereof excepted (but not excepting any
damage to glass). In the event of any insurance claim, Tenant shall be liable
for payment of any deductible under any of Landlord's insurance policies with
respect to the premises. Landlord's deductible is currently $5,000 Prorata for
damage affecting more than one Tenant's premises.
B. Tenant shall not damage any demising wall or disturb the integrity and
support provided by any demising wall and shall, at its sole cost and expense,
promptly repair any damage or injury to any demising wall caused by Tenant or
its employees, agents or invitees.
C. Tenant and its employees, customers and licensees shall have the
nonexclusive right to use, in common with the other parties occupying said
building, common parking areas, if any, (exclusive of any parking or work load
areas designated or to be designated by Landlord for the exclusive use of Tenant
or other tenants occupying or to be occupying other portions of the building),
driveways and alleys adjacent to said building, subject to such reasonable
rules and regulations as Landlord may from time to time prescribe. Further,
Landlord reserves the right to perform the paving and landscape maintenance for
the grounds around the building, including, but not limited to, the mowing of
the grass, care of shrubs, general landscaping and maintenance of common
parking areas, if any, driveways and alleys, roof repairs, exterior painting,
common sewage line plumbing, and repair and maintenance of any other items,
the obligations for which are shared by other tenants in the building and other
improvements of which the premises are a part, all of which are otherwise
Tenant's obligations under subparagraph A above, and Tenant shall, in lieu of
the obligations set forth under subparagraph A above with respect to such items,
be liable for its proportionate share (as defined in subparagraph 24J) of the
cost and ex-
<PAGE> 3
pense thereof unless landlord in its sole discretion determines that such cost
and expense is properly allocable in another proportion or solely to either
Tenant or the other tenants occupying said building. Tenant shall pay to
Landlord its share, determined as aforesaid, of such costs and expenses, upon
demand, as additional rent, in the event Landlord elects to perform or cause to
be performed such work.
D. Landlord shall have the right to coordinate any repairs and other
maintenance of any rail tracks serving or to serve the building, and if Tenant
uses such rail tracks. Tenant shall reimburse Landlord or the railroad company,
from time to time upon demand, as additional rent, for a share of the costs of
such repairs and maintenance and any other sums specified in any agreement to
which Landlord or Tenant is a party respecting such tracks, such costs to be
borne proportionately by all tenants in the building of which the premises are a
part using such rail tracks, based upon the actual number of rail cars shipped
and received by each tenant during each calendar year in which the lease term
falls.
E. Tenant shall, at its own cost and expense, enter into a regularly scheduled
preventive maintenance/service contract with a maintenance contractor approved
by Landlord, for servicing all heating and air conditioning systems and
equipment within the premises. The service contract must include all services
suggested by the equipment manufacturer within the operation/maintenance manual
and must become effective within thirty (30) days of the date Tenant takes
possession of the premises.
F. Tenant shall, at its own cost and expense, repair any damage to the
premises resulting from and/or caused in whole or in part by the negligence or
misconduct of Tenant, its agents, servants, employees, patrons, customers, or
any other person entering upon the premises as a result of Tenant's business
activities or caused by Tenant's default hereunder.
7. Alterations. Tenant shall not make any alterations. additions or
improvements to the premises (including, without limitation, the roof and wall
penetrations) without the prior written consent of Landlord, which consent shall
not be unreasonably withheld. Tenant may, without the consent of Landlord, but
at its own cost and expense and in a good workmanlike manner erect such shelves,
bins, machinery and other trade fixtures as it may deem advisable, without
altering the basic character of the building or improvements and without
overloading or damaging such building or improvements, and in each case after
complying with all applicable governmental laws, ordinances, regulations and
other requirements. All alterations, additions, improvements and partitions
erected by Tenant shall be and remain the property of Tenant during the term of
this lease and Tenant shall, unless Landlord otherwise elects as hereinafter
provided, remove all alterations, additions, improvements and partitions erected
by Tenant and restore the premises to their original condition by the date of
termination of this lease or upon earlier vacating of the premises; provided,
however, that if at such time Landlord so elects such alterations, additions,
improvements and partitions shall become the property of Landlord as of the date
of termination of this lease or upon earlier vacating of the premises and title
shall pass to Landlord under this lease as by a bill of sale. All shelves, bins,
machinery and trade fixtures installed by Tenant may be removed by Tenant prior
to the termination of this lease if Tenant so elects, and shall be removed by
the date of termination of this lease or upon earlier vacating of the premises
if required by Landlord: upon any such removal, Tenant shall restore the
premises to their original condition. All such removals and restoration shall
be accomplished in a good workmanlike manner so as not to damage the primary
structure or structural qualities of the buildings and other improvements
within which the premises are situated. If Landlord shall, in its sole
discretion, consent to any alterations, additions or improvements proposed by
Tenant, Tenant shall construct the same in accordance with all governmental
laws, ordinances, rules and regulations and shall, prior to construction,
provide such assurances to Landlord, (including but not limited to, waivers of
lien, surety company performance bonds and personal guaranties of individuals
of substance) as Landlord shall require to protect Landlord against any loss
from any mechanics', laborers' or materialmen's liens, or other liens.
8. Signs. Tenant shall not install any signs upon the premises, except that
Landlord will provide, at Tenant's request and cost. Landlord's standard
identification sign, which sign shall be removed by Tenant upon termination of
this lease.
9. Inspections. Landlord and Landlord's agents and representatives shall have
the right to enter and inspect the premises at any reasonable time during
business hours, for the following purposes: (i) to ascertain the condition of
the premises; (ii) to determine whether Tenant is diligently fulfilling Tenant's
responsibilities under this lease; (iii) to make such repairs as may be required
or permitted to be made by Landlord under the terms of this lease; or (iv) to do
any other act or thing which Landlord deems reasonable to preserve the premises
and the building and improvements of which the premises are a part. During the
period that is six (6) months prior to the end of the term hereof and at any
time Tenant is in default hereunder and such default has remained uncured for at
least thirty (30) days, Landlord and Landlord's agents and representatives shall
have the right to enter the premises at any reasonable time during business
hours for the purpose of showing the premises and shall have the right to erect
on the premises suitable signs indicating that the promises are available for
lease. Tenant shall give written notice to Landlord at least thirty (30) days
prior to vacating the premises and shall arrange to meet with Landlord for a
joint inspection of the premises prior to vacating. In the event of Tenant's
failure to give such notice or arrange such joint inspection, Landlord's
inspection at or after Tenant's vacating the premises shall conclusively deemed
correct for purposes of determining Tenant's responsibility for repairs and
restoration.
10. Utilities. Landlord agrees to provide, at its cost, water, electricity and
telephone service connections into the premises; but Tenant shall pay for all
water, gas, heat, light, power, telephone, sewer, sprinkler system charges and
other utilities and services used on or from the premises, including without
limitation. Tenant's proportionate share as determined by Landlord of any
central station signaling system installed in the premises or the building of
which the premises are a part, together with any taxes, penalties, and
surcharges or the like pertaining thereto and any maintenance charges for
utilities. Tenant shall furnish all electric light bulbs, tubes and ballasts. If
any such services are not separately metered to Tenant. Tenant shall pay such
proportion of all charges jointly metered with other premises as determined by
Landlord, in its sole discretion, to be reasonable. Any such charges paid by
Landlord and assessed against Tenant shall be immediately payable to Landlord on
demand and shall be additional rent hereunder. Landlord shall in no event be
liable for any interruption or failure of utility services on or to the
premises.
11. Assignment and Subletting.
A. Tenant shall not have the right to assign or pledge this lease or to sublet
the whole or any part of the premises, whether voluntarily or by operation of
law, or permit the use or occupancy of the premises by anyone other than Tenant,
without the prior written consent of Landlord, and such restrictions shall be
binding upon any assignee or subtenant to which Landlord has consented. In the
event Tenant desires to sublet the premises, or any portion thereof, or assign
this lease, Tenant shall give written notice thereof to Landlord within a
reasonable time prior to the proposed commencement date of such subletting or
assignment, which notice shall set forth the name of the proposed subtenant or
assignee, the relevant terms of any sublease and copies of financial reports and
other relevant financial information of the proposed subtenant or assignee.
Notwithstanding any permitted assignment or subletting, Tenant shall at all
times remain directly, primarily and fully responsible and liable for the
payment of the rent herein specified and for compliance with all of its other
obligations under the terms, provisions and covenants of this lease. Upon the
occurrence of an "event of default" (as hereinafter defined). if the premises or
any part thereof are then assigned or sublet, Landlord, in addition to any other
remedies herein provided, or provided by law, may, at its option collect
directly from such assignee or subtenant all rents due and becoming due to
Tenant under such assignment or sublease and apply such rent against any sums
due to Landlord from Tenant hereunder, and no such collection shall be construed
to constitute a novation or a release of Tenant from the further performance of
Tenant's obligations hereunder.
B. In addition to, but not in limitation of, Landlord's right to approve of
any subtenant or assignee, Landlord shall have the option, in its sole
discretion, in the event of any proposed subletting or assignment, to terminate
this lease, or in the case of a proposed subletting of less than the entire
premises, to recapture, the portion of the premises to be sublet, as of the date
the subletting or assignment is to be effective. The option shall be exercised,
if at all by Landlord giving Tenant written notice thereof within sixty (60)
days following Landlord's receipt of Tenant's written notice as required above.
If this lease shall be terminated with respect to the entire demised premises
pursuant to this paragraph, the term of this lease shall end on the date stated
in Tenant's notice as the effective date of the sublease or assignment as if
that date had been originally fixed in this lease for the expiration of the term
hereof; provided, however, that effective on such date Tenant shall pay Landlord
all amounts, as estimated by Landlord, payable by Tenant to such date, with
respect to taxes, insurance, repairs, maintenance, restoration and other
obligations, costs or, charges which are the responsibility of Tenant hereunder.
Further, upon any such cancellation Landlord and Tenant shall have no further
obligations of liabilities to each other under this lease, except with respect
to obligations or liabilities which accrued hereunder as of such cancellation
date (in the same manner as it such cancellation date were the date originally
fixed in this lease for the expiration of the term hereof). If Landlord
recaptures under this paragraph only a portion of the demised premises, the
rent during the unexpired term hereof shall abate proportionately based on the
rent per square foot contained in this lease as of the date immediately prior to
such recapture. Tenant shall, at Tenant's own cost and expense, discharge in
full any outstanding commission obligation on the part of Landlord with respect
to this lease, and any commissions which may be due and owing as a result of any
proposed assignment or subletting, whether or not the premises are recaptured
pursuant hereto and rented by Landlord to the proposed tenant or any other
tenant.
C. Notwithstanding the provisions of the foregoing paragraphs, Tenant may,
without Landlord's consent, assign this lease to any corporation succeeding to
substantially all the business and assets or Tenant by merger, consolidation,
purchase of assets or otherwise or to any corporation or entity which is a
subsidiary or division of Tenant, provided that the following conditions are
satisfied: (i) the total assets and net worth of such assignee shall be equal to
or more than that of Tenant immediately prior to such transaction: (ii) Tenant
is not then in default hereunder; and (iii) such successor shall execute and
deliver to Landlord an instrument in writing fully assuming all the obligations
and liabilities imposed upon Tenant hereunder. Upon satisfaction of the
foregoing, Landlord agrees to
Landlord:
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Tenant:
----------------------------
<PAGE> 4
discharge Tenant from any further liability hereunder.
12. Fire and Casualty Damage.
A. Landlord agrees to maintain standard fire and extended coverage Insurance
covering the building of which the premises are a part in an amount not less
than ninety percent (90%) (or such greater percentage as may be necessary to
comply with the provisions of any co-insurance clauses of the policy) of the
"replacement cost" thereof as such term is defined in the Replacement Cost
Endorsement to be attached thereto, insuring against the perils of fire and
lightning and including extended coverage, or at Landlord's option all risk
coverage, such coverages and endorsements to be as defined, provided and limited
in the standard bureau forms prescribed by the insurance regulatory authority
for the state in which the premises are situated for use by insurance companies
admitted in such state for the writing of such insurance on risks located within
such state. Subject to the provisions of subparagraphs 12C, 12D and 12F below
such insurance shall be for the sole benefit of Landlord and under its sole
control. If during the second full lease year after the commencement date of
this lease, or during any subsequent year of the primary term or any renewal or
extension, Landlord's cost of maintaining such insurance shall exceed Landlord's
cost of maintaining such insurance for the first full lease year of the term
hereof. Tenant agrees to pay to Landlord, as additional rental, Tenant's full
proportionate share (as defined in subparagraph 24(j) of such excess. Said
payments shall be made to Landlord within thirty (30) days after presentation to
Tenant of Landlord's statement setting forth the amount due, and the failure
to pay such excess shall be Treated in the same manner as a default in the
payment of rent hereunder when due. Any payment to be made pursuant to this
subparagraph 12A with respect to the year in which this lease commences or
terminates shall bear the same ratio to the payment which would be required to
be made for the full year as the part of such year covered by the term of this
lease bears to a full year. Tenant shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained by Landlord hereunder unless Landlord is included as an additional
insured thereon. Tenant shall immediately notify Landlord whenever any such
separate insurance is taken out and shall promptly deliver to Landlord the
policy or policies of such insurance.
B. If the buildings situated upon the premises should be damaged or destroyed
by fire, tornado or other casualty, Tenant shall give immediate written notice
thereof to Landlord.
C. If the buildings situated upon the premises should be damaged by any peril
covered by the insurance to be provided by Landlord under subparagraph 12A
above, but only to such extent that rebuilding or repairs can in Landlord's
estimation be completed within two hundred fifty (250) days after the date upon
which Landlord is notified by Tenant of such damage, (except that Landlord may
elect not to rebuild it such damage occurs during the last year of the term
hereof), this lease shall not terminate, and Landlord shall at its sole cost and
expense thereupon proceed with reasonable diligence to rebuild and repair such
buildings to substantially the condition in which they existed prior to such
damage, except Landlord shall not be required to rebuild, repair or replace any
part of the partitions, fixtures, additions and other improvements which may
have been placed in, on or about the premises by Tenant. If the premises are
untenantable in whole or in part following such damage, the rent payable
hereunder during the period in which the premises are untenantable shall be
reduced to such extent as may be fair and reasonable under all of the
circumstances. In the event that Landlord should fail to complete such repairs
and rebuilding within two hundred-fifty (250) days after the date upon which
Landlord is notified by Tenant of such damage, Tenant may at its option
terminate this lease by delivering written notice of termination to Landlord as
Tenant's exclusive remedy, whereupon all rights and obligations hereunder shall
cease and terminate; provided, however, that if construction is delayed because
of changes, deletions, or additions in construction requested by Tenant,
strikes, lockouts, casualties, acts of God, war, material or labor shortages,
Governmental regulation or control or other clauses beyond the reasonable
control of Landlord, the period for restoration, repair or rebuilding shall be
extended for the amount of time Landlord is so delayed.
D. If the buildings situated upon the promises should be damaged or
destroyed by fire, tornado or other casualty and Landlord is not required to
rebuild pursuant to the provisions of subparagraph 12C hereof, this lease shall
at the option of Landlord, upon notice to Tenant, given within thirty (30) days
after Landlord is notified by Tenant of such damage, terminate and the rent
shall be abated during the unexpired portion of this lease, effective upon the
date of the occurrence of such damage.
E. Tenant covenants and agrees to maintain insurance on all alterations,
additions, partitions and improvements erected by or on behalf of Tenant in, on
or about the premises in an amount not less than ninety percent (90%) (or such
greater percentage as may be necessary to comply with the provisions of any
co-insurance clause of the policy) of the "replacement cost" thereof, as such
term is defined in the Replacement Cost Endorsement to be attached thereto. Such
insurance shall insure against the perils and be in form, including stipulated
endorsements, as provided in subparagraph 12A hereof. Such insurance shall be
for the sole benefit of Tenant and under its sole control provided that Tenant
shall be obligated to immediately commence the rebuilding of the improvements
erected by Tenant and to apply such proceeds in payment of the cost thereof. All
such policies shall be procured by Tenant from responsible insurance companies
satisfactory to Landlord. Certified copies of policies of such insurance,
together with receipt evidencing payment of the premiums therefor, shall be
delivered lo Landlord prior to the commencement date of this lease. Not less
than fifteen (15) days prior to the expiration date of any such policies,
certified copies of renewals thereof (bearing notations evidencing the payment
of renewal premiums) shall be delivered to Landlord, Such policies shall further
provide that not less than thirty (30) days written notice shall be given to
Landlord before such policy may be canceled or changed to reduce insurance
provided thereby.
F. Notwithstanding anything herein to the contrary, in the event the holder of
any indebtedness secured by a mortgage or deed of trust covering the premises or
the building of which the premises are a part requires that the insurance
proceeds be applied to such indebtedness, then Landlord shall have the right to
terminate this lease by delivering written notice of termination to Tenant
within fifteen (15) days after such requirement is made by any such holder,
whereupon all rights and obligations hereunder shall cease and terminate.
G. Each of Landlord and Tenant hereby releases the other from any and all
liability or responsibility to the other or anyone claiming through or under
them by way of subrogation or otherwise for any loss or damage to property
caused by fire or any other perils insured in policies of insurance covering
such property, even if such loss or damage shall have been caused by the fault
or negligence of the other party, or anyone for whom such party may be
responsible, including any other tenants or occupants of the remainder of the
building in which the premises are located; provided, however, that this release
shall be applicable and in force and effect only to the extent that such release
shall be lawful at that time and in any event only with respect to loss or
damage occurring during such times as the releasor's policies shall contain a
clause or endorsement to the effect that any such release shall not adversely
affect or impair said policies or prejudice the right of the releasor to recover
thereunder and then only to the extent of the insurance proceeds payable under
such policies. Each of Landlord and Tenant agrees that it will request its
insurance carriers to include in its policies such a clause or endorsement. If
extra cost shall be charged therefor, each party shall advise the other thereof
and of the amount of the extra cost, and the other party, at its election, may
pay the same, but shall not be obligated to do so. If such other party fails to
pay such extra cost, the release provisions of this paragraph shall be
inoperative against such other party to the extent necessary to avoid
invalidation of such releasor's insurance.
H. In the event of any damage or destruction to the promises by any
peril covered by the provisions of this Paragraph 12, Tenant shall, upon notice
from Landlord, forthwith remove, at its sole cost and expense, such portion or
all of Tenant's shelves, bins, machinery and other trade fixtures and all other
properly belonging to Tenant or his licensees from such portion or all of the
premises as Landlord shall request and Tenant hereby indemnifies and holds
harmless the property. Landlord (including without limitation the trustee and
beneficiaries if landlord is a trust), Landlord's agents and employees from any
loss, liability, claims, suits, costs, expenses, including attorney's fees and
damages, both real and alleged, arising out of any damage or injury as a result
of the failure to properly secure the premises prior to such removal and/or as a
result of such removal.
13. Liability. Landlord shall not be liable to Tenant or Tenant's employees,
agents, patrons or visitors, or to any other person whomsoever, for any injury
to person or damage to property on or about the premises, resulting from and/or
caused in part or whole by the negligence or misconduct of Tenant, its agents,
servants or employees, or of any other person entering upon the premises, or
caused by the buildings and improvements located on the promises becoming out of
repair, or caused by leakage of gas, oil, water or steam or by electricity
emanating from the premises, or due to any cause whatsoever, and Tenant hereby
covenants and agrees that it will at all times indemnify and hold safe and
harmless the property, the Landlord (including without limitation the trustee
and beneficiaries if Landlord is a trust), Landlord's agents and employees from
any loss, liability, claims, suits, expenses, including attorney's fees and
damages, both real and alleged, arising out of any such damage or injury; except
injury to persons or damage to property the sole cause of which is the
negligence of Landlord or the failure of Landlord to repair any part of the
premises which Landlord is obligated to repair and maintain hereunder within a
reasonable time after the receipt of written notice from Tenant of needed
repairs, Tenant shall procure and maintain throughout the term of this lease a
policy or policies of insurance, in form and substance satisfactory to Landlord,
at Tenant's sole cost and expense, insuring both Landlord (and if Landlord is a
trust, the trustee, beneficiaries and their agents) and Tenant against all
claims, demands of actions arising out of or in connection with: (i) the
premises; (ii) the condition of the premises; (iii) Tenant's operations in and
maintenance and use of the premises; and (iv) Tenant's liability assumed under
this lease: the limits of such policy or policies to be in the amount of not
less than $2,000,000 per occurrence in respect of injury to persons (including
death), and in the amount of not less than $250,000 per occurrence in respect of
property damage or destruction, including loss
Landlord:
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Tenant:
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<PAGE> 5
of use thereof, All such policies shall be procured by Tenant from responsible
Insurance companies satisfactory to Landlord. Certified copies of such policies,
together with receipt evidencing payment of premiums therefore shall be
delivered to Landlord prior to the commencement date of this lease. Not less
than fifteen (15) days prior to the expiration date of any such policies,
certified copies of the renewals thereof (bearing notations evidencing the
payment of renewal premiums) shall be delivered to Landlord. Such policies shall
further provide that not less than thirty (30) days written notice shall be
given to Landlord before such policy may be canceled or changed to reduce the
Insurance coverage provided thereby.
14. Condemnation.
A. If the whole or any substantial part of the premises should be taken for
any public or quasi-public use under governmental law, ordinance or regulation,
or by right of eminent domain, or by private purchase in lieu thereof and the
taking would prevent or materially interfere with the use of the promises for
the purpose for which they are then being used. this lease shall terminate and
the rent shall be abated during the unexpired portion of this lease. effective
when the physical taking of said premises shall occur.
B. If part of the premises shall be taken for any public or quasi-public use
under any governmental law, ordinance or regulation. or by right of eminent
domain, or by private purchase in lieu thereof, and this lease is not terminated
as provided in the subparagraph above, this lease shall not terminate but the
rent payable hereunder during the unexpired portion of this lease shall be
reduced to such extent as may be fair and reasonable under all of the
circumstances and Landlord shall undertake to restore the premises to a
condition suitable for Tenant's use, as near to the condition thereof
immediately prior to such taking as is reasonably feasible under all the
circumstances.
C. In the event of any such taking or private purchase in lieu thereof,
Landlord and Tenant shall each be entitled to receive and retain such separate
awards and/or portion of lump sum awards as may be allocated to their respective
interests in any condemnation proceedings: provided that Tenant shall not be
entitled to receive any award for Tenant's loss of its leasehold interest, the
right to such award being hereby assigned by Tenant to Landlord.
15. Holding Over. Tenant will, at the termination of this lease by lapse of
time or otherwise, yield up immediate possession to Landlord. If Tenant retains
possession of the premises or any part thereof after such termination, then
Landlord may, at its option, serve written notice upon Tenant that such holding
over constitutes any one of (i) renewal of this lease for one year, and from
year to year thereafter, or (ii) creation of a month to month tenancy, upon the
terms and conditions set forth in this lease, or (iii) creation of a tenancy at
sufferance, in any case upon the terms and conditions set forth in this lease;
provided, however, that the monthly rental (or daily rental under (iii)) shall,
in addition to all other sums which are to be paid by Tenant hereunder, whether
or not as additional rent, be equal to double the rental being paid monthly to
Landlord under this lease immediately prior to such termination (prorated in the
case of (iii) on the basis of a 365 day year for each day Tenant remains in
possession). If no such notice is served, then a tenancy at sufferance shall be
deemed to be created at the rent in the preceding sentence. Tenant shall also
pay to Landlord all damages sustained by Landlord resulting from retention of
possession by Tenant, including the loss of any proposed subsequent tenant for
any portion of the premises. The provisions of this paragraph shall not
constitute a waiver by Landlord of any right of re-entry as herein set forth;
nor shall receipt of any rent or any other act in apparent affirmance of the
tenancy operate as a waiver of the right to terminate this lease for a breach of
any of the terms, covenants, or obligations herein on Tenant's part to be
performed.
16. Quiet Enjoyment. Landlord covenants that it now has, or will acquire
before Tenant takes possession of the premises, good title to the premises, free
and clear of all liens and encumbrances, excepting only the lien for current
taxes not yet due, such mortgage or mortgages as are permitted by the terms of
this lease, zoning ordinances and other building and fire ordinances and
governmental regulations relating to the use of such property, and easements,
restrictions and other conditions of record. In the event this lease is a
sublease, then Tenant agrees to take the premises subject to the provisions of
the prior leases. Landlord represents and warrants that it has full right and
authority to enter into this lease and that Tenant, upon paying the rental
herein set forth and performing its other covenants and agreements herein set
forth, shall peaceably and quietly have, hold and enjoy the premises for the
term hereof without hindrance or molestation from Landlord, subject to the terms
and provisions of this lease, Landlord agrees to make reasonable efforts to
protect Tenant from interference or disturbance by other tenants or third
persons; however, Landlord shall not be liable for any such interference or
disturbance, nor shall Tenant be released from any of the obligations of this
lease because of such interference or disturbance.
17. Events of Default. The following events shall be deemed to be events of
default by Tenant under this lease:
(a) Tenant shall fail to pay when or before due any sum of money
becoming due to be paid to Landlord hereunder, whether such sum be any
installment of the rent herein reserved, any other amount treated as additional
rent hereunder, or any other payment or reimbursement to Landlord required
herein, whether or not treated as additional rent hereunder, and such failure
shall continue for a period of seven (7) days from the date such payment was due
See Paragraph 32,; or disturbance.
(b) Tenant shall fail to comply with any term, provision or covenant of
this lease other than by failing to pay when or before due any sum of money
becoming due to be paid to Landlord hereunder, and shall not cure such failure
within twenty (20) days (forthwith, if the default involves a hazardous
condition) after written notice thereof to Tenant: or
(c) Tenant shall abandon or vacate any substantial portion of the
promises; or
(d) Tenant shall fail to immediately vacate the premises upon
termination of this lease, by lapse of time or otherwise, or upon termination of
Tenant's right to possession only: or
(e) The leasehold interest of Tenant shall be levied upon under
execution or be attached by process of law or Tenant shall fail to contest
diligently the validity of any lien or claimed lien and give sufficient security
to Landlord to insure payment thereof or shall fail to satisfy any judgment
rendered thereon and have the same released, and such default shall continue for
ten (10) days after written notice thereof to Tenant; or
(f) Tenant shall become insolvent, admit in writing its inability to pay
its debts generally as they become due, file a petition in bankruptcy or a
petition to take advantage of any insolvency statute, make an assignment for the
benefit of creditors, make a transfer in fraud of creditors, apply for or
consent to the appointment of a receiver of itself or of the whole or any
substantial part of its property, or file a petition or answer seeking
reorganization or arrangement under the federal bankruptcy laws, as now in
effect or hereafter amended, or any applicable law or statute of the United
States or any state thereof; or
(g) A court of competent jurisdiction shall enter an order, judgment or
decree adjudicating Tenant a bankrupt, or appointing a receiver of Tenant, or of
the whole or any substantial part of its property, without the consent of
Tenant, or approving a petition filed against Tenant seeking reorganization or
arrangement of Tenant under the bankruptcy laws of the United States, as now in
effect or hereafter amended, or any state thereof, and such order, judgment or
decree shall not be vacated or set aside or stayed within thirty (30) days from
the date of entry thereof.
18. Remedies. Upon the occurrence of any of such events of default described in
Paragraph 17 hereof or elsewhere in this lease. Landlord shall have the option
to pursue any one or more of the following remedies without any notice or demand
whatsoever:
(a) Landlord may, at its election, terminate this lease or
terminate Tenant's right to possession only, without terminating the
lease:
(b) Upon any termination of this lease, whether by lapse of time
or otherwise, or upon any termination of Tenant's right to possession
without termination of the lease. Tenant shall surrender possession and
vacate the premises immediately, and deliver possession thereof to
Landlord, and Tenant hereby grants to Landlord full and free license to
enter into and upon the premises in such event with or without process
of law and to repossess Landlord of the premises as of Landlord's former
estate and to expel or remove Tenant and any others who may be
occupying or within the premises and to remove any and all property
therefrom, without being deemed in any manner guilty of trespass,
eviction or forcible entry or detainer, and without incurring any
liability for any damage resulting therefrom. Tenant hereby waiving any
right to claim damage for such re-entry and expulsion, and without
relinquishing Landlord's right to rent or any other right given to
Landlord hereunder or by operation of law:
(c) Upon any termination of this lease, whether by lapse of time
or otherwise, Landlord shall be entitled to recover as damages, all
rent, including any amounts treated as additional rent hereunder, and
other sums due and payable by Tenant on the date of termination, plus
the sum of (i) an amount equal to the then present value of the rent,
including any amounts treated as additional rent hereunder, and other
sums provided herein to be paid by Tenant for the residue of the stated
term hereof, less the fair rental value of the premises for such residue
(taking into account the time and expense necessary to obtain a
replacement tenant or tenants, including expenses hereinafter described
in subparagraph (d) relating to recovery of the promises, preparation
for reletting and for reletting itself), and (ii) the cost of
performing any other covenants which would have otherwise been performed
by Tenant:
Landlord:
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Tenant: /s/
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<PAGE> 6
(d) (i) Upon any termination of Tenant's right to possession
only without termination of the lease. Landlord may, at Landlord's
option, enter into the premises, remove Tenant's signs and other
evidences of tenancy, and take and hold possession thereof as provided
in subparagraph (b) above, without such entry and possession terminating
the lease or releasing Tenant, in whole or in part, from any obligation,
including Tenant's obligation to pay the rent, including any amounts
treated as additional rent, hereunder for the full term. If any such
case Tenant shall pay forthwith to Landlord, if Landlord so elects, a
sum equal to the entire amount of the rent, including any amounts
treated as additional rent hereunder, for the residue of the stated term
hereof plus any other sums provided herein to be paid by Tenant for the
remainder of the lease term.
(ii) Landlord may, but need not, relet the premises or any part
thereof for such rent and upon such terms as Landlord in its sole
discretion shall determine (including the right to relet the premises
for a greater or lesser term than that remaining under this lease, the
right to relet the premises as a part of a larger area, and the right to
change the character or use made of the premises) and Landlord shall not
be required to accept any tenant offered by Tenant or to observe any
instructions given by Tenant about such reletting. In any such case,
Landlord may make repairs, alterations and additions in or to the
premises, and redecorate the same to the extent Landlord deems necessary
or desirable, and Tenant shall, upon demand, pay the cost thereof,
together with Landlord's expenses of reletting, including, without
limitation, any broker's commission incurred by Landlord. If the
consideration collected by Landlord upon any such reletting plus any
sums previously collected from Tenant are not sufficient to pay the full
amount of all rent, including any amounts treated as additional rent
hereunder and other sums reserved in this lease for the remaining term
hereof, together with the costs of repairs, alterations, additions,
redecorating, and Lessor's expenses of reletting and the collection of
the rent accruing therefrom (including attorney's fees and broker's
commissions). Tenant shall pay to Landlord the amount of such deficiency
upon demand and Tenant agrees that Landlord may file suit to recover any
sums falling due under this section from time to time;
(e) Landlord may, at Landlord's option, enter into and upon the
premises, with or without process of law, if Landlord determines in its
sole discretion that Tenant is not acting within a commercially
reasonable time to maintain, repair or replace anything for which Tenant
is responsible hereunder and correct the same, without being deemed in
any manner guilty of trespass, eviction or forcible entry and detainer
and without incurring any liability for any damage resulting therefrom
and Tenant agrees to reimburse Landlord, on demand, as additional rent,
for any expenses which Landlord may incur in thus effecting compliance
with Tenant's obligations under this lease;
(f) Any and all property which may be removed from the premises
by Landlord pursuant to the authority of the lease or of law, to which
Tenant is or may be entitled, may be handled, removed and stored, as the
case may be, by or at the direction of Landlord at the risk, cost and
expense of Tenant, and Landlord shall in no event be responsible for the
value, preservation or safekeeping thereof. Tenant shall pay to
Landlord, upon demand, any and all expenses incurred in such removal and
all storage charges against such property so long as the same shall be
in Landlord's possession or under Landlord's control. Any such property
of Tenant not retaken by Tenant from storage within thirty (30) days
after removal from the premises shall conclusively be presumed to have
been conveyed by Tenant to Landlord under this lease as a bill of sale
without further payment or credit by Landlord to Tenant.
In the event Tenant fails to pay any installment of rent, including any
amount treated as additional rent hereunder, or other sums hereunder as and when
such installment or other charge is due. Tenant shall pay to Landlord on demand
a late charge in an amount equal to five percent (5%) of such installment or
other charge overdue in any month and five percent (5%) each month thereafter
until paid in full to help defray the additional cost to Landlord for processing
such late payments, and such late charge shall be additional rent hereunder and
the failure to pay such late charge within ten (10) days after demand therefor
shall be an additional event of default hereunder. The provision for such late
charge shall be in addition to all of Landlord's other rights and remedies
hereunder or at law and shall not be construed as liquidated damages or as
limiting Landlord's remedies in any manner.
Pursuit of any of the foregoing remedies shall not preclude pursuit of any
of the other remedies herein provided or any other remedies provided by law (all
such remedies being cumulative), nor shall pursuit of any remedy herein provided
constitute a forfeiture or waiver of any rent due to Landlord hereunder or of
any damages accruing to Landlord by reason of the violation of any of the terms,
provisions and covenants herein contained. No act or thing done by Landlord or
its agents during the term hereby granted shall be deemed a termination of this
lease or an acceptance of the surrender of the premises, and no agreement to
terminate this lease or accept a surrender of said premises shall be valid
unless in writing signed by Landlord. No waiver by Landlord of any violation or
breach of any of the terms, provisions and covenants herein contained shall be
deemed or construed to constitute a waiver of any other violation or breach of
any of the terms, provisions and covenants herein contained. Landlord's
acceptance of the payment of rental or other payments hereunder after the
occurrence of an event of default shall not be construed as a waiver of such
default, unless Landlord so notifies Tenant in writing. Forbearance by
Landlord to enforce one or more of the remedies herein provided upon an event of
default shall not be deemed or construed to constitute a waiver of such default
or of Landlord's right to enforce any such remedies with respect to such default
or any subsequent default. If, on account of any breach or default by Tenant in
Tenant's obligations under the terms and conditions of this lease, it shall
become necessary or appropriate for Landlord to employ or consult with an
attorney concerning or to enforce or defend any of Landlord's rights or remedies
hereunder, Tenant agrees to pay any attorney's fees so incurred.
20. Mortgages. Tenant accepts this lease subject and subordinate to any
mortgage(s) and/or deed(s) of trust now or at any time hereafter constituting a
lien or charge upon the premises or the improvements situated thereon,
provided, however, that if the mortgagee, trustee, or holder of any such
mortgage or deed of trust elects to have Tenant's interest in this lease
superior to any such instrument, then by notice to Tenant from such mortgagee,
trustee or holder, this lease shall be deemed superior to such lien, whether
this lease was executed before or after said mortgage or deed of trust. Tenant
shall at any time hereafter on demand execute any instruments, releases or
other documents which may be required by any mortgagee for the purpose of
subjecting and subordinating this lease to the lien of any such mortgage or for
the purpose of evidencing the superiority of this lease to the lien of any such
mortgage, as may be the case.
21. Landlord's Liability. In no event shall Landlord's liability for any
breach of this lease exceed the amount of rental then remaining unpaid for the
then current term (exclusive of any renewal periods which have not then actually
commenced). This provision is not intended to be a measure or agreed amount of
Landlord's liability with respect to any particular breach, and shall not be
utilized by any court or otherwise for the purpose of determining any liability
of Landlord hereunder, except only as a maximum amount not to be exceeded in
any event.
22. Mechanic's and Other Liens. Tenant shall have no authority, express or
implied, to create or place any lien or encumbrance of any kind or nature
whatsoever upon, or in any manner to bind, the interest of Landlord in the
premises or to charge the rentals payable hereunder for any claim in favor of
any person dealing with Tenant, including those who may furnish materials or
perform labor for any construction or repairs, and each such claim shall affect
and each such lien shall attach to, if at all, only the leasehold interest
granted to Tenant by this instrument. Tenant covenants and agrees that it will
pay or cause to be paid all sums legally due and payable by it on account of any
labor performed or materials furnished in connection with any work performed on
the premises on which any lien is or
11
<PAGE> 7
can be validly and legally asserted against its leasehold Interest in the
premises or the improvements thereon and that it will save and hold Landlord
harmless from any and all loss, cost or expense based on or arising out of
asserted claims or liens against the leasehold estate or against the right,
title and interest of the Landlord in the premises or under the forms of this
lease. Tenant will not permit any mechanic's lien or liens or any other liens
which may be imposed by law affecting Landlord's or its mortgagees' interest in
the premises or any building or other improvement of which the promises are a
part to be placed upon the premises or any building or improvement thereon
during the term hereof, and in case of the filing of any such lien Tenant will
promptly pay same. If any such lien shall remain in force and effect for twenty
(20) days after written notice thereof from Landlord to Tenant. Landlord shall
have the right and privilege at Landlord's option of paying and discharging the
same or any portion thereof without inquiry as to the validity thereof. and any
amounts so paid, including expenses and interest, shall be so much additional
indebtedness hereunder due from Tenant to Landlord and shall be repaid to
Landlord immediately on rendition of a bill therefor. Notwithstanding the
foregoing, Tenant shall have the right, to contest any such lien in good faith
and with all due diligence so long as any such contest, or action taken in
connection therewith, protects the interest of Landlord and Landlord's mortgagee
in the premises and Landlord and any such mortgagee are, by the expiration of
said twenty (20) day period, furnished such protection, and indemnification
against any loss, cost or expense related to any such lien and the contest
thereof as are satisfactory to Landlord and any such mortgagee.
23. Notices. Each provision of this instrument or of any applicable
governmental laws, ordinances, regulations and other requirements with reference
to the sending, mailing or delivery of any notice or the making of any payment
by Landlord to Tenant or with reference to the sending, mailing or delivery of
any notice or the making of any payment by Tenant to Landlord shall be deemed to
be complied with when and if the following steps are taken:
(a) All rent and other payments required to be made by Tenant to
Landlord hereunder shall be payable to
Elk Grove Village Industrial Park Ltd.
-----------------------------------------------------------------------
or to such other entity at such other address as Landlord may
specify from time to time by written notice delivered in accordance
herewith.
(b) All payments required to be made by Landlord to Tenant
hereunder shall be payable to Tenant at the address herein below set
forth, or at such other address within the continental United States as
Tenant may specify from time to time by written notice delivered in
accordance herewith.
(c) Any notice or document required or permitted to be
delivered hereunder shall be deemed to be delivered. whether actually
received or not, when deposited in the United States Mail, postage
prepaid, Certified or Registered Mail, addressed to the parties hereto
at the respective addresses set out below, or at such other address as
they have theretofore specified by written notice delivered in
accordance herewith:
LANDLORD: TENANT:
Elk Grove Village Industrial Park Ltd. NCD, an Ameriquest Company
c/o Hamilton Partners 1600 Hollywood Blvd.
300 Park Blvd. Hollywood, FL 33024
Itasca, IL. 60143
If and when included within the term "Landlord", as used in this instrument.
there are more than one person, firm or corporation, all shall jointly arrange
among themselves for their joint execution of such a notice specifying some
individual it some specific address for the receipt of notices and payments to
Landlord; if and when included within the term "Tenant", as used in this
instrument, there are more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of such a notice
specifying some individual at some specific address within the continental
United States for the receipt of notices and payments to Tenant. All parties
included within the terms "Landlord" and "Tenant", respectively, shall be bound
by notices given in accordance with the provisions of this paragraph to the same
effect as if each had received such notice.
24. Miscellaneous.
A. Words of any gender used in this lease shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires.
B. The terms, provisions and covenants and conditions contained in this
lease shall apply to, inure to the benefit of, and be binding upon, the parties
hereto and upon their respective heirs, legal representatives, successors and
permitted assigns, except as otherwise herein expressly provided. Landlord shall
have the right to assign any of its rights and obligations under this lease and
Landlord's grantee or Landlord's successor, as the case may be, shall upon such
assignment, become Landlord hereunder, thereby freeing and relieving the grantor
or assignor, as the case may be, of all covenants and obligations of Landlord
hereunder. Each party agrees to furnish to the other, promptly upon demand, a
corporate resolution, proof of due authorization by partners, or other
appropriate documentation evidencing the due authorization of such party to
enter into this lease. Nothing herein contained shall give any other tenant in
the building of which the premises are a part any enforceable rights either
against Landlord or Tenant as a result of the covenants and obligations of
either party set forth herein.
C. The captions inserted in this lease are for convenience only and in
no way define, limit or otherwise describe the scope or intent of this lease, or
any provision hereof, or in any way affect the interpretation of this lease.
D. Tenant shall at any time and from time to time within ten (10) days
after written request from Landlord execute and deliver to the Landlord or any
prospective Landlord or mortgagee or prospective mortgagee a sworn and
acknowledged estoppel certificate, in form reasonably satisfactory to Landlord
and/or Landlord's mortgagee or prospective mortgagee certifying and stating as
follows: (i) this lease has not been modified or amended (or if modified or
amended, setting forth such modifications or amendments); (ii) this lease as so
modified or amended is in full force and effect (or if not in full force and
effect, the reasons therefor); (iii) the Tenant has no offsets or defenses to
its performance of the forms and provisions of this lease, including the payment
of rent, or if there are any such defenses or offsets, specifying the same; (iv)
Tenant is in possession of the premises, if such be the case; (v) if an
assignment of rents or leases has been served upon Tenant by a mortgagee or
prospective mortgagee, Tenant has received such assignment and agrees to be
bound by the provisions thereof; and (vi) any other accurate statements
reasonably required by Landlord or its mortgagee or prospective mortgagee. It is
intended that any such statement delivered pursuant to this subsection may be
relied upon by any prospective purchaser or mortgagee and their respective
successors and assigns and Tenant shall be liable for all loss, cost or expense
resulting from the failure of any sale or funding of any loan caused by any
misstatement contained in such estoppel certificate. Tenant hereby irrevocably
appoints Landlord or if Landlord is a trust, Landlord's beneficiary, as
attorney-in-fact for the Tenant with full power and authority to execute and
deliver in the name of Tenant such estoppel certificate if Tenant fails to
deliver the same within such ten (10) day period and such certificate as signed
by Landlord or Landlord's beneficiary, as the case may be, shall be fully
binding on Tenant, if Tenant fails to deliver a contrary certificate within five
(5) days after receipt by Tenant of a copy of the certificate executed by
Landlord or Landlord's beneficiary, as the case may be, on behalf of Tenant. In
addition to any other remedy Landlord may have hereunder, Landlord may, at its
option, if Tenant does not deliver to Landlord an estoppel certificate as set
forth above within fifteen (15) days after Tenant is requested so to do, cancel
this lease effective the last day of the then current month, without incurring
any liability on account thereof, and the term hereby granted is expressly
limited accordingly.
E. This lease may not be altered, changed or amended except by an
instrument in writing signed by both parties hereto.
F. All obligations of Tenant hereunder not fully performed as of the
expiration or earlier termination of the term of this lease shall survive the
expiration or earlier termination of the term hereof, including without
limitation, all payment obligations with respect to taxes and insurance and all
obligations concerning the condition of the promises. Upon the expiration or
earlier termination of the term hereof, and prior to Tenant vacating the
premises, Landlord and Tenant shall jointly inspect the premises and Tenant
shall pay to Landlord any reasonable amount estimated by Landlord as necessary
to put the premises, including without limitation heating and air conditioning
systems and equipment therein, in good condition and repair. Any work required
to be done by Tenant prior to its vacation of the premises which has not been
completed upon such vacation, shall be completed by Landlord and billed to
Tenant. Tenant shall also, prior to vacating the premises, pay to Landlord the
amount, as estimated by Landlord, of Tenant's obligation hereunder for unpaid
real estate taxes for the years during the term of this lease for which such
taxes are a lien against the premises, and insurance premiums for the year in
which the lease expires or terminates. All such amounts shall be used and held
by Landlord for payment of such obligations of Tenant hereunder, with Tenant
being liable for any additional costs therefor upon demand by Landlord, or
with any excess to be returned to Tenant after all such obligations have been
determined and satisfied, as the case may be. Any security deposit held by
Landlord shall be credited against the amount payable by Tenant under this
subparagraph 24F.
G. If any clause, phrase, provision or portion of this lease or the
application thereof to any person or circumstance shall be invalid or
unenforceable under applicable law, such event shall not affect, impair or
render invalid or unenforceable the remainder of this lease nor any other
clause, phrase, provision or portion hereof, nor shall it affect the application
of an clause, phrase, provision or portion hereof to other persons or
circumstances, and it is also the intention of the parties to this lease that
in lieu of each such clause, phrase, provision or portion as similiar in terms
to such invalid or unenforceable clause, phrase, provision or portion as may be
possible and be valid and unenforceable.
Landlord:
-----------------------
Tenant:
--------------------------
<PAGE> 8
H. Submission of this of this lease shall not be deemed to be a reservation of
the promises. Landlord shall not be bound hereby until its delivery to Tenant
of an executed copy hereof signed by Landlord, already having been signed by
Tenant, and until such delivery Landlord reserves the right to exhibit and
lease the premises to other prospective tenants. Notwithstanding anything
contained herein to the contrary Landlord may withhold delivery of possession
of the premises from Tenant until such time as Tenant has paid to Landlord the
security deposit required by subparagraph 2B hereof and the first month's rent
as set forth in subparagraph 2A hereof.
I. All references in this lease to "the date hereof" or similar references
shall be deemed to refer to the last date in point of time, on which all
parties hereto have executed this lease.
J. Tenant's "proportionate share" as used in this lease shall mean a fraction,
the numerator of which is the rentable area (other than any designated parking
or loading areas) contained in the premises and the denominator of which is the
rentable area contained in the building. In each case as determined by
Landlord. For purposes hereof the numerator is 47,265 and the denominator is
95,384 and Tenant's proportionate share is forty nine and fifty-five one
hundredths percent ( %) (49.55%).
26. See page 33.
27. Special Provisions.
EXECUTED the 17th day of January, 1995.
ATTEST/WITNESS LANDLORD
ELK GROVE VILLAGE INDUSTRIAL PARK LTD.
- -------------------------------- ---------------------------------------
Title
-------------------------- ---------------------------------------
By: /s/
------------------------------------
ATTEST/WITNESS Title Managing General Partner
---------------------------------
- -------------------------------- TENANT
TITLE
--------------------------- NCD, an Ameriquest Company
---------------------------------------
---------------------------------------
By: /s/
------------------------------------
Title
----------------------------------
<PAGE> 9
28. Landlord may, but need not, relet the premises or any part thereof for
such rent and upon such terms as Landlord, in its sole discretion, shall
determine (including the right to relet the premises for a greater or lesser
term than that remaining under this Lease, the right to relet the premises as a
part of a larger area, and the right to change the character or use made of the
premises). If Landlord decides to relet the premises or a duty to relet is
imposed upon Landlord by law, Landlord and Tenant agree that Landlord shall
only be required to use the same efforts Landlord then uses to lease other
properties Landlord owns or manages (of if the premises is then managed for
Landlord, then Landlord will instruct such manager to use the same efforts such
manager then uses to lease other space or properties which it owns or manages);
provided, however, that Landlord (or its manager) shall not be required to give
any preference or priority to the showing or leasing of the premises over any
other space that Landlord (or its manager) may be leasing or have available and
may place a suitable prospective tenant in any such available space regardless
of when alternative space becomes available; provided, further, that Landlord
shall not be required to observe any instruction given by Tenant about such
reletting or accept any tenant offered by Tenant unless such offered tenant has
a creditworthiness acceptable to Landlord, leases the entire premises, agrees
to use the premises in a manner consistent with the Lease and leases the
premises at the same rent, for no more than the current term and on the same
other terms and conditions as in this Lease without the expenditures by
Landlord for tenant improvements or broker's commissions. In any such case,
Landlord may, but shall not be required to, make repairs, alterations and
additions in or to the premises and redecorate the same to the extent Landlord
deems necessary or desirable, and Tenant shall, upon demand, pay the cost
thereof, together with Landlord's expenses of reletting, including, without
limitation, any broker's commission incurred by Landlord. If the consideration
collected by Landlord upon any such reletting plus any sums previously
collected from Tenant are not sufficient to pay the full amount of all rent,
including any amounts treated as additional rent hereunder and other sums are
reserved in this Lease for the remaining term hereof, together with the cost of
repairs, alterations, additions, redecorating, and Lessor's expenses of
reletting and the cost of collection of the rent accruing therefrom (including
attorneys' fees and broker's commissions), Tenant shall pay to Landlord he
amount of such deficiency upon demand and Tenant agrees that Landlord may file
suit to recover any sums falling due under this section from time to time.
29. Notwithstanding the provisions of Paragraph 6 of the Lease Agreement,
Landlord shall be responsible for the maintenance of driveways, parking and
sidewalks. Snow removal not included. Tenant shall share in these maintenance
expenses on a pro rata basis of the amount of the Tenant's leased space to the
aggregate of the total space in the building. Tenant will be billed monthly or
at some other time at Landlord's option, for his share of maintenance expenses.
Tenant's proportionate share shall be that set forth in Paragraph 24J above.
Landlord shall be responsible for landscape maintenance under the terms
of this lease except for the watering of the grass and other planted materials
which shall specifically be the responsibility of Tenant. If during the second
full lease year after the commencement date of this lease, or during any
subsequent year of the primary term or any renewal or extension, the cost to
Landlord of said landscape maintenance service shall exceed the cost for such
service during the first full lease year hereof, Tenant shall pay to Landlord
on demand the amount of such excess; and the failure to pay such excess upon
demand shall be treated in the same manner as a default in the payment of rent
hereunder when due.
30. Tenant covenants not to introduce any hazardous or toxic materials onto
the Property without a) first obtaining Landlord's written consent and b)
complying with all applicable federal, state and local laws or ordinances
pertaining to the transportation, storage, use or disposal of such materials,
including not limited to obtaining proper permits.
If Tenant's transportation, storage, use or disposal of hazardous or
toxic materials on the Property results in 1) contamination of the soil or
surface or ground water or 2)
Landlord: /s/
-------------------
Tenant: /s/
-------------------
<PAGE> 10
loss or damage to person(s) or property, then Tenant agrees to respond in
accordance with the following paragraph.
Tenant agrees (i) to notify Landlord immediately of any contamination,
claim of contamination, loss or damage, (ii) after consultation and approval by
Landlord to clean up the contamination in full compliance with all applicable
statutes, regulations and standards, and (iii) to indemnify, defend and hold
Landlord harmless from and against any claims, suits, causes of action, costs
and fees, including attorney's fees, arising from or connected with any such
contamination, claim of contamination, loss or damage. This provision shall
survive termination of this lease.
31. In the event that Tenant makes any roof penetrations during the term of
this Lease the obligation of the Landlord to perform the roof maintenance shall
terminate and in lieu thereof, Tenant shall be required to make such repairs.
32. It is expressly understood and agreed that nothing in this Lease
contained shall be construed as creating any liability whatsoever against the
Landlord, or its successors and assigns, personally, and in particular without
limiting the generality of the foregoing, there shall be no personal liability
to pay any indebtedness accruing hereunder or to perform any covenant, either
express or implied, herein contained, and that all personal liability of
Landlord, or its successors and assigns, of every sort, if any, is hereby
expressly waived by Tenant, and every person now or hereafter claiming any
right or security hereunder, and that so far as Landlord, or its successors and
assigns, is concerned the owner of any indebtedness or liability accruing
hereunder shall look solely to the premises hereby leased for the payment
thereof.
33. Landlord shall give Tenant written notice of default per Paragraph 17.a
once during a calendar year. Tenant shall have five (5) days from the date of
Landlord's notice to cure such default.
34. Landlord, at its own expense, will construct the tenant improvements
listed on Exhibit "C" which is attached hereto and made a part hereto. All of
said improvements shall be constructed in a good and workmanlike manner and
shall comply with all applicable laws, rules and regulations.
35. In the event that during the Lease term Tenant shall require a
larger warehouse space which shall be at least one hundred fifty percent (150%)
larger than the current leased space and Landlord is successful in negotiating
a new lease for the larger space with Tenant, Landlord would cancel this Lease.
<PAGE> 11
Drafted: October 23, 1995
LEASE AMENDMENT AGREEMENT
This Lease Amendment Agreement dated November 7, 1995 executed by and
between ELK GROVE VILLAGE INDUSTRIAL PARK LTD., a Texas Limited Partnership
d/b/a Elk Grove Village Industrial Park Ltd., As Landlord, and AmeriQuest/NCD,
Inc., As Tenant, is herby amended as follows:
Whereas Landlord and Tenant have previously entered into a Lease dated
January 17, 1995 ("hereafter called the "Lease") covering 47,265 square feet of
space in the building commonly known as 900-950 Thorndale in Elk Grove Village,
Illinois, and
Whereas, Landlord and Tenant hereby desire to amend that lease
agreement as follows:
1. Tenant shall be amended to AmeriQuest/NCD, Inc.
All the terms and provisions of the Lease not modified expressly or by
necessary implication herein shall be and remain in full force and effect.
ELK GROVE VILLAGE INDUSTRIAL
PARK LTD., AmeriQuest NCD, Inc.
/s/ Allan J. Hamilton /s/ ??? Exec. V.P.
- ------------------------------- -----------------------------
Managing General Partner Title
<PAGE> 1
EXHIBIT 10.24
STANDARD INDUSTRIAL LEASE -- MULTI-TENANT
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
[LOGO]
1. PARTIES. This Lease, dated, for reference purposes only, March 1,
1994, is made by and between OATES BUSINESS PARK - VISALIA, a California
general partnership (herein called "Lessor") and ROSS WHITE ENTERPRISES, INC.,
a Florida corporation, dba NATIONAL COMPUTER DISTRIBUTORS (herein called
"Lessee").
2. PREMISES, PARKING AND COMMON AREAS.
2.1 PREMISES. Lessor hereby leases to Lessee and Lessee leases
from Lessor for the term, at the rental, and upon all of the conditions set
forth herein, real property situated in the County of Tulare, State of
California commonly known as 8030 Doe Avenue, Visalia, California and described
as approximately 46,800 square feet, including approximately 1,000 square feet
of office space, of a building at the above address, shown in Exhibits "A" and
"B", herein referred to as the "Premises", as may be outlined on an Exhibit
attached hereto, including rights to the Common Areas as hereinafter specified
but not including any rights to the roof of the Premises or to any Building in
the Industrial Center. The Premises are a portion of a building, herein
referred to as the "Building." The Premises, the Building, the Common Areas on
Lot 4 the land upon which the same are located, and improvements thereon, are
herein collectively referred to as the "Industrial Center."
2.2 VEHICLE PARKING. Lessee shall be entitled to per code vehicle
parking spaces, unreserved and unassigned, on those portions of the Common Areas
designated by Lessor for parking. Lessee shall not use more parking spaces
than said number. Said parking spaces shall be used only for parking by
vehicles no larger than full size passenger automobiles or pick-up trucks,
herein called "Permitted Size Vehicles." Vehicles other than Permitted Size
Vehicles are herein referred to as "Oversized Vehicles."
2.2.1 Lessee shall not permit or allow any vehicles that
belong to or are controlled by Lessee or Lessee's employees, suppliers,
shippers, customers, or invitees to be loaded, unloaded, or parked in areas
other than those designated by Lessor for such activities.
2.2.2 If Lessee permits or allows any of the prohibited
activities described in paragraph 2.2 of this Lease, then Lessor shall have the
right, without notice, in addition to such other rights and remedies that it
may have, to remove or tow away the vehicle involved and charge the cost to
Lessee, which cost shall be immediately payable upon demand by Lessor.
2.3 COMMON AREAS - DEFINITION. The term "Common Areas" is defined
as all areas and facilities outside the Premises and within the exterior
boundary line of Lot 4 for the general non-exclusive use of Lessor, Lessee and
of other lessees of the Industrial Center and their respective employees,
suppliers, shippers, customers and invitees, including parking areas, loading
and unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways and landscaped areas.
2.4 COMMON AREAS - LESSEE'S RIGHTS. Lessor hereby grants to
Lessee, for the benefit of Lessee and its employees, suppliers, shippers,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and
regulations or restrictions governing the use of the Industrial Center. Under
no circumstances shall the right herein granted to use the Common Areas be
deeded to include the right to store any property, temporarily or permanently,
in the Common Areas. Any such storage shall be permitted only by the prior
written consent of Lessor or Lessor's designated agent, which consent may be
revoked at any time. In the event that any unauthorized storage shall occur
then Lessor shall have the right, without notice, in addition to such other
rights and remedies that it may have, to remove the property and charge the cost
to Lessee, which cost shall be immediately payable upon demand by Lessor.
2.5 COMMON AREAS - RULES AND REGULATIONS. Lessor or such other
person(s) as Lessor may appoint shall have the exclusive control and management
of the Common Areas and shall have the right, from time to time, to establish,
modify, amend and enforce reasonable rules and regulations with respect
thereto. Lessee agrees to abide by and conform to all such rules and
regulations, and to cause its employees, suppliers, shippers, customers, and
invitees to so abide and conform. Lessor shall not be responsible to Lessee
for the non-compliance with said rules and regulations by other lessees of the
Industrial Center.
2.6 COMMON AREAS - CHANGES. Lessor shall have the right, in
Lessor's sole discretion, from time to time:
(a) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas and walkways; (b) To close
temporarily any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available; (c) To designate other
land outside the boundaries of the Industrial Center to be a part of the Common
Areas; (d) To add additional buildings and improvements to the Common Areas;
(e) To use the Common Areas while engaged in making additional improvements,
repairs or alterations to the Industrial Center, or any portion thereof; (f) To
do and perform such other acts and make such other changes in, to or with
respect to the Common Areas and Industrial Center as Lessor may, in the
exercise of sound business judgment, deem to be appropriate.
2.6.1 Lessor shall at all times provide the parking
facilities required by applicable law and in no event shall the number of
parking spaces that Lessee is entitled to under paragraph 2.2 be reduced.
3. TERM
3.1 TERM. The term of this Lease shall be for five (5) years
commencing on 1994 and ending on 1999 unless sooner terminated pursuant to any
provision hereof. SEE ADDENDUM.
3.2 DELAY IN POSSESSION. Notwithstanding said commencement date,
if for any reason Lessor cannot deliver possession of the Premises to Lessee on
said date, Lessor shall not be subject to any liability therefor, nor shall
such failure affect the validity of this Lease or the obligations of Lessee
hereunder or extend the term hereof, but in such case, Lessee shall not be
obligated to pay rent or perform any other obligation of Lessee under the terms
of this Lease, except as may be otherwise provided in this Lease, until
possession of the Premises is tendered to Lessee; provided, however, that if
Lessor shall not have delivered possession of the Premises within sixty (60)
days from said commencement date, Lessee may, at Lessee's option, by notice in
writing to Lessor within ten (10) days thereafter, cancel this Lease, in which
event the parties shall be discharged from all obligations hereunder; provided
further, however, that if such written notice of Lessee is not received by
Lessor within said ten (10) day period, Lessee's right to cancel this Lease
hereunder shall terminate and be of no further force or effect.
3.3 EARLY POSSESSION. If Lessee occupies the Premises prior to
said commencement date, such occupancy shall be subject to all provisions of
this Lease, such occupancy shall not advance the termination date, and Lessee
shall pay rent for such period at the initial monthly rates set forth below.
SEE ADDENDUM.
4. RENT
4.1 BASE RENT. Lessee shall pay to Lessor, as Base Rent for the
Premises, without any offset or deduction, except as may be otherwise expressly
provided in this Lease, on the first day of each month of the term hereof,
monthly payments in advance of $ SEE ADDENDUM.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lessee shall pay Lessor upon execution hereof $12,870 as Base Rent for first
month's rent. Rent for any period during the term hereof which is for less
than one month shall be a pro rata portion of the Base Rent. Rent shall be
payable in lawful money of the United States to Lessor at the address stated
herein or to such other persons or at such other places as Lessor may designate
in writing.
4.2 OPERATING EXPENSES. Lessee shall pay to Lessor during the term
hereof, in addition to the Base Rent, Lessee's Share, as hereinafter defined,
of all Operating Expenses, as hereinafter defined, during each calendar year of
the term of this Lease, in accordance with the following provisions:
(a) "Lessee's Share" is defined, for purposes of this Lease,
as 100 percent. SEE ADDENDUM.
(b) "Operating Expenses" is defined, for purposes of this
Lease, as all costs incurred by Lessor, if any, for:
(i) The operation, repair and maintenance, in neat,
clean, good order and condition, of the following:
(aa) The Common Areas, including parking areas,
loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, driveways, landscaped areas, striping, bumpers, irrigation systems,
Common Area lighting facilities and fences and gates; and the exterior Building
painting and roof repair/replacement and management fees;
(bb) Trash disposal services;
(cc) Tenant directories;
(dd) Fire detection systems including sprinkler
system maintenance, monitoring, and repair;
Initials:
------
------
<PAGE> 2
(ee) Lessee shall provide own security services as needed.
(ff) Any other service to be provided by Lessor that is
elsewhere in this Lease stated to be an "Operating Expense;"
(ii) Any deductible portion of an insured loss concerning any of the
items or matters described in this paragraph 4.2;
(iii) The cost of the premiums for the liability and property insurance
policies to be maintained by Lessor under paragraph 8 hereof:
(iv) The amount of the real property tax to be paid by Lessor under
paragraph 10.1 hereof:
(v) The cost of water, gas and electricity to service the Common Areas.
(c) The inclusion of the improvements, facilities and services set
forth in paragraph 4.2(b)(i) of the definition of Operating Expenses shall not
be deemed to impose an obligation upon Lessor to either have said improvements
or facilities or to provide those services unless the Industrial Center already
has the same. Lessor already provides the services, or Lessor has agreed
elsewhere in this Lease to provide the same or some of them.
(d) Lessee's Share of Operating Expenses shall be payable by Lessee
within ten (10) days after a reasonably detailed statement of actual expenses is
presented to Lessee by Lessor. At Lessor's option, however, an amount may be
estimated by Lessor from time to time of Lessee's Share of annual Operating
Expenses and the same shall be payable monthly or quarterly, as Lessor shall
designate, during each twelve-month period of the Lease term, on the same day as
the Base Rent is due hereunder. In the event that Lessee pays Lessor's estimate
of Lessee's Share of Operating Expenses as aforesaid. Lessor shall deliver to
Lessee within sixty (60) days after the expiration of each calendar year a
reasonably detailed statement showing Lessee's Share of the actual Operating
Expenses incurred during the preceding year. If Lessee's payments under this
paragraph 4.2(d) during said preceding year exceed Lessee's Share as indicated
on said statement, Lessee shall be entitled to credit the amount of such
overpayment against Lessee's Share of Operating Expenses next falling due. If
Lessee's payments under this paragraph during said preceding year were less than
Lessee's Share as indicated on said statement, Lessee shall pay to Lessor the
amount of the deficiency within ten (10) days after delivery by Lessor to Lessee
of said statement.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution
hereof $12,870 as security for Lessee's faithful performance of Lessee's
obligations hereunder. If Lessee fails to pay rent or other charges due
hereunder, or otherwise defaults with respect to any provision of this Lease,
Lessor may use, apply or retain all or any portion of said deposit for the
payment of any rent or other charge in default or for the payment of any other
sum to which Lessor may become obligated by reason of Lessee's default, or to
compensate Lessor for any loss or damage which Lessor may suffer thereby. If
Lessor so uses or applies all or any portion of said deposit, Lessee shall
within ten (10) days after written demand therefor deposit cash with Lessor in
an amount sufficient to restore said deposit to the full amount then required of
Lessee. If the monthly rent shall, from time to time, increase during the term
of this Lease, Lessee shall, at the time of such increase, deposit with Lessor
additional money as a security deposit so that the total amount of the security
deposit held by Lessor shall at all times bear the same proportion to the then
current Base Rent as the initial security deposit bears to the initial Base Rent
set forth in paragraph 4. Lessor shall not be required to keep said security
deposit separate from its general accounts. If Lessee performs all of Lessee's
obligations hereunder, said deposit, or so much thereof as has not theretofore
been applied by Lessor, shall be returned, with payment of interest of 1.5% per
annum to Lessee (or, at Lessor's option, to the last assignee, if any, of
Lessee's interest hereunder) at the expiration of the term hereof, and after
Lessee has vacated the Premises. No trust relationship is created herein
between Lessor and Lessee with respect to said Security Deposit.
6. USE.
6.1 USE. The Premises shall be used and occupied only for storage and
distribution of Lessee's merchandise, and related uses or any other use which is
reasonably comparable and for no other purpose.
6.2 COMPLIANCE WITH LAW.
(a) Lessor warrants to Lessee that the Premises, in the state existing
on the date that the Lease term commences, but without regard to the use for
which Lessee will occupy the Premises, does not violate any covenants or
restrictions of record, or any applicable building code regulation or ordinance
in effect on such Lease term commencement date. In the event it is determined
that this warranty has been violated, then it shall be the obligation of the
Lessor, after written notice from Lessee, to promptly, at Lessor's sole cost and
expense, rectify any such violation. The warranty contained in this paragraph
6.2(a) shall be of no force or effect if, prior to the date of this Lease,
Lessee was an owner or occupant of the Premises and, in such event, Lessee shall
correct any such violation at Lessee's sole cost. See Addendum
(b) Except as provided in paragraph 6.2(a) Lessee shall, at Lessee's
expense, promptly comply with all applicable statutes, ordinances, rules,
regulations, orders, covenants and restrictions of record, and requirements of
any fire insurance underwriters or rating bureaus, now in effect or which may
hereafter come into effect, whether or not they reflect a change in policy from
that now existing, during the term or any part of the term hereof, relating in
any manner to the Premises and the occupation and use by Lessee of the Premises
and of the Common Areas. Lessee shall not use nor permit the use of the Premises
or the Common Areas in any manner that will tend to create waste or a nuisance
or shall tend to disturb other occupants of the Industrial Center.
6.3 CONDITION OF PREMISES.
(a) Lessor shall deliver the Premises to Lessee clean and free of
debris on the Lease commencement date (unless Lessee is already in possession)
and Lessor warrants to Lessee that the plumbing, lighting, air conditioning,
heating, and loading doors in the Premises shall be in good operating condition
on the Lease commencement date. In the event that it is determined that this
warranty has been violated, then it shall be the obligation of Lessor, after
receipt of written notice from Lessee setting forth with specificity the nature
of the violation, to promptly, at Lessor's sole cost, rectify such violation.
Lessee's failure to give such written notice to Lessor within thirty (30) days
after the Lease commencement date shall cause the conclusive presumption that
Lessor has complied with all of Lessor's obligations hereunder. The warranty
contained in this paragraph 6.3(a) shall be of no force or effect if prior to
the date of this Lease, Lessee was an owner or occupant of the Premises.
(b) Except as otherwise provided in this Lease, Lessee hereby accepts
the Premises in their condition existing as of the Lease commencement date or
the date that Lessee takes possession of the Premises, whichever is earlier,
subject to all applicable zoning, municipal, county and state laws, ordinances
and regulations governing and regulating the use of the Premises, and any
covenants or restrictions of record, and accepts this Lease subject thereto and
to all matters disclosed thereby and by any exhibits attached hereto. Lessee
acknowledges that neither Lessor nor Lessor's agent has made any representation
or warranty as to the present or future suitability of the Premises for the
conduct of Lessee's business.
7. MAINTENANCE, REPAIRS, ALTERATIONS AND COMMON AREA SERVICES.
7.1 LESSOR'S OBLIGATIONS. Subject to the provisions of paragraphs 4.2
(Operating Expenses), 6 (Use), 7.2 (Lessee's Obligations) and 9 (Damage or
Destruction) and except for damage caused by any negligent or intentional act or
omission of Lessee, Lessee's employees, suppliers, shippers, customers, or
invitees, in which event Lessee shall repair the damage, Lessor, at Lessor's
expense, subject to reimbursement pursuant to paragraph 4.2, shall keep in good
condition and repair the foundations, exterior walls, structural condition of
interior bearing walls, and roof of the Premises, as well as parking lots,
walkways, driveways, landscaping, fences, signs and utility installations of the
Common Areas and all parts thereof, as well as providing the services for which
there is an Operating Expense pursuant to paragraph 4.2. Lessor shall not,
however, be obligated to paint the exterior or interior surface of exterior
walls, nor shall Lessor be required to maintain, repair or replace windows,
doors or plate glass of the Premises. Lessor shall have no obligation to make
repairs under this paragraph 7.1 until a reasonable time after receipt of
written notice from Lessee of the need for such repairs. Lessor shall not be
liable for damages or loss of any kind or nature by reason of Lessor's failure
to furnish any Common Area Services when such failure is caused by accident,
breakage, repairs, strikes, lockout, or other labor disturbances or disputes of
any character, or by any other cause beyond the reasonable control of Lessor.
7.2 LESSEE'S OBLIGATIONS.
(a) Subject to the provisions of paragraphs 6 (Use), 7.1 (Lessor's
Obligations), and 9 (Damage or Destruction), Lessee, at Lessee's expense, shall
keep in good order, condition and repair the Premises and every part thereof
(whether or not the damaged portion of the Premises or the means of repairing
the same are reasonably or readily accessable to Lessee) including, without
limiting the generality of the foregoing, all plumbing, heating, ventilating and
air conditioning systems (Lessee shall procure and maintain, at Lessee's
expense, a ventilating and air conditioning system maintenance contract),
electrical and lighting facilities and equipment within the Premises, fixtures,
interior walls and interior surfaces of exterior walls, ceilings, windows,
doors, plate glass, and skylights located within the Premises. Lessor reserves
the right to procure and maintain the ventilating and air conditioning system
maintenance contract and if Lessor so elects, Lessee shall reimburse Lessor,
upon demand, for the cost thereof.
(b) If Lessee fails to perform Lessee's obligations under this paragraph
7.2 or under any other paragraph of this Lease, Lessor may enter upon the
Premises after ten (10) days' prior written notice to Lessee (except in the case
of emergency, in which no notice shall be required), perform such obligations on
Lessee's behalf and put the Premises in good order, condition and repair, and
the cost thereof together with interest thereon at the maximum rate then
allowable by law shall be due and payable as additional rent to Lessor together
with Lessee's next Base Rent installment.
(c) On the last day of the term hereof, or on any sooner termination,
Lessee shall surrender the Premises to Lessor in the same condition as received,
ordinary wear and tear excepted, clean and free of debris. Any damage or
deterioration of the Premises shall not be deemed ordinary wear and tear if the
same could have been prevented by good maintenance practices. Lessee shall
repair any damage to the Premises occasioned by the installation or removal of
Lessee's trade fixtures, alterations, furnishings and equipment. Notwithstanding
anything to the contrary otherwise stated in this Lease. Lessee shall leave the
air lines, power panels, electrical distribution systems, lighting fixtures,
space heaters, air conditioning, plumbing and fencing on the Premises in good
operating condition.
7.3 ALTERATIONS AND ADDITIONS.
(a) Lessee shall not, without Lessor's prior written consent make any
alterations, improvements, additions, or Utility Installations in, on or about
the Premises, or the Industrial Center, except for nonstructural alterations to
the Premises not exceeding $2,500 in cumulative costs, during the term of this
Lease. In any event, whether or not in excess of $2,500 in cumulative cost,
Lessee shall make no change or alteration to the
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exterior of the Premises nor the exterior of the Building nor the Industrial
Center without Lessor's prior written consent. As used in this paragraph 7.3
the term "Utility Installation" shall mean carpeting, window coverings, air
lines, power panels, electrical distribution systems, lighting fixtures, space
heaters, air conditioning, plumbing, and fencing. Lessor may require that
Lessee remove any or all of said alterations, improvements, additions or Utility
Installations at the expiration of the term, and restore the Premises and the
Industrial Center to their prior condition. Should Lessee make any alterations,
improvements, additions or Utility Installations without the prior approval of
Lessor, Lessor may, at any time during the term of this Lease, require that
Lessee remove any or all of the same.
(b) Any alterations, improvements, additions or Utility Installations
in or about the Premises or the Industrial Center that Lessee shall desire to
make and which requires the consent of the Lessor shall be presented to Lessor
in written form, with proposed detailed plans. If Lessor shall give its
consent, the consent shall be deemed conditioned upon Lessee acquiring a permit
to do so from appropriate governmental agencies, the furnishing of a copy
thereof to Lessor prior to the commencement of the work and the compliance by
Lessee of all conditions of said permit in a prompt and expeditious manner.
(c) Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use in
the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises, or the Industrial Center, or any
interest therein. Lessee shall give Lessor not less than ten (10) days' notice
prior to the commencement of any work in the Premises, and Lessor shall have the
right to post notices of non-responsibility in or on the Premises or the
Building as provided by law. If Lessee shall, in good faith, contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend itself and Lessor against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof against the Lessor or the Premises or the Industrial Center, upon the
condition that if Lessor shall require, Lessee shall furnish to Lessor a surety
bond satisfactory to Lessor in an amount equal to such contested lien claim or
demand indemnifying Lessor against liability for the same and holding the
Premises and the Industrial Center free from the effect of such lien or claim.
(d) All alterations, improvements, additions and Utility Installations
(whether or not such Utility Installations constitute trade fixtures of Lessee),
which may be made on the Premises, shall be the property of Lessor and shall
remain upon and be surrendered with the Premises at the expiration of the Lease
term, unless Lessor requires their removal pursuant to paragraph 7.3(a).
Notwithstanding the provisions of this paragraph 7.3(d), Lessee's machinery and
equipment, other than that which is affixed to the Premises so that it cannot be
removed without material damage to the Premises, and other than Utility
Installations, shall remain the property of Lessee and may be removed by Lessee
subject to the provisions of paragraph 7.2.
7.4 UTILITY ADDITIONS. Lessor reserves the right to install new or
additional utility facilities throughout the Building and the Common Areas for
the benefit of Lessor or Lessee, or any other lessee of the Industrial Center,
including, but not by way of limitation, such utilities as plumbing, electrical
systems, security systems, communication systems, and fire protection and
detection systems, so long as such installations do not unreasonably interfere
with Lessee's use of the Premises.
8. INSURANCE; INDEMNITY.
SEE ADDENDUM
8.2 LIABILITY INSURANCE -- LESSOR. Lessor shall obtain and keep in
force during the term of this Lease a policy of Combined Single Limit Bodily
Injury and Property Damage Insurance, insuring Lessor, but not Lessee, against
any liability arising out of the ownership, use, occupancy or maintenance of the
Industrial Center in an amount not less than $1,000,000.00 per occurrence.
SEE ADDENDUM
8.4 PAYMENT OF PREMIUM INCREASE.
(a) After the term of this Lease has commenced, Lessee shall not be
responsible for paying Lessee's Share of any increase in the property insurance
premium for the Industrial Center specified by Lessor's insurance carrier as
being caused by the use, acts or omissions of any other lessee of the Industrial
Center, or by the nature of such other lessee's occupancy which create an
extraordinary or unusual risk.
(b) Lessee, however, shall pay the entirety of any increase in the property
insurance premium for the Industrial Center over what it was immediately prior
to the commencement of the term of this Lease if the increase is specified by
Lessor's insurance carrier as being caused by the nature of Lessee's occupancy
or any act or omission of Lessee.
8.5 INSURANCE POLICIES. Insurance required hereunder shall be in
companies holding a "General Policyholders Rating" of at least B plus, or such
other rating as may be required by a lender having a lien on the Premises, as
set forth in the most current issue of "Best's Insurance Guide." Lessee shall
not do or permit to be done anything which shall invalidate the insurance
policies carried by Lessor. Lessee shall deliver to Lessor copies of liability
insurance policies required under paragraph 8.1 or certificates evidencing the
existence and amounts of such insurance within seven (7) days after the
commencement date of this Lease. No such policy shall be cancellable or subject
to reduction of coverage or other modification except after thirty (30) days
prior written notice to Lessor. Lessee shall, at least thirty (30) days prior
to the expiration of such policies, furnish Lessor with renewals or "binders"
thereof.
8.6 WAIVER OF SUBROGATION. Lessee and Lessor each hereby release and
relieve the other, and waive their entire right of recovery against the other
for loss or damage arising out of or incident to the perils insured against
which perils occur in, on or about the premises, whether due to the negligence
of Lessor or Lessee or their agents, employees, contractors and/or invitees.
Lessee and Lessor shall, upon obtaining the policies of insurance required give
notice to the insurance carrier or carriers that the foregoing mutual waiver of
subrogation is contained in this Lease.
SEE ADDENDUM
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessee hereby agrees that
Lessor shall not be liable for injury to Lessee's business or any loss of income
therefrom or for damage to the goods, wares, merchandise or other property of
Lessee, Lessee's employees, invitees, customers, or any other person in or about
the Premises or the Industrial Center, nor shall Lessor be liable for injury to
the person of Lessee, Lessee's employees, agents or contractors, whether such
damage or injury is caused by or results from fire, steam, electricity, gas,
water or rain, or from the breakage, leakage, obstruction or other defects of
pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause, whether said damage or injury results from
conditions arising upon the Premises or upon other portions of the Industrial
Center, or from other sources or places and regardless of whether the cause of
such damage or injury or the means of repairing the same is inaccessible to
Lessee. Lessor shall not be liable for any damages arising from any act or
neglect of any other lessee, occupant or user of the Industrial Center, nor from
the failure of Lessor to enforce the provisions of any other lease of the
Industrial Center.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "Premises Partial Damage" shall mean if the Premises are damaged or
destroyed to the extent that the cost of repair is less than fifty percent of
the then replacement cost of the Premises.
(b) "Premises Total Destruction" shall mean if the Premises are damaged or
destroyed to the extent that the cost of repair is fifty percent or more of the
then replacement cost of the Premises.
(c) "Premises Building Partial Damage" shall mean if the Building of which
the Premises are a part is damaged or destroyed to the extent that the cost to
repair is fifty percent or more of the then replacement cost of the Building.
(d) "Premises Building Total Destruction" shall mean if the Building of
which the Premises are a part is damaged or destroyed to the extent that the
cost to repair is fifty percent or more of the then replacement cost of the
Building.
(e) "Industrial Center Buildings" shall mean all of the buildings on the
Industrial Center site.
(f) "Industrial Center Buildings Total Destruction" shall mean if the
Industrial Center Buildings are damaged or destroyed to the extent that the cost
of repair is fifty percent or more of the then replacement cost of the
Industrial Center Buildings.
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(g) "Insured Loss" shall mean damage or destruction which
was covered by an event required to be covered by the insurance described in
paragraph 8. The fact that an Insured Loss has a deductible amount shall not
make the loss an uninsured loss.
(h) "Replacement Cost" shall mean the amount of money
necessary to be spent in order to repair or rebuild the damaged area to the
condition that existed immediately prior to the damage occurring excluding all
improvements made by lessees.
9.2 PREMISES PARTIAL DAMAGE; PREMISES BUILDING PARTIAL DAMAGE.
(a) Insured Loss: Subject to the provisions of paragraphs
9.4 and 9.5, if at any time during the term of this Lease there is damage which
is an Insured Loss and which falls into the classification of either
Premises Partial Damage or Premises Building Partial Damage, then Lessor shall,
at Lessor's expense, repair such damage to the Premises, but not Lessee's
fixtures, equipment or tenant improvements, as soon as reasonably possible and
this Lease shall continue in full force and effect.
(b) Uninsured Loss: Subject to the provisions of
paragraphs 9.4 and 9.5, if any time during the term of this Lease there is
damage which is not an Insured Loss and which falls within the classification
of Premises Partial Damage or Premises Building Partial Damage, unless caused
by a negligent or willful act of Lessee (in which event Lessee shall make the
repairs at Lessee's expense), which damage prevents Lessee from using the
premises, Lessor may at Lessor's option either (i) repair such damage as soon
as reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) give written notice to Lessee within
thirty (30) days after the date of the occurrence of such damage of Lessor's
intention to cancel and terminate this Lease as of the date of the occurrence
of such damage. In the event Lessor elects to give such notice of Lessor's
intention to cancel and terminate this Lease, Lessee shall have the right
within ten (10) days after the receipt of such notice to give written notice to
Lessor of Lessee's intention to repair such damage at Lessee's expense without
reimbursement from Lessor, in which event this Lease shall continue in full
force and effect, and Lessee shall proceed to make such repairs as soon as
reasonably possible. If Lessee does not give such notice within such 10-day
period this Lease shall be cancelled and terminated as of the date of the
occurrence of such damage.
9.3 PREMISES TOTAL DESTRUCTION; PREMISES BUILDING TOTAL DESTRUCTION;
INDUSTRIAL CENTER BUILDINGS TOTAL DESTRUCTION.
(a) Subject to the provisions of paragraphs 9.4 and 9.5, if
at any time during the term of this Lease there is damage, whether or not it is
an Insured Loss, and which falls into the classifications of either (i)
Premises Total Destruction, or (ii) Premises Building Total Destruction, or
(iii) Industrial Center Buildings Total Destruction, then Lessor may at
Lessor's option either (i) repair such damage or destruction, but not Lessee's
fixtures, equipment or tenant improvements, as soon as reasonably possible at
Lessor's expense, and this Lease shall continue in full force and effect, or
(ii) give written notice to Lessee within thirty (30) days after the date of
occurrence of such damage of Lessor's intention to cancel and terminate this
Lease, in which case this Lease shall be cancelled and terminated as of the
date of the occurrence of such damage.
9.4 DAMAGE NEAR END OF TERM.
(a) Subject to paragraph 9.4(b), if at any time during the
last six months of the term of this Lease there is substantial damage, whether
or not an Insured Loss, which falls within the classification of Premises
Partial Damage, Lessor may at Lessor's option cancel and terminate this Lease
as of the date of occurrence of such damage by giving written notice to Lessee
of Lessor's election to do so within 30 days after the date of occurrence of
such damage.
(b) Notwithstanding paragraph 9.4(a), in the event that
Lessee has an option to extend or renew this Lease, and the time within which
said option may be exercised has not yet expired, Lessee shall exercise such
option, if it is to be exercised at all, no later than twenty (20) days after
the occurrence of an Insured Loss falling within the classification of Premises
Partial Damage during the last six months of the term of this Lease. If
Lessee duly exercises such option during said twenty (20) day period, Lessor
shall, at Lessor's expense, repair such damage, but not Lessee's fixtures,
equipment or tenant improvements, as soon as reasonably possible and this Lease
shall continue in full force and effect. If Lessee fails to exercise such
option during said twenty (20) day period, then Lessor may at Lessor's option
terminate and cancel this Lease as of the expiration of said twenty (20) day
period by giving written notice to Lessee of Lessor's election to do so within
ten (10) days after the expiration of said twenty (20) day period,
notwithstanding any term or provision in the grant of option to the contrary.
9.5 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event Lessor repairs or restores the Premises
pursuant to the provisions of this paragraph 9, the rent payable hereunder for
the period during which such damage, repair or restoration continues shall be
abated in proportion to the degree to which Lessee's use of the Premises is
impaired. Except for abatement of rent, if any, Lessee shall have no claim
against Lessor for any damage suffered by reason of any such damage,
destruction, repair or restoration.
(b) If Lessor shall be obligated to repair or restore the
Premises under the provisions of this paragraph 9 and shall not commence such
repair or restoration within ninety (90) days after such obligation shall
accrue, Lessee may at Lessee's option cancel and terminate this Lease by giving
Lessor written notice of Lessee's election to do so at any time prior to the
commencement of such repair or restoration. In such event this Lease shall
terminate as of the date of such notice.
9.6 TERMINATION -- ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this paragraph 9, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor. Lessor shall,
in addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.
9.7 WAIVER. Lessor and Lessee waive the provisions of any statute
which relate to termination of leases when leased property is destroyed and
agree that such event shall be governed by the terms of this Lease.
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Lessor shall pay the real property tax, as
defined in paragraph 10.3, applicable to the Industrial Center subject to
reimbursement by Lessee of Lessee's Share of such taxes in accordance with the
provisions of paragraph 4.2, except as otherwise provided in paragraph 10.2.
10.2 ADDITIONAL IMPROVEMENTS. Lessee shall not be responsible for
paying Lessee's Share of any increase in real property tax specified in the tax
assessor's records and work sheets as being caused by additional improvements
placed upon the Industrial Center by other lessees or by Lessor for the
exclusive enjoyment of such other lessees. Lessee shall, however, pay to Lessor
at the time that Operating Expenses are payable under paragraph 4.2(c) the
entirety of any increase in real property tax if assessed solely by reason of
additional improvements placed upon the Premises by Lessee or at Lessee's
request.
10.3 DEFINITION OF "REAL PROPERTY TAX." As used herein, the term
"real property tax" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed on Industrial Center or any portion
thereof by any authority having the direct or indirect power to tax, including
any city, county, state or federal government, or any school, agricultural,
sanitary, fire, street, drainage or other improvement district thereof, as
against any legal or equitable interest of Lessor in the Industrial Center or
in any portion thereof, as against Lessor's right to rent or other income
therefrom, and as against Lessor's business of leasing the Industrial Center.
The term "real property tax" shall also include any tax, fee, levy, assessment
or charge (i) in substitution of, partially or totally, any tax, fee, levy,
assessment or charge hereinabove included within the definition of "real
property tax," or (ii) the nature of which was hereinbefore included within the
definition of "real property tax," or (iii) which is imposed for a service or
right not charged prior to June 1, 1978, or, if previously charged, has been
increased since June 1, 1978, or (iv) which is imposed as a result of a
transfer, either partial or total, of Lessor's interest in the Industrial
Center or which is added to a tax or charge hereinbefore included within the
definition of real property tax by reason of such transfer, or (v) which is
imposed by reason of this transaction, any modifications or changes hereto, or
any transfers hereof.
10.4 JOINT ASSESSMENT. If the Industrial Center is not separately
assessed, Lessee's Share of the real property tax liability shall be an
equitable proportion of the real property taxes for all of the land and
improvements included within the tax parcel assessed, such proportion to be
determined by Lessor from the respective valuations assigned in the assessor's
work sheets or such other information as may be reasonably available. Lessor's
reasonable determination thereof, in good faith, shall be conclusive.
10.5 PERSONAL PROPERTY TAXES.
(a) Lessee shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the Premises or elsewhere. When
possible, Lessee shall cause said trade fixtures, furnishings, equipment and
all other personal property to be assessed and billed separately from the real
property of Lessor.
(b) If any of Lessee's said personal property shall be
assessed with Lessor's real property, Lessee shall pay to Lessor the taxes
attributable to Lessee within ten (10) days after receipt of a written
statement setting forth the taxes applicable to Lessee's property.
11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities and services supplied to the Premises, together
with any taxes thereon. If any such services are not separately metered to
the Premises, Lessee shall pay at Lessor's option, either Lessee's Share or a
reasonable proportion to be determined by Lessor of all charges jointly metered
with other premises in the Building.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's interest in the Lease or in the Premises,
without Lessor's prior written consent, which Lessor shall not unreasonably
withhold. Lessor shall respond to Lessee's request for consent hereunder in a
timely manner and any attempted assignment, transfer, mortgage, encumbrance or
subletting without such consent shall be void, and shall constitute a breach of
this Lease without the need for notice to Lessee under paragraph 13.1.
12.2 LESSEE AFFILIATE. Notwithstanding the provisions of paragraph
12.1 hereof, Lessee may assign or sublet the Premises, or any portion thereof,
without Lessor's consent, to any corporation which controls, is controlled by
or is under common control with Lessee, or to any corporation resulting from
the merger or consolidation with Lessee, or to any person or entity which
acquires all the assets of Lessee as a going concern of the business that is
being conducted on the Premises, all of which are referred to as "Lessee
Affiliate," provided that before such assignment shall be effective said
assignee shall assume, in full, the obligations of Lessee under this Lease.
Any such assignment shall not, in any
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way, affect or limit the liability of Lessee under the terms of this Lease even
if after such assignment or subletting the terms of this Lease are materially
changed or altered without the consent of Lessee, the consent of whom shall not
be necessary.
12.3 Terms and Conditions of Assignment. Regardless of Lessor's consent, no
assignment shall release Lessee of Lessee's obligations hereunder or alter the
primary liability of Lessee to pay the Base Rent and Lessee's Share of Operating
Expenses, and to perform all other obligations to be performed by Lessee
hereunder. Lessor may accept rent from any person other than Lessee pending
approval or disapproval of such assignment. Neither a delay in the approval or
disapproval of such assignment nor the acceptance of rent shall constitute a
waiver or estoppel of Lessor's right to exercise its remedies for the breach of
any of the terms or conditions of this paragraph 12 or this Lease Consent to one
assignment shall not be deemed consent to any subsequent assignment. In the
event of default by any assignee of Lessee or any successor of Lessee, in the
performance of any of the terms hereof. Lessor may proceed directly against
Lessee without the necessity of exhausting remedies against said assignee.
Lessor may consent to subsequent assignments of this Lease or amendments or
modifications to this Lease with assignees of Lessee, without notifying Lessee,
or any successor of Lessee, and without obtaining its or their consent thereto
and such action shall not relieve Lessee of liability under this Lease.
12.4 Terms and Conditions Applicable to Subletting. Regardless of Lessor's
consent, the following terms and conditions shall apply to any subletting by
Lessee of all or any part of the Premises and shall be included in subleases:
(a) Lessee hereby assigns and in transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease heretofore or
hereafter made by Lessee, and Lessor may collect such rent and income and apply
same toward Lessee's obligations under this Lease; provided, however, that until
a default shall occur in the performance of Lessee's obligations under this
Lease, Lessee may receive, collect and enjoy the rents accruing under such
sublease. Lessor shall not, by reason of this or any other assignment of such
sublease to Lessor nor by reason of the collection of the rents from a
sublessee, be deemed liable to the sublessee for any failure of Lessee to
perform and comply with any of Lessee's obligations to such sublessee under such
sublease. Lessee hereby irrevocably authorizes and directs any such sublessee,
upon receipt of a written notice from Lessor stating that a default exists in
the performance of Lessee's obligations under this Lease, to pay to Lessor the
rents due and to become due under the sublease. Lessee agrees that such
sublessee shall have the right to rely upon any Such statement and request from
Lessor, and that such sublessee shall pay such rents to Lessor without any
obligation or right to inquire as to whether such default exists and
notwithstanding any notice from or claim from Lessee to the contrary. Lessee
shall have no right or claim against such sublessee or Lessor for any such rents
so paid by said sublessee to Lessor.
(b) No sublease entered into by Lessee shall be effective unless and
until it has been approved in writing by Lessor. In entering into any sublease,
Lessee shall use only such form of sublease as is satisfactory to Lessor, and
once approved by Lessor, such sublease shall not be changed or modified without
Lessor's prior written consent. Any sublessee shall, by reason of entering into
a sublease under this Lease, be deemed, for the benefit of Lessor, to have
assumed and agreed to conform and comply with each and every obligation herein
to be performed by Lessee other than such obligations as are contrary to or
inconsistent with provisions contained in a sublease to which Lessor has
expressly consented in writing.
(c) If Lessee's obligations under this Lease have been guaranteed by
third parties, then a sublease, and Lessor's consent thereto, shall not be
effective unless said guarantors give their written consent to such sublease and
the terms thereof.
(d) The consent by Lessor to any subletting shall not release Lessee
from any obligations or alter the primary liability of Lessee to pay the rent
and perform and comply with all of the obligations of Lessee to be performed
under this Lease.
(e) The consent by Lessor any subletting shall not constitute a consent
to any subsequent subletting by Lessee or to any assignment or subletting by the
sublessee. However, Lessor may consent to subsequent sublettings and assignments
of the sublease or any amendments or modifications thereto without notifying
Lessee or anyone else liable on the Lease or sublease and without obtaining
their consent and such action shall not relieve such persons from liability.
(f) In the event of any default under this Lease, Lessor may proceed
directly against Lessee, any guarantors or any one else responsible for the
performance of this Lease, including the sublessee, without first exhausting
Lessor's remedies against any other person or entity responsible therefor to
Lessor, or any security held by Lessor or Lessee.
(g) In the event Lessee shall default in the performance of its
obligations under this Lease, Lessor, at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, in which event Lessor
shall undertake the obligations of Lessee under such sublease from the time of
the exercise of said option to the termination of such sublease; provided,
however. Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to Lessee or for any other prior defaults of Lessee under
such sublease
(h) Each and every consent required of Lessee under a sublease shall
also require the consent of Lessor.
(i) No sublessee shall further assign or sublet all or any part of the
Premises without Lessor's prior written consent.
(j) Lessor's written consent to any subletting of the Premises by Lessee
shall not constitute an acknowledgement that no default then exists under this
Lease of the obligations to be performed by Lessee nor shall such consent be
deemed a waiver of any then existing default, except as may be otherwise stated
by Lessor at the time.
(k) With respect to any subletting which Lessor has consented, Lessor
agrees to deliver a copy of any notice of default by Lessee to the sublessee.
Such sublessee shall have the right to cure a default of Lessee within ten (10)
days after service of said notice of default upon such sublessee, and the
sublessee shall have a right of reimbursement and offset from and against Lessee
for any such defaults cured by the sublessee
13. Default; Remedies.
13.1 Default. The occurrence of any one or more of the following events
shall constitute a material default of this Lease by Lessee:
(a) The vacating or abandonment of the Premises by Lessee.
(b) The failure by Lessee to make any payment or rent or any other
payment required to be made by Lessee hereunder, as and when due, where such
failure shall continue for a period of three (3) days after written notice
thereof from Lessor to Lessee. In the event that Lessor serves Lessee with a
Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes
such Notice to Pay Rent or Quit shall also constitute the notice required by
this subparagraph.
(c) Except as otherwise provided in this Lease, the failure by Lessee to
observed or perform any of the covenants, conditions or provisions of this Lease
to be observed or performed by Lessee, other than described in paragraph (b)
above, where such failure shall continue for a period of thirty (30) days after
written notice thereof from Lessor to Lessee; provided, however, that if the
nature of Lessee's noncompliance is such that more than thirty (30) days are
reasonably required for its cure, then Lessee shall not be deemed to be in
default if Lessee commenced such cure within said thirty (30) day period and
thereafter diligently prosecutes such cure to completion. To the extent
permitted by law, such thirty (30) day notice shall constitute the sole and
exclusive notice required to be given to Lessee under applicable Unlawful
Detainer statutes.
(d) (i) The making by Lessee of any general arrangement or general
assignment for the benefit of creditors (ii) Lessee becomes a "debtor" as
defined in 11 U.S.C. Section 101 or any successor statute thereto (unless, in
the case of a petition filed against Lessee, the same is dismissed within sixty
(60) days); (iii) the appointment of a trustee or receiver to take possession
of substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within thirty
(30) days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where such seizure is not discharged within thirty (30)
days. In the event that any provision of this paragraph 13.1(d) is contrary to
any applicable law, such provision shall be of no force or effect.
(e) The discovery by Lessor that any financial statement given to Lessor
by Lessee, any assignee of Lessee, any subtenant of Lessee, any successor in
interest of Lessee or any guarantor of Lessee's obligation hereunder, was
materially false.
13.2 Remedies. In the event of any such material default by Lessee, Lessor
may at any time thereafter, with or without notice or demand and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such default:
(a) Terminate Lessee's right to possession of the Premises by any lawful
means, in which case this Lease and the term hereof shall terminate and Lessee
shall immediately surrender possession of the Premises to Lessor, In such event
Lessor shall be entitled to recover from Lessee all damages incurred by Lessor
by reason of Lessee's default including, but not limited to, the cost of
recovering possession of the Premises; expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorney's
fees, and any real estate commission actually paid; the worth at the time of
award by the court having jurisdiction thereof of the amount by which the
unpaid rent for the balance of the term after the time of such award exceeds
the amount of such rental loss for the same period that Lessee proves could be
reasonably avoided; that portion of the leasing commission paid by Lessor
pursuant to paragraph 15 applicable to the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this Lease shall
continue in effect whether or not Lessee shall have vacated or abandoned the
Premises. In such event Lessor shall be entitled to enforce all of Lessor's
rights and remedies under this Lease, including the right to recover the rent as
it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor under
the laws or judicial decisions of the state wherein the Premises are located.
Unpaid installments of rent and other unpaid monetary obligations of Lessee
under the terms of this Lease shall bear interest from the date due at the
maximum rate then allowable by law.
13.3 Default by Lessor. Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time, but in
no event later than thirty (30) days after written notice by Lessee to Lessor
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have theretofore been furnished to Lessee in
writing, specifying wherein Lessor has failed to perform such obligation;
provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required for performance then Lessors shall not be in
default if Lessor commences performance within such thirty (30) day period and
thereafter diligently prosecutes the same to completion.
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13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee to
Lessor of Base Rent, Lessee's share of Operating Expenses or other sums due
hereunder will cause Lessor to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed on Lessor by the terms of any mortgage or trust
deed covering the Property. Accordingly, if any installment of Base Rent,
Operating Expenses, or any other sum due from Lessee shall not be received by
Lessor or Lessor's designee within fifteen (15) days after such amount shall
be due, then, without any requirement for notice to Lessee, Lessee shall pay to
Lessor a late charge equal to 4% of such overdue amount. The parties hereby
agree that such late charge represents a fair and reasonable estimate of the
costs Lessor will incur by reason of late payment by Lessee. Acceptance of
such late charge by Lessor shall in no event constitute a waiver of Lessee's
default with respect to such overdue amount, nor prevent Lessor from
exercising any of the other rights and remedies granted hereunder. In the
event that a late charge is payable hereunder, whether or not collected. for
three (3) consecutive installments of any of the aforesaid monetary
obligations of Lessee, then Base Rent shall automatically become due and
payable quarterly in advance, rather than monthly notwithstanding paragraph
4.1 or any other provision of this Lease to the contrary.
14. Condemnation. If the Premises or any portion thereof or the Industrial
Center are taken under the power of eminent domain, or sold under the threat of
the exercise of said powers (all of which are herein called "condemnation").
this Lease shall terminate as to the part so taken as of the date the condemning
authority takes title or possession, whichever first occurs. If more than ten
percent of the floor area of the Premises, or more than twenty-five percent of
that portion of the Common Areas designated as parking for the Industrial Center
is taken by condemnation, Lessee may, at Lessee's option, to be exercised in
writing only within ten (10) days after Lessor shall have given Lessee written
notice of such taking (or in the absence of such notice, within ten (10) days
after the condemning authority shall have taken possession) terminate this Lease
as of the date the condemning authority takes such possession. If Lessee does
not terminate this Lease in accordance with the foregoing, this Lease shall
remain in full force and effect as to the portion of the premises remaining
except that the rent shall be reduced in the proportion that the floor area of
the Premises taken bears to the total floor area of the Premises. No reduction
of rent shall occur if the only area taken is that which does not have the
Premises located thereon. Any award for the taking of all or any part of the
Premises under the power of eminent domain or any payment made under threat of
the exercise of such power shall be the property of Lessor, whether such award
shall be made as compensation for diminution in value of the leasehold or for
the taking of the fee, or as severance damages, provided, however, that Lessee
shall be entitled to any award for loss of or damage to Lessee's trade
fixtures and removable personal property. In the event that this Lease is not
terminated by reason of such condemnation, Lessor shall to the extent of
severance damages received by Lessor in connection with such condemnation,
repair any damage to the Premises caused by such condemnation except to the
extent that Lessee has been reimbursed therefor by the condemning authority.
Lessee shall pay any amount in excess of such severance damages required to
complete such repair.
15. Broker's Fee.
SEE ADDENDUM
16. Estoppel Certificate.
(a) Each party (as "responding party") shall at any time upon not less than
ten (10) days prior written notice from the other party ("requesting party")
execute, acknowledge and deliver to the requesting party a statement in writing
(i) certifying that this Lease is unmodified and in full force and effect (or,
if modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect) and the date to which the
rent and other charges are paid in advance, if any, and (ii) acknowledging that
there are not, to the responding party's knowledge, any uncured defaults on the
part of the requesting party, or specifying such defaults if any are claimed.
Any such statement may be conclusively relied upon by any prospective purchaser
or encumbrancer of the Premises or of the business of the requesting party.
(b) At the requesting party's option, the failure to deliver such statement
within such time shall be a material default of this Lease by the party who is
to respond, without any further notice to such party.
(c) If Lessor desires to finance, refinance, or sell the Property or any
part thereof, Lessee hereby agrees to deliver to any lender or purchaser
designated by Lessor such financial statements of Lessee as may be reasonably
required by such lender or purchaser. Such statements shall include the past
three (3) years' financial statements of Lessee. All such financial statements
shall be received by Lessor and such lender or purchaser in confidence and shall
be used only for the purposes herein set forth.
17. Lessor's Liability. The term "Lessor" as used herein shall mean only the
owner or owners, at the time in question, of the fee title or a lessee's
interest in a ground lease of the Industrial Center, and except as expressly
provided in paragraph 15, in the event of any transfer of such title or
interest, Lessor herein named (and in case of any subsequent transfers then
the grantor) shall be relieved from and after the date of such transfer of all
liability as respects Lessor's obligations thereafter to be performed,
provided that any funds in the hands of Lessor or the then grantor at the time
of such transfer, in which Lessee has an interest, shall be delivered to the
grantee. The obligations contained in this Lease to be performed by Lessor
shall, subject as aforesaid, be binding on Lessor's successors and assigns,
only during their respective periods of ownership
18. Severability. The invalidity of any provision of this Lessee determined by a
court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
19. Interest on Past-due Obligations. Except as expressly herein provided, any
amount due to Lessor not paid when due shall bear interest at the maximum rate
then allowable by law from the date due. Payment of such interest shall not
excuse or cure any default by Lessee under this Lease, provided, however, that
interest shall not be payable on late charges incurred by Lessee nor on any
amounts upon which late charges are paid by Lessee.
20. Time of Essence. Time is of the essence with respect to the obligations to
be performed under this Lease.
21. Additional Rent. All monetary obligations of Lessee to Lessor under the
terms of this Lease, including but not limited to Lessee's Share of Operating
Expenses and insurance and lax expenses payable shall be deemed to be rent.
22. Incorporation of Prior Agreements; Amendments. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No prior
or contemporaneous agreement or understanding pertaining to any such matter
shall be effective. This lease may be modified in writing only, signed by the
parties in interest at the time of the modification. Except as otherwise stated
in this Lease, Lessee hereby acknowledges their neither the real estate broker
listed in paragraph 15 hereof nor any cooperating broker on this transaction
nor the Lessor or any employee or agents of any of said persons has made any
oral or written warranties or representations to Lessee relative to the
condition or use by Lessee of the Premises or the Property and Lessee
acknowledges that Lessee assumes all responsibility regarding the Occupational
Safety Health Act, the legal use and adaptability of the Premises and the
compliance thereof with all applicable laws and regulations in effect during the
term of this Lease except as otherwise specifically stated in this Lease.
23. Notices. Any notice required or permitted to be given hereunder shall be in
writing and may be given by personal delivery or by certified mail, and if given
personally or by mail, shall be deemed sufficiently given if addressed to Lessee
or to Lessor at the address noted below the signature of the respective parties,
as the case may be. Either party may by notice to the other specify a different
address for notice purposes except that upon Lessee's taking possession of the
Premises, the Premises shall constitute Lessee's address for notice purposes. A
copy of all notices required or permitted to be given to Lessor hereunder shall
be concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate by notice to Lessee.
24. Waivers. No waiver by Lessor or any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by Lessee of any provision
hereof other than the failure of Lessee to pay the particular rent so accepted,
regardless of Lessor's knowledge of such preceding breach at the time of
acceptance of such rent.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a "short form" memorandum of this
Lease for recording purposes.
26. Holding Over. If Lessee, with Lessor's consent, remains in possession of the
Premises or any part thereof after the expiration of the term hereof, such
occupancy shall be a tenancy from month to month upon all the provisions of this
Lease pertaining to the obligations of Lessee, but all Options, if any, granted
under the terms of this Lease shall be deemed terminated and be of no further
effect during said month to month tenancy.
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27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. Covenants and Conditions. Each provision of this Lease performable by Lessee
shall be deemed both a covenant and a condition.
29. Binding Effect; Choice of Law. Subject to any provisions hereof restricting
assignment or subletting by Lessee and subject to the provisions of paragraph
17, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State
where the Industrial Center is located and any litigation concerning this Lease
between the parties hereto shall be initiated in the county in which the
Industrial Center is located.
30. Subordination.
(a) This Lease, and any Option granted hereby, at Lessor's option, shall be
subordinate to any ground lease, mortgage, deed of trust, or any other
hypothecation or security now or hereafter placed upon the Industrial Center and
to any and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Lessee's right to quiet possession of the
Premises shall not be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms. If any
mortgagee, trustee or ground lessor shall elect to have this Lease and any
Options granted hereby prior to the lien of its mortgage, deed of trust or
ground lease, and shall give written notice thereof to Lessee, this Lease and
such Options shall be deemed prior to such mortgage, deed of trust or ground
lease, whether this Lease or such Options are dated prior or subsequent to the
date of said mortgage, deed of trust or ground lease or the date of recording
thereof.
(b) Lessee agrees to execute any documents required to effectuate an
attornment, a subordination or to make this Lease or any Option granted herein
prior to the lien of any mortgage, deed of trust or ground lease, as the case
may be. Lessee's failure to execute such documents with ten (10) days after
written demand shall constitute a material default by Lessee hereunder without
further notice to Lessee.
31. Attorney's Fees. If either party or the broker(s) named herein bring an
action to enforce the terms hereof or declare rights hereunder, the prevailing
party in any such action, on trial or appeal, shall be entitled to his
reasonable attorney's fees to be paid by the losing party as fixed by the court.
The provisions of this paragraph shall inure to the benefit of the broker named
herein who seeks to enforce a right hereunder.
32. Lessor's Access. Lessor and Lessor's agents shall have the right to enter
the Premises at reasonable times for the purpose of inspecting the same, showing
the same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises or to the
building of which they are part as Lessor may deem necessary or desirable.
Lessor may at any time place on or about the Premises or the Building any
ordinary "For Sale" signs and Lessor may at any time during the last 120 days of
the term hereof place on or about the Premises any ordinary "For Lease" signs.
All activities of Lessor pursuant to this paragraph shall be without abatement
of rent, nor shall Lessor have any liability lo Lessee for the same.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises or the Common Areas
without first having obtained Lessor's prior written consent. Notwithstanding
anything to the contrary in this Lease, Lessor shall not be obligated to
exercise any standard of reasonableness in determining whether to grant such
consent.
34. Signs. Lessee shall not place any sign upon the Premises or the Industrial
Center without Lessor's prior written consent. Under no circumstances shall
Lessee place a sign on any roof of the Industrial Center.
35. Merger. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to Lessor
of any or all of such subtenancies.
36. Consents. Except for paragraph 33 hereof, wherever in this Lease the consent
of one party is required to an act of the other party such consent shall not be
unreasonably withheld or delayed.
37. Guarantor. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.
38. Quiet Possession. Upon Lessee paying the rent for the Premises and observing
and performing all of the covenants, conditions and provisions on Lessee's part
to be observed and performed hereunder, Lessee shall have quiet possession of
the Premises for the entire term hereof subject to all of the provisions of this
Lease. The individuals executing this Lease on behalf of Lessor represent and
warrant to Lessee that they are fully authorized and legally capable of
executing this Lease on behalf of Lessor and that such execution is binding upon
all parties holding an ownership interest in the Property.
39. Options.
39.1 Definition. As used in this paragraph the word "Option" has the
following meaning: (1) the right or option to extend the term of this Lease the
term or to renew this Lease or to extend or renew any lease that Lessee has on
other property of Lessor; (2) the option or right of first refusal to lease the
Premises or the right of first offer to lease the Premises or the right of first
refusal to lease other space within the Industrial Center or other property of
Lessor or the right of first offer to lease other space within the Industrial
Center or other property of Lessor. (3) the right or option to purchase the
Premises or the Industrial Center, or the right of first refusal to purchase the
Premises or the Industrial Center, or the right of first offer to purchase the
Premises or the Industrial Center, or the right or option to purchase other
property of Lessor, or the right of first refusal to purchase other property of
Lessor or the right of first offer to purchase other property of Lessor.
39.2 Options Personal. Each Option granted to Lessee in this Lease is
personal to the original Lessee and may be exercised only by the original Lessee
while occupying the Premises who does so without the intent of thereafter
assigning this Lease or subletting the Premises or any portion thereof, and may
not be exercised or be assigned, voluntarily or involuntarily, by or to any
person or entity other than Lessee, provided, however, that an Option may be
exercised by or assigned to any Lessee Affiliate as defined in paragraph 12.2
of this Lease. The Options, if any, herein granted to Lessee are not assignable
separate and apart from this Lease, nor may any Option be separated from this
Lease in any manner, either by reservation or otherwise.
39.3 Multiple Options. In the event that Lessee has any multiple options to
extend or renew this Lease a later option cannot be exercised unless the prior
option to extend or renew this Lease has been so exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option, notwithstanding
any provision in the grant of Option to the contrary, (i) during the time
commencing from the date Lessor gives to Lessee a notice of default pursuant to
paragraph 13.1(b) or 13.1(c) and continuing until the noncompliance alleged in
said notice of default is cured, or (ii) during the period of time commencing on
the date after a monetary obligation to Lessor is due from Lessee and unpaid
(without any necessity for notice thereof to Lessee) and continuing until the
obligation is paid, or (iii) at any time after an event of default described in
paragraphs 13.1(a), 13.1(d) or 13.1(e) (without any necessity of Lessor to
give notice of such default to Lessee), nor (iv) in the event that Lessor has
given to Lessee three or more notices of default under paragraph 13.1(b), or
paragraph 13.1(c) whether or not the defaults are cured, during the 12 month
period of time immediately prior to the time that Lessee attempts to exercise
the subject Option.
(b) The period of time within which an Option may be exercised shall not
be extended or enlarged by reason of Lessee's inability to exercise an Option
because of the provisions of paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Options terminate
and be of no further force or effect, notwithstanding Lessee's due and timely
exercise of the Option, if, after such exercise and during the term of this
Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee for a
period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessee fails to
commence to cure a default specified in paragraph 13.1(c) within thirty (30)
days after the date that Lessor gives notice to Lessee of such default and/or
Lessee fails thereafter to diligently prosecute said cure to completion, or
(iii) Lessee commits a default described in paragraph 13.1(a), 13.1(d) or
13.1(e) (without any necessity of Lessor to give notice of such default to
Lessee), or (iv) Lessor gives to Lessee three or more notices of default under
paragraph 13.1(b), or paragraph 13.1(c), whether or not the defaults are cured.
39.5 SEE ADDENDUM
40. Security Measures. Lessee hereby acknowledges that Lessor shall have no
obligation whatsoever to provide guard service or other security measures for
the benefit of the Premises or the Industrial Center. Lessee assumes all
responsibility for the protection of Lessee, its agents, and invitees and the
property of Lessee and of Lessee's agents and invitees from acts of third
parties. Nothing herein contained shall prevent Lessor, at Lessor's sole option,
from providing security protection for the Industrial Center or any part
thereof, in which event the cost thereof shall be included within the definition
of Operating Expenses, as set forth in paragraph 4.2(b).
41. Easements. Lessor reserves to itself the right, from time to time, to grant
such easements, rights and dedications that Lessor deems necessary or desirable,
and to cause the recordation of Parcel Maps and restrictions, so long as such
easements, rights, dedications, Maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee shall sign any of the
aforementioned documents upon request of Lessor and failure to do so shall
constitute a material default of this Lease by Lessee without the need for
further notice to Lessee.
42. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one party to the other under the provisions
hereof, the party against who the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment, and there shall survive the right on the part
of said party to institute suit for recovery of such sum. If it shall be
adjudged that there was no legal obligation on the part of said party to pay
such sum or any part thereof, said party shall be entitled to recover such sum
or so much thereof as it was not legally required to pay under the provisions of
this Lease.
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43. AUTHORITY. If Lessee is a corporation, trust, or general or limited
partnership, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and
deliver this Lease on behalf of said entity. If Lessee is a corporation, trust
or partnership, Lessee shall, within thirty (30) days after execution of this
Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.
44. CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions, if any, shall be controlled by the
typewritten or handwritten provisions.
45. OFFER. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to lease. This Lease
shall become binding upon Lessor and Lessee only when fully executed by Lessor
and Lessee.
46. ADDENDUM. Attached hereto is an addendum which constitute a part of
this Lease.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
THIS LEASE HAS BEEN PREPARED FOR SUBMISSION TO YOUR ATTORNEY FOR
APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER OR ITS
AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING THERETO: THE
PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL COUNSEL
AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
LESSOR LESSEE
SIGNATURES - SEE ADDENDUM SIGNATURES - SEE ADDENDUM
- ------------------------------------- -------------------------------------
By By
----------------------------------- -----------------------------------
By By
----------------------------------- -----------------------------------
Executed on Executed on
------------------------- --------------------------
(Corporate Seal) (Corporate Seal)
ADDRESS FOR NOTICES AND RENT ADDRESS
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
NOTE: These forms are often modified to meet changing requirements of law
and needs of the industry. Always write or call to make sure you are
utilizing the most current from: AMERICAN INDUSTRIAL REAL ESTATE
ASSOCIATION, 345 So. Figueroa St., M-1, Los Angeles, CA 90071.
(213) 687-8777.
<PAGE> 9
ADDENDUM TO LEASE
LESSOR: OATES BUSINESS PARK - VISALIA
LESSEE: ROSS WHITE ENTERPRISES, INC.
PREMISES: 8030 DOE AVENUE, VISALIA, CALIFORNIA
LEASE DATED: MARCH 1, 1994
3.1 (Continued) The term shall commence on the date Lessor has substantially
completed construction of the tenant improvements pursuant to the provisions of
Exhibit "B" at Lessor's sole expense. Lessor shall be deemed to have
substantially completed the improvements when Lessee may legally occupy the
entire Premises, i.e., when Lessor has delivered to Lessee a Certificate of
Occupancy (which includes final governmental approval of all building permits)
for the Premises issued by the local governmental Building Department. The
anticipated commencement date is approximately 60 days after Lessee's execution
and delivery of this Lease to Lessor.
3.3 (Continued) Lessor consents to the early entry of Lessee into the Premises
for the purpose of storing materials and equipment. Lessee may enter the
Premises, at no cost to Lessee, approximately 15 days prior to commencement of
the Lease term (such period prior to the commencement date of the term shall be
referred to as the "Early Entry Period"). Prior to such entry, Lessee shall
provide to Lessor evidence that all insurance coverage required under the Lease
is in full effect during the Early Entry Period. The provisions of Paragraph 8
shall apply during the Early Entry Period as if the Lease term had started on
the first day of the Early Entry Period. During the Early Entry Period, Lessee
understands that Lessor shall be working to fulfill its obligations under
Exhibit "B" of this Lease. Lessee shall be permitted to use portions of the
Premises as construction is completed in order that Lessee can make a smooth
transition from its prior facilities.
4.1 (Continued) Schedule for base rent is as follows:
<TABLE>
<S> <C>
Months 01-24: $12,870.00 per month;
Months 25-36: $13,320.00 per month;
Months 37-48: $13,786.00 per month;
Months 49-60: $14,269.00 per month.
</TABLE>
4.2(a) (Continued) Lessee's Share shall not exceed $.05 per square foot per
month during Months 1-12 of the original lease term.
Lessee's Share shall include a reserve of $.005 per square foot per
ADDENDUM 1
<PAGE> 10
month as a reserve to pay for major repair/replacement of roof, parking lot,
and exterior painting. This reserve shall be held until such work is needed
and shall not be refundable to Lessee.
Management fees shall not exceed 3% of rents collected during the Lease term.
6.2(a) (Continued) Lessor warrants that any new construction by Lessor pursuant
to this Lease shall be in conformity with the building plans and permits, and
shall comply with current interpretations of the Americans With Disabilities
Act of 1990 ("ADA") regarding the type of building and/or tenant improvements
constructed by Lessor. However, if any governmental authority should require
any additional improvements, permits or approvals, under ADA or otherwise, due
to Lessee's particular use, or Lessee's employees, customers, or invitees, other
than those which are stated in this Lease, and other than requirements
generally for buildings of this type, including without limitation additional
fire protection equipment or flow capacity, use permits, or zoning variances,
such improvements or changes to the permitted uses shall be made at Lessee's
sole expense.
8.1 Liability Insurance - Lessee. Lessee shall, at Lessee's expense, obtain
and keep in force during the term of this Lease a policy of Combined Single
Limit Bodily Injury, Personal Injury, Advertising Injury, and Property Damage
insurance insuring Lessee and Lessor against any claim arising out of, or
related in any manner to, the use, occupancy, or maintenance of the Premises
and the Industrial Center. Such insurance shall be in an amount not less than
$1,000,000 per occurrence. The policy shall insure performance by Lessee of
the indemnity provisions of this Paragraph 8. The provisions of said insurance
nor the limits of said insurance shall not, however, limit the liability of
Lessee hereunder. Lessee covenants and agrees that Lessor will be listed as an
Additional Named Insured in said policy in conformity with the agreements to
defend and indemnify herein, and that said insurance maintained by Lessee is
agreed to be primary, with any insurance maintained by Lessor to be excess.
8.3 Property Insurance. Lessor shall maintain a policy of insurance covering
loss or damage to the Industrial Center improvements. Said insurance policy
will not cover Lessee's personal property, fixtures, the interruption of
business, extra expenses, equipment or tenant improvements. Said policy shall
be in an amount not to exceed the full replacement value thereof, as the same
may exist from time to time. Said policy will provide protection against all
perils included within the classification of fire, extended coverage,
vandalism, malicious mischief, flood (but only in the event same is required by
a lender having a lien on the Premises) special extended perils ("all risk", as
such term is used in the insurance industry), plate glass insurance and such
other insurance as Lessor deems advisable. In addition, Lessor shall
ADDENDUM 2
<PAGE> 11
obtain and keep in force, during the term of this Lease, a policy of rental
value insurance covering a period of one year, with loss payable to Lessor,
which insurance shall also cover all Operating Expenses for said period. In
the event that the Premises shall suffer an insured loss as defined in
Paragraph 9.1(g) hereof, the deductible amounts under the casualty insurance
policies relating to the Premises shall be paid by Lessee.
8.7 Indemnity. Lessee shall defend, indemnify and hold harmless Lessor from
and against any and all claims arising out of or in any manner related to
Lessee's use or occupancy of the Industrial center, or arising out of or in any
manner related to the conduct of Lessee's business or arising out of or in any
manner related to any activity, work or things done, permitted or suffered by
Lessee in or about the Premises or elsewhere and shall further indemnify and
hold harmless Lessor from and against all costs, attorney's fees, expenses and
liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon. Upon notice of a claim or action or proceeding
brought hereunder, the duty to defend and protect the interests of Lessor shall
apply unless Lessee can establish at the time of notice of the claim that any
such claim raised hereunder arises out of the sole negligence or sole wilful
misconduct of the Lessor. Lessor shall retain the right to reject defense
counsel appointed by Lessee or its agents, and to appoint satisfactory counsel
at Lessor's sole cost and expense, if Lessor believes that such counsel as
appointed by Lessee or its agents will not adequately represent Lessor's
interests in the case. The duty to indemnify shall apply unless Lessee can
establish as a matter of law that the settlement or judgment arises out of the
sole negligence or sole wilful misconduct of the Lessor. Lessee, as a material
part of the consideration to Lessor, hereby acknowledges that there is a risk
of harm to Lessee's property and injury to persons in, upon or about the
Industrial Center arising from any cause or event and Lessee agrees to assume
all such risks of harm and Lessee hereby waives all claims in respect thereof
against Lessor.
15. Lease Commission. Cushman and Wakefield shall receive a lease commission
according to a separate agreement.
39.5 Option to Extend Term. If the original Premises are not expanded pursuant
to Paragraph 51, and if Lessee is not in default of any of the terms and
conditions of the existing Lease regarding payment of rent, Lessee shall have
the option to renew for one (1) additional five (5) year period. Lessee shall
give written notice at least one hundred eighty (180) days prior to expiration
of the then-existing term of Lessee's intention to extend for that time.
However, if Lessee is in default on the date the option notice is given, the
option notice shall be totally ineffective; or, if Lessee is in default on the
date the extended term is to commence, the extended term shall not commence,
and this Lease shall expire at the end of the then-existing term. All of the
terms and
ADDENDUM 3
<PAGE> 12
conditions of this Lease shall remain the same with the exception of rent,
which shall be fair market rental as negotiated by the parties in good faith at
that time. In the event the parties cannot agree on the amount of such rental,
the parties shall each select a Tulare County real estate broker with at least
5 years of industrial leasing experience, and such brokers shall attempt to
agree upon the fair market rental for the Premises. In the event such brokers
cannot agree, they shall select a third broker with similar qualifications and
submit to the third broker, and exchange with each other, their written
opinions as to fair market rental. The third broker shall not average the
figures, but rather shall choose one of the two opinions as the rental for that
option period. Each party shall pay any fees charged by its own broker, and
each party shall pay one-half of any fees charged by the third broker.
47. Forklift Restrictions. Asphaltic cement cannot withstand hard rubber
forklift tires. In the event the asphalt is damaged by Lessee's use of a
forklift with hard rubber tires, it will be Lessee's obligation to repair the
damaged asphaltic cement at Lessee's sole expense.
48. Outside Storage. Lessee shall only store materials within the building or
outside on concrete inside a screened fence as specifically allowed by the
applicable governmental authorities.
49. Hazardous Waste. Each party shall be fully and completely responsible and
shall indemnify and hold the other party harmless from and against any and all
claims and governmental actions concerning hazardous waste on the Premises as a
result of each such party's activity, or permitted or suffered by each such
party on or about the Premises, as well as all costs, attorney's fees,
expenses, and liabilities incurred in defense of any such claim, action, or
proceeding brought thereon, including provision of counsel reasonably
satisfactory to the other party, and regardless of whether suit or any
administrative action is filed or commenced. Lessor warrants there is not
currently any hazardous waste in, on, or under the Premises, and similarly
indemnifies Lessee for any such currently existing hazardous waste.
50. Floor Sealer. Lessor does not warrant the fitness of the floor slab for
this purpose. For example, soil conditions may cause moisture to be present
under the concrete slab or migrate through the slab, which may affect the
sealer's performance. Lessee has been advised to consult directly with the
manufacturer's representative, and Lessee shall look directly to the
manufacturer in the event of product failure.
51. Right to Relocate Premises or Cancel Lease. During the original five-year
period of the Lease term, in the event that Lessee is not in default hereunder,
Lessee may request Lessor to relocate the Premises within Oates Business Park
or elsewhere on
ADDENDUM 4
<PAGE> 13
Lessor's land in the Visalia area, if any, and expand the Premises to 100,000
square feet. The parties shall execute a lease amendment, and Lessee shall
increase its security deposit to equal the new monthly base rent, prior to
Lessor constructing additional buildings or other improvements and prior to
Lessee taking possession of the new space.
In the event the Premises are relocated and expanded to 100,000 square feet as
stated in this Paragraph, the parties shall: increase the unexpired portion of
the lease term so that a total of seven (7) full unexpired years remain after
Lessee takes possession of the new space; increase the base rent to $26,000 per
month, with annual increases of 4% compounded yearly. The building shall be
improved as stated on the attached Exhibit "B".
If Lessor is unable to accommodate Lessee's request, Lessee may cancel the
lease, after 90 days advance written notice to Lessor, any time during the 49th
through 60th months of the original term. The notice shall be effective only
if accompanied by such cancellation payment. The cancellation payment shall be
an amount equal to the base rent and Lessee's Share of Operating Expenses, as
follows:
<TABLE>
<CAPTION>
DATE NOTICE GIVEN CANCELLATION PAYMENT
<S> <C>
During 49th - 60th months of
the original lease term: Four (4) months.
</TABLE>
52. Landlord's Waiver. Lessor hereby approves the Landlord's Waiver, as
modified, which is attached as Exhibit "C".
ADDENDUM 5
<PAGE> 14
<TABLE>
<CAPTION>
LESSOR: ADDRESS AND TELEPHONE
<S> <C>
OATES BUSINESS PARK - VISALIA, 3100 Cohasset Road
a California general partnership Chico, CA 95926
by all of its partners (916) 893-1277
(916) 891-6238 Fax
by /s/ Marvin L. Oates
-----------------------------
MARVIN L. OATES,
General Partner
by GUILLON, INC.,
a California corporation,
General Partner
by /s/ Douglas J. Guillon
--------------------------
DOUGLAS J. GUILLON,
President
by /s/ Martin R. Boersma
-----------------------------
MARTIN R. BOERSMA,
General Partner
LESSEE:
ROSS WHITE ENTERPRISES, INC., 8030 Doe Avenue
a Florida Corporation, Visalia, CA 93291
dba National Computer Distributors (209)
--------------
by /s/ Thomas F. Ross
-----------------------------
(print) THOMAS F. ROSS,
------------------------
its Vice President
----------------------------
by
-----------------------------
(print)
------------------------
its
----------------------------
Exhibit "A" - Map
Exhibit "B" - Improvement Specifications
Exhibit "C" - Landlord's Waiver (modified)
</TABLE>
ADDENDUM 6
<PAGE> 1
EXHIBIT 10.25
<TABLE>
<S> <C>
LANDLORD: NEW WORLD PARTNERS JOINT VENTURE, a
Florida general partnership
c/o Bush Real Estate Management, Inc.
8323 N.W. 12th Street, Suite 115
Miami, Florida 33126
TENANT: ROSS WHITE ENTERPRISES, d/b/a National
Computer Distributors, Inc., a
Florida corporation
Attn: Thomas Ross
DATE OF EXECUTION: September 12, 1994
------------------
</TABLE>
LEASE-INDUSTRIAL COMMERCIAL
<PAGE> 2
LEASE SUMMARY
The following is a summary of basic lease provisions with respect to the
Lease. It is an integral part of the Lease, and terms defined or dollar
amounts specified in this Summary shall have the meanings or amounts as stated,
unless expanded upon in the text of the Lease and its Exhibits, which are
attached to and made a part of this Summary.
<TABLE>
<S> <C>
1. Date of Lease Execution: 9-12-94
-----------------------------
2. "Landlord": New World Partners Joint Venture, a
Florida general partnership
3. Landlord's Address: c/o Bush Real Estate Management, Inc.
8323 N.W. 12th Street, Suite 115
Miami, Florida 33126
Attention: Property Manager
4. "Tenant": Ross White Enterprises, d/b/a National
Computer Distributors, a Florida corporation
Attn: Dennis Fairchild
5. Tenant's Address: 6100 Hollywood Boulevard
Hollywood, Florida 33024
6. Premises (Section 1.1): As shown on Exhibit "A"
7. Building No.: Building No. 4
8. Gross Rentable Area of
Premises (Section 1.1): Approximately 31,975 rentable square feet
9. Tenant's Proportionate
Share: 36.93%
10. Permitted Use of
Premises (Section 3.1): Warehouse/distribution center for storage and
distribution of computers and related
merchandise and ancillary office use
related to foregoing use.
11. Term of Lease (Section 1.1): Five years and four months.
"Commencement Date": Upon earlier of (i)
issuance by Dade County of a Certificate
of Occupancy or Temporary Certificate of
Occupancy; (ii) Tenant taking possession
with respect to Premises; or (iii) if
ANF is selected as the contractor
(pursuant to Exhibit "D"), the date
which is one and one-half (1 and 1/2)
months from the date which the Landlord
permits ANF to commence and
diligently pursue construction of
"Tenant's Improvements" (as subsequently
defined). "Expiration Date": five years
and four months from Commencement Date.
</TABLE>
<PAGE> 3
12. "Minimum Rent" (section 2.2):
<TABLE>
<CAPTION>
LEASE YEAR (OR ANNUAL MINIMUM RENT MONTHLY PAYMENT
PORTION THEREOF) RATE PER SQUARE FOOT (NOT INCLUDING SALES TAX)
- ----------------------------------------------------------------------------
<S> <C> <C>
First four months No Minimum Rent*
(Months 5-12) $7.00 $18,652.08
(Months 13-24) $7.28 $19,398.17
(Months 25-36) $7.57 $20,170.90
(Months 37-48) $7.87 $20,970.27
(Months 49-64) $8.19 $21,822.94
</TABLE>
<TABLE>
<S> <C>
16. Prepaid Rent: $39,728.93 (includes sales
tax) (due upon execution of Lease;
to be applied to Minimum Rent for
months 5 and 6)
17. Security Deposit (Section 2.6): $20,000 (due upon execution of Lease)
18. Cost Pass-Throughs Section 2.3): Operating Costs
19. Base Year (Section 2.3): Calendar year 1995
20. Comprehensive General
Liability Insurance (Section 6.1): $1,000,000
21. No. of Parking Spaces: 1.25 parking spaces shall be available on
an unassigned basis for each one thousand
(1000) square feet of Gross Rentable Area
(excluding unoccupied space) in the
building in which the Premises is located.
22. Broker(s) (Section 13.12): Codina Klein Realty, Inc.; ANF Real Estate
Group, Inc.
</TABLE>
*Subject to right of Landlord to receive rent for a portion of this time period
as set forth in Section 2.2.
<PAGE> 4
THIS LEASE (the "Lease"), dated the 12th day of September, 1994 is made
between New World Partners Joint Venture, a Florida general partnership (the
"Landlord"), and Ross White Enterprises, d/b/a National Computer Distributors,
a Florida corporation (the "Tenant").
ARTICLE 1. TERM AND CONSTRUCTION.
1.1 Grant. Subject to the terms of this Agreement, and in consideration
of the performance by the Tenant of its obligations under this Lease, the
Landlord leases to the Tenant, and the Tenant leases from the Landlord, for
the Term, the "Premises," which Premises are shown outlined on the floor plan
attached hereto and made a part hereof as Exhibit "A". The Premises are to be
located in that certain building to be constructed by the Landlord in Beacon
Centre (the "Building"), located in Dade County, Florida, as more particularly
described in Exhibit "B," attached hereto and made a part hereof.
1.2 Term.
1.2.1 The "Term" of this Lease is the period from the Commencement
Date, through and including the Expiration Date. The Commencement Date shall
be deemed the earlier of the date upon which (a) the Landlord obtains a
Certificate of Occupancy; or (b) the Tenant takes possession of the Premises;
or (c) if ANF is selected as the Contractor (pursuant to Exhibit "D"), the date
which is one and one-half (1 and 1/2) months from the date which Landlord
permits ANF to commence and diligently pursue construction of "Tenant
Improvements" (as subsequently defined). Subject to the provisions of Section
1.2.4, if no default has occurred on the part of the Tenant under this Lease,
then Landlord agrees to reimburse the Tenant for any "Holdover Penalty"
(subsequently defined) incurred by the Tenant, for, and attributable to, the
period from November 1, 1994 until, and including, December 31, 1994; provided,
however, that the Landlord shall not be required to reimburse the Tenant for
any amount(s) singularly or in the aggregate in excess of $10,000 per month.
For purposes of the Lease, "Holdover Penalty" means the penalty in excess of
rent and other items payable by the Tenant under the Tenant's existing lease
for the premises located at 3401C NW 72 Ave, Miami, FL 33122 (the "Existing
Premises") as the result of the Tenant continuing to maintain possession of the
Premises beyond the term or renewal term of such lease.
1.2.2 Subject to the provisions of Sections 1.2.4 and 1.2.6, if no
default has occurred on the part of the Tenant under this Lease, and if the
Commencement Date does not occur on or before the date which is five (5) months
from the Date of Lease Execution (the "Holdover Payment Date"), then, Landlord
agrees to reimburse the Tenant for any Holdover Penalty incurred by the Tenant
and attributable to the period commencing immediately after the Holdover
Payment Date and continuing until, but not including, the Commencement Date.
1.2.3 Subject to the provisions of Sections 1.2.4 and 1.2.6, if no
default has occurred on the part of the Tenant under this Lease, and if the
Commencement Date does not occur on or before the date which is eight (8)
months from the Date of Lease Execution (the "Build-out Period"):
(a) the Tenant may terminate this Lease by providing the Landlord with
notice of such termination within fifteen (15) days of the expiration of
such eight (8) month period, effective upon receipt by the Landlord of
such notice of termination and the parties shall be relieved of all
obligations set forth under this Lease, except for those obligations which
survive the termination of this Lease; and
(b) the Landlord agrees to reimburse the Tenant for any Holdover Penalty
incurred by the Tenant within, and attributable to a period of no longer
than, 90 consecutive days immediately after the expiration of the
Build-out Period; provided, however, that the Landlord shall not be
required to reimburse the Tenant for any amount(s) singularly or in the
aggregate in excess of $10,000 per month.
1
<PAGE> 5
Notwithstanding the foregoing provisions of Section 1.2.1, 1.2.2 and 1.2.3, if
delivery of possession or obtaining of a Certificate of Occupancy is delayed
due to: (a) any act or omission of the Tenant, then the Commencement Date shall
be the date the Landlord would have delivered possession or obtained a
Certificate of Occupancy, but for the Tenant's act or omission; or (b) any act
of God, labor dispute, materials shortage, or other circumstance beyond the
Landlord's reasonable control (collectively, "Force Majeure"), then the
Holdover Payment Date and the Build-out Period shall be extended by an amount
of time equal to the delay caused by such an event.
1.2.4 Notwithstanding Sections 1.2.1 and 1.2.2 to the contrary, at
any time after the Holdover Payment Date, if Landlord reasonably believes that
it will not be able, or has not been able, to Substantially Complete
(subsequently defined) and deliver the Premises within the Build-out Period,
then the Landlord may terminate this Lease by delivering notice to the Tenant
of such termination ("Notice of Termination"). Upon delivery of the Notice of
Termination, the Landlord shall thereupon reimburse the Tenant (promptly upon
Tenant's demand and after the Tenant delivers proof of payment to Landlord) for
any Holdover Penalty; provided, however, Landlord's liability shall not exceed
$10,000 per month and shall be limited to a period not exceeding one hundred
twenty (120) days from the date of the Notice of Termination.
1.2.5 Landlord shall exercise reasonable efforts to give Tenant
five days' prior notice of the proposed final inspection date for the Premises
by Dade County in connection with the issuance of a Certificate of Occupancy,
in order to provide Tenant with prior notice of a proposed Commencement Date.
1.2.6 If the Tenant selects a contractor other than Codina
Construction, Inc. to perform the work set forth in Exhibit C, the Landlord
shall have no obligation to pay any amounts due to Tenant under Sections 1.2.2
through 1.2.4, inclusive, or otherwise, and the Tenant shall have no right to
terminate this Lease by reason of the Landlord's failure to substantially
complete the Premises by a particular date, notwithstanding any provision to
the contrary.
1.3 Construction. The Landlord shall have no construction or
improvement obligations with respect to the Premises except as expressly set
forth in Exhibit C to this Lease. The Tenant shall be conclusively deemed to
have accepted the Premises upon taking of possession; provided, however, that
the Tenant and Landlord may agree upon a "punch list" of minor items to be
completed after the Commencement Date. Upon the expiration of fifteen (15)
business days following the Commencement Date, the Premises shall be
conclusively deemed to be accepted by the Tenant unless the Tenant shall have
given the Landlord specific written notice of any contended defects in the
Premises.
ARTICLE 2. RENT.
2.1 Covenant to Pay. The Minimum Rent and "Additional Rent"
(subsequently defined) (Minimum Rent and Additional Rent are sometimes referred
to as "Rent") shall be payable and shall begin to accrue on the date (the "Rent
Commencement Date") which is four (4) months from the Commencement Date. The
term "Additional Rent" means all other sums, charges and expenses of any kind
(including, without limitation, reasonable attorneys' fees and costs), which
are or may become due and payable to the Landlord under this Lease. The Tenant
shall pay to the Landlord all sums due hereunder from time to time from the
Rent Commencement Date without prior demand, together with all applicable
Florida sales tax, use tax or other similar tax thereon; however, unless
otherwise provided in this Lease, payments other than the Tenant's regular
monthly payments of Minimum Rent and Operating Costs shall be payable by the
Tenant to the Landlord within five (5) days following demand, but in no event
later than the first day of the month after the month in which such Additional
Rent shall accrue. All Rent or other charges that are required to be paid by
the Tenant to the Landlord shall be payable at the Landlord's address indicated
on the Lease Summary. Minimum Rent and Additional Rent for any "Lease Year"
consisting of less than twelve (12) months shall be prorated on a per diem
basis, based upon a period of 365 days. "Lease Year" means the twelve (12)
full calendar months commencing on the Commencement Date. However, the final
Lease
2
<PAGE> 6
Year may contain less than twelve (12) months due to expiration or sooner
termination of the Term. The Tenant agrees that its covenant to pay rent and
all other sums under this Lease is an independent covenant and that all such
amounts are payable without counterclaim, set-off, deduction, abatement, or
reduction whatsoever, except as expressly provided for in this Lease.
2.2 Minimum Rent. Minimum Rent for the period commencing on the Rent
Commencement Date and ending two months thereafter (the "Prepaid Rent Period")
shall be due and payable upon the execution and delivery of this Lease by the
Tenant. Upon expiration of the Prepaid Rent Period, payments of Minimum Base
Rent shall be due and payable in advance on the first day of each and every
month thereafter, subject to adjustment as set forth in the Lease Summary;
provided, however, if the Prepaid Rent Period expires on other than the last
day of a calendar month, then, on or prior to the expiration of the Prepaid
Rent Period, the Tenant shall make a proportionate payment of Minimum Rent for
the remainder of such calendar month. The parties acknowledge that no Rent
shall be due or payable during the first four (4) months of the Lease Term, as
set forth in item 12 of the Lease Summary; provided, however, on or before the
Commencement Date, the Tenant shall pay to the Landlord as Rent for such period,
an amount equal to any Holdover Penalty paid by the Landlord pursuant to
Section 1.2.1 for November and/or December 1994, which shall be in addition to
any other amounts payable by the Tenant under this Lease.
2.3 Operating Costs. The Tenant shall pay to the Landlord the Tenant's
proportionate share of the amount by which the annual "Operating Costs"
(subsequently defined), for each calendar year exceed the Operating Costs
incurred during the Base Year specified in the Lease . Summary (i.e. 1995).
Such excess is referred to for purposes of this Lease as the "Increased
Operating Costs." The Tenant's obligation to pay its proportionate share of
Increased Operating Costs shall commence as of the beginning of the first full
calendar year following the Base Year. The amount of Increased Operating Costs
payable to the Landlord may be estimated by the Landlord for such period as the
Landlord determines from time to time (not to exceed twelve (12) months), and
the Tenant agrees to pay to the Landlord the amounts so estimated in equal
installments, in advance, on the first day of each month during such period.
Notwithstanding the foregoing, when bills for all or any portion of Increased
Operating Costs so estimated are actually received by the Landlord, the
Landlord may bill the Tenant for the Tenant's proportionate share thereof, less
any amount previously paid by the Tenant to the Landlord on account of such
item(s) by way of estimated Increased Operating Costs payments.
Within a reasonable period of time after the end of the period for
which estimated payments have been made, the Landlord shall submit to the
Tenant a statement from the Landlord setting forth the actual amounts payable
by the Tenant based on actual costs. If the amount the Tenant has paid based
on estimates is less than the amount due based on actual costs, the Tenant
shall pay such deficiency within ten (10) days after submission of such
statement. If the amount paid by the Tenant is greater than the amount
actually due, the excess may be retained by the Landlord to be credited and
applied by the Landlord to the next due installments of the Tenant's
proportionate share of Increased Operating Costs, or as to the final Lease
Year, provided the Tenant is not in default, the Landlord will refund such
excess to the Tenant. The Tenant's proportionate share of actual Increased
Operating Costs for the final estimate period of the Term of this Lease shall
be due and payable even though it may not be finally calculated until after the
expiration of the Term. Accordingly, the Landlord shall have the right to
continue to hold the Tenant's security deposit following expiration of the Term
until the Tenant's share of actual Increased Operating Costs has been paid.
For purposes of this Lease, the Tenant's proportionate share shall
be a fraction, the numerator of which shall be the gross rentable area of the
Premises, and the denominator of which shall be the "Gross Rentable Area"
(subsequently defined) of the Building. For purposes of this Lease, the term
"Gross Leasable Area" means the amount of square feet constituting the actual
floor space of the Premises, including mezzanine space, measured to the
exterior faces of exterior walls and the center lines of any interior walls
constituting the boundaries of the Premises. The term "Operating Costs" shall
mean any amounts paid or payable whether by the Landlord or by others on behalf
of the Landlord, arising out of the Landlord's maintenance, operation, repair,
replacement (if such replacement increases operating
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efficiency) and administration of the Building and Common Areas, including,
without limitation: (i) the cost of all real estate, personal property and
other ad valorem taxes, and any other levies, charges, local improvement rates,
and assessments whatsoever assessed or charged against the Building and Common
Areas, the equipment and improvements therein contained, and including all
costs associated with the appeal of any assessment on taxes; (ii) the cost of
insurance which the Landlord is obligated or permitted to obtain under this
Lease and any deductible amount applicable to any claim made by the Landlord
under such insurance; (iii) the cost of security, (iv) the cost of landscaping,
and (v) a reasonable management fee (which shall be the greater of four percent
(4%) of Landlord's gross revenues under this Lease or such other fee as may be
charged from time to time as a management fee by any comparable facility).
Operating Costs shall not include real estate commissions payable to brokers in
connection with Landlord's ordinary course of business. If the Building is not
included in determining real property taxes for the year 1995, then,
notwithstanding "(i)" of the preceding sentence, Tenant shall not be
responsible for paying increases in real estate taxes until the calendar year
after the Building is included for purposes of determining the amount of real
estate taxes, and Tenant's liability for increases in real estate taxes shall
be calculated based upon increases over the amount of real estate taxes for the
first year in which the Building was included for purpose of determining real
property tax assessments. For purposes of information only, as of the date of
this Lease, the Landlord charges a management fee of four percent (4%) of the
gross revenues received by the Landlord.
2.4 Payment of Personal Property Taxes. The Tenant shall pay, when due,
all taxes attributable to the personal property, trade fixtures, business,
occupancy, or sales of the Tenant or any other occupant of the Premises and to
the use of the Building by the Tenant or such other occupant.
2.5 Rent Past Due. If any payment due from the Tenant shall not be paid
when due, and within five (5) days of Landlord delivering notice to Tenant of
such delinquency (provided, however, that Landlord shall not be required to
provide such notice more than three (3) times during any calendar year), a late
charge of five (5%) percent of the delinquent sum may be charged by the
Landlord. Such late charge is not a penalty, but liquidated damages to defray
administrative, collection, and related expense due to the Tenant's failure to
make such Rent payment when due. If any payment due from the Tenant shall
remain overdue for more than fifteen (15) days, an additional late charge in an
amount equal to the lesser of the highest rate permitted by law or one and
one-half (1.5%) percent per month (eighteen percent (18%) per annum) of the
delinquent amount may be charged by the Landlord, such charge to be computed
for the entire period for which the amount is overdue and which shall be in
addition to and not in lieu of the five (5%) percent late charge or any other
remedy available to the Landlord. Notwithstanding the provisions of this
Section 2.5, the Landlord does not intend to charge and the Tenant shall not
pay interest or charges in the nature of interest which violate any applicable
usury law. The provisions in this Section 2.5 for late charges are not, and
shall not be deemed, a grace period, except as expressly stated above.
2.6 Security Deposit. The Landlord acknowledges receipt of a security
deposit in the amount specified on the Lease Summary to be held by the
Landlord, as security for the performance by the Tenant of all of its
obligations under this Lease. The Landlord shall be entitled to commingle the
security deposit with the Landlord's other funds. If the Tenant defaults in
any of its obligations under this Lease, the Landlord may at its option, but
without prejudice to any other rights which the Landlord may have, apply all or
part of the security deposit to compensate the Landlord for any loss, damage,
or expense sustained by the Landlord as a result of such default. If all or
any part of the security deposit is so applied, the Tenant shall restore the
security deposit to its original amount on demand of the Landlord. Subject to
the provisions of Section 2.3, within thirty (30) days following termination of
this Lease, if the Tenant is not then in default, the security deposit, or
applicable portion thereof, will be returned by the Landlord to the Tenant,
together with interest thereon calculated on the basis of the passbook rate of
interest of Barnett Banks of South Florida, N.A. (or such other bank as
Landlord may select) during the Term of the Lease (as such rate may change from
time to time during the Term of the Lease). If the Landlord transfers or
assigns the Landlord's interest under this Lease, the Landlord shall transfer
the security deposit to the transferee or assignee.
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Landlord shall also cause the new landlord to acknowledge receipt of the
deposit at the time of transfer. Upon such transfer, the Landlord shall be
released by the Tenant from all liability for the return of the security
deposit, and the Tenant shall look solely to the new landlord for the return of
the security deposit. The preceding sentence shall apply to every transfer or
assignment of the security deposit to a new landlord. The Tenant shall not
transfer, assign, or encumber, or attempt to transfer, assign, or encumber the
moneys deposited as security and the Landlord shall not be bound by any such
actual or attempted transfer, assignment, or encumbrance.
2.7 The Landlord's Lien. To secure the payment of all Rent and other
sums of money due and to become due hereunder and the faithful performance of
this Lease by the Tenant, the Tenant hereby give to the Landlord an express
first and prior contract lien and security interest on all property now or
hereafter acquired (including fixtures, equipment, chattels, and merchandise)
which may be placed in the Premises and also upon all proceeds of any insurance
which may accrue to the Tenant by reason of destruction of or damage to any
such property. Such property shall not be removed therefrom without the
written consent of the Landlord until all arrearages in rental and other sums
of money then due to the Landlord hereunder shall first have been paid. All
exemption laws are hereby waived in favor of said lien and security interest.
This lien and security interest is given in addition to the Landlord's
statutory lien and shall be cumulative thereto. The Landlord shall, in
addition to all of its rights hereunder, also have all of the rights and
remedies of a secured party under the Uniform Commercial Code as adopted in
the State of Florida. To the extent permitted by law, this Lease shall
constitute, a security agreement under Article 9 of the Florida Uniform
Commercial Code. Notwithstanding the foregoing, the Landlord agrees to
subordinate its lien to a bona fide institutional lender providing acquisition
financing or lease financing for the Tenant's furniture, fixtures, and
equipment, so that the Landlord will have a second lien on such furniture,
fixtures, and equipment. The Landlord further agrees to execute and deliver
the subordination agreement attached to this Lease as Exhibit E.
ARTICLE 3. USE OF PREMISES.
3.1 Permitted Use. The Premises shall be used and occupied only for the
use specified in the Lease Summary and no other use. Without limiting the
application of the foregoing sentence, the Tenant shall not use the Premises,
for other than warehouse for storage and distribution of computers and related
merchandise and ancillary office needs, in any manner which creates excessive
parking needs, or for the purpose of a telephone answering and order center.
The Tenant shall carry on its business on the Premises in a reputable manner
and shall not do, omit, permit, or suffer to be done or exist upon the Premises
anything which shall result in a nuisance, hazard, or bring about a breach of
any provision of this Lease or any applicable municipal or other governmental
law or regulation. The Tenant shall observe all reasonable rules and
regulations established by the Landlord from time to time for the Building.
The rules and regulations in effect as of the date hereof are attached to and
made a part of this Lease as Exhibit "D." The names for the Building and the
business park of which the Building is a part, which the Landlord may from time
to time adopt, and every name or mark adopted by the Landlord in connection
with the Building shall be used by the Tenant only in association with the
business carried on in the Premises during the Term and the Tenant's use
thereof shall be subject to such regulation as the Landlord may from time to
time impose.
3.2 Compliance with Laws. The Premises shall be used and occupied in a
safe, careful, and proper manner so as not to contravene any present or future
governmental or quasigovernmental laws, regulations, or orders, or the
requirements of the Landlord's or the Tenant's insurers. If due to the
Tenant's use of the Premises, repairs, improvements, or alterations are
necessary to comply with any of the foregoing, the Tenant shall pay the entire
cost thereof.
3.3 Signs. Except with the prior written consent of the Landlord, the
Tenant shall not erect, install, display, inscribe, paint, or affix any signs,
lettering, or advertising medium upon or above any exterior portion of the
Premises. Any exterior signage shall be installed by the Landlord, or any
contractor approved by Landlord (such approval not to be unreasonably
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withheld) at the Tenant's expense, and such signage shall comply with the
Landlord's sign criteria as adopted from time to time. The design and
specification of such signage (including camera-ready artwork) shall be
submitted for the Landlord's prior written approval.
3.4 Environmental Provisions. The Tenant shall give written notice to
the Landlord at least seven (7) days in advance of any production, generation,
handling, storage, treatment, transportation, disposal, release, or removal of
hazardous waste or hazardous substances from or on the Premises. The Tenant
warrants and represents that it will not use or employ the Landlord's and/or
the Building property, facilities, equipment, or services to handle, transport,
store, treat, or dispose of any hazardous waste or hazardous substance, whether
or not it was generated or produced on the Premises; and the Tenant further
warrants and represents that any activity on or relating to the Premises shall
be conducted in full compliance with all applicable laws. In addition, the
Landlord reserves the right to cause the Premises to be periodically inspected
by a reputable environmental consulting firm (upon two (2) business days' prior
notice to the Tenant, except that in the case of an emergency no such notice
shall be required); provided, however, such inspections shall not occur more
than twice during any calendar year and Tenant's costs shall not exceed five
hundred dollars ($500) per inspection, unless Landlord receives notice or has
reason to believe, that any hazardous waste or substance may have been
produced, generated, handled, stored, treated, disposed or released on, or
removed from, the Premises during the term of this Lease. Except as limited in
the preceding sentence, the cost of such inspections, as well as the cost to
comply with such consultant's recommendations, shall be borne by the Tenant.
The Tenant agrees to defend, indemnify, and hold harmless the Landlord against
any and all claims, costs, expenses (including, without limitation, reasonable
attorneys' fees and costs of any kind), damages, liability, and the like, which
the Landlord may hereafter be liable for, suffer, incur, or pay arising under
any applicable laws and resulting from or arising out of any breach of the
warranties and representations contained in this Section 3.4, or out of any
act, activity, or violation of any applicable laws on the part of the Tenant,
its agents, employees, or assigns. The Tenant's liability under this Section
3.4 shall survive the expiration or any termination of this Lease. The
Landlord shall provide the Tenant with a copy of the most recent environmental
report in the Landlord's possession and pertaining to the Leased Premises and
such other real property as may be referenced on such report. The Landlord
shall take reasonable measures to assure that any environmental consultant
utilized by the Landlord to inspect the Premises shall have adequate insurance
coverage (as determined in the Landlord's reasonable judgment). The Landlord
agrees to provide the Tenant with copies of any report rendered by such a
consultant, except when such a report is obtained in connection with pending or
anticipated litigation.
ARTICLE 4. ACCESS AND ENTRY.
4.1 Right of Examination. The Landlord shall be entitled, upon
reasonable notice (but no notice shall be required in emergencies), between
8:00 a.m. and 6:00 p.m., Monday through Friday, to enter the Premises to
examine them; to make such repairs, alterations, or improvements thereto as the
Landlord considers necessary or reasonably desirable; to have access to
underfloor facilities and access panels to mechanical shafts and to check,
calibrate, adjust, and balance controls and other parts of the heating, air
conditioning, ventilating, and climate control systems. The Landlord reserves
to itself the right to install, maintain, use, and repair pipes, ducts,
conduits, vents, wires, and other installations leading in, through, over, or
under the Premises and for this purpose, the Landlord may take all material
into and upon the Premises which is required therefor. The Tenant shall not
unduly obstruct any pipes, conduits, or mechanical or other electrical
equipment so as to prevent reasonable access thereto. The Landlord reserves
the right to use all exterior walls and roof area. The Landlord shall exercise
its rights under this Section, to the extent possible in the circumstances, in
such a manner so as to minimize interference with the Tenant's use and
enjoyment of the Premises.
4.2 Right to Show Premises. The Landlord and its agents have the right
to enter the Premises at all reasonable times during normal business hours and
upon reasonable notice to show them to prospective purchasers, lenders, or
anyone having a prospective interest in the Building, and during the last six
months of the Term (or the last six (6) months of any renewal term if this
Lease is renewed), to show them to prospective tenants in a manner which will
not unreasonably interfere with Tenant's business.
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ARTICLE 5. MAINTENANCE, REPAIRS, AND ALTERATIONS.
5.1 Maintenance and Repairs by the Landlord. The Landlord covenants to
keep the following in good repair: (i) the structure of the Building including
exterior walls and roofs; and (ii) the entrances, sidewalks, corridors, parking
areas and other facilities from time to time comprising the "Common Areas"
(subsequently defined). The cost of such maintenance and repairs shall be
included in Operating Costs. So long as the Landlord is acting in good faith,
the Landlord shall not be responsible for any damages caused to the Tenant by
reason of failure of any equipment or facilities serving the Building or delays
in the performance of any work for which the Landlord is responsible pursuant
to this Lease. Notwithstanding any other provisions of this Lease, if any part
of the Building is damaged or destroyed or requires repair, replacement, or
alteration as a result of the act or omission of the Tenant, its employees,
agents, invitees, licensees, or contractors, the Landlord shall have the right
to perform same and the cost of such repairs, replacement or alterations shall
be paid by the Tenant to the Landlord upon demand. In addition, if, in any
emergency, it shall become necessary to make promptly any repairs or
replacements required to be made by the Tenant, the Landlord may re-enter the
Premises and proceed forthwith to have the repairs or replacements made and pay
the costs thereof. Upon demand, the Tenant shall reimburse the Landlord for
the cost of making the repairs.
5.2 Maintenance and Repairs by the Tenant. The Tenant shall, at its sole
cost, repair and maintain the Premises including, but not limited to, base
building mechanical and electrical systems, all to a standard consistent with a
first class building, with the exception only of those repairs which are the
obligation of the Landlord pursuant to this Lease. Without limiting the
generality of the foregoing, the Tenant is specifically required to maintain
and make repairs to (a) the portion of any pipes, lines, ducts, wires, or
conduits contained within the Premises and serving the Premises; (b) windows,
plate glass, doors, and any fixtures or appurtenances composed of glass; (c)
the Tenant's sign; (d) any heating or air conditioning equipment serving the
Premises ("HVAC") (which shall include, without limitation, a preventive
maintenance HVAC service contract, which service contract shall be entered into
between the Tenant and one of the Landlord's approved HVAC contractors; (Such
service contract shall include, without limitation, preventive HVAC maintenance
no less than quarterly.); (e) the Premises or the Building when repairs to the
same are necessitated by any act or omission of the Tenant, or the failure of
the Tenant to perform its obligations under this Lease; provided, however,
Landlord shall make repairs to the items described in "(a)-(e)" above during
the one (1) year period beginning with the Commencement Date, to the extent
that such repairs are made necessary solely by virtue of the Landlord's
improper installation of such items. All repair and maintenance performed by
the Tenant in the Premises shall be performed by contractors or workmen
designated or approved by the Landlord, such approval not to be unreasonably
withheld by Landlord. At the expiration or earlier termination of the Term,
the Tenant shall surrender the Premises to the Landlord in as good condition
and repair as the Tenant is required to maintain the Premises throughout the
Term. The Tenant shall also furnish, maintain, and replace a electric light
bulbs, tubes, and tube casings located within or serving the Premises and the
Tenant's signage, all at the Tenant's sole cost and expense.
5.3 Approval of the Tenant's Alterations. No alterations (including
without limitation, repairs, replacements, additions, or modifications to the
Premises by the Tenant), other than minor or cosmetic alterations which are
interior and nonstructural, shall be made to the Premises without the
Landlord's written approval, which, as to exterior or structural alterations
may be withheld in Landlord's sole and absolute discretion. Any alterations by
the Tenant shall be performed at the sole cost of the Tenant, by contractors
and workmen approved by the Landlord (which approval shall not be unreasonably
withheld), in a good and workmanlike manner, and in accordance with all
applicable laws and regulations. Tenant shall be permitted to make repairs to
the Premises while Landlord is performing its work, provided that Landlord
shall determine in its reasonable judgment that such repairs by Tenant shall
not delay or interfere with Landlord's work, and subject to such reasonable
terms and conditions as Landlord may impose.
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5.4 Removal of Improvements and Fixtures. All leasehold improvements
(other than unattached, movable trade fixtures which can be removed without
damage to the Premises) shall at the expiration or earlier termination of this
Lease become the Landlord's property. The Tenant may, during the Term, in the
usual course of its business, remove its trade fixtures, provided that the
Tenant is not in default under this Lease; and the Tenant shall, at the
expiration or earlier termination of the Term, at its sole cost, remove such of
the leasehold improvements (except for improvements installed by Landlord prior
to the commencement Date) and trade fixtures in the Premises as the Landlord
shall require to be removed and restore the Premises to the condition existing
prior to such removal. The Tenant shall at its own expense repair any damage
caused to the Building by such removal. If the Tenant does not remove its
trade fixtures at the expiration or earlier termination of the Term, the trade
fixtures shall, at the option of the Landlord, become the property of the
Landlord and may be removed from the Premises and sold or disposed of by the
Landlord in such manner as it deems advisable without any accounting to the
Tenant.
5.5 Liens. The Tenant shall promptly pay for all materials supplied and
work done in respect of the Premises so as to ensure that no lien is recorded
against any portion of the Building or against the Landlord's or the Tenant's
interest therein. If a lien is so recorded, the Tenant shall discharge it
promptly by payment or bonding. If any such lien against the Building or
Landlord's interest therein is recorded and not discharged by the Tenant as
above required within fifteen (15) days following recording, the Landlord shall
have the right to remove such lien by bonding or payment and the cost thereof
shall be paid immediately from the Tenant to Landlord. The Landlord and the
Tenant expressly agree and acknowledge that no interest of Landlord in the
Premises or the Building shall be subject to any lien for improvements made by
the Tenant in or for the Premises, and the Landlord shall not be liable for any
lien for any improvements made by the Tenant, such liability being expressly
prohibited by the terms of this Lease. In accordance with applicable laws of
the State of Florida, the Landlord has filed in the public records of Dade
County, Florida, a public notice containing a true and correct copy of this
paragraph, and the Tenant hereby agrees to inform all contractors and
materialmen performing work in or for or supplying materials to the Premises of
the existence of said notice.
5.6 Utilities. The Tenant shall pay to the Landlord, or as the Landlord
directs, all gas, water, and other utility charges applicable to the Premises
as separately metered or, if not so metered, as part of the Tenant's
proportionate share of Increased Operating Costs. Landlord shall separately
meter the Premises for electricity and the Tenant shall be solely responsible
for paying all charges. The Tenant shall engage its own janitorial and garbage
removal services and shall pay the cost of janitorial and garbage removal
services for the Premises and the cost of heating, ventilating, and air
conditioning the Premises.
ARTICLE 6. INSURANCE AND INDEMNITY.
6.1 The Tenant's Insurance. The Tenant shall, throughout the Term (and
any other period when the Tenant is in possession of the Premises), maintain at
its sole cost the following insurance:
6.1.1 All risks property insurance, naming the Tenant and the
Landlord as insured parties, containing a waiver of subrogation rights which
the Tenant's insurers may have against the Landlord and against those for whom
the Landlord is in law responsible including, without limitation, its
directors, officers, agents, and employees, and (except with respect to the
Tenant's chattels) incorporating a standard New York mortgagee endorsement
(without contribution). Such insurance shall insure property of every kind
owned by the Tenant in an amount not less than the full replacement cost
thereof (new), with such cost to be adjusted no less than annually.
6.1.2 Commercial general liability insurance. Such policy shall
contain inclusive limits per occurrence of not less than the amount specified
in the Lease Summary; provide for cross liability; and include the Landlord and
any mortgagee of the Landlord as additional insureds.
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6.1.3 Worker's compensation and employer's liability insurance in
compliance with applicable legal requirements.
6.1.4 Any other form of insurance which the Tenant or the Landlord,
acting reasonably, requires from time to time in form, in amounts, and for
risks against which a prudent tenant would insure.
All policies referred to above shall: (a) be taken out with insurers
licensed to do business in Florida and reasonably acceptable to the Landlord;
(b) be in a form reasonably satisfactory to the Landlord; (c) be
non-contributing with, and shall apply only as primary and not as excess to any
other insurance available to the Landlord or any mortgagee of the Landlord; (d)
contain an undertaking by the insurers to notify the Landlord by certified mail
not less than thirty (30) days prior to any material change, cancellation, or
termination; and (e) with respect to Subsection 6.2.2, contain replacement
cost, demolition cost, and increased cost of construction endorsements.
Certificates of insurance on the Landlord's standard form or, if required by a
mortgagee, copies of such insurance policies certified by an authorized officer
of the Tenant's insurer as being complete and current, shall be delivered to
the Landlord promptly upon request. If the Tenant fails to take out or to keep
in force any insurance referred to in this Section 6.1, or should any such
insurance not be approved by either the Landlord or any mortgagee, then the
Landlord shall have the right, without assuming any obligation in connection
therewith, to effect such insurance at the sole cost of the Tenant and all
outlays by the Landlord shall be paid by the Tenant to the Landlord without
prejudice to any other rights or remedies of the Landlord under this Lease.
The Tenant shall not keep or use on the Premises any article which may be
prohibited by any fire or casualty insurance policy in force from time to time
covering the Premises or the Building.
6.2 Loss or Damage. The Landlord shall not be liable for any death or
injury arising from or out of any occurrence in, upon, at, or relating to the
Building or damage to property of the Tenant or of others located on the
Premises or elsewhere in the Building, nor shall it be responsible for any loss
of or damage to any property of the Tenant or others from any cause, unless
such death, injury, loss, or damage results from the gross negligence or
willful misconduct of the Landlord. Without limiting the generality of the
foregoing, the Landlord shall not be liable for any injury or damage to persons
or property resulting from fire, explosion, falling plaster, falling ceiling
tile, falling fixtures, steam, gas, electricity, water, rain, flood, or leaks
from any part of the Premises or from the pipes, sprinklers, appliances,
plumbing works, roof, windows, or subsurface of any floor or ceiling of the
building or from the street or any other place or by dampness, or by any other
cause whatsoever. The Tenant agrees to indemnify the Landlord and hold it
harmless from and against any and all loss (including loss of Minimum Rent and
Additional Rent payable in respect to the Premises), claims, actions, damages,
liability, and expense of any kind whatsoever (including reasonable attorneys'
fees and costs of any kind), UNLESS CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE LANDLORD OR ITS AGENTS, arising from any occurrence in, upon,
or at the Premises, or the occupancy, use, or improvement by the Tenant or its
agents or invitees of the Premises or any part thereof, or occasioned wholly or
in part by any act or omission of the Tenant, its agents, employees, and
invitees or by anyone permitted to be on the Premises by the Tenant.
6.3 The Landlord's Insurance. To the extent reasonably available, the
Landlord shall, throughout the Term carry: (i) "all risks" insurance on the
Building and the machinery and equipment contained therein or servicing the
Building and owned by the Landlord (excluding any property with respect to
which the Tenant and other tenants are obliged to insure pursuant to Section
6.1 or similar sections of their respective leases); (ii) public liability and
property damage insurance with respect to the Landlord's operations in the
Building; and (iii) such other forms of insurance as the Landlord or its
mortgagee reasonably considers advisable, all in such amounts and with such
deductibles as the Landlord in its sole and absolute discretion deems
advisable.
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ARTICLE 7. DAMAGE AND DESTRUCTION.
7.1 Damage to Premises. If the Premises are partially destroyed due to
fire or other casualty, the Landlord shall diligently repair the Premises, to
the extent of its obligations under section 5.1, and Minimum Rent shall abate
proportionately to the portion of the Premises, if any, rendered untenantable
from the date of destruction or damage until the Landlord's repairs have been
substantially completed. If the Premises are totally destroyed due to fire or
other casualty, the Landlord shall diligently repair the Premises to the extent
only of its obligations pursuant to section 5.1, and Minimum Rent shall abate
entirely from the date of destruction or damage to such date which is the
earlier of (i) the date tenantable, or (ii) thirty (30) days after Landlord's
repairs have been substantially completed. Upon being notified by the Landlord
that the Landlord's repairs have been substantially completed, the Tenant shall
diligently perform all other work required to fully restore the Premises for
use in the Tenant's business, in every case at the Tenant's cost and without
any contribution to such cost by the Landlord, whether or not the Landlord has
at any time made any contribution to the cost of supply, installation, or
construction of leasehold improvements in the Premises. Tenant agrees that
during any period of reconstruction or repair of the Premises, it will continue
the operation of its business within the Premises to the extent practicable.
If all or any part of the Premises shall be damaged by fire or other casualty
and the fire or other casualty is caused by the fault of neglect of Tenant or
Tenant's agents, guest, or invitees, rent and all other charges shall not
abate.
7.2 Termination for Damage. Notwithstanding section 7.1, if damage or
destruction which has occurred to the Premises or the Building is such that in
the reasonable opinion of the Landlord such reconstruction or repair cannot be
completed (as evidenced by a Certificate of Occupancy) within one hundred
eighty (180) days of the happening of the damage or destruction, the Landlord
may, at its option, terminate this Lease on notice to the Tenant given within
thirty (30) days after such damage or destruction and the Tenant shall deliver
vacant possession of the Premises in accordance with the terms of this Lease as
soon as possible, but in no event more than thirty (30) days after such notice;
provided, however, during the last year of the Lease or any renewal period, the
Landlord shall have the right to terminate this Lease in the event of any
casualty to the Premises constituting more than thirty (30%) percent of the
prior value thereof.
ARTICLE 8. ASSIGNMENT, SUBLEASES, AND TRANSFERS.
8.1 Transfer by the Tenant.
8.1.1 The Tenant shall not enter into, consent to, or permit any
Transfer, as hereinafter defined, without the prior written consent of the
Landlord in each instance, which consent may be granted or withheld in the
Landlord's sole and reasonable discretion. For purposes of this Lease,
"Transfer" means an assignment of this Lease in whole or in part; a sublease of
all or any part of the Premises; any transaction whereby the rights of the
Tenant under this Lease or to the Premises are transferred to another; any
mortgage or encumbrance of this Lease or the Premises or any part thereof or
other arrangement under which either this Lease or the Premises become security
for any indebtedness or other obligations (all whether by operation of law or
otherwise); and if the Tenant is a corporation or a partnership, the transfer
of a controlling interest in the stock of the corporation or partnership
interests, as applicable. Any transfer done without the Landlord's prior
written consent (unless such consent is not required under the terms of this
Lease) shall, at the Landlord's election be void.
8.1.2 Notwithstanding the foregoing, Tenant may assign this Lease
or sublease the Premises (in whole, but not in part) to a "Controlled Entity"
(subsequently defined) which is engaged exclusively in the same business as
Tenant, provided that (a) Tenant provides Landlord with ten days' prior written
notice of such assignment or sublease, (b) Tenant acknowledges, in form and
substance reasonably satisfactory to Landlord, that it remains jointly and
severally liable for all obligations of Tenant under this Lease, and (c) Tenant
provides or causes to be provided all such documents and information as
Landlord may reasonably request, including, without limitation, a written
assumption by such assignee or sublessee of all obligations under this Lease.
For purposes of this Section 8.1.2 Controlled Entity means any
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corporation, partnership, trust or other entity, in which all of the voting and
equity securities are owned and controlled by (a) Ross White Enterprises, Inc.
or (b) the shareholders owning and controlling a majority of the equity and
voting securities of Ross White Enterprises, Inc.
8.1.3 If there is a permitted Transfer (or any other Transfer), the
Landlord may collect rent or other payments from the transferee and apply the
net amount collected to the rent or other payments required to be paid pursuant
to this Lease but no acceptance by the Landlord of any payments by a transferee
shall be deemed a waiver of any provisions hereof regarding the Tenant.
Notwithstanding any Transfer, the Tenant shall not be released from any of its
obligations under this Lease. The Landlord's consent to any Transfer shall be
subject to the further condition that if the Minimum Rent and Additional Rent
pursuant to such Transfer exceeds the Minimum Rent and Additional Rent payable
under this Lease, one-half of the amount of such excess (after deduction of the
Tenant's reasonable legal fees, reasonable brokerage fees and other reasonable
costs of Tenant in connection with such Transfer) shall be paid to the
Landlord, upon receipt by Tenant. If, pursuant to a Transfer, the Tenant
receives from the transferee, either directly or indirectly, any consideration
other than Minimum Rent and Additional Rent for such Transfer, either in the
form of cash, goods, or services, the Tenant shall, upon receipt thereof,
similarly pay to the Landlord an amount equivalent to one-half of such
consideration (after deducting Tenant's reasonable legal fees, reasonable
brokerage fees and other reasonable costs).
8.2 Notice of Proposed Transfer. If the Tenant shall at any time or
times during the term of this Lease desire to Transfer or assign this Lease or
to sublease all or part of the Premises, the Tenant shall give written notice
to the Landlord requesting the Landlord's prior written consent to the proposed
transfer, assignment or sublease and shall submit a $1,000 nonrefundable
processing fee. Such notice shall be accompanied by (a) a statement setting
forth the name and address of the proposed assignee or subtenant, the nature of
its business, and its proposed use of the Premises; (b) current financial
information with respect to the proposed transferee, assignee or subtenant,
including, without limitation, its most recent financial report and audited
financial reports; (c) a true and complete copy of the executed transfer
document, assignment or sublease, conditioned only upon approval of the
Landlord; and (e) such other information as the Landlord may request in its
sole and absolute discretion.
8.3 Consideration with Respect to a Transfer. Without in any way
obligating the Landlord to consent to any assignment, sublease or other
Transfer, the Landlord's consent may be predicated, among other things, on the
Landlord's evaluation of following criteria:
8.3.1 the consistency of the proposed use, with the use permitted
under this Lease;
8.3.2 the nature of the proposed use in relation to tenants and
owners, and proposed tenants and owners and development plans, of the Beacon
Centre;
8.3.3 the potential liability of any kind to Landlord with respect
to the Transfer, the proposed transferee, assignee, or sublessee or the use
contemplated by such transferee, assignee or sublessee;
8.3.4 the use, storage, disposition or handling, or potential use,
storage, disposition or handling, if any, of hazardous materials or waste;
8.3.5 the assumption by the assignee or sublessee of all
obligations under this Lease;
8.3.6 the creditworthiness of the proposed assignee, sublessee, or
transferee and affiliates thereof (which shall be in all respects at least
equal to that of the assignor or transferor);
8.3.7 the effect or potential effect of the proposed Transfer upon
other tenants and owners, or potential tenants and owners of the Beacon Centre
or of the Landlord's ability to sell or lease other space within the Beacon
Centre; and
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8.3.8 the proposed sublease, assignment or Transfer or the use
thereby does not violate any applicable law, regulation or order.
8.4 Right of Landlord to Terminate. In addition to its other rights
under this Lease, and without in any way limiting such rights, upon receipt of
any notice of a Transfer, or upon any such Transfer without the Landlord's
consent, the Landlord may terminate this Lease. The Landlord may exercise its
right to terminate this Lease upon sixty (60) days prior written notice after
receipt of the notice required by Section 8.2 or at any time after a Transfer
which is made without such notice. The foregoing provisions of this Section
8.4 do not apply to any Transfer for which this Lease provides that no consent
of the Landlord is necessary.
8.5 Assignment by the Landlord. The Landlord shall have the
unrestricted right to sell, lease, convey, or otherwise dispose of the Building
or any part thereof and this Lease or any interest of the Landlord in this
Lease. To the extent that the purchaser or assignee from the Landlord assumes
the obligations of the Landlord under this Lease, the Landlord shall thereupon
and without further agreement be released of all further liability under this
Lease. If the Landlord sells its interest in the Premises, it shall deliver
the security deposit to the purchaser and the Landlord will thereupon be
released from any further liability with respect to the security deposit or its
return to the Tenant and the purchaser shall become directly responsible to the
Tenant.
ARTICLE 9. DEFAULT.
9.1 Defaults. A default by the Tenant shall be deemed to have occurred
hereunder, if and whenever:
9.1.1 any Minimum Rent, Additional Rent (including, without
limitation, the Tenant's proportionate share of Increased Operating Costs) is
not paid within ten (10) days of the Landlord delivering notice to Tenant of
such default; provided, however, that the Landlord shall not be required to
provide such notice more than three (3) times during any calendar year;
9.1.2 a Transfer shall occur, except as permitted under this Lease;
9.1.3 the Tenant has breached any of its obligations under this
Lease (other than the payment of Rent) and the Tenant fails to remedy such
breach within twenty (20) days (or such shorter period as may be provided in
this Lease) after receiving notice of such breach (except that no notice shall
be required in the case of a breach knowingly and intentionally committed by
Tenant);
9.1.4 the Tenant becomes bankrupt or insolvent, or generally fails
to pay its obligations when due, or the Tenant takes the benefit of any
reorganization or composition proceeding, makes an assignment for the benefit
of creditors, takes the benefit of (as to itself) of any insolvency laws, or a
petition in bankruptcy or insolvency proceeding is initiated against the Tenant
or its property and the Tenant shall acquiesce in such proceedings or fail to
obtain their dismissal within thirty (30) days of the filing thereof;
9.1.5 the Premises shall be abandoned or deserted by the Tenant;
9.1.6 any of the Landlord's policies of insurance with respect to
the Building are cancelled or adversely changed as a result of the Tenant's use
or occupancy of the Premises; or
9.1.7 the business operated by the Tenant in the Premises shall be
closed by governmental or court order for any reason.
9.2 Remedies. In the event of any default hereunder by the Tenant, then
without prejudice to any other rights which it has pursuant to this Lease or at
law or in equity, the Landlord shall have the following rights and remedies,
which are cumulative and not alternative:
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9.2.1 The Landlord may cancel this Lease by notice to the Tenant
and retake possession of the Premises for the Landlord's account. The Tenant
shall then quit and surrender the Premises to the Landlord. The Tenant's
liability under all of the provisions of this Lease shall continue
notwithstanding any expiration and surrender, or any re-entry, repossession, or
disposition hereunder.
9.2.2 The Landlord may enter the Premises as agent of the Tenant to
take possession of any property of the Tenant on the Premises to store such
property at the expense and risk of the Tenant or to sell or otherwise dispose
of such property in such manner as the Landlord may see fit without notice to
the Tenant. Re-entry and removal may be effectuated by summary dispossession
proceedings, by any suitable action or proceeding, or otherwise. The Landlord
shall not be liable in any way in connection with its actions pursuant to this
section, to the extent that its actions are in accordance with law.
9.2.3 If this Lease is cancelled under Subsection 9.2.1 above, the
Tenant shall remain liable (in addition to accrued liabilities) to the extent
legally permissible for all Rent and all of the charges the Tenant would have
been required to pay until the date this Lease would have expired had such
cancellation not occurred. The Tenant's liability for Rent shall continue
notwithstanding re-entry or repossession of the Premises by the Landlord. In
addition to the foregoing, the Tenant shall pay to Landlord all reasonable
attorneys fees and costs of any kind with respect to any successful lawsuit or
action instituted by the Landlord to enforce the provisions of this Lease or in
connection with any default by the Tenant hereunder.
9.2.4 The Landlord may relet all or any part of the Premises for
all or any part of the unexpired portion of the Term of this Lease or for any
longer period, and may accept any rent then attainable; grant any concessions
of Rent, and agree to paint or make any special repairs, alterations, and
decorations for any new Tenant as it may deem advisable in its sole and
absolute discretion. The Landlord shall be under no obligation to relet or to
attempt to relet the Premises.
9.2.5 If this Lease is canceled in accordance with Subsection 9.2.1
above, and if the Landlord so elects, the Rent hereunder shall be accelerated
and the Tenant shall pay the Landlord damages in the amount of any and all sums
which would have been due for the remainder of the Term.
9.2.6 The Landlord may remedy or attempt to remedy any default of
the Tenant under this Lease for the account of the Tenant and to enter upon the
Premises for such purposes. No notice of the Landlord's intention to perform
such covenants need be given the Tenant unless expressly required by this
Lease. The Landlord shall not be liable to the Tenant for any loss or damage
caused by acts of the Landlord in remedying or attempting to remedy such
default and the Tenant shall pay to the Landlord all expenses of any kind
(including, without limitation, reasonable attorneys' fees and costs of any
kind) incurred by the Landlord in connection with remedying or attempting to
remedy such default. Any expenses incurred by the Landlord shall accrue
interest from the date of payment by the Landlord until repaired by the Tenant
at the highest rate permitted by law.
9.3 Costs. The Tenant shall pay to the Landlord on demand all costs of
any kind incurred by the Landlord, including, without limitation reasonable
attorneys' fees and costs of any kind, incurred by the Landlord in enforcing
any of the obligations of the Tenant under this Lease or in connection with any
default by Tenant under this Lease. In addition, upon any default by the
Tenant, the Tenant shall be also liable to the Landlord for the expenses to
which the Landlord may be put in re-entering the Premises; repossessing the
Premises; painting, altering, or dividing the Premises; combining the Premises
with an adjacent space for any new tenant; putting the Premises in proper
repair; protecting and preserving the Premises by placing watchmen and
caretakers therein; reletting the Premises (including reasonable attorneys'
fees and disbursements, marshall's fees, and brokerage fees, in so doing); and
any other expenses reasonably incurred by the Landlord.
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9.4 Additional Remedies; Waiver. The rights and remedies of the
Landlord set forth herein shall be in addition to any other right and remedy
now and hereinafter provided by law. All rights and remedies shall be
cumulative and non-exclusive of each other. No delay or omission by the
Landlord in exercising a right or remedy shall exhaust or impair the same or
constitute a waiver of, or acquiescence to, a default.
9.5 Default by the Landlord. In the event of any default by the
Landlord, except as expressly provided otherwise in this Lease, Tenant's
non-exclusive remedy shall be an action for damages, but prior to any such
action the Tenant will give the Landlord written notice specifying such default
with particularity, and the Landlord shall have a period of thirty (30) days
following the date of such notice in which to commence the appropriate cure of
such default. Notwithstanding the foregoing sentence, the Tenant shall not be
entitled to the remedy of specific performance or any other equitable remedy.
Unless and until the Landlord fails to commence and diligently pursue the
appropriate cure of such default after such notice or complete same within a
reasonable period of time, the Tenant shall not have any remedy or cause of
action by reason thereof. If the Landlord, or any successor or assign, fails
to perform any covenant, term or condition of this Lease upon the Landlord's
part to be performed and as a consequence of such default the Tenant recovers a
money judgment against the Landlord, such judgment shall be satisfied only out
of the proceeds of sale received upon execution of such judgment and levy
thereon against the right, title and interest of Landlord in the Demised
Premises as the same may then be encumbered and neither the Landlord nor, if
the Landlord be a partnership, any of the partners comprising the Landlord,
will be liable for any deficiency. It is understood that in no event shall the
Tenant have the right to levy execution against any property of the Landlord
other than its interest in the Premises as hereinbefore expressly provided. In
the event of the sale or other transfer of the Landlord's right, title and
interest in the Premises, the Landlord will be released thereby from all
liability and obligations under this Lease.
ARTICLE 10. ESTOPPEL CERTIFICATE; SUBORDINATION.
10.1 Estoppel Certificate. Within ten (10) days after written request by
the Landlord, the Tenant shall deliver in a form supplied by the Landlord, an
estoppel certificate to the Landlord as to the status of this Lease, including
whether this Lease is unmodified and in full force and effect (or, if there
have been modifications, that this Lease is in full force and effect as
modified and identifying the modification agreements); the amount of Minimum
Rent and Additional Rent then being paid and the dates to which same have been
paid; whether or not there is any existing or alleged default by either party
with respect to which a notice of default has been served, or any facts exist
which, with the passing of time or giving of notice, would constitute a
default, and if there is any such default or facts, specifying the nature and
extent thereof; and any other matters pertaining to this Lease as to which the
Landlord shall request such certificate. The Landlord, and any prospective
purchaser, lender, or ground lessor shall have the right to rely on such
certificate.
10.2 Subordination; Attornment. This Lease and all rights of the Tenant
shall be subject and subordinate to any and all mortgages, security agreements,
or like instruments resulting from any financing, refinancing, or collateral
financing (including renewals or extensions thereof), and to any and all ground
leases, made or arranged by the Landlord of its interests in all or any part of
the Building), from time to time in existence against the Building, whether now
existing or hereafter created. Such subordination shall not require any
further instrument to evidence such subordination. However, on request, the
Tenant shall further evidence its agreement to subordinate this Lease and its
rights under this Lease to any and all documents and to all advances made under
such documents. The form of such subordination shall be made as required by
the Landlord, its lender, or ground lessor. The Tenant shall, if requested by
such mortgagee, owner, or purchaser, or by any person succeeding to the
interest of such mortgagee, owner, or purchaser, or by any person succeeding to
the interest of such mortgagee, owner, or purchaser, as the result of the
enforcement of the remedies provided by law or the applicable security
instrument held by such mortgagee, owner, or purchaser, automatically become
the tenant of any such mortgagee, owner, purchaser, or successor-in-interest,
without any change in the terms or other provisions of this Lease; provided,
however, that said mortgagee, owner, purchaser, or successor shall not be bound
by (a) any payment of
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rent or additional rent for more than one month in advance, or (b) any security
deposit or the like not actually received by such mortgagee, owner, or
purchaser, or successor, or (c) any amendment or modification in this Lease
made without the consent of such mortgagee, owner, purchaser, or successor
thereto (to the extent that such mortgagee, owner, purchaser or
successor-in-interest thereto had an interest of any kind in the Premises at
the time of such amendment or modification), or (d) any construction
obligation, free rent, or other concession or monetary allowance, or (e) any
set-off, counterclaim, or the like otherwise available against the Landlord, or
(f) any act or omission of any prior landlord (including the Landlord). Upon
request by said mortgagee, owner, or purchaser, or successor, the Tenant shall
execute and deliver an instrument or instruments confirming its attornment.
Notwithstanding the foregoing, any such subordination shall be conditioned upon
the Landlord obtaining a nondisturbance agreement in favor of Tenant from all
mortgagees having mortgages encumbering the Premises. Further, amendments and
modifications referred to in "(c)" above shall be subject to reasonable
negotiation by the Tenant and the Landlord's lenders and ground lessors, if
any.
ARTICLE 11. CONTROL OF BUILDING BY THE LANDLORD.
11.1 Use and Maintenance of Common Areas. The Tenant and those doing
business with the Tenant for purposes associated with the Tenant's business on
the Premises, shall have a non-exclusive license to use the Common Areas for
their intended purposes during normal business hours in common with others
entitled thereto and subject to any rules and regulations imposed by the
Landlord. The Landlord shall keep the Common Areas in good repair and
condition and shall clean the Common Areas when necessary. Subject to all of
the terms, provisions, covenants, and conditions contained herein, the Tenant
shall have the right to use its proportionate share of the number of parking
spaces indicated in the Lease Summary in the parking lot which the Landlord
shall provide for the use of tenants of the Building. The Landlord shall not
be liable for any damage to automobiles of any nature whatsoever to, or any
theft of, automobiles or other vehicles or the contents thereof, while in or
about the parking lots. The Landlord shall not have any responsibility for the
use of the parking lots by unauthorized individuals. The Tenant acknowledges
that its non-exclusive right to use any parking facilities forming part of the
Building may be subject to such rules and regulations as reasonably imposed by
the Landlord from time to time. The Tenant acknowledges that all Common Areas
shall at all times be under the exclusive control and management of the
Landlord. For purposes of this Lease, "Common Areas" shall mean those areas,
facilities, utilities, improvements, equipment, and installations of the
Building which serve or are for the benefit of the tenants of more than one
component of the Building and which are not designated or intended by the
Landlord to be leased, from time to time, or which are provided or designated
from time to time by the Landlord for the benefit or use of all tenants in the
Building, their employees, customers, and invitees, in common with others
entitled to the use or benefit of same.
11.2 Alterations by the Landlord. The Landlord may (a) alter, add to,
subtract from, construct improvements on, re-arrange, and construct additional
facilities in, adjoining, or proximate to the Building; (b) relocate the
facilities and improvements in or comprising the Building or erected on the
land; (c) do such things on or in the Building as required to comply with any
laws, by-laws, regulations, orders, or directives affecting the land or any
part of the Building; and (d) do such other things on or in the Building as the
Landlord, in the use of good business judgment determines to be advisable,
provided that notwithstanding anything contained in this Section 11.2, access
to the Premises shall be available at all times. The Landlord shall not be in
breach of its covenants for quiet enjoyment or liable for any loss, costs, or
damages, whether direct or indirect, incurred by the Tenant due to any of the
foregoing.
11.3 Covenants, Conditions, and Restrictions. The Tenant hereby
acknowledges and agrees that the Building of which the Premises is a part, and
the Tenant's occupancy thereof, is subject to Declarations of Covenants,
Conditions, and Restrictions for Beacon Centre (the "Declarations"), which
Declarations have been recorded among the Public Records of Dade County,
Florida. Copies of the Declarations are located at the Landlord's management
office and may be reviewed by the Tenant during the Landlord's normal business
hours. The Tenant hereby acknowledges the existence of such Declarations and
agrees to be bound by the terms thereof (and any amendments or modifications
thereto). The Tenant hereby agrees to reimburse
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the Landlord, within fifteen (15) days after demand therefor, for the
proportionate share of Common Expenses and Common Element Expenses attributable
to the Premises (as described in the Declarations) to the extent that such
amounts in any calendar year exceed the total amount of such items during the
Base Year. It is the Landlord's intention not to double charge the Tenant for
any expenses pursuant to Section 2.3 of this Lease and the Declaration(s). The
expenses solely relating to the Building are intended to be charged pursuant to
Section 2.3 of this Lease. Those expenses that are incurred by the Landlord on
a park-wide basis (including, without limitation, park-wide security and
landscaping of the perimeter berm) are passed-through pursuant to the
Declarations.
ARTICLE 12. CONDEMNATION.
12.1 Total or Partial Taking. If the whole of the Premises, or such
portion thereof as will make the Premises unusable for the purposes leased
hereunder, shall be taken by any public authority under the power of eminent
domain or sold to public authority under threat or in lieu of such taking, the
Term shall cease as of the day possession or title shall be taken by such
public authority, whichever is earlier ("Taking Date"), whereupon the Rent and
all other charges shall be paid up to the Taking Date with a proportionate
refund by the Landlord of any Rent and all other charges paid for a period
subsequent to the Taking Date. If less than the whole of the Premises, or less
than such portion thereof as will make the Premises unusable for the purposes
leased hereunder, the Term shall cease only as to the part so taken as of the
Taking Date, and the Tenant shall pay Rent and other charges up to the Taking
Date, with appropriate credit by the Landlord (toward the next installment of
Rent due from the Tenant) of any Rent or charges paid for a period subsequent
to the Taking Date. Minimum Rent and other charges payable to the Landlord
shall be reduced in proportion to the amount of the Premises taken.
12.2 Taking for Temporary Use. If there is a taking of the Premises for
temporary use, this Lease shall continue in full force and effect, and the
Tenant shall continue to comply with the Tenant's obligations under this Lease,
except to the extent compliance shall be rendered impossible or impracticable
by reason of the taking. Minimum Rent and other charges payable to the
Landlord shall be reduced in proportion to the amount of the Premises taken for
the period of such temporary use.
12.3 Award. All compensation awarded or paid upon a total or partial
taking of the Premises or Building including the value of the leasehold estate
created hereby shall belong to and be the property of the Landlord without any
participation by the Tenant; the Tenant shall have no claim to any such award
based on the Tenant's leasehold interest. However, nothing contained herein
shall be construed to preclude the Tenant, at its cost, from independently
prosecuting any claim directly against the condemning authority in such
condemnation proceeding for damage to, or cost of removal of, stock, trade
fixtures, furniture, and other personal property belonging to the Tenant;
provided, however, that no such claim shall diminish or otherwise adversely
affect the Landlord's award or the award of any mortgages.
ARTICLE 13. GENERAL PROVISIONS
13.1 Delay. Except as expressly provided in this Lease (including,
without limitation, Section 1.2), whenever the Landlord is delayed in the
fulfillment of any obligation under this Lease, by an unavoidable occurrence
which is not the fault of the Landlord delayed in performing such obligation,
then the time for fulfillment of such obligation shall be extended during the
period in which such circumstances operate to delay the fulfillment of such
obligation.
13.2 Holding Over. If the Tenant remains in possession of the Premises
after the end of the Term without having executed and delivered a new lease or
an agreement extending the Term, there shall be no tacit renewal of this Lease
or the Term, and the Tenant shall be deemed to be occupying the Premises as a
Tenant from month to month at a monthly Minimum Rent payable in advance on the
first day of each month equal to one hundred fifty percent (150%) of the
monthly amount of Minimum Rent payable during the last month of the Term, and
otherwise upon the same terms as are set forth in this Lease, so far as they
are applicable to a monthly tenancy.
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13.3 Waiver: Partial Invalidity. If either the Landlord or the Tenant
excuses or condones any default by the other of any obligation under this
Lease, this shall not be a waiver of such obligation in respect of any
continuing or subsequent default and no such waiver shall be implied. All of
the provisions of this Lease are to be construed as covenants even though not
expressed as such. If any such provision is held or rendered illegal or
unenforceable it shall be considered separate and severable from this Lease and
the remaining provisions of this Lease shall remain in force and bind the
parties as though the illegal or unenforceable provision had never been
included in this Lease.
13.4 Recording. Neither the Tenant nor anyone claiming under the Tenant
shall record this Lease or any memorandum hereof in any public records without
the prior written consent of the Landlord.
13.5 Notices. Any notice, consent, or other instrument required or
permitted to be given under this Lease shall be in writing and shall be
delivered by certified mail, return receipt requested, or overnight express
mail courier, postage prepaid, addressed (i) if to the Landlord, at the address
set forth on the Lease Summary; and (ii) if to the Tenant, at the Premises or,
prior to the Tenant's occupancy of the Premises, at the address set forth on
the Lease Summary. Any such notice or other instruments shall be deemed to
have been given and received on the day upon which personal delivery is made
or, if mailed, then forty-eight (48) hours following the date of mailing.
Either party may give notice to the other of any change of address and after
the giving of such notice, the address therein specified is deemed to be the
address of such party for the giving of notices. If postal service is
interrupted or substantially delayed, all notices or other instruments shall be
delivered in person or by overnight express mail courier.
13.6 Successors: Joint and Several Liability. The rights and
liabilities created by this Lease extend to and bind the successors and assigns
of the Landlord and the heirs, executors, administrators, and permitted
successors and assigns of the Tenant. No rights, however, shall inure to the
benefit of any transferee unless such Transfer complies with the provisions of
Article 8. If there is at any time more than one Tenant or more than one person
constituting the Tenant, their covenants shall be considered to be joint and
several and shall apply to each and every one of them.
13.7 Captions and Section Numbers. The captions, section numbers,
article numbers, and table of contents appearing in this Lease are inserted
only as a matter of convenience and in no way affect the substance of this
Lease.
13.8 Extended Meanings. The words "hereof," "hereto," "hereunder," and
similar expressions used in this Lease related to the whole of this Lease and
not only to the provisions in which such expressions appear. This Lease shall
be read with all changes in number and gender as may be appropriate or required
by the context. Any reference to the Tenant includes, when the context allows,
the employees, agents, invites, and licensees of the Tenant and all others over
whom the Tenant might reasonably be expected to exercise control. This Lease
has been fully reviewed and negotiated by each party and their counsel and
shall not be more strictly construed against either party.
13.9 Entire Agreement; Governing Law; Time. This Lease and the Exhibits
and Riders, if any, attached hereto are incorporated herein and set forth the
entire agreement between the Landlord and the Tenant concerning the Premises
and there are no other agreements or understandings between them. This Lease
and its Exhibits and Riders may not be modified except by agreement in writing
executed by the Landlord and the Tenant. This Lease shall be construed in
accordance with and governed by the laws of the State of Florida, without
application of conflict of laws principles. Time is of the essence of this
Lease.
13.10 No Partnership. Nothing in this Lease creates any relationship
between the parties other than that of lessor and lessee and nothing in this
Lease constitutes the Landlord a partner of the Tenant or a joint venture or
member of a common enterprise with the Tenant.
13.11 Quiet Enjoyment. If the Tenant pays Rent and other charges when due
and
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otherwise fully observes and performs all of its obligations under this
Lease, the Tenant shall be entitled to peaceful and quiet enjoyment of the
Premises for the Term without interruption or interference by the Landlord or
any person claiming through the Landlord.
13.12 Brokerage. The Landlord and the Tenant each represent and warrant
one to the other that except as set forth in the Lease Summary (i.e. Codina
Klein Realty, Inc. and ANF Real Estate Group, Inc.), neither of them has
employed any broker in connection with the negotiations of the terms of this
Lease or the execution thereof. The Landlord and the Tenant hereby agree to
indemnify and to hold each other harmless against any loss, expense, or
liability with respect to any claims for commissions or brokerage fees arising
from or out of any breach of the foregoing representation and warranty. The
Landlord recognizes the broker(s) specified in the Lease Summary as the sole
broker(s) with whom the Landlord has dealt in this transaction and agrees to
pay any commissions determined to be due said broker(s). The Tenant
acknowledges that Bush Klein Realty, Inc. represents solely the Landlord with
respect to this Lease.
13.13 ACCORD AND SATISFACTION. No payment by the Tenant, or receipt by
the Landlord of a lesser amount than the Rent required under this Lease will be
deemed to be other than on account of the earliest stipulated Rent nor shall
any endorsement or statement on any check or any letter accompanying any check
or payment of Rent be deemed an accord and satisfaction, and the Landlord may
accept such check or payment without prejudice to the Landlord's right to
recover the balance of such Rent or pursue any other remedy provided for in
this Lease or available at law or in equity.
13.14 TRIAL BY JURY. THE LANDLORD AND THE TENANT EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THAT IT OR THEY MANY HAVE TO A
TRIAL BY JURY WITH RESPECT TO ANY LITIGATION OR CONTROVERSY BASED UPON THIS
LEASE, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LEASE OR ANY
TRANSACTION, MATTER, COURSE OF CONDUCT, STATEMENTS OR ACTIONS OF ANY PARTY TO
THIS LEASE. EACH OF THE PARTIES ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT FOR THE PARTIES ENTERING INTO THIS LEASE.
13.15 Counterparts. This Lease may be executed in a number of identical
counterparts, each of which for all purposes is deemed an original, and all of
which collectively constitute one agreement, but in making proof of this Lease,
it shall not be necessary to produce or account for more than one such
counterpart.
13.16 Execution by the Landlord. The submission of this Lease to the
Tenant shall not constitute an offer by the Landlord, and until such time as
this Lease is fully executed and delivered by the Landlord and the Tenant, this
Lease may be withdrawn by the Landlord.
13.17. NOTICE REQUIRED BY CHAPTER 88-285, LAWS OF FLORIDA.
Chapter 88-285, Laws of Florida, requires the following notice to be
provided with respect to the contract for sale and purchase of any building, or
a rental agreement for any building:
"RADON GAS: Radon is a naturally occurring radioactive gas that, when it
has accumulated in a building in sufficient quantities, may present health
risks to persons who are exposed to it over time. Levels of radon that exceed
federal and state guidelines have been found in buildings in Florida.
Additional information regarding radon and radon testing may be obtained form
your county public health unit."
18
<PAGE> 22
EXECUTED as of the day and year first above written.
Witnesses: THE LANDLORD:
NEW WORLD PARTNERS JOINT VENTURE,
a Florida general partnership
By: Codina/Tradewind, Ltd., a Florida
limited partnership, as general partner
By: Codina West Dade Development Corp.,
as general partner
/s/ Ana C. Lopez By : /s/ Armando Codina
- -------------------------- -------------------------------
Armando Codina, President
/s/ Barbara ???
- --------------------------
THE TENANT:
ROSS WHITE ENTERPRISES, INC. D/B/A National
Computer Distributors, a Florida corporation
/s/ Dennis L. Fairchild By: /s/ Thomas F. Ross 9-12-94
- -------------------------- -----------------------------------------
Its: Vice President
/s/ ??? ----------------------------------------
- --------------------------
19
<PAGE> 23
EXHIBIT "A"
Draft of Premises
<PAGE> 24
EXHIBIT "B"
LEGAL DESCRIPTION
BUILDING NO.4
LEGAL DESCRIPTION PREPARED BY BERMELLO, AJAMIL & PARTNERS, INC.
A PARCEL OF LAND LYING IN SECTION 34, TOWNSHIP 53 SOUTH, RANGE 40 EAST, DADE
COUNTY, FLORIDA AND BEING A PORTION OF BEACON CENTRE PHASE I FIRST ADDITION,
ACCORDING TO THE PLAT BOOK THEREOF, AS RECORDED IN PLAT BOOK 141, PAGE 31 OF
THE PUBLIC RECORDS OF DADE COUNTY, FLORIDA AND BEING MORE PARTICULARLY
DESCRIBED AS FOLLOWS.
COMMENCE AT THE SOUTHEAST CORNER OF TRACT "AA" OF SAID BEACON CENTRE
PHASE I FIRST ADDITION; SAID POINT ALSO BEING THE NORTHEAST CORNER OF TRACT "F"
OF BEACON CENTRE PHASE III, ACCORDING TO THE PLAT THEREOF, AS RECORDED ON PLAT
BOOK 137, PAGE 19 OF THE PUBLIC RECORDS OF DADE COUNTY, FLORIDA; FROM THAT
POINT PROCEED NO0(DEG.)1'27"W A DISTANCE OF 35.00 FEET, TO THE POINT OF
BEGINNING.
FROM THE POINT OF BEGINNING, RUN N89(DEG.)58'15"E FOR 13.94 FEET TO THE EAST
LINE OF SAID TRACT "AA"; THENCE RUN ALONG SAID LINE NO174'09"W FOR 583.12 FEET;
THENCE DEPARTING SAID EAST LINE RUN S88(DEG.)45'51"W FOR 344.00 FEET TO THE
WEST LINE OF SAID TRACT "AA"; THENCE RUN ALONG SAID WEST LINE SO174'09"E FOR
575.52 FEET AND THENCE DEPARTING SAID WEST LINE RUN N89(DEG.)58'15"E FOR 330.14
FEET, BACK TO THE POINT OF BEGINNING.
CONTAINING 4.57 ACRE, MORE OR LESS.
<PAGE> 25
EXHIBIT "C"
WORK LETTER AGREEMENT
THIS WORK LETTER AGREEMENT (the "Work Letter"), dated as of 9-12, 1994 is
attached to and made part of that certain Lease by and between New World
Partners Joint Venture Number One, a Florida general partnership (the
"Landlord"), and Ross White Enterprises, Inc., a Florida corporation ( the
"Tenant"). The terms, definitions and other provisions of the Lease are hereby
incorporated into this Work Letter by reference as if set forth in full.
IN CONSIDERATION OF the execution of the Lease and the mutual covenants and
conditions hereinafter set forth, Landlord and Tenant agree as follows:
(a) Landlord will cause Substantial Completion, as hereinafter defined,
of the tenant improvements (the "Tenant Improvements", which term shall not
include the items set forth in is "(i)" - "(ix)" below) to the Premises, in
accordance with plans and specifications for the Premises to be prepared by
Landlord's architect (such plans and specifications and architect's fees shall
be at Tenant's expense). The responsibility of the parties for payment of Tenant
Improvements is set forth below. Landlord and Tenant shall work together in good
faith to mutually approve such plans and specifications within fifteen (15) days
after the date of the Lease. "Substantial Completion" shall mean that a
certificate of occupancy has been obtained for the Premises and that the Tenant
Improvements are sufficiently complete so as to allow Tenant to occupy the
Premises for the use and purposes intended without unreasonable disturbance or
interruption; provided that Landlord, its employees, agents, and contractors,
shall be allowed to enter upon the Premises at any reasonable time(s) following
Substantial Completion as necessary to complete any unfinished details pursuant
to a punchlist to be prepared by Tenant and delivered to Landlord within thirty
(30) days following the date of Substantial Completion. The improvements to the
warehouse portion of the Premises to be installed at Landlord's expense are as
follows:
(i) Tenant to tenant demising wall: Partition will consist of 3
5/8" metal stud with 1 layer 5/8" sheetrock each side.
(ii) Ceilings: None (exposed joists and roofdeck in unpainted and
unfinished condition).
(iii) Concrete floor: Existing finished and sealed concrete floor.
(iv) Warehouse lighting fixtures: HID or equal light fixtures as
required by code.
(v) Standard electrical outlets: One (1) wall mounted electrical
outlet with four (4) receptacles will be provided per 1,000
square feet of warehouse space, or per code.
(vi) Light switches: Wall mounted light switches as per code.
(vii) Telephone outlets: Four (4) telephone outlets.
(viii) Exit lights: Lighted, wall mounted exit light signs per code
requirements.
(ix) Ventilation system: Building-standard exhaust fans with no
less capacity than six air changes per hour.
Any and all costs and expenses with respect to any and all other improvements to
the warehouse
22
<PAGE> 26
portion of the Premises, except as set forth in (i) - (ix) above, which are
requested by Tenant to the warehouse portion of the Premises shall be borne by
Tenant.
(b) Within fifteen (15) days following receipt of the final approved
plans and specifications for the Premises, Landlord shall have its contractor(s)
prepare an estimated budget (the "Construction Budget") of the cost of the
Tenant Improvements, and shall submit same to Tenant. ANF shall also be
permitted to prepare a Construction Budget and at Tenant's election, serve as
the contractor for the Tenant Improvements, subject to reasonable and ordinary
criteria and qualifications established by Landlord. The Construction Budget
shall be in reasonable detail and shall reflect a unit cost for all improvements
which is reasonable in amount, given the then current market conditions
pertinent to labor and material costs for such construction. The cost of the
Tenant Improvements, as set forth in the construction Budget, shall also include
the cost of all utilities, air conditioning, security, and other services
provided during construction. The Construction Budget shall be used as a basis
for calculating Tenant's Costs, as hereinafter defined, if any. Following final
completion of the Tenant Improvements, Landlord shall provide Tenant with a
statement of actual costs thereof, including the cost of any approved change
orders. Landlord's general contractor shall be licensed and insured in the State
of Florida and Dade County.
(c) Upon Substantial Completion of the Premises, Tenant, at its
expense, shall install its furniture, trade fixtures, and equipment so that
Tenant can occupy the Premises for the use and purposes intended. Tenant may
begin to install such items prior to Substantial Completion; provided, however,
that no such pre-Substantial Completion installation shall in any way delay or
interfere with Landlord's work pursuant to this Work Letter and Tenant shall
arrange a meeting to coordinate with Landlord prior to any such pre-Substantial
Completion installation.
(d) Tenant shall be responsible for any delay (including associated
costs) in Substantial Completion resulting from any of the following causes:
(i) Tenant's failure to timely approve (or submit to Landlord
any proposed modifications or additions to) the plans and
specifications, unless such failure is due to causes beyond Tenant's
control; or
(ii) Tenant's failure to pay any portion of Tenant's Costs, as
hereinafter defined, when due; or
(iii) Tenant's specification of special materials or finishes,
or special installations, which special items cannot be delivered or
completed within Landlord's construction schedule (subject to
Landlord's obligation to give Tenant prior notice of same at the time
of such specification); or
(iv) any change in the plans and specifications caused by
Tenant once finally approved and accepted by Landlord, even though
Landlord may approve such change (Landlord agrees to estimate the delay
to be caused by a change order, provided Tenant expressly requests such
estimate at the time it requests a change order); or
If any delay caused by Tenant results in or contributes to a delay in
Substantial Completion, then Substantial Completion shall be deemed to have
occurred as of the date Landlord would have otherwise achieved Substantial
Completion, but for Tenant's delay. Landlord will specify in writing to Tenant
the Tenant delays(s) which resulted in or contributed to a delay in Substantial
Completion.
(e) Landlord will provide Tenant with an allowance (the "Tenant
Improvement Allowance") as a credit against the cost of the improvements to the
office portion of the Premises and as against the fees and costs incurred with
respect to preparation of the plans and specifications for the entire Premises.
The Tenant Improvement Allowance shall be equal to the lesser of (x) the actual
cost of improvements to the office portion of the Premises and the fees and
costs with respect to preparation of the plans and specifications, or (y)
Thirty Dollars
23
<PAGE> 27
per square foot of the office portion of the Premises up to a maximum of four
thousand seven hundred ninety-six (4,796) square feet of office space for the
Premises (which equals a total of One Hundred Forty Three Thousand Eight Hundred
Eighty-eight Dollars ($143,888)). To the extent that Landlord constructs any
improvements to warehouse portion of the Premises in excess of those enumerated
in section (a)(i)-(ix) and requested by the Tenant, above, and to the extent
that total cost of the improvements to the office portion of the Premises and
the reasonable fees and costs with respect to preparation of the plans and
specifications exceeds the Tenant Improvement Allowance,
Tenant shall pay the full amount of such excess ("Tenant's Costs") as
follows:
(i) Prior to commencement of construction of the Tenant
Improvements, Tenant shall pay Landlord an amount equal to one-third of
the Tenant's Costs, as such amount is then determined by reference to
the Construction Budget.
(ii) When fifty (50%) percent of the Tenant Improvements are
complete in accordance with the plans and specifications (as verified
in writing by Landlord's architect), Tenant shall pay Landlord an
amount equal to the one-third of the Tenant's Costs, as such amount can
then be reasonably determined by Landlord based on available
information.
(iii) When Tenant Improvements are substantially complete in
accordance with the plans and specifications (as verified in writing by
the Landlord's architect), Tenant shall pay the Landlord an amount
equal to the remaining unpaid balance of Tenant's Costs, as such amount
can then be reasonably determined by the Landlord based upon available
information.
Notwithstanding the foregoing clauses "(i)-(iii)", Tenant may pay the
first Fifty Thousand Dollars of Tenant's Costs in 60 equal monthly installments
of principal in the amount of $833.34, plus interest on principal outstanding
at the rate of twelve percent (12%) per annum, commencing on the Rent
Commencement Date and continuing through the Expiration Date of the initial
term; provided, however, all such principal amounts outstanding thereunder
shall be due and payable in full on or before the earlier of (a) a default on
the part of Tenant occuring under this Lease, or (b) the termination or
expiration of this Lease. Such payments shall be made concurrently with
payments of Minimum Rent under the Lease and shall be considered as Additional
Rent due under the Lease. If Tenant elects to pay such portion of Tenant's
Costs in installments as set forth in the two immediately preceeding sentences,
all other sums owed with respect to Tenant's Costs shall be due and payable on
or before the date upon which construction of Tenant Improvements is commenced.
Tenant's Costs represent a reimbursement of monies expended by Landlord
on Tenant's behalf. Payment when due shall be a condition to Landlord's
continued performance under this Work Letter and this Lease. Any delay in
construction of the Tenant Improvements or in Tenant taking occupancy of the
Premises resulting from Tenant's failure to make any Tenant's Costs payments
when due shall be Tenant's responsibility. Tenant's failure to pay any portion
of Tenant's Costs when due shall constitute a default under the Lease (subject
to any applicable notice requirements or grace periods), entitling Landlord to
all of its remedies thereunder.
(f) Tenant's Costs shall include, without limitation, any and all
impact and connection fees payable to Dade County if the amount of square
footage constituting the office portion of the Premises exceeds twenty-five
(25%) percent of the rentable area of the Premises.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Work
Letter as of the day and first year above written
24
<PAGE> 28
Witnesses: LANDLORD:
New World Partners Joint Venture Number
One, a Florida general partnership
By: Codina/Tradewind, Ltd., a Florida limited
partnership, as general partner
By: Codina West Dade Development Corp., as
general partner
/s/
- ---------------------
/s/ By: /s/ Armando Codina
- --------------------- ---------------------------------
Armando Codina
President
TENANT:
/s/ By:
- --------------------- --------------------------------------
Its: Vice President
/s/ -------------------------------------
- ---------------------
25
<PAGE> 29
EXHIBIT "D"
RULES AND REGULATIONS
1. Security. The may from time to time adopt appropriate systems and procedures
for the security or safety of the Building, any persons occupying, using, or
entering the same, or any equipment, furnishings, or contents thereof, and the
Tenant shall comply with the the's reasonable requirements relative thereto.
2. Return of Keys. At the end of the Term, the Tenant shall promptly return to
the Landlord all keys for the Building and Premises which are in the possession
of the Tenant. In the event any Tenant fails to return keys, the may retain
$50.00 of the Tenant's security deposit for locksmith work and administration.
3. Repair, Maintenance, Alterations, and Improvements. The Tenant shall carry
out the Tenant's repair, maintenance, alterations, and improvements in the
Premises only during times agreed to in advance by the Landlord and in a manner
which will not interfere with the rights of other tenants in the Building.
4. Water Fixtures. The Tenant shall not use water fixtures for any purpose for
which they are not intended, nor shall water be wasted by tampering with such
fixtures. Any cost or damage resulting from such misuse by the Tenant shall be
paid for by the Tenant.
5. Personal Use of Premises. The Premises shall not be used or permitted to be
used for residential, lodging, or sleeping purposes or for the storage of
personal effects or property not required for business purposes.
6. Heavy Articles. The Tenant shall not place in or move about the Premises
without the Landlord's prior written consent any safe or other heavy article
which in the Landlord's reasonable opinion may damage the Building, and the
Landlord may designate the location of any such heavy articles in the Premises.
7. Bicycles, Animals. The Tenant shall not bring any animals or birds into the
Building, and shall not permit bicycles or other vehicles inside or on the
sidewalks outside the Building except in areas designated from time to time by
the Landlord such purposes.
8. Deliveries. The Tenant shall promptly pay or cause to be paid to the Landlord
the cost of repairing any damage in the Building caused by any person making
improper deliveries.
9. Solicitations. The Landlord reserves the right to restrict or prohibit
canvassing, soliciting, or peddling in the Building.
10. Food and Beverages. Only persons approved from time to time by the Landlord
may prepare foods or beverages in the Building, or use the Common Areas for any
such purpose. Except with the Landlord's prior written consent and in accordance
with arrangements approved by the Landlord, the Tenant shall not permit on the
Premises the use of equipment for the preparation, sale, serving, or
distribution of food or beverages; provided that vending machines for employee
use shall be permitted.
11. Refuse. The Tenant shall place all refuse in proper receptacles provided by
Tenant at its expense in the Premises or in receptacles (if any) provided by the
Landlord for the Building, and shall keep sidewalks and driveways outside the
Building, and lobbies, corridors, stairwells, ducts, and shafts of the Building,
free of all refuse.
12. Obstructions. The Tenant shall not obstruct or replace anything in or on the
sidewalks or driveways outside the Building or in the lobbies, corridors,
stairwells, or other Common Areas,
26
<PAGE> 30
or use such locations for any purpose except access to and exit from the
Premises without the Landlord's prior written consent. The Landlord may remove
at the Tenant's expense any such obstruction or thing caused or placed by the
Tenant (and unauthorized by the Landlord) without notice or obligation to the
Tenant.
13. Proper Conduct. The Tenant shall not conduct itself in any manner which is
inconsistent with the character of the Building as a first quality building or
which will impair the comfort and convenience of other tenants in the Building.
14. Employees, Agents, and Invitees. In these Rules and Regulations, "Tenant"
includes the employees, agents, invitees, and licensees of the Tenant and others
permitted by the Tenant to use or occupy the Premises.
15. Parking. If the Landlord designates tenant parking areas for the Building,
the Tenant shall park its vehicles and shall cause its employees and agents to
park their vehicles only in such designated parking areas. The Tenant shall
furnish the Landlord, upon request, with the current license numbers of all
vehicles owned or used by the Tenant or its employees or agents and the Tenant
thereafter shall notify the Landlord of any changes in such numbers within five
(5) days after the occurrence thereof. In the event of failure of the Tenant or
its employees or agents to park their vehicles in such designated parking areas,
the Tenant shall forthwith on demand pay to the Landlord the sum of Ten Dollars
($10.00) per day per each car so parked. The Landlord may itself or through any
agent designated for such purpose, make, administer, and enforce additional
rules and regulations regarding parking by tenants and by their employees or
agents, including, without limitation, rules and regulations permitting the
Landlord or such agent to move any vehicles improperly parked to the designated
tenant or employee parking areas. No disables vehicle shall be left in the
parking areas of the Building for more than 24 hours.
27
<PAGE> 31
RECEIPT OF SIGNAGE CRITERIA
Pursuant to that certain Lease entered into between the undersigned
Tenant and New World Partners Joint Venture (the "Landlord"), the undersigned,
by its execution below, hereby acknowledges receipt of the Landlord's signage
criteria as such criteria exists on the date hereof.
THE TENANT:
ROSS WHITE ENTERPRISES, INC.
--------------------------------------
By:
-----------------------------------
Its: Vice President
----------------------------------
Date: September 12, 1994
---------------------------------
28
<PAGE> 32
RIDER NUMBER 1 TO LEASE
dated September 12, 1994
between New World Partners Joint Venture, as
Landlord, and Ross White Enterprises, Inc. a
Florida corporation, as Tenant
OPTION TO RENEW
A. Landlord hereby grants Tenant the option to renew (the "Renewal
Option") the initial Term (not to include, for purposes of this Rider only, any
Renewal Term(s) , as hereinafter defined) for one (1) additional term(s) of
sixty (60) months (the "Renewal Term"), commencing as of the date immediately
following the expiration of the Term, such option to be subject to the
covenants and conditions hereinafter set forth in this Rider.
B. Tenant shall give Landlord written notice (the "Renewal Notice") of
Tenant's election to exercise its Renewal Option not later than one hundred
eighty (180) days prior to the expiration of the then-current term of the
Lease; provided that Tenant's failure to give the Renewal Notice by said date,
whether due to Tenant's oversight or failure to cure any existing defaults or
otherwise, shall render the Renewal Option null and void.
C. Tenant shall not be permitted to exercise any Renewal Option at any
time during which Tenant is in default under the Lease, subject to applicable
notice and grace periods (if any). If Tenant fails to cure any default under
the Lease prior to the commencement of the Renewal Term, subject to applicable
notice and grace periods, the Renewal Term shall be immediately cancelled,
unless Landlord elects to waive such default, and Tenant shall forthwith deliver
possession of the Premises to Landlord as of the expiration or earlier
termination of the then-current term of the Lease.
D. Tenant shall be deemed to have accepted the Premises in "as-is"
condition as of the commencement of the Renewal Term, subject to any other
repair and maintenance obligations of Landlord under the Lease, it being
understood and agreed that Landlord shall have no additional obligations to
renovate or remodel the Premises or any portion of the Building as a result
Tenant's renewal of the Lease.
E. The covenants and conditions of the Lease in force during the
original Term, as the same may be modified from time to time, shall continue to
be in effect during the Renewal Term(s), except as follows:
(1) The "Commencement Date" for the purposes of the Lease
shall be the first day of the Renewal Term.
(2) The Minimum Rent for the Renewal Term(s) shall be an
amount equal to the then Fair Market Value of the Premises. "Fair
Market Rental Value" of the Premises shall be an amount determined by
Landlord on the basis of the then-prevailing market rental rate for
industrial space comparable to the Premises as reflected in one or more
leases executed by Landlord with new tenants of comparable space in the
Beacon Centre within the twelve-month period immediately preceding
commencement of the Renewal Terms. If Landlord has not executed any
lease with new tenants within said twelve-month period, the new
prevailing market rental rate determination shall be based on new
leases for premises comparible to the Premises herein, as executed
within said twelve month period by owners of other industrial building
properties located in west Dade County, Florida. However, in no event
shall Minimum Rent for any year of the Renewal Term be less than the
amount of Minimum Rent for the immediate prior year.
29
<PAGE> 33
(3) Following expiration of the Renewal Term(s) as provided
herein, Tenant shall have no further right to renew or extend the
Lease.
F. Tenant's option to renew the Lease shall not be transferable by
Tenant, except in conjunction with a permissible Transfer in accordance with the
applicable provisions of the Lease.
30
<PAGE> 34
ADDENDUM (this "Addendum") TO LEASE DATED October 26, 1994
(the "Lease") BETWEEN NEW WORLD PARTNERS JOINT VENTURE
(the "Landlord") AND ROSS WHITE ENTERPRISES, INC., D/B/A
NATIONAL COMPUTER DISTRIBUTORS, INC. (the "Tenant")
1. The parties are entering into the Lease contemporaneously with the execution
of this Addendum and desire to modify the terms of the Lease as set forth in
this Addendum. Except as set forth in this Addendum, the Lease is and shall
remain in full force and effect. References to the Lease contained in the Lease,
or in any other instrument, shall be deemed to refer to the Lease as amended by
this Addendum. All capitalized terms utilized in this Addendum and not defined
in this Addendum shall have the respective meanings ascribed to such terms in
the Lease.
2. Section 17 of the Lease Summary is amended to provide that in addition to the
$20,000 security deposit called for in such Section 17, the Tenant shall also
deposit with the Landlord an additional amount of $17,304.16 which shall in all
cases be treated as a security deposit under Section 2.6 of the Lease; provided,
however, if no default has occurred by the Tenant under the Lease, then, the
Tenant's deposit shall be reduced to $20,000 and any excess returned to the
Tenant, within ten (10) days of the Tenant delivering to Landlord a certificate
from the president and chief financial officer of Tenant (in their individual
and corporate capacities) stating that as of the end of the Tenant's last fiscal
quarter, the Tenant had a "Tangible Net Worth" of not less than $6,250,000. For
purposes of this Addendum, "Tangible Net Worth" means (a) the aggregate amount
of all assets of the Tenant which should, in accordance with generally accepted
accounting principles, be classified as assets, other than goodwill, patents,
trademarks, copyrights, franchises, licenses and such other assets as are
properly classified as "intangible assets"; less (b) the aggregate amount of all
liabilities of any kind (including, without limitation, any subordinated debt or
liabilities) of the Tenant.
The parties have executed this Addendum as of October 26, 1994.
WITNESSES: THE LANDLORD:
NEW WORLD PARTNERS JOINT VENTURE, a Florida
general partnership
By: Codina/Tradewind, Ltd., a Florida
limited partnership, as general
partner
/s/ Patricia H. Blusi By: /s/
- ------------------------------- ------------------------------------
Armando Codina, President
/s/
- -------------------------------
THE TENANT:
ROSS WHITE ENTERPRISES, d/b/a National
Computer Distributors Inc. a
Florida corporation
By: /s/
- ------------------------------- --------------------------------------
Its: Vice President
----------------------------------
- -------------------------------
31
<PAGE> 35
ASSIGNMENT AND ASSUMPTION OF LEASE
KNOW ALL MEN BY THESE PRESENTS, that in consideration of the sum of
Ten and No/100 ($10.00) Dollars and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, NEW WORLD PARTNERS
JOINT VENTURE, a Florida general partnership (the "Assignor"), does hereby
assign, set over, and transfer to NEW WORLD PARTNERS JOINT VENTURE NUMBER THREE,
a Florida general partnership (the "Assignee"), all of the Assignor's right,
title, and interest in and to that certain Lease Agreement between Assignor, as
Landlord, and Ross White Enterprises, d/b/a National Computer Distributors, a
Florida corporation, as Tenant, dated September 12, 1994 (the "Lease").
By its acceptance of this Assignment, Assignee does hereby assume
and agree to perform all of the Landlord's obligations under the Lease, and
shall indemnify and hold harmless the Assignor against any claims or damages
which Assignor may sustain by reason of Assignee's acts occurring subsequent to
the date of this Assignment. Assignor shall indemnify and hold Assignee harmless
against any claims or damages which Assignee may sustain by reason of Assignor's
acts occurring prior to the date of this Assignment.
IN WITNESS WHEREOF, Assignor and Assignee have duly executed this
Assignment and Assumption of Lease as of the 28 day of November, 1994.
WITNESSES: ASSIGNOR:
NEW WORLD PARTNERS JOINT VENTURE, a
Florida general partnership
By: Codina/Tradewind, Ltd., a Florida limited
partnership, as general partner
By: Codina West Dade Development
Corp., as general partner
/s/ By: /s/
- ----------------------------- -----------------------------
/s/
- -----------------------------
ASSIGNEE:
NEW WORLD PARTNERS JOINT VENTURE NUMBER
THREE, a Florida general partnership
By: Codina/Tradewind, Ltd., a Florida
limited Partnership, as general
partner
BY: Codina West Dade Development
Corp., as general partner
/s/ By: /s/
- ----------------------------- -----------------------------
/s/
- -----------------------------
By:
<PAGE> 1
EXHIBIT 10.26
STANDARD INDUSTRIAL LEASE AGREEMENT Approximately 13,520 square feet
TRAMMELL CROW COMPANY 1746 West Crosby Road
COMMERCIAL 87 Carrollton, TX 75006
230523-02
LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into by and between VALWOOD WEST
ASSOCIATES & CIIF hereinafter referred to as "Lessor", and ROSS WHITE
ENTERPRISES INC. hereinafter referred to as "Lessee":
WITNESSETH:
1. PREMISES AND TERM. In consideration of the mutual obligations of Lessor
and Lessee set forth herein, Lessor leases to Lessee, and Lessee hereby takes
from Lessor the Premises situated within the County of Dallas, State of Texas,
more particularly described on EXHIBIT "A" attached hereto and incorporated
herein by reference, (the "Premises"), together with all rights, privileges,
easements, appurtances, and amenities belonging to or in any way pertaining to
the Premises, to have and to hold, subject to the terms, covenants and
conditions in this Lease. The term of this Lease shall commence on the
commencement date hereinafter set forth and shall end on the last day of the
month that is thirty-six (36) months after the commencement date.
A. EXISTING BUILDING. If no improvements are to be constructed to the
Premises, the commencement date shall be _______________. Lessee acknowledges
that (i) it has inspected and accepts the Premises, (ii) the buildings and
improvements comprising the same are suitable for the purpose for which the
Premises are leased, (iii) the Premises are in good and satisfactory condition,
and (iv) no representations as to the repair of the Premises, nor promises to
alter, remodel or improve the Premises have been made by Lessor (unless
otherwise expressly set forth in this Lease).
B. BUILDING TO BE CONSTRUCTED OR SHELL SPACE. If the Premises or part
thereof are to be constructed, the commencement date shall be deemed to be the
date upon which the Premises and other improvements to be erected in accordance
with the plans and specifications described on Exhibit "B" attached hereto and
incorporated herein by reference (the "Plans") have been substantially
completed. As used herein, the term "substantially completed" shall mean, that
in the opinion of the architect or space planner that prepared the Plans, such
improvements have been completed in accordance with the Plans and the Premises
are in good and satisfactory condition, subject only to completion of minor
punch list items. As soon as such improvements have been substantially
completed, Lessor shall notify Lessee in writing that the commencement date has
occurred. Within ten (10) days thereafter, Lessee shall submit to Lessor in
writing a punch list of items needing completion or correction. Lessor shall
use its best efforts to complete such items within thirty (30) days after the
receipt of such notice. In the event Lessee, its employees, agents or
contractors cause construction of such improvements to be delayed, the
commencement date shall be deemed to be the date that, in the opinion of the
architect or space planner that prepared the Plans, substantial completion
would have occurred if such delays had not taken place.
2. BASE RENT, SECURITY DEPOSIT AND ESCROW PAYMENTS
A. Lessee agrees to pay to Lessor rent for the Premises, in advance,
without demand, deduction or set off, at the rate of Four thousand seven
hundred eighty-eight & 33/100 Dollars ($4,788.33) per month during the term
hereof. One such monthly installment, plus the other monthly charges set forth
in Paragraph 2C below shall be due and payable on the date hereof and a like
monthly installment shall be due and payable on or before the first day of each
calendar month succeeding the commencement date, except that all payments due
hereunder for any fractional calendar month shall be prorated, per EXHIBIT "C",
25B SCHEDULE.
B. In addition, Lessee agrees to deposit with Lessor on the date hereof the
sum of Five Thousand Four Hundred Thirty and 41/100 Dollars ($5,430.41), which
shall be held by Lessor, without obligation for interest, as security for the
performance of Lessee's obligations under this lease, it being expressly
understood and agreed that this deposit is not an advance rental deposit or a
measure of Lessor's damages in case of Lessee's default. Upon each occurrence
of an event of default, Lessor may use all or part of the deposit to pay past
due rent or other payments due Lessor under this Lease, and the cost of any
other damage, injury, expense or liability caused by such event of default
without prejudice to any other remedy provided herein or provided by law. On
demand, Lessee shall pay Lessor the amount that will restore the security
deposit to its original amount. The security deposit shall be deemed the
property of Lessor, but any remaining balance of such deposit shall be returned
by Lessor to Lessee when Lessee's obligations under this Lease have been
fulfilled.
C. Lesse agrees to pay its proportionate share (as defined in Paragraph 22B
below) of (i) Taxes (hereinafter defined) payable by Lessor pursuant to
paragraph 3A below, (ii) the cost of utilities payable pursuant to paragraph 8
below, (iii) the cost of maintaining insurance pursuant to paragraph 9 below,
(iv) the cost of any common area charges payable by Lessee in accordance with
paragraph 4 below and (v) the cost of security provided to the Premises as set
forth in paragraph 23 below. During each month of the term of this Lease, on
the same day that rent is due hereunder, Lessee shall escrow with Lessor an
amount equal to 1/12 of the estimated annual cost of its proportionate share of
such items. Lessee authorizes Lessor to use the funds deposited with Lessor
under this Paragraph 2C to pay such costs. The initial monthly escrow payments
are based upon the estimated amounts for the year in question, and shall be
increased or decreased annually to reflect the projected actual cost of all
such items. If the Lessee's total escrow payments are less than Lessee's actual
proportionate share of all such items, Lessee shall pay the difference to
Lessor within ten (10) days after demand. If the total escrow payments of
Lessee are more than Lessee's actual proportionate share of all such items,
Lessor shall retain such excess and credit it against Lessee's next annual
escrow payments. The amount of the monthly rental and the initial monthly
escrow payments are as follows:
<TABLE>
<S> <C>
(1) Base Rent as set forth in Paragraph 2A . . . . . . . . . . . . $4,788.33
---------
(2) Tax Escrow Payment . . . . . . . . . . . . . . . . . . . . . . $ 518.27
---------
(3) Insurance Escrow Payment . . . . . . . . . . . . . . . . . . . $ 22.53
---------
(4) Utility Charge . . . . . . . . . . . . . . . . . . . . . . . . $ 36.88
---------
(5) Common Area Charge (Maintainance). . . . . . . . . . . . . . . $ 31.60
---------
(6) Security Services. . . . . . . . . . . . . . . . . . . . . . . $ 0.00
---------
(7) Other (Landscaping). . . . . . . . . . . . . . . . . . . . . . $ 32.80
---------
Monthly Payment Total. . . . . . . . . . . . . . . . . . . . $5,430.41
=========
</TABLE>
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<PAGE> 2
3. TAXES.
A. Lessor agrees to pay all taxes, assessments and governmental charges of
any kind and nature (collectively referred to herein as "Taxes"), that accrue
against the Premises, and/or the land and/or improvements of which the Premises
are a part. If at any time during the term of this Lease, there shall be
levied, assessed or imposed on Lessor a capital levy or other tax directly on
the rents received therefrom and/or a franchise tax, assessment, levy or
charge measured by or based, in whole or in part, upon such rents from the
Premises and/or the land and improvements of which the Premises are a part,
then all such taxes, assessments, levies or charges, or the part, thereof so
measured or based, shall be deemed to be included within the term "Taxes" for
the purposes hereof. The Lessor shall have the right to employ a tax consulting
firm to attempt to assure a fair tax burden on the building and grounds within
the applicable taxing jurisdiction. Lessee agrees to pay its proportionate
share of the cost of such consultant.
B. Lessee shall be liable for all taxes levied or assessed against any
personal property or fixtures placed in the Premises. If any such taxes are
levied or assessed against Lessor or Lessor's property and (i) Lessor pays the
same or (ii) the assessed value of Lessor's property is increased by inclusion
of such personal property and fixtures and Lessor pays the increased taxes,
then, upon demand Lessee shall pay to Lessor such taxes.
4. LESSOR'S REPAIRS.
A. Lessor, at its own cost and expense, shall maintain the roof,
foundation and the structural soundness of the exterior walls of the building
of which the Premises are a part in good repair, reasonable wear and tear
excluded. The term "walls" as used herein shall not include windows, glass or
plate glass, doors, special store fronts or office entries. Lessee shall
immediately give Lessor written notice of defect or need for repairs, after
which Lessor shall have reasonable opportunity to repair same or cure such
defect.
B. Lessor reserves the right to perform the paving, common area and
landscape replacement and maintenance, exterior painting, common sewage line
plumbing and any other items that are otherwise Lessee's obligations under
Paragraph 5A, in which event, Lessee shall be liable for its proportionate
share of the cost and expense of such repair, replacement, maintenance and
other such items.
C. Lessee agrees to pay its proportionate share of the cost of (i)
maintenance and/or landscaping of any property that is a part of the building
and/or project of which the Premises are a part, (ii) maintenance and/or
landscaping of any property that is maintained or landscaped by any property
owner or community owner association that is named in the restrictive covenants
or deed restrictions to which the Premises are subject, and (iii) operating and
maintaining any property, facilities or services provided for the common use of
Lessee and other lessees of any project or building of which the Premises are a
part.
5. LESSEE'S REPAIRS.
A. Lessee, at its own cost and expense, shall (i) maintain all parts of the
Premises, landscape and grounds surrounding the Premises (except those for
which Lessor is expressly responsible hereunder) in good condition, (ii)
promptly make all necessary repairs and replacements, (iii) keep the parking
areas, driveways and alleys surrounding the Premises in a clean and sanitary
condition, and (iv) maintain any spur track servicing the Premises. Lessee
agrees to sign a joint maintenance agreement with the railroad company
servicing the Premises if requested by the railroad company. Lessor shall have
the right to coordinate all repairs and maintenance of any rail tracks serving
or intended to serve the Premises and, if Lessee uses such rail tracks, Lessee
shall reimburse Lessor from time to time, upon demand, for its proportionate
share of the costs of such repairs and maintenance and any other sums specified
in any agreement respecting such tracks to which Lessor is a party.
B. Lessee and its employees, customers and licensees shall have the
exclusive rights to use any parking areas that have been designated for such
use by Lessor in writing, subject to (i) all rules and regulations promulgated
by Lessor and (ii) rights of ingress and egress of other lessees. Lessor shall
not be responsible for enforcing Lessee's parking rights against any third
parties. Lessee agrees not to use more spaces than so provided.
C. Lessee, at its own cost and expense, shall enter into a regularly
scheduled preventive maintenance/service contract with a maintenance contractor
approved by Lessor for servicing all hot water, heating and air conditioning
systems and equipment within the Premises. The service contract must include
all services suggested by the equipment manufacturer in its
operations/maintenance manual and must become effective within thirty (30) days
of the date Lessee takes possession of the Premises.
6. ALTERATIONS. Lessee shall not make any alterations, additions or
improvements to the Premises without the prior written consent of Lessor.
Lessee, at its own cost and expense, may erect such shelves, bins, machinery
and trade fixtures as it desires provided that (a) such items do not alter the
basic character of the Premises or the building and/or improvements of which
the Premises are a part; (b) such items do not overload or damage the same; (c)
such items may be removed without injury to the Premises; and (d) the
construction, erection or installation thereof complies with all applicable
governmental laws, ordinances, regulations and with Lessor's specifications and
requirements. All alterations, additions, improvements and partitions erected
by Lessee shall be and remain the property of Lessee during the term of this
Lease. All shelves, bins, machinery and trade fixtures installed by Lessee
shall be removed on or before the earlier to occur of the date of termination
of this Lease or vacating the Premises, at which time Lessee shall restore the
Premises to their original condition. All alterations, installations, removals
and restoration shall be performed in a good and workmanlike manner so as not to
damage or alter the primary structure or structural qualities of the buildings
and other improvements situated on the Premises or of which the Premises are a
part.
7. SIGNS. Any signage Lessee desires for the Premises shall be subject to
Lessor's written approval and shall be submitted to Lessor prior to the
commencement date of this Lease. Lessee shall repair, paint, and/or replace the
building facia surface to which its signs are attached upon vacation of the
Premises, or the removal or alteration of its signage. Lessee shall not, (i)
make any changes to the exterior of the Premises, (ii) install any exterior
lights, decorations, balloons, flags, pennants, banners or painting, or (iii)
erect or install any signs, windows or door lettering, placards, decorations or
advertising media of any type which can be viewed from the exterior of the
Premises, without Lessor's prior written consent. All signs, decorations,
advertising media, blinds, draperies and other window treatment or bars or
other security installations visible from outside the Premises shall conform in
all respects to the criteria established by Lessor.
8. UTILITIES. Lessor agrees to provide normal water and electricity service
to the Premises. Lessee shall pay for all water, gas, heat, light, power,
telephone, sewer, sprinkler charges and other utilities and services used on or
at the Premises, together with any taxes, penalties, surcharges or the like
pertaining to the Lessee's use of the Premises, and any maintenance charges for
utilities. Lessor shall have the right to cause any of said services to be
separately metered to Lessee, at Lessee's expense. Lessee shall pay its pro
rata share, as reasonably determined by Lessor, of all charges for jointly
metered utilities. Lessor shall not be liable for any interruption or failure
of utility service on the Premises.
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<PAGE> 3
9. INSURANCE
A. Lessor shall maintain insurance covering the buildings situated on the
Premises or of which the Premises are a part in an amount not less than eighty
percent (80%) of the "replacement cost" thereof insuring against the perils of
Fire, Lightning, Extended Coverage, Vandalism and Malicious Mischief.
B. Lessee, at its own expense, shall maintain during the term of this
Lease a policy or policies of worker's compensation and comprehensive general
liability insurance, including personal injury and property damage, with
contractual liability endorsement, in the amount of Five Hundred Thousand
Dollars ($500,000.00) for property damage and One Million Dollars
($1,000,000.00) per occurrence for personal injuries or deaths of persons
occurring in or about the Premises. Lessee, at its own expense, also shall
maintain during the term of this Lease, fire and extended coverage insurance
covering the replacement cost of (i) all alterations, additions, partitions and
improvements installed or placed on the Premises by Lessee or by Lessor on
behalf of Lessee and (ii) all of Lessee's personal property contained within
the Premises. Said policies shall (i) name Lessor as an additional insured and
insure Lessor's contingent liability under this Lease (except for the worker's
compensation policy, which instead shall include waiver of subrogation
endorsement in favor of Lessor), (ii) be issued by an insurance company which
is acceptable to Lessor, and (iii) provide that said insurance shall not be
cancelled unless thirty (30) days prior written notice shall have been given to
Lessor. Said policy or policies or certificates thereof shall be delivered to
Lessor by Lessee upon commencement of the term of the Lease and upon each
renewal of said insurance.
C. Lessee will not permit the Premises to be used for any purpose or in
any manner that would (i) void the insurance thereon, (ii) increase the
insurance risk, or (iii) cause the disallowance of any sprinkler credits,
including without limitation, use of the Premises for the receipt, storage or
handling of any product, material or merchandise that is explosive or highly
inflammable. If any increase in the cost of any insurance on the Premises or
the building of which the Premises are a part is caused by Lessee's use of the
Premises, or because Lessee vacates the Premises, then Lessee shall pay the
amount of such increase to Lessor.
10. FIRE AND CASUALTY DAMAGE
A. If the Premises or the building of which the Premises are a part should
be damaged or destroyed by fire or other peril, Lessee immediately shall give
written notice to Lessor. If the buildings situated upon the Premises or of
which the Premises are a part should be totally destroyed by any peril covered
by the insurance to be provided by Lessor under Paragraph 9A above, or if they
should be so damaged thereby that, in Lessor's estimation, rebuilding or
repairs cannot be completed within one hundred eighty (180) days after the date
of such damage, this Lease shall terminate and the rent shall be abated during
the unexpired portion of this Lease, effective upon the date of the occurrence
of such damage.
B. If the buildings situated upon the Premises or of which the
Premises are a part, should be damaged by any peril covered by the insurance to
be provided by Lessor under Paragraph 9A above, and in Lessor's estimation,
rebuilding or repairs can be substantially completed within one hundred eighty
(180) days after the date of such damage, this Lease shall not terminate, and
Lessor shall restore the Premises to substantially its previous condition,
except that Lessor shall not be required to rebuild, repair or replace any part
of the partitions, fixtures, additions and other improvements that may have
been constructed, erected or installed in, or about the Premises or for the
benefit of, or by or for Lessee. If such repairs and rebuilding have not been
substantially completed within one hundred eighty (180) days after the date of
such damage, Lessee as Lessee's exclusive remedy, may terminate this Lease by
delivering written notice of termination to Lessor in which event the rights
and obligations hereunder shall cease and terminate.
C. Notwithstanding anything herein to the contrary, in the event the
holder of any indebtedness secured by a mortgage or deed of trust covering the
Premises requires that the insurance proceeds be applied to such indebtedness,
then Lessor shall have the right to terminate this Lease by delivering written
notice of termination to Lessee within fifteen (15) days after such requirement
is made known by any such holder, whereupon all rights and obligations
hereunder shall cease and terminate.
D. Anything in this Lease to the contrary notwithstanding, Lessor and
Lessee hereby waive and release each other of and from any and all rights of
recovery, claim, action or cause of action, against each other, their agents,
officers and employees, for any loss or damage that may occur to the Premises,
improvements to the building of which the Premises are a part, or personal
property (building contents) within the building and/or Premises, for any
reason regardless of cause or origin. Each party to this Lease agrees
immediately after execution of this Lease to give each insurance company, which
has issued to it policies of fire and extended coverage insurance, written
notice of the terms of the mutual waivers contained in this subparagraph, and
if necessary, to have the insurance policies properly endorsed.
11. LIABILITY AND INDEMNIFICATION. Except for any claims, rights of
recovery and causes of action that Lessee has released, Lessor shall hold
Lessee harmless and defend Lessee against any and all claims or liability for
any injury or damage to any person in, on or about the Premises or any part
thereof and/or the building of which the Premises are a part, when such injury
or damage shall be caused by the act, neglect, fault of, or omission of any
duty with respect to the same by Lessor, its agents, servants and employees.
Except for any claims, rights of recovery and causes of action that Lessor has
released, Lessee shall hold Lessor harmless from and defend Lessor against any
and all claims or liability for any injury or damage (i) to any person or
property whatsoever occurring in, on or about the Premises or any part thereof
and/or of the building of which the Premises are a part, including without
limitation elevators, stairways, passageways or hallways, the use of which
Lessee may have in accordance with this Lease, when such injury or damage shall
be caused by the act, neglect, fault of, or omission of any duty with respect
to the same by Lessee, its agents, servants, employees, or invitees (ii)
arising from the conduct of management of any work done by the Lessee in or
about the Premises, (iii) arising from transactions of the Lessee, and (iv) all
costs, counsel fees, expenses and liabilities incurred in connection with any
such claim or action or proceeding brought thereon. The provisions of this
Paragraph 11 shall survive the expiration or termination of this Lease with
respect to any claims or liability occurring prior to such expiration or
termination.
12. USE. The Premises shall be used only for the purpose of receiving,
storing, shipping and selling (other than retail) products, materials and
merchandise made and/or distributed by Lessee and for such other lawful
purposes as may be incidental thereto. Outside storage, including without
limitation, storage of trucks and other vehicles, is prohibited without
Lessor's prior written consent. Lessee shall comply with all governmental
laws, ordinances and regulations applicable to the use of the Premises, and
promptly shall comply with all governmental orders and directives for the
correction, prevention and abatement of nuisances in or upon, or connected
with, the Premises, all at Lessee's sole expense. Lessee shall not permit any
objectionable or unpleasant odors, smoke, dust, gas, noise or vibrations to
emanate from the Premises, nor take any other action that would constitute a
nuisance or would disturb, unreasonably interfere with, or endanger Lessor or
any other lessees of the building in which the Premises are a part.
13. INSPECTION. Lessor and Lessor's agents and representatives shall
have the right to enter the Premises at any reasonable time during business
hours, to inspect the Premises and to make such repairs as may be required or
permitted pursuant to this Lease. During the period that is six (6) months
prior to the end of the Lease term, upon telephonic notice to Lessee, Lessor
and Lessor's representatives may enter the Premises during business hours for
the purpose of showing the Premises. In addition, Lessor shall have the right
to erect a suitable sign on the Premises stating the Premises are available.
Lessee shall notify Lessor in writing at least thirty (30) days prior to
vacating the Premises and shall arrange to meet with Lessor for a joint
inspection of the Premises prior to
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<PAGE> 4
vacating. If Lessee fails to give such notice or to arrange for such
inspection, then Lessor's inspection of the Premises shall be deemed correct for
the purpose of determining Lessee's responsibility for repairs and restoration
of the Premises.
14. ASSIGNMENT AND SUBLETTING.
A. Lessee shall not have the right to assign, sublet, transfer or
encumber this Lease, or any interest therein, without the prior written consent
of Lessor. Any attempted assignment, subletting, transfer or encumbrance by
Lessee in violation of the terms and covenants of this Paragraph shall be void.
Notwithstanding the foregoing, Lessee shall have the right to assign this Lease
to any affiliate (as such term is defined in the Securities Act of 1933)
provided that such assignment is in form satisfactory to Lessor. Any assignee,
sublessee or transferee of Lessee's interest in this Lease (all of such
assignees, sublessees and transferees being hereinafter referred to as
"Transferees"), by assuming Lessee's obligations hereunder, shall assume
liability to Lessor for all amounts paid to persons other than Lessor by such
Transferees in contravention of this Paragraph. No assignment, subletting or
other transfer, whether consented to by Lessor or not or permitted hereunder
shall relieve Lessee of its liability hereunder. If an event of default occurs
while the Premises or any part thereof are assigned or sublet, then Lessor, in
addition to any other remedies herein provided, or provided by law, may collect
directly from such Transferee all rents payable to the Lessee and apply such
rent against any sums due Lessor hereunder. No such collection shall be
construed to constitute a novation or a release of Lessee from the further
performance of Lessee's obligations hereunder.
B. If this Lease is assigned to any person or entity pursuant to
the provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et. seq., (the
"Bankruptcy Code"), any and all monies or other consideration payable or
otherwise to be delivered in connection with such assignment shall be paid or
delivered to Lessor, shall be and remain the exclusive property of Lessor and
shall not constitute property of Lessee or of the estate of Lessee within the
meaning of the Bankruptcy Code. Any and all monies or other considerations
constituting Lessor's property under the preceding sentence not paid or
delivered to Lessor shall be held in trust for the benefit of Lessor and be
promptly paid or delivered to Lessor.
C. Any person or entity to which this Lease is assigned pursuant to the
provisions of the Bankruptcy Code, shall be deemed, without further act or
deed, to have assumed all of the obligations arising under this Lease on and
after the date of such assignment. Any such assignee shall upon demand execute
and deliver to Lessor an instrument confirming such assumption.
15. CONDEMNATION. If more than eighty percent (80%) of the Premises
are taken for any public or quasi-public use under governmental law, ordinance
or regulation, or by right of eminent domain, or by private purchase in lieu
thereof and the taking prevents or materially interferes with the use of the
Premises for the purpose for which they were leased to Lessee, this Lease
shall terminate and the rent shall be abated during the unexpired portion of
this Lease, effective on the date of such taking. If less than eighty percent
(80%) of the Premises are taken for any public or quasi-public use under any
governmental law, ordinance or regulation, or by right of eminent domain, or by
private purchase in lieu thereof, this Lease shall not terminate, but the rent
payable hereunder during the unexpired portion of this Lease shall be reduced to
such extent as may be fair and reasonable under all of the circumstances. All
compensation awarded in connection with or as a result of any of the foregoing
proceedings shall be the property of Lessor and Lessee hereby assigns any
interest in any such award to Lessor; provided, however, Lessor shall have no
interest in any award made to Lessee for loss of business or goodwill or for
the taking of Lessee's fixtures and improvements, if a separate award for such
items is made to Lessee.
16. HOLDING OVER. At the termination of this Lease by its expiration or
otherwise, Lessee immediately shall deliver possession to Lessor with all
repairs and maintenance required herein to be performed by Lessee completed.
If, for any reason, Lessee retains possession of the Premises after the
expiration or termination of this Lease, unless the parties hereto otherwise
agree in writing, such possession shall be subject to termination by either
Lessor or Lessee at any time upon not less than ten (10) days advance written
notice, and all of the other terms and provisions of this Lease shall be
applicable during such period, except that Lessee shall pay Lessor from time to
time, upon demand, as rental for the period of such possession, an amount equal
to double the rent in effect on the termination date, computed on a daily basis
for each day of such period. No holding over by Lessee, whether with or without
consent of Lessor shall operate to extend this Lease except as otherwise
expressly provided. The preceding provisions of this Paragraph 16 shall not be
construed as consent for Lessee to retain possession of the Premises in the
absence of written consent thereto by Lessor.
17. QUIET ENJOYMENT. Lessor covenants that on or before the commencement
date it will have good title to the Premises, free and clear of all liens and
encumbrances, excepting only the lien for current taxes not yet due, such
mortgage or mortgages as are permitted by the terms of this Lease, zoning
ordinances and other building and fire ordinances and governmental regulations
relating to the use of such property, and easements, restrictions and other
conditions of record. If this Lease is a sublease, then Lessee agrees to take
the Premises subject to the provisions of the prior Leases. Lessor represents
that it has the authority to enter into this Lease and that so long as Lessee
pays all amounts due hereunder and performs all other covenants and agreements
herein set forth, Lessee shall peaceably and quietly have, hold and enjoy the
Premises for the term hereof without hindrance or molestation from Lessor,
subject to the terms and provisions of this Lease.
18. EVENTS OF DEFAULT. The following events (herein individually referred
to as "event of default") each shall be deemed to be events of nonperformance by
Lessee under this Lease:
A. Lessee shall fail to pay any installment of the rent herein
reserved when due, or any other payment or reimbursement to Lessor required
herein when due, and such failure shall continue for a period of five (5)
days from the date such payment was due.
B. The Lessee or any guarantor of the Lessee's obligations hereunder
shall (i) become insolvent; (ii) admit in writing its inability to pay its
debts; (iii) make a general assignment for the benefit of creditors; (iv)
commence any case, proceeding or other action seeking to have an order for
relief entered on its behalf as a debtor or to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors or seeking
appointment of a receiver, trustee, custodian or other similar official for
it or for all or of any substantial part of its property; or (v) take any
action to authorize or in contemplation of any of the actions set forth
above in this Paragraph.
C. Any case, proceeding or other action against the Lessee or any
guarantor of the Lessee's obligations hereunder shall be commenced seeking
(i) to have an order for relief entered against it as debtor or to
adjudicate it a bankrupt or insolvent; (ii) reorganization, arrangement,
adjustment, liquidation, dissolution or composition of it or its debts
under any law relating to bankruptcy, insolvency, reorganization or relief
of debtors; (iii) appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its property,
and such case, proceeding or other action (a) results in the entry of an
order for relief against it which it is not fully stayed within seven (7)
business days after the entry thereof or (b) shall remain undismissed for a
period of forty-five (45) days.
D. Lessee shall (i) vacate all or a substantial portion of the
Premises or (ii) fail to continuously operate its business at the
Premises for the permitted use set forth herein, whether or not Lessee is
in default of the rental payments due under this Lease.
E. Lessee shall fail to discharge any lien placed upon the Premises
in violation of Paragraph 21 hereof within twenty (20) days after any such
lien or encumbrance is filed against the Premises.
4
<PAGE> 5
F. Lessee shall fail to comply with any term, provision or covenant
of this Lease (other than those listed in this Paragraph 18), and shall not
cure such failure within twenty (20) days after written notice thereof to
Lessee.
19. REMEDIES.
A. Upon each occurrence of an event of default, Lessor shall have the
option to pursue any one or more of the following remedies without any notice
or demand:
(1) Terminate this Lease; and/or
(2) Enter upon and take possession of the Premises without
terminating this Lease; and/or
(3) Alter all locks and other security devices at the Premises with
or without terminating this Lease, and pursue, at Lessor's option, one or
more remedies pursuant to this Lease Lessee hereby specifically waiving any
state or federal law to the contrary;
and in any such event Lessee immediately shall surrender the Premises to
Lessor, and if Lessee fails so to do, Lessor, without waiving any other remedy
it may have, may enter upon and take possession of the Premises and expel or
remove Lessee and any other person who may be occupying such Premises or any
part thereof, without being liable for prosecution or any claim of damages
therefor.
B. If Lessor terminates this Lease, at Lessor's option, Lessor shall be
liable for and shall pay to Lessor, the sum of all rental and other payments
owed to Lessor hereunder accrued to the date of such termination, plus, as
liquidated damages, an amount equal to (1) the present value of the total
rental and other payments owed hereunder for the remaining portion of the Lease
term, calculated as if such term expired on the date set forth in Paragraph 1,
less (2) the then present fair market value of the Premises for such period,
which because of the difficulty of ascertaining such value, Lessor and Lessee
stipulate and agree, shall in no event be deemed to exceed seventy-five percent
(75%) of the rental amount set forth in Paragraph 2 above.
C. If Lessor repossesses the Premises without terminating the Lease,
Lessee, at Lessor's option, shall be liable for and shall pay Lessor on demand
all rental and other payments owed to Lessor hereunder, accrued to the date of
such repossession, plus all amounts required to be paid by Lessee to Lessor
until the date of expiration of the term as stated in Paragraph 1, diminished by
all amounts received by Lessor through reletting the Premises during such
remaining term (but only to the extent of the rent herein reserved). Actions
to collect amounts due by Lessee to Lessor under this subparagraph may be
brought from time to time, on one or more occasions, without the necessity of
Lessor's waiting until expiration of the Lease term.
D. Upon an event of default, in addition to any sum provided to be paid
herein, Lessee also shall be liable for and shall pay to Lessor (i) brokers[
fees incurred by Lessor in connection with reletting the whole or any part of
the Premises; (ii) the costs of removing and storing Lessee's or other
occupant's property; (iii) the costs of repairing, altering, remodeling or
otherwise putting the Premises into condition acceptable to a new Lessee or
Lessees; and (iv) all reasonable expenses incurred by Lessor in enforcing or
defending Lessor's rights and/or remedies. If either party hereto institute
any action or proceeding to enforce any provision hereof by reason of any
alleged breach of any provision of this Lease, the prevailing party shall be
entitled to receive from the losing party all reasonable attorney's fees and
all court costs in connection with such proceeding.
E. In the event Lessee fails to make any payment due hereunder when
payment is due, to help defray the additional cost to Lessor for processing
such late payments, Lessee shall pay to Lessor on demand a late charge in an
amount equal to five percent (5%) of such installment; and the failure to pay
such amount within ten (10) days after demand therefor shall be an additional
event of default hereunder. The provision for such late charge shall be in
addition to all of Lessor's other rights and remedies hereunder or at law and
shall not be construed as liquidated damages or as limiting Lessor's remedies
in any manner.
F. Exercise by Lessor of any one or more remedies hereunder granted or
otherwise available shall not be deemed to be an acceptance of surrender of the
Premises by Lessor, whether by agreement or by operation of law, it being
understood that such surrender can be effected only by the written agreement of
Lessor and Lessee. Lessee and Lessor further agree that forbearance by Lessor
to enforce its rights pursuant to the Lease at law or in equity, shall not be
waiver of Lessor's right to enforce one or more of its rights in connection
with any subsequent default.
G. In the event of termination and/or repossession of the Premises for an
event of default, Lessor shall use reasonable efforts to relet the Premises and
to collect rental after reletting; provided, that, Lessee shall not be entitled
to credit or reimbursement of any proceeds in excess of the rental owed
hereunder. Lessor may relet the whole or any portion of the Premises for any
period, to any Lessee and for any use and purpose.
H. If Lessor fails to perform any of its obligations hereunder within
thirty (30) days after written notice from Lessee specifying such failure,
Lessee's exclusive remedy shall be an action for damages. Unless and until
Lessor fails to so cure any default after such notice, Lessee shall not have
any remedy or cause of action by reason thereof. All obligations of Lessor
hereunder will be construed as covenants, not conditions; and all such
obligations will be binding upon Lessor only during the period of its
possession of the Premises and not thereafter. The term "Lessor" shall mean
only the owner, for the time being of the Premises, and in the event of the
transfer by such owner of its interest in the Premises, such owner shall
thereupon be released and discharged from all covenants and obligations of the
Lessor thereafter accruing, but such covenants and obligations shall be binding
during the Lease term upon each new owner for the duration of such owner's
ownership. Notwithstanding any other provision hereof, Lessor shall not have
any personal liability hereunder. In the event of any breach or default by
Lessor in any term or provision of this Lease, Lessee agrees to look solely to
the equity or interest then owned by Lessor in the Premises or of the building
of which the Premises are a part; however, in no event, shall any deficiency
judgment or any money judgment of any kind be sought or obtained against any
Lessor.
I. If Lessor repossesses the Premises pursuant to the authority herein
granted, then Lessor shall have the right to (i) keep in place and use or (ii)
remove and store all of the furniture, fixtures and equipment at the Premises,
including that which is owned by or leased to Lessee at all times prior to any
foreclosure thereon by Lessor or repossession thereof by any Lessor thereof or
a third party having a lien thereon. Lessor also shall have the right to
relinquish possession of all or any portion of such furniture, fixtures,
equipment and other property to any person ("Claimant") who presents to Lessor
a copy of any instrument represented by Claimant to have been executed by
Lessee (or any predecessor of Lessee) granting Claimant the right under various
circumstances to take possession of such furniture, fixtures, equipment or
other property, without the necessity on the part of Lessor to inquire in to
the authenticity or legality of said instrument. The rights of Lessor herein
stated shall be in addition to any and all other rights that Lessor has or may
hereafter have at law or in equity; and Lessee stipulates and agrees that the
rights herein granted Lessor are commercially reasonable.
J. Notwithstanding anything in this Lease to the contrary, all amounts
payable by Lessee to or on behalf of Lessor under this Lease, whether or not
expressly denominated as rent, shall constitute rent.
K. This is a contract under which applicable law excuses Lessor from
accepting performance from (or rendering performance to) any person or entity
other than Lessee.
20. MORTGAGES. Lessee accepts this Lease subject and subordinate to any
mortgages and/or deeds of trust now or at any time hereafter constituting a
lien or charge upon the Premises or the improvements situated thereon or the
building of which the Premises are a part, provided, however, that if the
mortgagee, trustee, or holder of any such mortgage or deed of trust elects to
have Lessee's interest in this Lease superior to any such instrument, then by
notice to Lessee from such mortgagee, trustee or holder, this Lease shall be
deemed superior to such lien, whether this Lease was executed before or after
said mortgage or deed of trust. Lessee, at any time
5
<PAGE> 6
hereafter on demand, shall execute any instruments, releases or other documents
that may be required by any mortgagee for the purpose of subjecting and
subordinating this Lease to the lien on any such mortgage.
21. MECHANIC'S LIENS. Lessee has no authority, express or implied, to
create or place any lien or encumbrance of any kind or nature whatsoever upon,
or in any manner to bind the interest of Lessor or Lessee in the Premises or to
charge the rentals payable hereunder for any claim in favor of any person
dealing with Lessee, including those who may furnish materials or perform labor
for any construction or repairs. Lessee covenants and agrees that it will pay
or cause to be paid all sums legally due and payable by it on account of any
labor performed or materials furnished in connection with any work performed on
the Premises and that it will save and hold Lessor harmless from any and all
loss, cost or expense based on or arising out of asserted claims or liens
against the leasehold estate or against the right, title and interest of the
Lessor in the Premises or under the terms of this Lease. Lessee agrees to give
Lessor immediate written notice of the placing of any lien or encumbrance
against the Premises.
22. MISCELLANEOUS.
A. Words of any gender used in this Lease shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires. the captions
inserted in this Lease are for convenience only and in no way define, limit or
otherwise describe the scope or intent of this Lease, or any provision hereof,
or in any way affect the interpretation of this Lease.
B. In the event the Premises constitute a portion of a multiple occupancy
building, Lessee's "proportionate share", as used in this Lease, shall mean a
fraction, the numerator of which is the space contained in the Premises and the
denominator of which is the entire space contained in the building.
C. The terms, provisions and covenants and conditions contained in this
Lease shall run with the land and shall apply to, inure to the benefit of, and
be binding upon, the parties hereto and upon their respective heirs, executors,
personal representatives, successors and assigns, except as otherwise herein
expressly provided. Lessor shall have the right to transfer and assign, in
whole or in part, its rights and obligations in the building and property that
are the subject of this Lease. Each party agrees to furnish to the other,
promptly upon demand, a corporate resolution, proof of due authorization by
partners, or other appropriate documentation evidencing the due authorization
of such party to enter into this Lease.
D. Lessor shall not be held responsible for delays in the performance of
its obligations hereunder when caused by material shortages, acts of God or
labor disputes.
E. Lessee agrees, from time to time, within ten (10) days after request
of Lessor, to deliver to Lessor, or Lessor's designee, a Certificate of
Occupancy and an estoppel certificate saying that this Lease is in full force
and effect, the date to which rent has been paid, the unexpired term of this
Lease and such other factual matters pertaining to this Lease as may be
requested by Lessor. It is understood and agreed that Lessee's obligation to
furnish such estoppel certificates in a timely fashion is a material inducement
for Lessor's execution of this Lease.
F. This Lease constitutes the entire understanding and agreement of the
Lessor and Lessee with respect to the subject matter of this Lease, and
contains all of the covenants and agreements of Lessor and Lessee with respect
thereto. Lessor and Lessee each acknowledge that no representations,
inducements, promisees or agreements, oral or written, have been made by Lessor
or Lessee, or anyone acting on behalf of Lessor or Lessee, which are not
contained herein, and any prior agreements, promises, negotiations, or
representations not expressly set forth in this Lease are of no force or effect.
This Lease may not be altered, changed or amended except by an instrument in
writing signed by both parties hereto.
G. All obligations of Lessee hereunder not fully performed as of the
expiration or earlier termination of the term of this Lease shall survive the
expiration or earlier termination of the term hereof, including without
limitation, all payment obligations with respect to taxes and insurance and all
obligations concerning the condition and repair of the Premises. Upon the
expiration or earlier termination of the term hereof, and prior to Lessee
vacating the Premises, Lessee shall pay to Lessor any amount reasonably
estimated by Lessor as necessary to put the Premises, including without
limitations, all heating and air conditioning systems and equipment therein, in
good condition and repair, reasonable wear and tear excluded. Lessee shall
also, prior to vacating the Premises, pay to Lessor the amount, as estimated by
Lessor, of Lessee's obligation hereunder for real estate taxes and insurance
premiums for the year in which the Lease expires or terminates. All such
amounts shall be used and held by Lessor for payment of such obligations of
Lessee hereunder, with Lessee being liable for any additional costs therefor
upon demand by Lessor, or with any excess to be returned to Lessee after all
such obligations have been determined and satisfied as the case may be. Any
security deposit held by Lessor shall be credited against the amount due from
Lessee under this Paragraph 22G.
H. If any clause or provision of this Lease is illegal, invalid or
unenforceable under present or future laws effective during the term of this
Lease, then and in that event, it is the intention of the parties hereto that
the remainder of this Lease shall not be affected thereby, and it is also the
intention of the parties to this Lease that in lieu of each clause or provision
of this Lease that is illegal, invalid or unenforceable, there be added, as a
part of this Lease, a clause or provision as similar in terms to such illegal,
invalid or unenforceable clause or provision as may be possible and be legal,
valid and enforceable.
I. All references in this Lease to "the date hereof" or similar references
shall be deemed to refer to the last date, in point of time, on which all
parties hereto have executed this Lease.
J. Lessee represents and warrants that it has dealt with no broker, agent
or other person in connection with this transaction or that no broker, agent or
other person brought about this transaction, other than as may be referenced in
a separate written agreement executed by Lessee, and delivered to Lessor, and
Lessee agrees to indemnify and hold Lessor harmless from and against any claims
by any other broker, agent or other person claiming a commission or other form
of compensation by virtue of having dealt with Lessee with regard to this
leasing transaction.
K. If and when included within the term "Lessor", as used in this
instrument, there is more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of a notice
specifying some individual at some specific address for the receipt of notices
and payments to Lessor. If and when included within the term "Lessee", as used
in this instrument, there is more than one person, firm or corporation, all
shall jointly arrange among themselves for their joint execution of a notice
specifying some individual at some specific address within the continental
United States for the receipt of notices and payments to Lessee. All parties
included within the terms "Lessor" and "Lessee", respectively shall be bound by
notices given in accordance with the provisions of Paragraph 25 hereof to the
same effect as if each had received such notice.
24. NOTICES. Each provision of this instrument or of any applicable
governmental laws, ordinances, regulations and other requirements with reference
to the sending, mailing or delivering of notice or the making of any payment by
Lessor to Lessee or with reference to the sending, mailing or delivering of any
notice or the
6
<PAGE> 7
making of any payment by Lessee to Lessor shall be deemed to be complied with
when and if the following steps are taken:
(a) All rent and other payments required to be made by Lessee to
Lessor hereunder shall be payable to Lessor at the address for Lessor set
forth below or at such other address as Lessor may specify from time to
time by written notice delivered in accordance herewith. Lessee's
obligation to pay rent and any other amounts to Lessor under the terms of
this Lease shall not be deemed satisfied until such rent and other amounts
have been actually received by Lessor. In addition to base rental due
hereunder, all sums of money and all payments due Lessor hereunder shall
be deemed to be additional rent owed to Lessor.
(b) All payments required to be made by Lessor to Lessee hereunder
shall be payable to Lessee at the address set forth below, or at such other
address within the continental United States as Lessee may specify from
time to time by written notice delivered in accordance herewith.
(c) Any written notice or document required or permitted to be
delivered hereunder shall be deemed to be delivered whether actually
received or not when deposited in the United States Mail, postage prepaid,
Certified or Registered Mail, addressed to the parties hereto at the
respective addresses set out below, or at such other address as they have
theretofore specified by written notice delivered in accordance herewith.
25. ADDITIONAL PROVISIONS. See Exhibit "C" attached hereto and
incorporated by reference herein.
26. LESSOR'S LIEN. In addition to any statutory lien for rent in
Lessor's favor, Lessor shall have and Lessee hereby grants to Lessor a
continuing security interest for all rentals and other sums of money become due
hereunder from Lessee, upon all goods, wares, equipment, fixtures, furniture,
inventory, and other personal property of Lessee now or hereafter situated at
1746 West Crosby, and such property shall not be removed therefrom without the
consent of Lessor until all arrearages in rent as well as any and all other
sums of money then due to Lessor hereunder shall first have been paid and
discharged. In the event any of the foregoing described property is removed
from the Premises in violation of the covenant in the preceding sentence, the
security interest shall continue in such property and all proceeds and
products, regardless of location. Upon a default hereunder by Lessee in
addition to all other rights and remedies, Lessor shall have all rights and
remedies under the Uniform Commercial Code, including without limitation, the
right to sell the property described in this Paragraph at public or private
sale upon five (5) days notice by Lessor. Lessee hereby agrees to execute such
other instruments, necessary or desirable under applicable law to perfect the
security interest hereby created. Lessor and Lessee agree that this Lease and
security agreement serves as a financing statement and that a copy,
photographic or other reproduction of this portion of the Lease may be filed of
record by Lessor and have the same force and effect as the original. This
security agreement and financing statement also covers fixtures located at the
premises subject to this Lease and legally described in Exhibit "A" attached
hereto and incorporated herein by reference and is to be filed for record in
the real estate records. The record owner of this property is VALWOOD WEST
ASSOCIATES.
EXECUTED BY LESSOR, this day of , 19 .
Attest/Witness VALWOOD WEST ASSOCIATES
By: Valwest Partners Ltd.
By: TCC North Dallas Div. #1, Inc.
- ----------------------------------- By
--------------------------------------
Title: John M. Walsh, III, President
-----------------------------
BY: CIIF ASSOCIATES
A Massachusetts General Partnership
By: Copley Advisors, Inc., Managing
General Partner
By:
-------------------------------------
William J. Salisbury
Title: Managing General Director
----------------------------------
ADDRESS:
Valwood West Associates
----------------------------------------
1430 Valwood Parkway, Suite 120
----------------------------------------
Carrolton, TX 75006
----------------------------------------
EXECUTED BY LESSEE, this 21st day
of February, 1990
Attest/Witness
/s/ Th. J. ? ROSS WHITE ENTERPRISES INC.
- ----------------------------------- ----------------------------------------
Title By /s/ Greg A. White
------------------------------ --------------------------------------
Title: President
----------------------------------
ADDRESS:
ROSS WHITE ENTERPRISES INC.
----------------------------------------
3401-C N.W. 72nd Avenue
----------------------------------------
Miaimi, Florida 33122-1321
----------------------------------------
7
<PAGE> 8
LEGAL DESCRIPTION
1746 W. CROSBY ROAD -- VALWOOD WEST
Being approximately 13,520 square feet of a larger facility containing
approximately 47,813 square feet, and known as 1746 West Crosby Road, Suite
_______, Carrollton, Texas 75006, and more particularly described as follows:
BEING a tract of land in the William Masters Survey, Abstract 899, and being
part of a tract of land conveyed to VALWOOD WEST ASSOCIATES as recorded in
Volume 87225, Page 0980 of the Deed Records of Dallas County, Texas and being
part of that tract of land known as Block 3, Luna Park Place as recorded in
Volume 84229, Page 2384, Plat Records, Dallas County, Texas and being more
particularly described as follows:
COMMENCING at the intersection of the centerline of Selene Drive (60-foot
right-of-way) and the centerline of Wallace Drive (60-foot right-of-way);
THENCE South 89 degrees 59 minutes 02 seconds West, along the said centerline
of Wallace Drive, a distance of 330.00 feet to the point of curvature of a
circular curve to the right having a radius of 130.00 feet, said point also
being the point of street name change to West Crosby Road (60-foot
right-of-way);
THENCE Northwesterly, along the centerline of said West Crosby Road and along
said curve through a central angle of 90 degrees 00 minutes 00 seconds, an arc
distance of 204.20 feet to a point for a corner;
THENCE South 89 degrees 59 minutes 02 seconds West, departing said centerline,
a distance of 30.00 feet to a set 1/2" iron rod with a yellow plastic cap
stamped "A.H. Halff Assoc." (hereinafter referred to as "with cap") for the
POINT OF BEGINNING, said corner being on a circular curve to the left having a
radius of 160.00 feet and whose back tangent bears South 0 degrees 00 minutes
58 seconds East, said corner also being on the west line of said West Crosby
Road;
THENCE Southerly, along said west line and along said curve through a central
angle of 1 degree 51 minutes 13 seconds, and arc distance of 5.18 feet to a set
1/2" iron rod with cap for a corner;
THENCE South 89 degrees 59 minutes 02 seconds West, departing said west line, a
distance of 250.09 feet to a set 1/2" iron rod with cap for a corner, said
corner being on the west line of said Luna Park Place;
THENCE North 0 degrees 00 minutes 58 seconds West, along said west line, a
distance of 52.50 feet to a set 1/2" iron rod with cap for a corner;
THENCE North 89 degrees 59 minutes 02 seconds East, departing said west line, a
distance of 250.00 feet to a set 1/2" iron rod with cap for a corner, said
corner being on the said west line of West Crosby Road;
THENCE South 0 degrees 00 minutes 58 seconds East, along said west line, a
distance of 517.32 feet to the POINT OF BEGINNING AND CONTAINING 130,625 square
feet or 2.9987 acres of land more or less.
<PAGE> 9
AMENDMENT NO. 1 TO
LEASE AGREEMENT BY AND BETWEEN
CIIF ASSOCIATES, A MASSACHUSETTS GENERAL PARTNERSHIP
AS LESSOR AND
ROSS WHITE ENTERPRISES INC.
AS LESSEE
This Amendment No. 1 to Lease shall be attached to and form a part of that Lease
Agreement (which together with any amendments, modifications and extensions
thereof is hereinafter called "the Lease") covering the 13,520 square foot
facility located at 1746 W. Crosby Rd, Carrollton, Texas, signed and dated on
or about the 27th day of February, 1990.
WITNESSETH:
That the Lease is hereby amended as follows:
1. The Lease is hereby extended for one further term of Sixty (60) months.
2. The commencement of the Extension Term of the lease shall be the 1st day
of April 1993, and terminate on the 31st day of March 1998, on the condition
that Lessor and Lessee comply with all the provisions of the covenants and
agreements contained in the Lease.
3. The base monthly rental during said period shall be $3.50 per square foot, or
Three Thousand, Nine Hundred Forty Three and 33/100 Dollars ($3,943.33) per
month, net of taxes, insurance and operating expense charges.
4. The amount of the initial monthly escrow payments for 1993 are estimated as
follows:
<TABLE>
<S> <C>
Tax Escrow $ 808.95
Insurance Escrow 33.80
Operating Expenses 260.26
----------
Total Expenses $ 1,103.01
</TABLE>
5. Lessor will provide lessee improvements per the attached Exhibit B at
Lessor's expense.
6. It is agreed and understood that if Lessee is not in default of any of the
terms, covenants and conditions hereof and Lessee has not assigned this Lease
or sublet the premises (or a part thereof), Lessee shall have the option to
terminate this Lease Agreement effective at the end of the THIRTY SIXTH MONTH
(36th) of the Extension Term of this Lease Agreement. Such termination is
conditioned upon Lessee's providing prior written notice, if notice is not
received this termination option will be rendered null and void. Concurrent
with notice, Lessee shall make payment to Lessor the amount of SEVEN THOUSAND
EIGHT HUNDRED THIRTEEN AND 90/100 DOLLARS ($7,813.90) which represents the
unamortized portion of the tenant finish and unamortized brokerage commission.
Notice of Lessee's intention to terminate this Lease Agreement must be received
by Lessor, in writing, not less than ONE HUNDRED EIGHTY (180) days prior to the
effective date of termination. Said date of termination would be effective as
if the date had been the original termination date under this Lease Agreement.
Accordingly, Lessee shall be liable and responsible for its obligations and
liabilities under the Lease Agreement, which include but are not limited to
excess tax assessments and restoration of the premises to its original
condition. In the event Lessee fails to deliver such notice of termination
within the time period set forth above, this Lease Agreement shall remain in
full force and effect.
7. Lessor agrees to execute a Landlord's Subordination Agreement in the attached
form Exhibit C within thirty (30) days of written request by Lessee.
Notwithstanding Lessor's agreement to provide a Landlord Lien Subordination,
such will be provided upon Lessee's written request only if Lessee 1) is not in
default of any obligation under the lease, and 2) has paid all rent and other
payments as and when due under the lease, and 3) Lessee has submitted certified
or acknowledged financial statements that accurately reflect Lessee's financial
condition at the time of such request, and 4) Lessee's financial condition, in
Lessor's reasonable estimation at the time of such request, is equal to or
better than its financial condition on the date of this agreement and 5) Lessee
submits a processing fee payment of $250 at the time of such request.
<PAGE> 10
8. All other terms, provisions of the covenants and agreements as renewed,
extended and amended shall remain the same.
IN WITNESS WHEREOF, the parties hereto have signed and sealed this Amendment
No. 1 to Lease Agreement this 16th day of February, 1993.
WITNESS: Lessor: CIIF Associates, a Massachusetts general
partnership By: Copley Advisors, Inc., Managing
General Partner
By: /s/ A.E. Stoddard
- -------------- -----------------------------------------------
Title:
--------------------------------------------
WITNESS Lessee: Ross White Enterprises Inc.
/s/ By: /s/ Greg White
- -------------- -----------------------------------------------
Title: President
--------------------------------------------
<PAGE> 1
EXHIBIT 10.27
<TABLE>
<CAPTION>
Basic Lease Information
<S> <C>
Lease Date: January 25, 1993
Landlord: Anaheim Technology Center,
a California Limited Partnership
Landlord's Address: P.O. Box 19693, 30 Executive Park, Suite 100
Irvine, California 92713-9693
Tenant: AmeriQuest Technologies, Inc.
a Delaware Corporation
Tenant's Address: No. 3 Imperial Promenade
Santa Ana, CA 92705
Premises: Approximately 62,298 square feet as
shown on Exhibit A
Premises Address: 1051 South East Street
Anaheim, CA 92805
Building: 108,000 square feet
Lot (Building's tax parcel): 108,000 square feet
Park: 237,600 square feet
Term: March 1, 1995 ("Commencement Date"), through
February 29, 2000 ("Expiration Date")
Base Rent (Paragraph 3): Eighteen Thousand Sixty-Six Dollars ($18,066) per month
Adjustments to Base Rent: 3/l/95 - 3/31/95 $18,066 per month
4/l/95 - 11/30/95 $ 9,033 per month (Months 2-9 are at one-half rent
resulting in a "Rent Waiver" of $9,345 per month)
12/l/95 - 2/29/96 $18,066 per month
3/1/96 - 2/28/98 $21,804 per month
3/l/98 - 2/29/00 $23,673 per month
Security Deposit (Paragraph 4.1): Eighteen Thousand Sixty-Six Dollars ($18,066)
Cleaning Deposit (Paragraph 4.2): N/A
*Tenant's Share of Operating Expenses (Paragraph 6.1): 57.7% of the Building or 26.2% of the Park
*Tenant's Share of Tax Expenses (Paragraph 6.2): 57.7% of the Lot
*Tenant's Share of Common Area Utility Costs (Paragraph 7): 57.7% of the Building or 26.2% of the Park
*The amount of Tenant's Share of the expenses as referenced above shall be
subject to modification as set forth in this Lease.
Permitted Uses: Warehouse and distribution of electronic
and computer components, related light assembly,
and related office, engineering, and
administrative uses.
General Liability Insurance Bodily injury limit of not less than
Amount (Paragraph 12) $1,000,600 per occurrence; Property damage limit
of not less than $1,000,000 per occurrence;
Combined single limit of not less than
$2,000,000.
Unreserved Parking Spaces: One Hundred Twenty-Five (125)
nonexclusive and undesignated spaces, except
those areas designated on Exhibit A as Exclusive
Parking.
Broker (Paragraph 38): CB Commercial (Pat Cavanaugh, Forrest Wylder),
Lee & Associates (Bob Griffin)
Exhibits: Exhibit A - Premises, Building, Lot and/or Park
Exhibit B - Tenant Improvements
Exhibit C - Rules and Regulations
Exhibit F - Hazardous Materials Disclosure Certificate
Exhibit G - Change of Commencement Date - Example
Addenda: Addendum I:
</TABLE>
<PAGE> 2
LEASE AGREEMENT
DATE: This Lease is made and entered into as of the Lease Date defined on Page
1. The Basic Lease Information set forth on Page 1 and this Lease are
and shall be construed as a single instrument.
1. Premises: Landlord hereby leases the Premises to Tenant upon the
terms and conditions contained herein. Landlord hereby grants to Tenant a
revocable license for the right to use, on a non-exclusive basis, parking areas
and ancillary facilities located within the Common Area of the Park, subject to
the terms of this Lease. Landlord and Tenant hereby agree that for purposes of
this Lease, as of the Lease Date, the rentable square footage area of the
Premises, the Building, the Lot and the Park shall be deemed to be the number of
rentable square feet set forth in the Basic Lease Information on Page 1. Tenant
further agrees that the number of rentable square feet of the Premises, the
Building, the Lot and the Park may subsequently change after the Lease Date
commensurate with any modifications to any of the foregoing.
2. Adjustment of Commencement Date; Condition of the Premises: If
Landlord cannot deliver possession of the Premises on the Commencement Date,
Landlord shall not be subject to any liability nor shall the validity of the
Lease be affected; provided the Lease term and the obligation to pay Rent shall
commence on the date possession is tendered and the Expiration Date shall be
extended by a period of time equal to the period computed from the Commencement
Date to the date possession is tendered by Landlord to Tenant. In the event the
commencement date and/or the expiration date of this Lease is other than the
Commencement Date and/or Expiration Date provided on Page 1, as the case may be,
Landlord and Tenant shall execute a written amendment to this Lease,
substantially in the form of Exhibit F hereto, wherein the parties shall specify
the actual commencement date, expiration date and the date on which Tenant is to
commence paying Rent. In the event that Landlord permits Tenant to occupy the
Premises prior to the Commencement Date, such occupancy shall be at Tenant's
sole risk and subject to all the provisions of this Lease, including, but not
limited to, the requirement to pay the Security Deposit, and to obtain
the insurance required pursuant to this Lease and to deliver insurance
certificates as required herein. In addition to the foregoing, Landlord shall
have the right to impose such additional conditions on Tenant's early entry as
Landlord shall deem appropriate. By taking possession of the Premises, Tenant
shall be deemed to have accepted the Premises in a good, clean and completed
condition and state of repair, in compliance with all applicable laws, codes,
regulations, administrative orders and ordinances, and subject to all matters of
record. Tenant hereby acknowledges and agrees that neither Landlord nor
Landlord's agents or representatives has made any representations or warranties
as to the suitability, safety or fitness of the Premises for the conduct of
Tenant's business, Tenant's intended use of the Premises or for any other
purpose, and that neither Landlord nor Landlord's agents or representatives has
agreed to undertake any alterations or construct any Tenant Improvements to the
Premises except as expressly provided in this Lease.
3. Rent: On the date that Tenant executes this Lease, Tenant shall
deliver to Landlord the original executed Lease, the Base Rent (which shall be
applied against the Rent payable for the first month Tenant is required to pay
Base Rent), the Security Deposit, the Cleaning Deposit, and all insurance
certificates evidencing the insurance required to be obtained by Tenant under
Section 12 of this Lease. Tenant agrees to pay Landlord, without prior notice or
demand, or abatement, offset, deduction or claim, the Base Rent described on
Page 1, payable in advance at Landlord's address shown on Page 1 on the first
day of each month throughout the term of the Lease. In addition to the Base Rent
set forth on Page 1, Tenant shall pay Landlord in advance and on the first (1st)
day of each month throughout the term of this Lease (including any extensions of
such term), as Additional Rent Tenant's share, as set forth on Page 1, of
Operating Expenses, Tax Expenses, Common Area Utility Costs, and Utility
Expenses, and Administrative Expenses all in the manner as specified in Sections
6.1, 6.2, 6.3, 6.4 and 7 of this Lease, respectively. Additionally, Tenant shall
pay to Landlord as Additional Rent hereunder, immediately on Landlord's demand
therefor, any and all costs and expenses incurred by Landlord to enforce the
provisions of this Lease, including, but not limited to, costs associated with
any proposed assignment or subletting of all or any portion of the Premises by
Tenant, costs associated with the delivery of notices, delivery and recordation
of notice(s) of default, attorneys' fees, expert fees, court costs and filing
fees (collectively, the "Enforcement Expenses"). The term "Rent" whenever used
herein refers to the aggregate of all these amounts. If Landlord permits Tenant
to occupy the Premises without requiring Tenant to pay rental payments for a
period of time, the waiver of the requirement to pay rental payments shall only
apply to waiver of the Base Rent and Tenant shall otherwise perform all other
obligations of Tenant hereunder, including, but not limited to paying to
Landlord any and all amounts considered additional rent, such as Tenant's share
of Operating Expenses, Tax Expenses, Common Area Utility Costs, and Utility
Expenses, and Administrative Expenses. If, at any time, Tenant is in default of
or otherwise breaches any term, condition or provision of this Lease, any such
waiver by Landlord of Tenant's requirement to pay rental payments shall be null
and void and Tenant shall immediately pay to Landlord all rental payments waived
by Landlord. The Rent for any fractional part of a calendar month at the
commencement or termination of the Lease term shall be a prorated amount of the
Rent for a full calendar month based upon a thirty (30) day month. The prorated
Rent shall be paid on the Commencement Date and the first day of the calendar
month in which the date of termination occurs, as the case may be.
<PAGE> 3
4.1 Security Deposit: Upon Tenant's execution of this Lease, Tenant
shall deliver to Landlord, as a Security Deposit for the performance by Tenant
of its obligations under this Lease, the amount described on Page 1. If Tenant
is in default, Landlord may, but without obligation to do so, use the Security
Deposit, or any portion thereof, to cure the default or to compensate Landlord
for all damages sustained by Landlord resulting from Tenant's default,
including, but not limited to the Enforcement Expenses. Tenant shall,
immediately on demand, pay to Landlord a sum equal to the portion of the
Security Deposit so applied or used so as to replenish the amount of the
Security Deposit held to increase such deposit to the amount initially
deposited with Landlord. As soon as practicable but in no event more than
thirty (30) days after the termination of this Lease, Landlord shall return the
Security Deposit to Tenant, less such amounts as are reasonably necessary, as
determined solely by Landlord, to remedy Tenant's default(s) hereunder or to
otherwise restore the Premises to a clean and safe condition, reasonable wear
and tear excepted. If the cost to restore the Premises exceeds the amount of
the Security Deposit, Tenant shall promptly deliver to Landlord any and all of
such excess sums as reasonably determined by Landlord. Landlord shall not be
required to keep the Security Deposit separate from other funds, and, unless
otherwise required by law, Tenant shall not be entitled to interest on the
Security Deposit. In no event or circumstance shall Tenant have the right to
any use of the Security Deposit and, specifically, Tenant may not use the
Security Deposit as a credit or to otherwise offset any payments required
hereunder, including, but not limited to, Rent or any portion thereof.
5. Tenant Improvements: Tenant hereby accepts the Premises in its
current "as is" condition unless otherwise specified in Exhibit B, attached
hereto and incorporated herein by this reference. If so specified in Exhibit B
hereto, Landlord or Tenant, as the case may be, shall install the improvements
("Tenant Improvements") on the Premises as described and in accordance with the
terms, conditions, criteria and provisions set forth in Exhibit B, attached and
incorporated herein by this reference. Tenant acknowledges that neither Landlord
nor any of Landlord's agents, representatives or employees has made any
representations as to the suitability or fitness of the Premises for the conduct
of Tenant's business, including, without limitation, any storage incidental
thereto, or for any other purpose, and that neither Landlord nor any of
Landlord's agents, representatives or employees has agreed to undertake any
alterations or construct any Tenant Improvements to the Premises except as
expressly provided in Exhibit B to this Lease.
6. Additional Rent: The costs and expenses described in this Section 6
and all other sums, charges, costs and expenses specified in this Lease other
than Base Rent, including, but not limited to, Utility Expenses, Tenant's share
of Common Area Utility Costs, Late Charges and Enforcement Expenses are to be
paid by Tenant to Landlord as additional rent (collectively "Additional Rent").
6.1 Operating Expenses: In addition to the base Rent set forth
in Section 3, Tenant shall pay its share, which is defined on Page 1, of all
Operating Expenses as Additional Rent. The term "Operating Expenses" as used
herein shall mean the total amounts paid or payable by landlord in connection
with the ownership, maintenance, repair and operation of the Premises, the
Building and the Lot, and where applicable, of the Park referred to on Page 1.
The amount of Tenant's share of Operating Expenses shall be reviewed from time
to time by Landlord and shall be subject to modification by landlord as
reasonably determined by Landlord. These Operating Expenses may include, but are
not limited to:
<PAGE> 4
[xxxxxxxxxxxxxxxxxxx] the roof, the roof membrane and the
exterior walls of the Building. Notwithstanding the above, Landlord
agrees to amortize the cost of any capital improvements or replacements
over the useful life of the improvements or replacements;
6.1.2 Landlord's cost of maintaining the outside paved area,
landscaping and other common areas for the Park. The term "Common Area"
shall mean all areas and facilities within the Park exclusive of the
Premises and the other portions of the Park leased exclusively to other
tenants. The Common Area includes, but is not limited to, interior
lobbies, mezzanines, parking areas, access and perimeter roads,
sidewalks, rail spurs, landscaped areas and similar areas and
facilities;
6.1.3 Landlord's annual cost of insurance insuring against fire
and extended coverage (including, if Landlord elects, "all risk"
coverage) and all other insurance, including, but not limited to,
earthquake, flood and/or surface water endorsements for the Building,
the Lot and the Park (including the Common Area), rental value insurance
against loss of Rent in an amount equal to the amount of Rent for a
period of at least six (6) months commencing on the date of loss, and
subject to the provisions of Section 27 below, any deductible;
6.1.4 Landlord's cost of modifications to the Building, the
Common Area and/or the Park occasioned by any rules, laws or regulations
effective subsequent to the date on which the Building was originally
constructed;
6.1.5 Landlord's cost of modifications to the Building, the
Common Area and/or the Park occasioned by any rules, laws or regulations
arising from Tenant's use of the Premises regardless of when such rules,
laws or regulations became effective;
6.1.6 If Landlord elects to so procure, Landlord's cost of
preventative maintenance, and repair contracts including, but not
limited to, contracts for elevator systems and heating, ventilation and
air conditioning systems, lifts for disabled persons, and trash or
refuse collection;
6.1.7 Landlord's cost of security and fire protection services
for the Building and/or the Park, as the case may be, if in Landlord's
sole discretion such services are provided;
6.1.9 Landlord's cost for the creation and negotiation of, and
pursuant to, any rail spur or track agreements, licenses, easements or
other similar undertakings; and
6.1.10 Landlord's cost of supplies, equipment, rental equipment
and other similar items used in the operation and/or maintenance of the
Park.
6.2 Tax Expenses: In addition to the Base Rent set forth in Section 3,
Tenant shall pay its share, which is defined on Page 1, of all real property
taxes applicable to the land and improvements included within the Lot on which
the Premises are situated and one hundred percent (100%) of all personal
property taxes now or hereafter assessed or levied against the Premises or
Tenant's personal property. The amount of Tenant's share of Tax Expenses shall
be reviewed from time to time by Landlord and shall be subject to modification
by Landlord as reasonably determined by Landlord. Tenant shall also pay one
hundred percent (100%) of any increase in real property taxes attributable, in
Landlord's sole discretion, to any and all alterations, Tenant Improvements or
other improvements of any kind, which are above standard improvements
customarily installed for similar buildings located within the Building or the
Park (as applicable), whatsoever placed in, on or about the Premises for the
benefit of, at the request of, or by Tenant. The term "Tax Expenses" shall mean
and include, without limitation, any form of tax and assessment (general,
special, supplemental, ordinary or extraordinary), commercial rental tax,
payments under any improvement bond or bonds, license, rental tax, transaction
tax, levy, or penalty imposed by authority having the direct or indirect power
of tax (including any city, county, state or federal government, or any school,
agricultural, lighting, drainage or other improvement district thereof) as
against any legal or equitable interest of Landlord in the Premises, the
Building, the Lot or the Park, as against Landlord's right to rent or other
income therefrom, or as against Landlord's business of leasing the Premises or
the occupancy of Tenant or any other tax, fee, or excise, however described,
including, but not limited to, any value added tax, or any tax imposed in
substitution (partially or totally) of any tax previously included within the
definition of real property taxes, or any additional tax the nature of which was
previously included within the definition of real property taxes. The term "Tax
Expenses" shall not include any franchise, estate inheritance, net income, or
excess profits tax imposed upon Landlord.
6.3 Administrative Expenses: In addition to the Base Rent set forth
in Section 3 hereof, Tenant shall pay Landlord, without prior or demand, on the
first (1st) day of each month and throughout the term of this Lease (including
any extension of such term), as compensation to Landlord for accounting and
management services rendered on behalf of the Building and/or the Park,
one-twelfth (1/12th) of an amount equal to ten percent (10%) of the aggregate
of Tenant's share of (i) the total Operating Expenses as described in Sections
6.1 above, respectively, and (ii) all Common Area Utility Costs for the Park as
described in Section 7 below; as such amounts are estimated by Landlord in
Accordance with the provisions of Section 6.4 below (collectively, the
Administrative Expenses"). Tenant's obligations to pay such Administrative
Expenses shall survive the expiration or earlier termination of this Lease.
<PAGE> 5
[xxxxxxxxxxxxxxxxxxxxxxxxx] the calendar year in which the Lease commences.
Commencing on the Commencement Date, one-twelfth (1/12th) of this estimated
amount shall be paid by Tenant to Landlord, as Additional Rent, on the first
(1st) day of each month and throughout the remaining months of such calendar
year. Thereafter, Landlord may estimate such expenses as of the beginning of
each calendar year and Tenant shall pay one-twelfth (1/12th) of such estimated
amount as Additional Rent hereunder on the first day of each month during such
calendar year and for each ensuing calendar year throughout the term of this
Lease (including any extensions of the term). By April 30th of each of the
following calendar years, or as soon thereafter as reasonably possible,
including the calendar year after the calendar year in which this Lease
terminates or the term expires, Landlord shall endeavor to furnish Tenant with
an accounting of actual Operating Expenses and Tax Expenses. Within thirty (30)
days of Landlord's delivery of such accounting, Tenant shall pay to Landlord
the amount of any underpayment. Notwithstanding the foregoing, failure by
Landlord to give such accounting by such date shall not constitute a waiver by
Landlord of its right to collect any of Tenant's underpayment at any time.
Landlord shall credit the amount of any overpayment by Tenant toward the next
estimated monthly installment(s) falling due, or where the term of the Lease
has expired, refund the amount of overpayment to Tenant. Tenant, at its sole
cost and expense through any certified public accountant designated by it,
shall have the right to examine and/or audit the books and records evidencing
such costs and expenses for the previous one (1) calendar year, during
Landlord's reasonable business hours and not more frequently than once during
any calendar year. Tenant's obligations to pay its share of Operating Expenses
and Tax Expenses shall survive the expiration or earlier termination of this
Lease.
6.5 Annual Reconciliation: If the term of the Lease expires prior to the
annual reconciliation of expenses, if any, Landlord shall have the right to
reasonably estimate Tenant's share of such expenses, and if Landlord determines
that an underpayment is due, Tenant hereby agrees that Landlord shall be
entitled to deduct such underpayment from Tenant's Security Deposit. If Landlord
reasonably determines that an overpayment has been made by Tenant, Landlord
shall refund said overpayment to Tenant as soon as practicable thereafter.
Notwithstanding the foregoing, failure of Landlord to accurately estimate
Tenant's share of such expenses or to otherwise perform such reconciliation of
expenses, including, without limitation, Landlord's failure to deduct any
portion of any underpayment from Tenant's Security Deposit, shall not constitute
a waiver of Landlord's right to collect any of Tenant's underpayment at any time
during the term of the Lease or at any time after the expiration or earlier
termination of this Lease.
7. Utilities: Utility Expenses, Common Area Utility Costs and all other sums or
charges set forth in this Section 7 are considered part of Additional Rent.
Tenant shall pay the cost of all water, sewer use, sewer discharge fees and
sewer connection fees, gas, heat, electricity, refuse pickup, janitorial
service, telephone and other utilities billed or metered separately to the
Premises and/or Tenant. Tenant shall also pay its share of any assessments or
charges for utility or similar purposes included within any tax bill for the Lot
on which the Premises are situated, including, without limitation, entitlement
fees, allocation unit fees, and/or any similar fees or charges, and any
penalties related thereto. For any such utility fees or use charges that are not
billed or metered separately to Tenant, Tenant shall pay to Landlord, as
Additional Rent, without prior notice or demand, on the first (1st) day of each
month throughout the term of this Lease the amount which is attributable to
Tenant's use of the utilities or similar services, as reasonably estimated and
determined by Landlord based upon factors such as size of the Premises and
intensity of use of such utilities by Tenant such that Tenant shall pay the
portion of such charges reasonably consistent with Tenant's use of such
utilities and similar services ("Utility Expenses"). If Tenant disputes any such
estimate or determination, then Tenant shall either pay the estimated amount or
cause the Premises to be separately metered at Tenant's sole expense. In
addition, Tenant shall pay to Landlord its share, which is described on Page 1,
as Additional Rent, without prior notice or demand, on the first (1st) day of
each month throughout the term of this Lease, of any Common Area utility costs,
fees, charges or expenses ("Common Area Utility Costs"). Tenant shall pay to
Landlord one-twelfth (1/12th) of the estimated amount of Tenant's share of the
Common Area Utility Costs in the same manner and time periods as specified in
Section 6.4 above and any reconciliation thereof shall also be in the same
manner as specified in Sections 6.4 and 6.5 above. The amount of Tenant's share
of Common Area Utility Costs shall be reviewed from time to time by Landlord and
shall be subject to modification by Landlord as reasonably determined by
Landlord. Tenant acknowledges that the Premises may become subject to the
rationing of utility services or restrictions on utility use as required by a
public utility company, governmental agency or other similar entity having
jurisdiction thereof. Notwithstanding any such rationing or restrictions on use
of any such utility services, Tenant acknowledges and agrees that its tenancy
and occupancy hereunder shall be subject to such rationing restrictions as may
be imposed upon Landlord, Tenant, the Premises, the Building or the Park, and
Tenant shall in no event be excused or relieved from any covenant or obligation
to be kept or performed by Tenant by reason of any such rationing or
restrictions. Tenant further agrees to timely and faithfully pay, prior to
delinquency, any amount, tax, charge, surcharge, assessment or imposition
levied, assessed or imposed upon the Premises, or Tenant's use and occupancy
thereof, or as a result directly or indirectly of any such rationing or
restrictions.
8. Late Charges: Any and all sums or charges set forth in this Section 8 are
considered part of Additional Rent. Tenant acknowledges that late payment (the
tenth day of each month or anytime thereafter) by Tenant to Landlord of Base
Rent, Tenant's share of Operating Expenses, Tax Expenses, Common Area Utility
Costs, and Utility Expenses, Administrative Expenses or other sums due
hereunder, will cause landlord to incur costs not contemplated by this Lease,
the exact amount of such costs being extremely difficult and impracticable to
fix. Such costs include, without limitation, processing and accounting charges,
and late charges that may be imposed on Landlord by the terms of any note
secured by any encumbrance against the Premises, and late charges and penalties
due to the late payment of real property taxes on the Premises. Therefore, if
any installment of Rent or any other some due from
<PAGE> 6
[xxxxxxxxxxxxxxxxxxxxxxxx] of the following, as:
(a) An additional sum equal to ten percent (10%) of such delinquent
amount plus interest on such delinquent amount at the rate equal to the prime
rate plus three percent (3%) for the time period such payments are delinquent as
a late charge for every month or portion thereof that such sums remain unpaid,
(b) the amount of seventy-five dollars ($75) for each three-day notice prepared
for, or served on, Tenant, (c) the amount of fifty dollars ($50) relating to
checks for which there are not sufficient funds. If Tenant delivers to Landlord
a check for which there are not sufficient funds, Landlord may, at its sole
option, require Tenant to replace such check with a cashier's check for the
amount of such check and all other charges payable hereunder. The parties agree
that this late charge and the other charges referenced above represent a fair
and reasonable estimate of the costs that Landlord will incur by reason of late
payment by Tenant. Acceptance of any late charge or other charges shall not
constitute a waiver by Landlord of Tenant's default with respect to the
delinquent amount, nor prevent Landlord from exercising any of the other rights
and remedies available to Landlord for any other breach of Tenant under this
Lease. If a late charge or other charge becomes payable for any three (3)
installments of Rent within any twelve (12) month period, then Landlord, at
Landlord's sole option, can either require the Rent be paid quarterly in
advance, or be paid monthly in advance by cashier's check or by electronic funds
transfer.
9. Use of Premises:
9.1 Compliance with Laws, Recorded Matters, and Rules and Regulations:
The Premises are to be used solely for the uses stated on Page 1 and for no
other uses or purposes without Landlord's prior written consent, which consent
may be given or withheld in Landlord's sole discretion. The use of the Premises
by Tenant and its employees, representatives, agents, invitee, licensees,
subtenants, customers or contractors (collectively, "Tenant's Representatives")
shall be subject to, and at all times in compliance with, (a) any and all
applicable laws, ordinances, statutes, orders and regulations as same exist from
time to time (collectively, the "Laws"), (b) any and all documents, matters or
instruments, including without limitation, any declarations of covenants,
conditions and restrictions, and any supplements thereto, each of which has been
or hereafter is recorded in any official or public records with respect to the
Premises, the Building, the Lot and/or the Park, or any portion thereof
(collectively, the "Recorded Matters"), and (c) any and all rules and
regulations set forth in Exhibit C, attached to and made a part of this Lease,
and any other reasonable rules and regulations promulgated by Landlord now or
hereafter enacted relating to parking and the operation of the Premises, the
Building and the Park (collectively, the "Rules and Regulations").
9.2 Prohibition on Use: Tenant shall not use the Premises or permit
anything to be done in or about the Premises nor keep or bring anything therein
which will in any way conflict with any of the requirements of the Board of Fire
Underwriters or similar body now or hereafter constituted or in any way increase
the existing rate of or affect any policy of fire or other insurance upon the
Building or any of its contents, or cause a cancellation of any insurance
policy. No auctions may be held or otherwise conducted in, on or about the
Premises, the Building, the Lot or the Park without Landlord's written consent
thereto, which consent may be given or withheld in Landlord's sole discretion.
Tenant shall not do or permit anything to be done in or about the Premises which
will in any way obstruct or interfere with the rights of Landlord, other tenants
or occupants of the Building, other buildings in the Park, or other persons or
businesses in the area, or injure or annoy other tenants or use or allow the
Premises to be used for any unlawful or objectionable purpose, as determined by
Landlord, in its reasonable discretion, for the benefit, quiet enjoyment and use
by Landlord and all other tenants or occupants of the Building or other
buildings in the Park; nor no shall Tenant cause, maintain or permit any private
or public nuisance in, on or about the Premises, Building, Park and/or the
Common Area, including, but not limited to, any offensive odors, noises, fumes
or vibrations. Tenant shall not damage or deface or otherwise commit or suffer
to be committed any waste in, upon or about the Premises. Tenant shall not place
or store, nor permit any other person or entity to place or store, any property,
equipment, materials, supplies, personal property or any other items or goods
outside of the Promises for any period of time. Tenant shall not permit any
animals, including, but not limited to, any household pets, to be brought or
kept in or about the Premises. Tenant shall place no loads upon the floors,
walls, or ceilings in excess of the maximum designed load permitted by the
applicable Uniform Building Code or which may damage the Building or outside
areas; nor place any harmful liquids in the drainage systems; nor dump or store
waste materials, refuse or other such materials, or allow such to remain outside
the Building area, except in refuse dumpsters or in any enclosed trash areas
provided. Tenant shall honor the terms of all Recorded Matters relating to the
Premises, the Building, the Lot and/or the Park. Tenant shall honor the Rules
and Regulations. If Tenant fails to comply with such Laws, Recorded Matters,
Rules and Regulations or the provisions of this Lease, Landlord shall have the
right to collect from Tenant a reasonable sum as a penalty, in addition to all
rights and remedies of Landlord hereunder including, but not limited to, the
payment by Tenant to Landlord of all Enforcement Expenses and Landlord's costs
and expenses, if any, to cure any of such failures of Tenant, if Landlord, at
its sole option, elects to undertake such cure.
10. Alterations and Additions; and Surrender of Premises:
10.1 Alterations and Additions: Tenant shall not install any signs,
fixtures, improvements, nor make or permit any other alterations or additions to
the Premises without the prior written consent of landlord. If any such
alteration or addition is expressly permitted by Landlord, Tenant shall deliver
at least twenty (20) days prior notice to Landlord, from the date Tenant intends
to commence construction, sufficient to enable Landlord to post a Notice of
Non-Responsibility. In all events, Tenant shall obtain all permits or other
governmental approvals prior to commencing any of such work and deliver a copy
of same to Landlord. All alterations and additions shall be installed by a
licensed contractor approved by Landlord, at Tenant's sole expense in compliance
with all applicable Laws (including, but not limited to, the ADA as defined
herein), Recorded Matters, and Rules and Regulations. Tenant shall
<PAGE> 7
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] obligations
incurred by or on behalf of Tenant. As a condition to Landlord's consent to the
installation of any fixtures, additions or other improvements, Landlord may
require Tenant to post and contain a completion and indemnity bond for up to one
hundred fifty percent (150%) of the cost of the work.
10.2 Surrender of Premises: Upon the termination of this Lease, whether
by forfeiture, lapse of time or otherwise, or upon the termination of Tenant's
right to possession of the Premises, Tenant will at once surrender and deliver
up the Premises, together with the fixtures, furnishings, additions and
improvements which Landlord has notified Tenant, in writing, that Landlord will
require Tenant not to remove, to Landlord in good condition and repair
including, but not limited to, replacing all light bulbs and ballasts not in
good working condition, excepting for reasonable wear and tear. Reasonable wear
and tear shall not include and any damage or deterioration that would have been
prevented by proper maintenance by Tenant or Tenant otherwise performing all of
its obligations under this Lease. Upon such termination of this Lease, Tenant
shall remove all tenant signage, trade fixtures, furniture, furnishings,
personal property, additions, and other improvements unless Landlord requests,
in writing, that Tenant not remove some or all of such trade fixtures,
furniture, furnishings, additions or improvements installed by, of Tenant or
situated in or about the Premises. Notwithstanding the above, Tenant shall not
be responsible to remove any of the Tenant Improvements installed as a part of
Exhibit B to this Lease. By the date which is twenty (20) days prior to such
termination of this Lease, Landlord shall notify Tenant in writing of those
fixtures, alterations, furniture, furnishings, trade fixtures, additions and
other improvements which Landlord shall require Tenant not to remove from the
Premises. Tenant shall repair any damage caused by the installation or removal
of such signs, trade fixtures, furniture, furnishings, fixtures, additions and
improvements which are to be removed from the Premises by Tenant hereunder. If
Landlord fails to so notify Tenant at least twenty (20) days prior to such
termination of this Lease, then Tenant shall remove all tenant signage,
fixtures, alterations, furniture, furnishings, trade fixtures, additions and
other improvements installed in or about the Premises by, or on behalf of
Tenant. Tenant shall ensure that the removal of such items and the repair of
the Premises will be completed prior to such termination of this Lease.
11. Repairs and Maintenance:
11.1 Tenant's Repairs and Maintenance Obligations: Tenant shall, at
Tenant's sole cost and expense, keep and maintain the Premises and the adjacent
areas (including, without limitation, any portion of the Common Area used by
Tenant or Tenant's Representatives) in good, clean and safe condition and repair
to the satisfaction of Landlord including, but not limited to, repairing any
damage caused by Tenant or Tenant's Representatives and replacing any property
so damaged by Tenant or Tenant's Representatives. Without limiting the
generality of the foregoing, Tenant shall be solely responsible for maintaining,
repairing and replacing all interior plumbing and mechanical systems, heating,
ventilation and air conditioning systems, interior electrical wiring and
equipment, interior lighting (including, without limitation, light bulbs and/or
ballasts), all interior glass, interior window casements, partitions, tenant
signage, interior doors and door closers, lifts for disabled persons serving the
Premises, sprinkler systems, fire protection systems, security systems,
fixtures, equipment, interior painting, and interior walls and floors of the
Premises (including, without limitation, any demising walls contiguous to any
portion of the Premises), and exterior lighting, exterior glass, exterior doors
and entrances, exterior window casements, exterior doors and door closers, and
exterior painting of the Premises. Tenant's obligation to keep, maintain,
preserve and repair the Premises and the adjacent area shall specifically extend
to the cleanup and removal of any and all Hazardous Materials (hereafter
defined) occurring in, on or about the Premises.
11.2 Reimbursable Repairs and Maintenance Obligations: Subject to the
provisions of Sections 6 and 9 of this Lease and except for repairs rendered
necessary by the intentional or negligent acts or omissions of Tenant or
Tenant's Representatives, Landlord agrees, at Landlord's expense, subject to
reimbursement pursuant to Section 6 above, to keep in good repair the plumbing
and mechanical systems exterior to the Premises, the roof, roof membranes,
exterior walls of the Building, signage (exclusive of tenant signs), and
exterior electrical wiring and equipment, exterior lighting, exterior glass,
exterior doors and entrances, exterior window casements, exterior doors and
door closers, and exterior painting of the Building (exclusive of the
Premises), and underground utility and underground sewer pipes outside the
exterior walls of the Building. Unless otherwise notified by Landlord, in
writing, that Landlord has elected to procure and maintain the following
described contract(s), Tenant shall procure and maintain (a) the heating,
ventilation and air conditioning systems preventative maintenance and repair
contract(s); such contract(s) to be on a bi-monthly or quarterly basis, as
reasonably determined by Landlord, and (b) the fire and sprinkler protection
services and preventative maintenance and repair contract(s) (including,
without limitation, monitoring services); such contract(s) to be on a
bi-monthly or quarterly basis, as reasonably determined by Landlord. Landlord
reserves the right, but without the obligation to do so, to procure and
maintain (i) the heating, ventilation and air conditioning systems preventative
maintenance and repair contract(s), and/or (ii) the fire and sprinkler
protection services and preventative maintenance and repair contract(s)
(including, without limitation, monitoring services). If landlord so elects to
procure and maintain any such contract(s), Tenant will reimburse Landlord for
the cost thereof in accordance with the provisions of Section 6 above. If
Tenant procures and maintains any such contract(s), Tenant will promptly
deliver to landlord a true and complete copy of (x) each such contract and any
and all renewals or extensions thereof, and (y) each service report or other
summary received by Tenant pursuant to or in connection with such contract(s).
11.3 Landlord's Repairs and Maintenance Obligations: Except for repairs
rendered necessary by the intentional or negligent acts or omissions of Tenant
or Tenant's Representatives, Landlord agrees, at Landlord's sole
<PAGE> 8
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] exclusive of glass and exterior doors)
and (b) replace the structural portions of the roof of the Building (excluding
the roof membrane) as, and when, Landlord determines such replacement to be
necessary in Landlord's sole discretion.
11.4 Tenant's Failure to Perform Repairs and Maintenance Obligations:
Except for normal maintenance and repair of the items described above, Tenant
shall have no right of access to or right to install any device on the roof of
the Building nor make any penetrations of the roof of the Building without the
express prior written consent of Landlord. If Tenant refuses or neglects to
repair and maintain the Premises and the adjacent areas properly as required
herein and to the reasonable satisfaction of Landlord, Landlord may, but
without obligation to do so, at any time make such repairs and/or maintenance
without Landlord having any liability to Tenant for any loss or damage that may
accrue to Tenant's merchandise, fixtures or other property, or to Tenant's
business by reason thereof, except to the extent any damage is caused by the
willful misconduct or gross negligence of Landlord or its authorized agents and
representatives. In the event Landlord makes such repairs and/or maintenance,
upon completion thereof Tenant shall pay to Landlord, as additional rent, the
Landlord's costs for making such repairs and/or maintenance, ten percent (10%)
for overhead, upon presentation of a bill therefor, plus any Enforcement
Expenses. The obligations of Tenant hereunder shall survive the expiration of
the term of this Lease or the earlier termination thereof. Tenant hereby waives
any right to repair at the expense of Landlord under any applicable Laws now or
hereafter in effect respecting the Premises.
12. Insurance:
12.1 Types of Insurance: Tenant shall maintain in full force and effect
at all times during the term of this Lease, at Tenant's sole cost and expense,
for the protection of Tenant and Landlord, as their interests may appear,
policies of insurance issued by a carrier or carriers acceptable to Landlord and
its lender(s) which afford the following overages: (i) worker's compensation:
statutory limits; (ii) employer's liability, as required by law, with a minimum
limit of $100,000 per employee and $500,000 per occurrence; (iii) commercial
general liability insurance (occurrence form) providing coverage against any and
all claims for bodily injury and property damage occurring in, on or about the
Premises arising out of Tenant's and Tenant's Representatives' use and/or
occupancy of the Premises. Such insurance shall include coverage for blanket
contractual liability, fire damage, premises, personal injury, completed
operations, products liability, personal and advertising, and a plate-glass
rider to provide coverage for all glass in, on or about the Premises including,
without limitation, skylights, with deletion of the exclusion for operations
within fifty (50) feet of a railroad track (railroad protective liability), if
applicable. Such insurance shall have a combined single limit of not less than
One Million Dollars ($1,000,000) per occurrence with a Two Million Dollar
($2,000,000) aggregate limit and excess umbrella insurance in the amount of Two
Million Dollars ($2,000,000). If Tenant has other locations which it owns or
leases, the policy shall include an aggregate limit per location endorsement. If
necessary, as reasonably determined by Landlord, Tenant shall provide for
restoration of the aggregate limit; (iv) comprehensive automobile liability
insurance: a combined single limit of not less than $2,000,000 per occurrence
and insuring Tenant against liability for claims arising out of the ownership,
maintenance, or use of any owned, hired or non-owned automobiles; (v) "all risk"
property insurance, including without limitation, sprinkler leakage, boiler and
machinery comprehensive form, if applicable, covering damage to or loss of any
personal property, trade fixtures, inventory, fixtures and equipment located in,
on or about the Premises, and in addition, coverage for flood, earthquake, and
business interruption of Tenant, together with, if the property of Tenant's
invitees is to be kept in the Premises, warehouser's legal liability or bailee
customers insurance for the full replacement cost of the property belonging to
invitees and located in the Premises. Such insurance shall be written on a
replacement cost basis (without deduction for depreciation) in an amount equal
to one hundred percent (100%) of the full replacement value of the aggregate of
the items referred to in this subparagraph (v); and (vi) such other insurance as
Landlord deems necessary and prudent or as may otherwise be required by any of
Landlord's lenders or joint venture partners.
12.2 Insurance Policies: Insurance required to be maintained by Tenant
shall be written by companies (i) licensed to do business in the State of
California, (ii) domiciled in the United States of America, and (iii) having a
"General Policyholders Rating" of at least A:X (or such higher rating as may be
required by a lender having a lien on the Premises) as set forth in the most
current issue of "Best's Insurance Reports." Any deductible amounts under any
of the insurance policies required hereunder shall not exceed Ten Thousand
Dollars ($10,000) Tenant shall deliver to Landlord certificates of insurance
and true and complete copies of any and all endorsements required herein for
all insurance required to be maintained by Tenant hereunder at the time of
execution of this Lease by Tenant. Tenant shall, at least thirty (30) days
prior to expiration of each policy, furnish Landlord with certificates of
renewal or "binders" thereof. Each certificate shall expressly provide that
such policies shall not be cancelable or otherwise subject to modification
except after thirty (30) days prior written notice to the parties named as
additional insured as required in this Lease (except for cancellation for
nonpayment of premium, in which event cancellation shall not take effect until
at least ten (10) days' notice has been given to landlord). Tenant shall have
the right to provide insurance coverage which it is obligated to carry pursuant
to the terms of this Lease under a blanket insurance policy, provided such
blanket policy expressly affords coverage for the Premises and for Landlord as
required by this Lease.
12.3 Additional Insured and Coverage: Landlord, any property management
company and/or agent of Landlord for the Premises, the Building, the Lot or the
Park, any lender(s) of Landlord, having a lien against the Premises, the
Building, the Lot or the Park, and any joint venture partners of Landlord shall
be named as additional assureds under all of the policies required in Section
12.1 (iii) above. Additionally, such policies shall provide for severability
of interest. All insurance to be maintained by Tenant shall, except for
workers' compensation and
<PAGE> 9
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] policy or excess liability policy
(which shall be in "following form") shall provide that if the underlying
aggregate is exhausted, the excess coverage will drop down as primary insurance.
The limits of insurance maintained by Tenant shall not limit Tenant's liability
under this Lease. It is the parties' intention that the insurance to be procured
and maintained by Tenant as required herein shall provide coverage for any and
all damage or injury arising from or related to Tenant's operations of its
business and/or Tenant's or Tenant's Representatives' use of the Premises and/or
any of the areas within the Park, whether such events occur within the Premises
(as described in Exhibit A hereto) or in any other areas of the Park. It is not
contemplated or anticipated by the parties that the aforementioned risks of
loss be borne by Landlord's insurance carriers, rather it is contemplated and
anticipated by Landlord and Tenant that such risks of loss be borne by Tenant's
insurance carriers pursuant to the insurance policies procured and maintained by
Tenant as required herein.
12.4 Failure of Tenant to Purchase and Maintain Insurance: In the event
Tenant does not purchase the insurance required in this Lease or keep the same
in full force and effect throughout the term of this Lease (including any
renewals or extensions), Landlord may, but without obligation to do so, purchase
the necessary insurance and pay the premiums therefor. If Landlord so elects to
purchase such insurance, Tenant shall pay to Landlord, as additional rent, the
amount so paid by Landlord promptly upon Landlord's demand therefor. In
addition, Landlord may recover from Tenant and Tenant agrees to pay, as
additional rent, any and all Enforcement Expenses and damages which Landlord may
sustain by reason of Tenant's failure to obtain and maintain such insurance. If
Tenant fails to maintain any insurance required in this Lease, Tenant shall be
liable for all losses, damages and costs resulting from such failure.
13. Waiver of Subrogation: Landlord and Tenant hereby mutually waive their
respective rights of recovery against each other for any loss of, or damage to,
either parties' property to the extent that such loss or damage is insured by an
insurance policy required to be in effect at the time of such loss or damage,
Each party shall obtain any special endorsements, if required by its insurer
whereby the insurer waives its rights of subrogation against the other party.
This provision is intended to waive fully, and for the benefit of the parties
hereto, any rights and/or claims which might give rise to a right of subrogation
in favor of any insurance carrier. The coverage obtained by Tenant pursuant to
Section 12 of this Lease shall include, without limitation, a waiver of
subrogation endorsement attached to the certificate of insurance. The provisions
of this Section 13 shall not apply in those instances in which such waiver of
subrogation would invalidate such insurance coverage or would cause either
party's insurance coverage to be voided or otherwise uncollectible.
14. Limitation of Liability and Indemnity: Except for damage resulting from the
active negligence or willful misconduct of Landlord or its authorized
representatives, Tenant agrees to protect, defend (with counsel acceptable to
Landlord) and hold Landlord and Landlord's lender(s), partners, employees,
representatives, legal representatives, successors and assigns (collectively,
the "Indemnitees") harmless and indemnify the Indemnitees from and against all
liabilities, damages, claims, losses, judgments, charges and expenses (including
reasonable attorneys' fees, costs of court and expenses necessary in the
prosecution or defense of any litigation including the enforcement of this
provision) arising from or in any way related to, directly or indirectly,
Tenant's or Tenant's Representatives use of the Premises, Building and/or the
Park, or the conduct of Tenant's business, or from any activity, work or thing
done, permitted or suffered by Tenant in or about the Premises, or in any way
connected with the Premises or with the improvements or personal property
therein, including, but not limited to, any liability for injury to person or
property of Tenant, Tenant's Representatives, or third party persons. Tenant
agrees that the obligations of Tenant herein shall survive the expiration or
earlier termination of this Lease.
Except for damage resulting from the active negligence or willful
misconduct of Landlord or its authorized representatives, Landlord shall not be
liable to Tenant for any loss or damage to Tenant or Tenant's property, for any
injury to or loss of Tenant's business or for any damage or injury to any person
from any cause whatsoever, including, but not limited to, any acts, errors or
omissions by or on behalf of any other tenants or occupants of the Building
and/or the Park. Tenant shall not, in any event or circumstance, be permitted
to offset or otherwise credit against any payments of Rent required herein for
matters for which Landlord may be liable hereunder. Landlord and its authorized
representatives shall not be liable for any interference with light or air,
or, for any latent defect in the Premises or the Building. To the fullest extent
permitted by law, Tenant agrees that neither Landlord nor and of Landlord's
lender(s), partners, employees, representatives, legal representatives,
successors and assigns shall at any time or to any extent whatsoever be liable,
responsible or in any way accountable for any loss, liability, injury, death or
damage to persons or property which at any time may be suffered or sustained by
Tenant or by any person(s) whomsoever who may at any time be using, occupying or
visiting the Premises, the Building or the Park.
<PAGE> 10
15.1 Prohibition: Tenant shall not assign, mortgage, hypothecate,
encumber, grant any license or concession, pledge or otherwise transfer this
Lease (collectively, "assignment"), in whole or in part, whether voluntarily or
involuntarily or by operation of law, nor sublet or permit occupancy by any
person other than Tenant of all or any portion of the Premises without first
obtaining the prior written consent of Landlord, which consent shall not be
unreasonably withheld. Tenant hereby agrees that Landlord may withhold its
consent to any proposed sublease or assignment if the proposed sublessee or
assignee or its business is subject to compliance with additional requirements
of the ADA (defined below) beyond those requirements which are applicable to
Tenant, unless the proposed sublessee or assignee shall (a) first deliver plans
and specifications for complying with such additional requirements and obtain
Landlord's written consent thereto, and (b) comply with all Landlord's
conditions for or contained in such consent, including without limitation,
requirements for security to assure the lien-free completion of such
improvements. If Tenant seeks to sublet or assign all or any portion of the
Premises, Tenant shall deliver to Landlord at least thirty (30) days prior to
the proposed commencement of the sublease or assignment (the "Proposed
Effective Date") the following: (i) the name of the proposed assignee or
sublessee; (ii) such information as to such assignee's or sublessee's financial
responsibility and standing as Landlord may reasonably require; and (iii) the
aforementioned plans and specifications, if any. Within ten (10) days after
Landlord's receipt of a written request from Tenant that Tenant seeks to sublet
or assign all or any portion of the Premises, Landlord shall deliver to Tenant
a copy of Landlord's standard form of sublease or assignment agreement (as
applicable), which instrument shall be utilized for each proposed sublease or
assignment (as applicable), and such instrument shall include a provision
whereby the assignee or sublessee assumes all of Tenant's obligations hereunder
and agrees to be bound by the terms hereof. As Additional Rent hereunder,
Tenant shall reimburse Landlord for actual legal and other expenses incurred
by Landlord in connection with any actual or proposed assignment or subletting.
In the event the sublease (1) by itself or taken together with prior
sublease(s) covers or totals, as the case may be, more than twenty-five percent
(25%) of the rentable square feet of the Premises or (2) is for a term which by
itself or taken together with prior or other subleases is greater than fifty
percent (50%) of the period remaining in the term of this Lease as of the time
of the Proposed Effective Date, then Landlord shall have the right, to be
exercised by giving written notice to Tenant, to recapture the space described
in the sublease. If such recapture notice is given, it shall serve to terminate
this Lease with respect to the proposed sublease space, or, if the proposed
sublease space covers all the Premises, it shall serve to terminate the entire
term of this Lease, in either case as of the Proposed Effective Date. However,
no termination of this Lease with respect to part or all of the Premises shall
become effective without the prior written consent, where necessary, of the
holder of each deed of trust encumbering the Premises or any part thereof. If
this Lease is terminated pursuant to the foregoing with respect to less than
the entire Premises, the Rent shall be adjusted on the basis of the proportion
of square feet retained by Tenant to the square feet originally demised and
this Lease as so amended shall continue thereafter in full force and effect.
Each permitted assignee or sublessee shall assume and be deemed to assume this
Lease and shall be and remain liable jointly and severally with Tenant for
payment of Rent and for the due performance of, and compliance with all the
terms, covenants, conditions and agreements herein contained on Tenant's part
to be performed or complied with, for the term of this Lease. No assignment or
subletting shall affect the continuing primary liability of Tenant (which,
following assignment, shall be joint and several with the assignee), and Tenant
shall not be released from performing any of the terms, covenants and
conditions of this Lease. Tenant hereby acknowledges and agrees that it
understands that Landlord's accounting department may process and accept Rent
payments without verifying that such payments are being made by Tenant, a
permitted sublessee or a permitted assignee in accordance with the provisions
of this Lease. Although such payments may be processed and accepted by such
accounting department personnel, any and all actions or omissions by the
personnel of Landlord's accounting department shall not be considered as
acceptance by Landlord of any proposed assignee or sublessee nor shall such
actions or omissions be deemed to be a substitute for the requirement that
Tenant obtain Landlord's prior written consent to any such subletting or
assignment, and any such actions or omissions by the personnel of Landlord's
accounting department shall not be considered as a voluntary relinquishment by
Landlord of any of its rights hereunder nor shall any voluntary relinquishment
of such rights be inferred therefrom. For purposes hereof, in the event Tenant
is a corporation, partnership, joint venture, trust or other entity other than
a natural person, any change in the direct or indirect ownership of Tenant
(whether pursuant to one or more transfers) which results in a change of more
than fifty percent (50%) in the direct or indirect ownership of Tenant shall be
deemed to be an assignment within the meaning of this Section 15 and shall be
subject to all the provisions hereof. Notwithstanding the preceding sentence,
Landlord acknowledges that Tenant is contemplating a merger or sale to another
entity and such merger or sale shall not be deemed an Assignment hereunder,
provided the net worth and financial strength of the resulting company is not
materially diminished as a result of said sale or, merger. Any and all
options, first rights of refusal, tenant improvement allowances and other
similar rights granted to Tenant in this Lease, if any, shall not be assignable
by Tenant unless expressly authorized in writing by Landlord.
15.2 Excess Sublease Rental or Assignment Consideration: In the event of
any sublease or assignment of all or any portion of the Premises where the rent
or other consideration provided for in the sublease or assignment either
initially or over the term of the sublease or assignment exceeds the Rent or pro
rata portion of the rent, as the case may be, for such space reserved in the
Lease, Tenant shall pay the Landlord monthly, as additional Rent, at the same
time as the monthly installments of Rent are payable hereunder, fifty percent
(50%) of the excess of each such payment of rent or other consideration in
excess of the Rent called for hereunder.
15.3 Waiver: Notwithstanding any assignment or sublease, or any
indulgences, waivers or extensions of time granted by Landlord to any assignee
or sublessee, or failure by landlord to take acting against any assignee or
sublessee, Tenant waives notice of any default of any assignee or sublessee and
agrees that Landlord may, at its discretion, proceed against Tenant without
having taken action against or joined such assignee or sublessee, except that
<PAGE> 11
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]
16. Ad Valorem Taxes: Prior to delinquency, Tenant shall pay all taxes and
assessments levied upon trade fixtures, alterations, additions, improvements,
inventories and personal property located and/or installed on or in the Premises
by, or on behalf of, Tenant; and if requested by Landlord, Tenant shall promptly
deliver to Landlord copies of receipts for payment of all such taxes and
assessments. To the extent any such taxes ar not separately assessed or billed
to Tenant, Tenant shall pay the amount thereof as invoiced by Landlord.
17. Subordination: Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, and at the
election of Landlord or any bona fide mortgagee or deed of trust beneficiary
with a lien on all or any portion of the Premises or any ground lessor with
respect to the land of which the Premises are a part, the rights of Tenant under
this Lease and this Lease shall be subject and subordinate at all times to: (i)
all ground leases or underlying leases which may now exist or hereafter be
executed affecting the Building or the land upon which the Building is situated
or both, and (ii) the lien of any mortgage or deed of trust which may now
exist or hereafter be executed in any amount for which the Building, the Lot,
ground leases or underlying leases, or Landlord's interest or estate in any of
said items is specified as security. Notwithstanding the foregoing, Landlord or
any such ground lessor, mortgagee, or any beneficiary shall have the right to
subordinate or cause to be subordinated any such ground leases or underlying
leases or any such liens to this Lease. If any ground lease or underlying lease
terminates for any reason or any mortgage or deed of trust is foreclosed or a
conveyance in lieu of foreclosure is made for any reason, Tenant shall,
notwithstanding any subordination and upon the request of such successor to
Landlord, attorn to and become the Tenant of the successor in interest to
Landlord, provided such successor in interest will not disturb Tenant's use,
occupancy or quiet enjoyment of the Premises so long as Tenant is not in default
of the terms and provisions of this Lease. The successor in interest to Landlord
following foreclosure, sale or deed in lieu thereof shall not be (a) liable for
any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (b) subject to any offsets or defenses which
Tenant might have against any prior lessor; (c) bound by prepayment of more than
one (1) month's Rent; or (d) liable to Tenant for any Security Deposit not
actually received by such successor in interest to the extent any portion or all
of such Security Deposit has not already been forfeited by, or refunded to,
Tenant. Landlord shall be liable to Tenant for all or any portion of the
Security Deposit not forfeited by, or refunded to Tenant, until and unless
Landlord transfers such Security Deposit to the successor in interest. Tenant
covenants and agrees to execute (and acknowledge if required by Landlord, any
lender or ground lessor) and deliver, within five (5) days of a demand or
request by Landlord and in the form requested by Landlord, ground lessor,
mortgagee or beneficiary, any additional documents evidencing the priority or
subordination of this Lease with respect to any such ground leases or underlying
leases or the lien of any such mortgage or deed of trust. Tenant's failure to
timely execute and deliver such additional documents shall, at Landlord's
option, constitute a material default hereunder. It is further agreed that
Tenant shall be liable to Landlord, and shall indemnify Landlord from and
against any loss, cost, damage or expense, incidental, consequential, or
otherwise, arising or accruing directly or indirectly, from any failure of
Tenant to execute or deliver to Landlord any such additional documents, together
with any and all Enforcement Expenses. Landlord agrees to execute at the request
of Tenant commercially reasonable "Landlord Waivers" subordinating Landlord's
interest in Tenant's personal property, equipment, and inventory.
18. Right of Entry: Tenant grants Landlord or its agents the right to enter the
Premises at all reasonable times for purposes of inspection, exhibition, posting
of notices, repair or alteration. It is further agreed that Landlord shall have
the right to use any and all means Landlord deems necessary to enter the
Premises in an emergency. Landlord shall also have the right to place "for
rent" and/or "for sale" signs on the outside of the Premises. Tenant hereby
waives any claim from damages or for any injury or inconvenience to or
interference with Tenant's business, or any other loss occasioned thereby except
for any claim for any of the foregoing arising out of the sole active gross
negligence or willful misconduct of Landlord or its authorized representatives.
19. Estoppel Certificate: Tenant shall execute (and acknowledge if required by
any lender or ground lessor) and deliver to Landlord, within not less than five
(5) days after Landlord provides such to Tenant, a statement in writing
certifying that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of such modification), the date to which the Rent
and other charges are paid in advance, if any, acknowledging that there are not,
to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder or
specifying such defaults as are claimed, and such other matters as Landlord may
reasonably require. Any statement may be conclusively relied upon by Landlord
any prospective purchaser or encumbrancer of the Premises. Tenant's failure to
deliver such statement within such time shall be conclusive upon the Tenant that
(a) this Lease is in full force and effect, without modification except as may
be represented by Landlord; (b) there are no uncured defaults in Landlord's
performance; and (c) not more than one month's Rent has been paid in advance,
except in those instances when Tenant pays Rent quarterly in advance pursuant
to Section 8 hereof, then not more than three month's Rent has been paid in
advance. Failure by Tenant to so deliver such certified estoppel certificate
shall be a default of the provisions of this Lease. Tenant shall be liable to
Landlord, and shall indemnify Landlord from and against any loss, cost, damage
or expense, incidental, consequential, or otherwise, arising or accruing
directly or indirectly, from any failure of Tenant to execute or deliver to
Landlord any such certified estoppel certificate, together with any and all
Enforcement Expenses.
<PAGE> 12
20. Tenant's Default: The occurrence of any one or more of the following events
shall, at Landlord's option, constitute a default and breach of this Lease by
Tenant:
20.1 The vacation or abandonment of the Premises by Tenant for a period
of ten (10) consecutive days or the vacation of the Premises by Tenant which
would cause any insurance policy to be invalidated or otherwise lapse. Tenant
agrees to notice and service of notice as provided for in this Lease and waives
any right to any other or further notice or service of notice which Tenant may
have under any statute or law now or hereafter in effect;
20.2 The failure by Tenant to make any payment of Rent, Additional Rent
or any other payment required hereunder on the date said payment is due. Tenant
agrees to notice and service of notice as provided for in this Lease and waives
any right to any other or further notice or service of notice which Tenant may
have under any statute or law now or hereafter in effect;
20.3 The failure by Tenant to observe, perform or comply with any of the
conditions, covenants or provisions of this Lease (except failure to make any
payment of Rent and/or Additional Rent) and such failure is not cured within the
time period required under the provisions of this Lease. If such failure is
susceptible of cure but cannot reasonably be cured within the aforementioned
time period (if any), as determined solely by Landlord, Tenant shall promptly
commence the cure of such failure and thereafter diligently prosecute such cure
to completion within the time period specified by Landlord in any written notice
regarding such failure as may be delivered to Tenant by Landlord. In no event or
circumstance shall Tenant have more than thirty (30) days to complete any such
cure, unless otherwise expressly agreed to in writing by Landlord (in Landlord's
sole discretion);
20.4 The making of a general assignment by Tenant for the benefit of
creditors, the filing of a voluntary petition by Tenant or the filing of an
involuntary petition by any of Tenant's creditors seeking the rehabilitation,
liquidation, or reorganization of Tenant under any law relating to bankruptcy,
insolvency or other relief of debtors and, in the case of an involuntary action,
the failure to remove or discharge the same within sixty (60) days of such
filing, the appointment of a receiver or other custodian to take possession of
substantially all of Tenant's assets or this leasehold, Tenant's insolvency or
inability to pay Tenant's debts or failure generally to pay Tenant's debts when
due, any court entering a decree or order directing the winding up or
liquidation of Tenant or of substantially all of Tenant's assets, Tenant taking
any action toward the dissolution or winding up of Tenant's affairs, the
cessation or suspension of Tenant's use of the Premises, or the attachment,
execution or other judicial seizure of substantially all of Tenant's assets or
this leasehold;
20.5 Tenant's use or storage of Hazardous Materials in, on or about the
Premises, the Building, the Lot and/or the Park other than as expressly
permitted by the provisions of Section 29 below;
20.6 The making of any material misrepresentation or omission by Tenant
in any materials delivered by or on behalf of Tenant to Landlord pursuant to
this Lease; or
20.7 A material adverse change in the financial condition of Tenant or
an affiliated entity of Tenant which may adversely affect Tenant's ability to
perform all or any portion of its obligations under this Lease.
21. Remedies for Tenant's Default:
21.1 Landlord's Rights: In the event of Tenant's default or breach of
the Lease, Landlord may terminate Tenant's right to possession of the Premises
by any lawful means in which case upon delivery of written notice by Landlord
this Lease shall terminate on the date specified by Landlord in such notice and
Tenant shall immediately surrender possession of the Premises to Landlord. In
addition, the Landlord shall have the immediate right of re-entry whether or not
this Lease is terminated, and if this right of re-entry is exercised following
abandonment of the Premises by Tenant, Landlord may consider any personal
property belonging to Tenant and left on the Premises to also have been
abandoned. No re-entry or taking possession of the Premises by Landlord pursuant
to this Section 21 shall be construed as an election to terminate this Lease
unless a written notice of such intention is given to Tenant. If Landlord
reflects the Premises or any portion thereof, (i) Tenant shall be liable
immediately to Landlord for all costs Landlord incurs in reletting the Premises
or any part thereof, including, without limitation, broker's commissions,
expenses of cleaning, redecorating, and further improving the Premises and other
similar costs (collectively, the "Reletting Costs"), and (ii) the rent received
by Landlord from such reletting shall be applied to the payment of, first, any
indebtedness from Tenant to Landlord other than Base Rent, Operating Expenses,
Tax Expenses, Administrative Expenses, Common Area Utility Costs, and Utility
Expenses; second, all costs including maintenance, incurred by Landlord in
reletting; and, third, Base Rent, Operating Expenses, Tax Expenses,
Administrative Expenses, Common Area Utility Costs, Utility Expenses, and all
other sums due under this Lease. Any and all of the Reletting Costs shall be
fully chargeable to Tenant and shall not be prorated or otherwise amortized in
relation to any new lease for the Premises or any portion thereof. After
deducting the payments referred to above, any sum remaining from the rental
Landlord receives from reletting shall be held by Landlord and applied in
payment of future Rent as Rent becomes due under this Lease. In no event shall
Tenant be entitled to any excess rent received by Landlord. Reletting may be
for a period shorter or longer than the remaining of this Lease. No act by
Landlord other than giving written notice to Tenant shall terminate this Lease.
Acts of maintenance, efforts to relet the Premises or the appointment of a
receiver of Landlord's intitative to protect Landlord's interest under this
Lease shall not constitute a termination of Tenant's right to possession. So
long as this Lease is not terminated, Landlord shall have the right to remedy
any default of Tenant, to maintain or improve the Premises, to cause a receiver
to be appointed to administer the Premises
<PAGE> 13
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] reasonable costs in so doing,
with interest at the maximum rate permitted by law from the date of such
expenditure.
21.2 Damages Recoverable: If Tenant breaches this Lease and abandons the
Premises before the end of the term, or if Tenant's right to possession is
terminated by Landlord because of a breach or default of the Lease, then in
either such case, Landlord may recover from Tenant all damages suffered by
Landlord as a result of Tenant's failure to perform its obligations hereunder,
including, but not limited to, the cost of any tenant improvements constructed
by or on behalf of Tenant pursuant to Exhibit B hereto, the portion of any
broker's or leasing agent's commission incurred with respect to the leasing of
the Premises to Tenant for the balance of the term of the Lease remaining after
the date on which Tenant is in default of its obligations hereunder, and all
Reletting Costs, and the worth at the time of the award (computed in accordance
with paragraph (3) of Subdivision (a) of Section 1951.2 of the California Civil
Code) of the amount by which the Rent then unpaid hereunder for the balance of
the Lease term exceeds the amount of such loss of Rent for the same period which
Tenant proves could be reasonably avoided by Landlord and in such case, Landlord
prior to the award, may relet the Premises for the purpose of mitigating damages
suffered by Landlord because of Tenant's failure to perform its obligations
hereunder; provided, however, that even though Tenant has abandoned the Premises
following such breach, this Lease shall nevertheless continue in full force and
effect for as long as Landlord does not terminate Tenant's right of possession,
and until such termination, Landlord shall have the remedy described in Section
1951.4 of the California Civil Code (Landlord may continue this Lease in effect
after Tenant's breach and abandonment and recover Rent as it becomes due, if
Tenant has the right to sublet or assign, subject only to reasonable
limitations) and may enforce all its rights and remedies under this Lease,
including the right to recover the Rent from Tenant as it becomes due hereunder.
The "worth at the time of the award" within the meaning of Subparagraphs (a)(1)
and (a)(2) of Section 1951.2 of the California Civil Code shall be computed by
allowing interest at the rate of ten percent (10%) per annum. Tenant waives
redemption or relief from forfeiture under California Code of Civil Procedure
Sections 1174 and 1179, or under any other present or future law, in the event
Tenant is evicted or Landlord takes possession of the Premises by reason of any
default of Tenant hereunder.
21.3 Rights and Remedies Cumulative: The foregoing rights and remedies
of Landlord are not exclusive; they are cumulative in addition to any rights and
remedies now or hereafter existing at law, in equity by statute or otherwise, or
to any equitable remedies Landlord may have, and to any remedies Landlord may
have under bankruptcy laws or laws affecting creditor's rights generally. In
addition to all remedies set forth above, if Tenant defaults or otherwise
breaches this Lease, any and all Base Rent waived by Landlord under Section 3
above shall be immediately due and payable to Landlord and all options granted
to Tenant hereunder shall automatically terminate, unless otherwise expressly
agreed to in writing by Landlord.
21.4 Waiver of a Default: The waiver by Landlord of any default or
breach of any provision of this Lease shall not be deemed or construed a waiver
of any other breach or default by Tenant hereunder or of any subsequent breach
or default of this Lease, except for the default specified in the waiver.
22. Holding Over: If Tenant holds possession of the Premises after the
expiration of the term of this Lease with Landlord's consent, Tenant shall
become a tenant from month-to-month upon the terms and provisions of this Lease,
provided the monthly Base Rent during such hold over period shall be 125%
of the Base Rent due on the last month of the Lease term, payable in advance on
or before the first day of each month. Acceptance by Landlord of the monthly
Base Rent without the additional twenty-five percent (25%) increase of Base
Rent shall not be deemed or construed as a waiver by Landlord of any of its
rights to collect the increased amount of the Base Rent as provided herein
at any time. Such month-to-month tenancy shall not constitute a renewal or
extension for any further term. All options, if any, granted under the terms
of this Lease shall be deemed automatically terminated and be of no force or
effect during said month-to-month tenancy. Tenant shall continue in possession
until such tenancy shall be terminated by either Landlord or Tenant giving
written notice of termination to the other party at least thirty (30) days
prior to the effective date of termination. This paragraph shall not be
construed as Landlord's permission for Tenant to hold over. Acceptance of Base
Rent by Landlord following expiration or termination of this Lease shall not
constitute a renewal of this Lease.
23. Landlord's Default: Landlord shall not be deemed in breach or default of
this Lease unless Landlord fails within a reasonable time to perform an
obligation required to be performed by Landlord hereunder. For purposes of this
provision, a reasonable time shall in no event be less than thirty (30) days
after receipt by Landlord of written notice specifying the nature of the
obligation Landlord has not performed; provided, however, that if the nature of
Landlord's obligation is such that more than thirty (30) days, after receipt of
written notice, is reasonably necessary for its performance, then Landlord shall
not be in breach or default of this Lease if performance of such obligation is
commenced within such thirty (30) day period and thereafter diligently pursued
to completion.
24. Parking: Tenant shall have license to use the number of undesignated and
nonexclusive parking spaces set forth on Page 1 except those areas designated on
Exhibit A as Exclusive Parking. Landlord shall exercise reasonable efforts to
insure that such spaces are available to Tenant for its use, but Landlord shall
not be required to enforce Tenant's right to use the same.
<PAGE> 14
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Landlord shall be and is hereby entirely released from any and all of its
obligations to perform or further perform under this Lease and from all
liability hereunder as of the date of such sale; and the purchaser, at such sale
or any subsequent sale of the Premises shall be deemed, without any further
agreement between the parties or their successors in interest or between the
parties and any such purchaser, to have assumed and agreed to carry out any and
all of the covenants and obligations of the Landlord under this Lease. For
purposes of this Section 25, the term "Landlord" means only the owner and/or
agent of the owner as such parties exist as of the date on which Tenant executes
this Lease. A ground lease or similar long term lease by Landlord of the entire
Building, of which the Premises are a part, shall be deemed a sale within the
meaning of this Section 25. Tenant agrees to attorn to such new owner provided
such new owner does not disturb Tenant's use, occupancy or quiet enjoyment of
the Premises so long as Tenant is not in default of any of the provisions of
this Lease.
26. Waiver: No delay or omission in the exercise of any right or remedy of
Landlord on any default by Tenant shall impair such a right or remedy or be
construed as a waiver. The subsequent acceptance of Rent by Landlord after
breach by Tenant of any covenant or term of this Lease shall not be deemed a
waiver of such breach, other than a waiver of timely payment for the particular
Rent payment involved, and shall not prevent Landlord from maintaining an
unlawful detainer or other action based on such breach. No payment by Tenant or
receipt by Landlord of a lesser amount than the monthly Rent and other sums due
hereunder shall be deemed to be other than on account of the earliest Rent or
other sums due, nor shall any endorsement or statement on any check or
accompanying any check or payment be deemed an accord and satisfaction; and
Landlord may accept such check or payment without prejudice to Landlord's right
to recover the balance of such Rent or other sum or pursue any other remedy
provided in this Lease. No failure, partial exercise or delay on the part of the
Landlord in exercising any right, power or privilege hereunder shall operate as
a waiver thereof.
27. Casualty Damage: If the Premises or any part thereof shall be damaged by
fire or other casualty, Tenant shall give prompt written notice thereof to
Landlord. In case the Building shall be so damaged by fire or other casualty
that substantial alteration or reconstruction of the Building shall, in
Landlord's sole opinion, be required (whether or not the Premises shall have
been damaged by such fire or other casualty), Landlord may, at its option,
terminate this Lease by notifying Tenant in writing of such termination
within sixty (60) days after the date of such damage, in which event the Rent
shall be abated as of the date of such damage. If Landlord does not elect to
terminate this Lease and provided insurance proceeds and any contributions from
Tenant, if necessary, are available to fully repair the damage, Landlord shall
within ninety (90) days after the date of such damage commence to repair and
restore the Building and shall proceed with reasonable diligence to restore the
Building (except that Landlord shall not be responsible for delays outside its
control) to substantially the same condition in which it was immediately prior
to the happening of the casualty; provided, Landlord shall not be required to
rebuild, repair, or replace any part of Tenant's furniture, furnishings or
fixtures and equipment removable by Tenant or any improvements, alterations or
additions installed by or for the benefit of Tenant under the provisions of
this Lease. Landlord shall not in any event be required to spend for such work
an amount in excess of the insurance proceeds (excluding any deductible) and
any contributions from Tenant, if necessary, actually received by Landlord as a
result of the fire or other casualty. Landlord shall not be liable for any
inconvenience or annoyance to Tenant, injury to the business of Tenant, loss of
use of any part of the Premises by the Tenant or loss of Tenant's personal
property resulting in any way from such damage or the repair thereof, except
that, subject to the provisions of the next sentence, Landlord shall allow
Tenant a fair diminution of Rent during the time and to the extent the Premises
are unfit for occupancy. If the Premises or any other portion of the Building
be damaged by fire or other casualty resulting from the intentional or
negligent acts or omissions of Tenant or any of Tenant's Representatives, the
Rent shall not be diminished during the repair of such damage and Tenant shall
be liable to Landlord for the cost and expense of the repair and restoration of
all or any portion of the Building caused thereby (including, without
limitation, any deductible) to the extent such cost and expense is not covered
by insurance proceeds. In the event the holder of any indebtedness secured by
the Premises requires that the insurance proceeds be applied to such
indebtedness, then Landlord shall have the right to terminate this Lease by
delivering written notice of termination to Tenant within thirty (30) days
after the date of notice to Tenant of any such event, whereupon all rights in
obligations shall cease and terminate hereunder. Except as otherwise provided
in this Section 27, Tenant hereby valves the provisions of Sections 1932(2.),
1933(4.), 1941 and 1942 of the California Civil Code.
8. Condemnation: If twenty-five percent (25%) or more of the Premises is
condemned by eminent domain, adversely condemned or sold in lieu of condemnation
for any public or quasi-public use or purpose ("Condemned"), then Tenant or
Landlord may terminate this Lease as of the date when physical possession of the
Premises is taken and title vests in such condemning authority, and Rent shall
be adjusted to the date of termination. Tenant shall not because of such
condemnation assert any claim against Landlord or the condemning suthority for
any compensation because of such condemnation, and Landlord shall be entitled
to receive the entire amount of any award provided Tenant shall be entitled to
any estate of interest or other interest of Tenant. If a substantial portion of
the Premises, Building or the Lot is so Condemned, Landlord at its option may
terminate this Lease. If Landlord does not elect to terminate this Lease,
Landlord shall, if necessary, promptly proceed to restore the Premises the
Building to substantially its same condition prior to such partial condemnation,
allowing for the reasonable effects of such partial condemantion, and a
proportionate allowance shall be made to Tenant, as solely determined by
Landlord, for the Rent corresponding to the time during which, and to the part
of the Premises of which, Tenant is arrived on acount of such partial
condemnation and resoration. Landlord shall not be required to spend funds for
restoration in excess of the amount received by Landlord as compensation
awarded.
<PAGE> 15
29.1 Hazardous Materials Disclosure Certificate: Concurrently with
executing this Lease, and upon written request by Landlord, Tenant shall within
thirty (30) days execute, and deliver to Landlord, the Hazardous Materials
Disclosure Certificate (the "HazMat Certificate") in substantially the form
attached hereto as Exhibit F, and any other reasonably necessary documents as
requested by Landlord.
29.2 Definition of Hazardous Materials: As used in this Lease, the term
Hazardous Materials shall mean and include (a) any hazardous or toxic wastes,
materials or substances, and other pollutants or contaminants, which are or
become regulated by any Environmental Laws; (b) petroleum, petroleum by
products, crude oil or any fraction thereof; (c) asbestos; (d) polychlorinated
biphenyls; (e) radioactive materials; (f) any other material or substance
displaying toxic, reactive, ignitable or corrosive characteristics, as all such
terms are used in their broadest sense, and are defined or become defined by any
Environmental Law (defined below); or (g) any materials which cause a nuisance
upon or waste to the Premises, the Building, the Lot, the Park or any portion of
any of the foregoing.
29.3 Prohibition; Environmental Laws: Tenant shall not be entitled to
use nor store any Hazardous Materials on, in, or about the Premises, the
Building, the Lot and the Park, or any portion of the foregoing, without, in
each instance, obtaining Landlord's prior written consent thereto. If Landlord
consents to any such usage or storage, then Tenant shall be permitted to use
and/or store only those Hazardous Materials that are necessary for Tenant's
business and to the extent disclosed in the HazMat Certificate and as expressly
approved by Landlord in writing, provided that such usage and storage is only to
the extent of the quantities of Hazardous Materials as specified in the then
applicable HazMat Certificate as expressly approved by Landlord and provided
further that such usage and storage is in full compliance with any and all
local, state and federal environmental, health and/or safety-related laws,
statutes, orders, standards, courts' decisions, ordinances, rules and
regulations (as interpreted by judicial and administrative decisions), decrees,
directives, guidelines, permits or permit conditions, currently existing and as
amended, enacted, issued or adopted in the future which are or become applicable
to Tenant or all or any portion of the Premises (collectively, the
"Environmental Laws"). Tenant agrees that any changes to the type and/or
quantities of Hazardous Materials specified in the most recent HazMat
Certificate may be implemented only with the prior written consent of Landlord,
which consent may be given or withheld in Landlord's sole discretion. Tenant
shall not be entitled nor permitted to install any tanks under, on or about the
Premises for the storage of Hazardous Materials without the express written
consent of Landlord, which may be given or withheld in Landlord's sole
discretion. Landlord shall have the right at all times during the term of this
Lease to (i) inspect the Premises, (ii) conduct tests and investigations to
determine whether Tenant is in compliance with the provisions of this Section
29, and (iii) request lists of all Hazardous Materials used, stored or otherwise
located on, under or about the Premises, the Common Areas and/or the parking
lots (to the extent the Common Areas and/or the parking lots are not considered
part of the Premises). The cost of all such inspections, tests and
investigations shall be borne solely by Tenant, if Landlord reasonably believes
they are necessary.
29.4 Tenant's Environmental Obligations: Tenant shall give to Landlord
immediate verbal and follow-up written notice of any spills, releases,
discharges, disposals, emissions, migrations, removals or transportation of
Hazardous Materials on, under or about the Premises, or in any Common Areas or
parking lots (to the extent such areas are not considered part of the Premises).
Tenant covenants and warrants to promptly investigate, clean up, remove, restore
and otherwise remediate (including, without limitation, preparation of any
feasibility studies or reports and the performance of any and all closures) any
spill, release, discharge, disposal, emission, migration or transportation of
Hazardous Materials arising from or related to the intentional or negligent acts
or omissions of Tenant or Tenant's Representatives at Tenant's sole cost and
expense. Any such investigation, clean up, removal, restoration and other
remediation shall only be performed after Tenant has obtained Landlord's prior
written consent, which consent shall not be unreasonably withheld so long as
such actions would not potentially have a material adverse long-term or
short-term effect on the Premises, the Building, the Lot or the Park, or any
portion of any of the foregoing. Notwithstanding the foregoing, Tenant shall be
entitled to respond immediately to an emergency without first obtaining
Landlord's prior written consent. Tenant, at its sole cost and expense, shall
conduct and perform, or cause to be conducted and performed, all closures as
required by any Environmental Laws or any agencies or other governmental
authorities having jurisdiction thereof. If Tenant fails to so promptly
investigate, clean up, remove, restore, provide closure or otherwise so
remediate, Landlord may, but without obligation to do so, take any and all steps
necessary to rectify the same and Tenant shall promptly reimburse Landlord, upon
demand, for all costs and expenses to Landlord of performing investigation,
clean up, removal, restoration, closure and remediation work. All such work
undertaken by Tenant, as required herein, shall be performed in such a manner so
as to enable Landlord to make full economic use of the Premises, the Building,
the Lot and the Park after the satisfactory completion of such work.
29.5 Environmental Indemnity: In addition to Tenant's obligations as
set forth hereinabove, Tenant and Tenant's officers and directors agree to, and
shall, protect, indemnify, defend (with counsel acceptable to Landlord)
and hold Landlord and Landlord's lenders, partners, property management company
(if other than Landlord), agents, directors, officers, employees,
representatives, contractors, shareholders, successors and assigns and each of
their respective partners, directors, employees, representatives, agents,
contractors, shareholders, successors and assigns harmless from and against any
and all claims, judgments, damages, penalties, fines, liabilities, losses
(including, without limitation, diminution in value of the Premises, the
Building, the Lot, the Park, or any portion of any of the foregoing, damages
for the loss of or restriction on the use of rentable or usable space, and from
any adverse impact of Landlord's marketing of any space within the Building
and/or Park), suits, administrative proceedings and costs (including, but not
limited to, attorneys' and consultant fees and court costs) arising at any time
during or after the term of this Lease in connection with or related to,
directly or indirectly, the use, presence, transportation, storage, disposal,
migration,
<PAGE> 16
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (to the extent such areas are not
considered part of the Premises) as a result (directly or indirectly) of the
intentional or negligent acts or omissions of Tenant or Tenant's
Representatives. Neither the written consent of Landlord to the presence, use or
storage of Hazardous Materials in, on, under or about any portion of the
Premises, the Building, the Lot and the Park, nor the strict compliance by
Tenant with all Environmental Laws shall excuse Tenant and Tenant's officers and
directors from its obligations of indemnification pursuant hereto. To the extent
Landlord is strictly liable under any Environmental Laws, Tenant's obligations
to Landlord under this Section 29 and the indemnity contained herein shall
likewise be without regard to fault on Tenant's part with respect to the
violation of an Environmental Law which results in liability to any of the
aforementioned indemnitees. Refer to Addendum I.
29.6 Survival: Tenant's obligations and liabilities pursuant to the
provisions of this Section 29 shall survive the expiration or earlier
termination of this Lease. If it is determined by Landlord that Tenant, its use
of the Premises, the Building, the Lot and/or the Park, or any portion of any
of the foregoing, or the condition of all or any portion of the Premises, the
Building, the Lot and/or the Park is not in compliance with all Environmental
Laws (including, without limitation, the conduct or performance of any closures
as required by any Environmental Laws or any agencies or other governmental
authorities having jurisdiction thereof) at the expiration or earlier
termination of this Lease, then at Landlord's sole option, Landlord may require
Tenant to hold over possession of the Premises until Tenant can surrender the
Premises to Landlord in compliance with all Environmental Laws (including,
without limitation, the conduct or performance of any closures as required by
any Environmental Laws or any agencies or other governmental authorities having
jurisdiction thereof). Any such holdover by Tenant will be with Landlord's
consent, will not be terminable by Tenant in any event or circumstance and will
otherwise be subject to the provisions of Section 22 of this Lease.
30. Financial Statements: Tenant, for the reliance of Landlord, any lender
holding or anticipated to acquire a lien upon the Premises, the Building or the
Park or any portion thereof, or any prospective purchaser of the Building or the
Park or any portion thereof, within ten (10) days after Landlord's request
therefor, but not more often than once annually so long as Tenant is not in
default of this Lease, shall deliver to Landlord the then current audited
financial statements of Tenant (including interim periods following the end of
the last fiscal year for which annual statements are available) which statements
shall be prepared or compiled by a certified public accountant and shall present
fairly the financial condition of Tenant at such dates and the result of its
operations and changes in its financial positions for the periods ended on such
dates. If an audited financial statement has not been prepared, Tenant shall
provide Landlord with an unaudited financial statement and/or such other
information, the type and form of which are acceptable to Landlord in Landlord's
reasonable discretion, which reflects the financial condition of Tenant. If
Landlord so requests, Tenant shall deliver to Landlord an opinion of a certified
public accountant, including a balance sheet and profit and loss statement for
the most recent prior year, all prepared in accordance with generally accepted
accounting principles consistently applied. Any and all options granted to
Tenant hereunder shall be subject to and conditioned upon Landlord's reasonable
approval of Tenant's financial condition at the time of Tenant's exercise of any
such option.
31. General Provisions:
31.1 Time. Time is of the essence in this Lease and with respect to each
and all of its provisions in which performance is a factor.
31.2 Successors and Assigns. The covenants and conditions herein
contained, subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors, administrators and assigns of the parties hereto.
31.3 Recordation. Tenant shall not record this Lease or a short form
memorandum hereof without the prior written consent of the Landlord.
31.4 Landlord's Personal Liability. The liability of Landlord
(which, for purposes of this Lease, shall include Landlord and the owner of the
Building if other than Landlord) to Tenant for any default by Landlord under the
terms of this Lease shall be limited to the actual interest of Landlord and its
present or future partners in the Premises or the Building and Tenant agrees to
look solely to the Premises for satisfaction of any liability and shall not look
to other assets of Landlord nor seek any recourse against the assets of the
individual partners, directors, officers, shareholders, agents or employees of
Landlord; it being intended that Landlord and the individual partners,
directors, officers, shareholders, agents or employees of Landlord shall not be
personally liable in any manner whatsoever for any judgment or deficiency. The
liability of Landlord under this Lease is limited to its actual period of
ownership of title to the Building, and Landlord shall be automatically released
from further performance under this Lease and from all further liabilities and
expenses hereunder upon transfer of Landlord's interest in the Premises or the
Building.
31.5 Separability. Any provisions of this Lease which shall prove to be
invalid, void or illegal shall in no way affect, impair or invalidate any other
provisions hereof and such other provision shall remain in full force ad effect.
31.6 Choice of Law. This Lease shall be governed by the laws of the
State of California.
<PAGE> 17
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precceding, the prevailing party shall be reimbursed by the party not prevailing
for all reasonable costs and expenses, including, without imitation, reasonable
attorneys' and experts' fees and costs incurred by the prevailing party in
connection with such litigation or other proceeding and any appeal thereof. Such
costs, expenses and fees shall be included in and made a part of the judgment
recovered by the prevailing party, if any.
31.8 Entire Agreement. This Lease supersedes any prior agreements,
representations, negotiations or correspondence between the parties, and
contains the entire agreement of the parties on matters covered. No other
agreement, statement or promise made by any party that is not in writing and
signed by all parties to this Lease shall be binding.
31.9 Warranty of Authority. On the date that Tenant executes this Lease,
Tenant shall deliver to Landlord an original certificate of status for Tenant
issued by the California Secretary of State or statement of partnership for
Tenant recorded in the county in which the Premises are located, as applicable,
and such other documents as Landlord may reasonably request with regard to the
lawful existence of Tenant. Each person executing this Lease on behalf of a
party represents and warrants that (1) such person is duly and validly
authorized to do so on behalf of the entity it purports to so bind, and (2) if
such party is a partnership, corporation or trustee, that such partnership,
corporation or trustee has full right and authority to enter into this Lease and
perform all of its obligations hereunder. In addition to any other remedies
available to Landlord under this Lease, if there is any breach of the foregoing
warranty, the person(s) executing this Lease on behalf of Tenant shall be
personally liable for all of Tenant's obligations under this Lease, including,
but not limited to, the payment by such person(s) to Landlord of any and all
losses, liabilities, costs, expenses and damages incurred by Landlord hereunder.
31.10 Notices. Any and all notices and demands required or permitted to
be given hereunder to Landlord shall be in writing and shall be sent: (a) by
United States mail, certified and postage prepaid; or (b) by personal delivery;
or (c) by overnight courier, addressed to Landlord at 30 Executive Park, Suite
100, Irvine, CA 92714. Any and all notices and demands required or permitted to
be given hereunder to Tenant shall be in writing and shall be sent: (i) by
United States mail, certified and postage prepaid; or (ii) by personal delivery
to any employee or agent of Tenant over the age of eighteen (18) years of age;
or (iii) by overnight courier, all of which shall be addressed to Tenant at the
Premises; or (iv) by facsimile at the facsimile number at the Premises, if any,
as provided by Tenant on Page 1 of this Lease or otherwise provided to Landlord.
Notice and/or demand shall be deemed given upon the earlier of actual receipt or
the third day following deposit in the United States mail. Notice and/or demand
by facsimile shall be complete upon transmission over the telephone line. Any
notice or requirement of service required by any statute or law now or hereafter
in effect, including, but not limited to, California Code of Civil Procedure
Sections 1161, 1161.1, and 1162, is hereby waived by Tenant.
31.11 Joint and Several. If Tenant consists of more than one person or
entity, the obligations of all such persons or entities shall be joint and
several.
31.12 Covenants and Conditions. Each provision to be performed by Tenant
hereunder shall be deemed to be both a covenant and a condition.
31.13 Waiver of Jury Trial. The parties hereto shall and they hereby do
waive trial by jury in any action, proceeding or counterclaim brought by either
of the parties hereto against the other on any matters whatsoever arising out of
or in any way related to this Lease, the relationship of Landlord and Tenant,
Tenant's use or occupancy of the Premises, the Building or the Park, and/or any
claim of injury, loss or damage.
31.14 Counterclaims. In the event Landlord commences any proceedings for
nonpayment of Rent, Additional Rent, or any other sums or amounts due hereunder,
Tenant shall not interpose any counterclaim of whatever nature or description in
any such proceedings, provided, however, nothing contained herein shall be
deemed or construed as a waiver of the Tenant's right to assert such claims in
any separate action brought by Tenant or the right to offset the amount of any
final judgment owed by Landlord to Tenant.
31.15 Underlining. The use of underlining within the Lease is for
Landlord's reference purposes only and no other meaning or emphasis is intended
by this use, nor should any be inferred.
32. Signs: All signs and graphics of every kind visible in or from public view
or corridors or the exterior of the Premises shall be subject to Landlord's
prior written approval and shall be subject to any applicable governmental laws,
ordinances, and regulations and in compliance with Landlord's Sign Criteria as
set forth in Exhibit G hereto and made a part hereof. Tenant shall remove all
such signs and graphics prior to the termination of this Lease. Such
installations and removals shall be made in a manner as to avoid damage or
defacement of the Premises; and Tenant shall repair any damage or defacement,
including without limitation, discoloration caused by such installation or
reamoval. Landlord shall have the right, at its option, to deduct from the
Security Deposit such sums as are reasonably necessary to remove such signs,
including, but not limited to, the costs and expenses associated with any
repairs necessitated by such removal. Notwithstanding the foregoing, in no event
shall any: (a) neon, flashing or moving sign(s) or (b) sign(s) which shall
interfere with the visibility of any sign, awning, canopy, advertising matter,
or decoration of any kind of any other business or occupant of the Building or
the Park be permitted hereunder. Tenant further agrees to maintain any such
sign, awning, canopy, advertising matter, lettering, decoration or other thing
as may be approved in good condition and repair at all times.
<PAGE> 18
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]
notice by registered or certified mail to any beneficiary of a deed of trust or
mortgagee of a mortgage covering the Premises who as provided Tenant with
notice of their interest together with an addresss for receiving notice, and
shall offer such beneficiary or mortgagee a reasonable opportunity to cure the
default (which, in no event shall be less than ninety (90) days), including
time to obtain possession of the Premises by power of sale or a judicial
foreclosure, if such should prove necessary to effect a cure. If such breach or
default cannot be cured within such time period, then such additional time as
may be necessary will be given to such beneficiary or mortgagee to effect such
cure so long as such beneficiary or mortgagee has commenced the cure within the
original time period and thereafter diligently pursues such cure to completion,
in which event this Lease shall not be terminated while such cure is being
diligently pursued. Tenant agrees that each lender to whom this Lease has been
assigned by Landlord is an express third party beneficiary hereof. Tenant shall
not make any prepayment of Rent more than one (1) month in advance without the
prior written consent of each such lender, except if Tenant is required to make
quarterly payments of Rent in advance pursuant to the provisions of Section 8
above. Tenant waives the collection of any deposit from such lender(s) or any
purchaser at a foreclosure sale of such Lender(s)' deed of trust unless the
lender(s) or such purchaser shall have actually received and not refunded the
deposit. Tenant agrees to make all payments under this Lease to the lender with
the most senior encumbrance upon receiving a direction, in writing, to pay said
amounts to such lender. Tenant shall comply with such written direction to pay
without determining whether an event of default exists under such lender's loan
to Landlord.
34. Quitclaim: Upon any termination of this Lease, Tenant shall, at Landlord's
request, execute, have acknowledged and deliver to Landlord a quitclaim deed of
Tenant's interest in and to the Premises. If Tenant fails to so deliver to
Landlord such a quitclaim deed, Tenant hereby agrees that Landlord shall have
the full authority and right to record such a quitclaim deed signed only by
Landlord and such quitclaim deed shall be deemed conclusive and binding upon
Tenant.
35. Modifications for Lender: If, in connection with obtaining financing for the
Premises or any portion thereof, Landlord's lender shall request reasonable
modification(s) to this Lease as a condition to such financing, Tenant shall not
unreasonably withhold, delay or defer its consent thereto, provided such
modifications do not materially adversely affect Tenant's rights hereunder or
the use, occupancy or quiet enjoyment of Tenant hereunder.
36. Warranties of Tenant: Tenant hereby warrants and represents to Landlord, for
the express benefit of Landlord, that Tenant has undertaken a complete and
independent evaluation of the risks inherent in the execution of this Lease and
the operation of the Premises for the use permitted hereby, and that, based upon
said independent evaluation, Tenant has elected to enter into this Lease and
hereby assumes all risks with respect thereto. Tenant hereby further warrants
and represents to Landlord, for the express benefit of Landlord, that in
entering into this Lease, Tenant has not relied upon any statement, fact,
promise or representation (whether express or implied, written or oral) not
specifically set forth herein in writing and that any statement, fact, promise
or representation (whether express or implied, written or oral) made at any time
to Tenant, which is not expressly incorporated herein in writing, is hereby
waived by Tenant.
37. Compliance with Americans With Disabilities Act: Landlord and Tenant
hereby agree and acknowledge that the Premises, the Building and/or the Park
may be subject to the requirements of the Americans with Disabilities Act, a
federal law codified at 42 U.S.C. 12101 et seq, including, but not limited
to Title III thereof, all regulations and guidelines related thereto, together
with any and all laws, rules, regulations, ordinances, codes and statutes now or
hereafter enacted by local or state agencies having jurisdiction thereof,
including all requirements of Title 24 of the State of Califomia, as the same
may be in effect on the date of this Lease and may be hereafter modified,
amended or supplemented (collectively, the "ADA"). Any Tenant Improvements to be
constructed hereunder shall be in compliance with the requirements of the ADA,
and all costs incurred for purposes of compliance therewith shall be a part of
and included in the costs of the Tenant Improvements. Tenant shall be solely
responsible for conducting its own independent investigation of this matter and
for ensuring that the design of all Tenant Improvements strictly comply with all
requirements of the ADA. If any barrier removal work or other work is required
to the Building, the Common Area or the Park under the ADA, then such work shall
be the responsibility of Landlord; provided, if such work is required under the
ADA as a result of Tenant's use of the Premises or any work or alteration made
to the Premises by or on behalf of Tenant, then such work shall be performed by
Landlord at the sole cost and expense of Tenant. Except as otherwise expressly
provided in this provision, Tenant shall be responsible at its sole cost and
expense for fully and faithfully complying with all applicable requirements of
the ADA, including without limitation, not discriminating against any disabled
persons in the operation of Tenant's business in or about the Premises, and
offering or otherwise providing auxiliary aids and services as, and when,
required by the ADA. Within ten (10) days after receipt, Landlord and Tenant
shall advise the other party in writing, and provide the other with copies of
(as applicable), any notices alleging violation of the ADA relating to any
portion of the Premises or the Building; any claims made or threatened in
writing regarding noncompliance with the ADA and relating to any portion of the
Premises or the Building; or any governmental or regulatory actions or
investigations instituted or threatened regarding noncompliance with the ADA and
relating to any portion of the Premises or the Building. Tenant shall and hereby
agrees to protect, defend (with counsel acceptable to Landlord) and hold
Landlord and Landlord's lender(s), partners, employees, representatives, legal
representatives, successors and assigns (collectively, the "Indemnitees")
harmless and indemnify the Indemnitees from and against all liabilities,
damages, claims, losses, penalties, judgments, charges and expenses (including
reasonable attorneys' fees, costs of court and expenses necessary in the
prosecution or defense of any litigation including the enforcement of this
provision) arising from or in any way related to, directly or indirectly,
<PAGE> 19
38. Brokerage Commission: Landlord and Tenant each represents and warrants
for the benefit of the other that it has had no dealings with any real estate
broker, agent or finder in connection with the Premises and/or the negotiation
of this Lease, except for the Broker(s) (as set forth on Page 1), and that it
knows of no other real estate broker, agent or finder who is or might be
entitled to a real estate brokerage commission or finder's fee in connection
with this Lease or otherwise based upon contacts between the claimant and
Tenant. Each party shall indemnify and hold harmless the other from and
against any and all liabilities or expenses arising out of claims made for a
fee or commission by any real estate broker, agent or finder in connection with
the Premises and this Lease other than Broker(s), if any, resulting from the
actions of the indemnifying party. Any real estate brokerage commission or
finder's fee payable to the Broker(s) in connection with this Lease shall only
be payable and applicable to the extent of the initial term of the Lease and to
the extent of the Premises as same exist as of the date on which Tenant
executes this Lease. Unless expressly agreed to in writing by Landlord and
Broker(s), no real estate brokerage commission or finder's fee shall be owed
to, or otherwise payable to, the Broker(s) for any renewals or other extensions
of the initial term of this Lease or for any additional space leased by Tenant
other than the Premises as same exist as of the date on which Tenant executes
this Lease.
39. Quiet Enjoyment: Landlord covenants with Tenant, upon the paying of
Rent and observing and keeping the covenants, agreements and conditions of this
Lease on its part to be kept and during the periods that Tenant is not
otherwise in default of any of the terms or provisions of this Lease, and
subject to the rights of any of Landlord's lenders, (i) that Tenant shall and
may peaceably and quietly hold, occupy and enjoy the Premises and the Common
Areas during the term of this Lease, and (ii) neither Landlord, nor any
successor or assign of Landlord, shall disturb Tenant's occupancy or enjoyment
of the Premises and the Common Areas.
40. Option to Renew: Landlord grants to Tenant one (1) three (3) year
option to renew this Lease at the then Fair Market Value rent provided Tenant
gives Landlord no less than six (6) months prior written notice of Tenant's
intent to so exercise this option. This Option shall be personal to Tenant and
not assignable or transferable to any sublessee or assignee. Furthermore,
Tenant may not exercise this Option if Tenant is in default of the Lease either
at the time the Option is exercised or upon the Commencement of the Option
period.
41. Right of First Opportunity: Landlord grants to Tenant a Right of First
Opportunity to Tenant on contiguous space within the Building or other space
within the Park controlled by Landlord. Landlord agrees to notify Tenant upon
such space becoming available, at which point Landlord and Tenant may negotiate
in good faith on such space. This Right of First Opportunity shall not
preclude Landlord from negotiating with any other party provided Landlord has
notified Tenant of said space being available. Landlord hereby notifies Tenant
of approximately 25,000 square feet at 1047 South East Street that will be
available March 1, 1996.
IN WITNESS WHEREOF, this Lease is executed on the date and year first
written above.
LANDLORD:
ANAHEIM TECHNOLOGY CENTER,
a California Limited Partnership
By: PATRICIAN ASSOCIATES, INC., a
California Corporation, General Partner
By: /s/ John N. Urban /s/ Ronald B. Franklin
---------------------------------------------
JOHN N. URBAN RONALD B. FRANKLIN
Title: Vice President Vice President
------------------------------------------
Date:
--------------------------------
TENANT:
AMERIQUEST TECHNOLOGIES, INC.,
a Delaware Corporation
By: /s/ ???
----------------------------------
Title: CFO
-------------------------------
Date: 2-10-95
--------------------------------
<PAGE> 20
EXHIBIT B
TENANT IMPROVEMENTS
Landlord, at Landlord's sole cost and expense she construct the
following Tenant Improvements:
1. Refurbish and/or demolish the existing office to provide a maximum of
6,500 square feet of drop-ceiling HVAC office area in general accordance
with Exhibit B-1 attached hereto. The office shall be constructed to
Landlord's standard office finishes with carpet and paint colors to be
mutually agreed upon. Landlord she provide standard electrical outlets
and office lighting. All furniture, equipment and office partitions shall
be at Tenant's sole cost and expense.
2. Construct an assembly/production area of no more than 9,000 square feet
in accordance with the area so noted on Exhibit B-2 attached hereto.
This area shall be drop-ceiling HVAC with standard office lighting and VCT
floor. Landlord will stubb 400 amps of 277/480 volt power to a sub-panel
adjacent to the existing common area electrical room. All electrical
distribution within the production/assembly area shall be at Tenant's sole
cost, excepting only that Landlord shall provide Tenant with an allowance
of $5,000 for said electrical distribution. Landlord and Tenant agree
that this $5,000 allowance is not intended to cover the entire cost of
Tenant's electrical distribution.
3. Construct four (4) dock positions along the westerly wall of the Premises
as illustrated on Exhibit B-2. As a part of this work, Landlord
contemplates filling in the existing truck well bringing it to grade with
the surrounding yard area. Landlord shall also provide edge-of-dock
manual dock revelers at each dock position.
4. Demolish and remove existing HVAC ducting, plumbing lines, and strip
fluorescent lighting in the warehouse to provide a minimum 20' clearance.
5. Install new high-pressure sodium or metal halide warehouse lighting
throughout the warehouse. In the event Tenant desires mercury vapor
warehouse lighting, Landlord will provide on the condition that Tenant
pays for the incremental cost of mercury lighting, if any.
6. Deliver the warehouse floor in a broom-swept clean condition with one coat
of standard floor sealer. All major defects will be epoxy-patched and all
protrusions cut off.
7. Construct one (1) warehouse office and one (1) men's single-restroom and
one (1) women's single-restroom in the warehouse area indicated on Exhibit
B-2.
8. Landlord agrees to install 36" deep dock canopies over the new dock doors,
but only in the event the new docks are not flush with the building panels.
Any improvements above and beyond those listed above, including any
modifications to the fire sprinkler system, shall be at Tenant's sole cost and
expense. Notwithstanding the above, the cost of space planning, construction,
documents, and building permits shall be borne by Landlord.
Tenant agrees that the space plans illustrated in Exhibits B-1 and B-2 are
acceptable and Landlord shall proceed with construction drawings based on said
exhibits. Upon completion, Tenant shall have the opportunity to review the
plans and request minor modifications which do not impact Landlord's cost. In
the event Tenant requires substantial modifications, modifications resulting in
increased cost, or modifications that in any way delay Landlord, Tenant shall
be (i) fully responsible for any and all costs attributable to such delays or
modifications and (ii) the Commencement Date of the Lease shall not be delayed
as a result of Tenant's delay or modification resulting in a delay.
Tenant shall be permitted, subject to City approval, to early access; but
Tenant acknowledges that Landlord shall assume no liability for any of Tenant's
property. Tenant further agrees not to interfere with Landlord or Landlord's
contractors during construction of the Tenant Improvements.
LANDLORD'S INITIALS: /s/
----------
TENANT'S INITIALS: /s/
----------
<PAGE> 21
EXHIBIT C
RULES AND REGULATIONS
1. Tenant shall not suffer or permit the obstruction of any Common
Areas, including driveways, walkways and stairways.
2. Landlord reserves the right to refuse access to any persons
Landlord in good faith judges to be a threat to the safety,
reputation, or property of the Project and its occupants.
3. Tenant shall not make or permit any noise or odors that annoy or
interfere with other lessees or persons having business within the
Project.
4. Tenant shall not keep animals or birds within the Project, and
shall not bring bicycles, motorcycles or other vehicles into areas
not designated as authorized for the same.
5. Tenant shall not make, suffer or permit litter except in
appropriate receptacles for that purpose.
6.
7. Tenant shall be responsible for the inappropriate use of any toilet
rooms, plumbing or other utilities. No foreign substances of any
kind are to be inserted therein.
8. Tenant shall not deface the walls, partitions or other surfaces of
the Premises of the Project.
9. Tenant shall not suffer or permit any thing in or around the
Premises or Building that causes excessive vibration or floor
loading in any part of the Project.
10. Tenant shall return all keys at the termination of its tenancy and
shall be responsible for the cost of replacing any keys that are
lost.
11. No window coverings, shades or awnings shall be installed or used
by Tenant, without Landlord's written prior consent.
12. No Tenant, employee or Invitee shall go upon the roof of the
Building without Landlord's written prior consent
13. Tenant shall not suffer or permit smoking or carrying of lighted
cigars or cigarettes in areas reasonably designated by Landlord or
by applicable governmental agencies as non-smoking areas.
14. Tenant shall not use any method of portable heating or
window-mounted air conditioning other than as provided by Landlord.
15. Tenant shall not install, maintain or operate any vending machines
upon the Premises without Landlord's written consent.
16. The Premises shall not be used for lodging, cooking or food
preparation other than ordinary lunch room use for employees.
17. Tenant shall comply with all safety, fire protection and evacuation
regulations established by Landlord or any applicable governmental
agency.
18. Landlord reserves the right to waive any one of these rules or
regulations, and/or as to any particular Tenant, and any such
waiver shall not constitute a waiver of any other rule or
regulation or any subsequent application thereof to such Tenant.
19. Tenant assumes all risks from theft or vandalism and agrees to keep
its Premises locked as may be required.
20. Landlord reserves the right to make such other reasonable rules and
regulations as it may from time to time deem necessary for the
appropriate operation and safety of the Project and its occupants.
Tenant agrees to abide by these and such rules and regulations.
PARKING RULES
1. Tenant shall not permit or allow any vehicles that belong to or are
controlled by Tenant or Tenant's employees, suppliers, shippers,
customers, or invitees to be loaded, unloaded, or parked in areas
other than those designated by Landlord for such activities.
2. Users of the parking area will obey all posted signs and park only
in the areas designated for vehicle parking.
3. Unless otherwise instructed, every person using the parking area is
required to park and lock his own vehicle. Landlord will not be
responsible for any damage to vehicles, injury to persons or loss
of property, all of which risks are assumed by the party using the
parking area.
4. The maintenance, washing, waxing or cleaning of vehicles in the
Common Area is prohibited.
5. Tenant shall be responsible for seeing that all of its employees,
agents and invitees comply with the applicable parking rules,
regulations, laws and agreements.
6. Landlord reserves the right to modify these rules and/or adopt such
other reasonable and non-discriminatory rules and regulations as it
may deem necessary for the proper operation of the parking area.
LANDLORD'S INITIALS: /s/
----------
TENANT'S INITIALS: /s/
----------
<PAGE> 22
EXHIBIT F
HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE
Your cooperation in this matter is appreciated. Initially, the information
provided by you in this Hazardous Materials Disclosure Certificate is necessary
for the Landlord (identified below) to evaluate and finalize a lease agreement
with you as lessee. After a lease agreement is signed by you and the Landlord
(the "Lease Agreement"), on an annual basis in accordance with the provisions
of Paragraph 29 of the signed Lease Agreement, you are to provide an update to
the information initially provided by you in this certificate. The information
contained in the initial Hazardous Materials Disclosure Certificate and each
annual certificate provided by you thereafter will be maintained in
confidentiality by Landlord subject to release and disclosure as required by
(i) any lenders and owners and their respective environmental consultants, (ii)
any prospective purchaser(s) of all or any portion of the property on which the
Premises are located, (iii) Landlord to defend itself or its lenders, partners
or representatives against any claim or demand, and (iv) any laws, rules,
regulations, orders, decrees, or ordinances, including, without limitation,
court orders or subpoenas. Any and all capitalized terms used herein, which are
not otherwise defined herein, shall have the same meaning ascribed to such term
in the signed Lease Agreement. Any questions regarding this certificate should
be directed to, and when completed, the certificate should be delivered to:
Landlord: Anaheim Technology Center,
a California Limited Partnership
c/o Lincoln Property Company N.C, Inc.
P.O. Box 19693
30 Executive Park, Suite 100
Irvine, California 92713-9693
Attn: Erik M. Hansen
Phone: (714) 261-2100
Name of Tenant: AmeriQuest Technologies, Inc.
a Delaware Corporation
Mailing Address: No. 3 Imperial Promenade
Santa Ana, CA 92705
Contact Person, Title and Telephone Number(s): Peter D. Lytle, Sr. V.P.
----------------------------
Operations 714-222-6032.
- --------------------------------------------------------------------------
Contact Person for Harzardous Waste Materials Management and Manifests and
Telephone Number(s): same.
------------------------------------------------------
Address of Premises: 1051 South East Street
Anaheim, CA 92805
Length of Initial Term: Five Years
1. GENERAL INFORMATION:
Describe the initial proposed operations to take place in, on, or
about the Premises, including, without limitation, principal
products processed, manufactured or assembled services and
activities to be provided or otherwise conducted. Existing
lessees should describe any proposed changes to on-going
operations.
Computer Products Distribution Assembly
------------------------------------------------------------------
2. USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS
2.1 Will any Hazardous Materials be used, generated, stored or
disposed of in, on or about the Premises? Existing lessees
should describe any Hazardous Materials which continue to be
used, generated, stored or disposed of in, on or about the
Premises.
Wastes Yes [ ] No [X]
Chemical Products Yes [ ] No [X]
Other Yes [ ] No [X]
If Yes is marked, please explain:
----------------------------
-------------------------------------------------------------
-------------------------------------------------------------
1
<PAGE> 23
2.2 If yes is marked in Section 2.1, attach a list of any
Hazardous Materials to be used, generated, stored or disposed
of in, on or about the Premises, including the applicable
hazard class and in estimate of the quantities of such
Hazardous Materials at any given time; estimated annual
throughput; the proposed location(s) and method of storage
(excluding nominal amounts of ordinary household cleaners and
janitorial supplies which are not regulated by any
Environmental Laws); and the proposed location(s) and method
of disposal for each Hazardous Material, including, the
estimated frequency, and the proposed contractors or
subcontractors. Existing lessees should attach a list
setting forth the information requested above and such list
should include actual data from on-going operations and the
identification of any variations in such information from the
prior year's certificate.
3. STORAGE TANKS AND SUMPS
3.1 Is any above or below ground storage of gasoline, diesel,
petroleum, or other Hazardous Materials in tanks or sumps
proposed in, on or about the Premises? Existing lessees
should describe any such actual or proposed activities.
Yes [ ] No [X]
If Yes is marked, please explain:
----------------------------
-------------------------------------------------------------
-------------------------------------------------------------
4. WASTE MANAGEMENT
4.1 Has your company been issued an EPA Hazardous Waste Generator
I.D. Number? Existing lessees should describe any additional
identification numbers issued since the previous certificate.
Yes [ ] No [X]
4.2 Has your company filed a biennial or quarterly reports as a
hazardous waste generator? Existing lessees should describe
any new reports filed.
Yes [ ] No [X]
If yes, attach a copy of the most recent report filed.
5. WASTEWATER TREATMENT AND DISCHARGE
5.1 Will your company discharge wastewater or other wastes to:
storm drain? sewer?
--- ---
surface water? X no wastewater or other wastes discharged.
--- ---
Existing lessees should indicate any actual discharges. If
so, describe the nature of any proposed or actual
discharge(s).
-------------------------------------------------------------
-------------------------------------------------------------
5.2 Will any such wastewater or waste be treated before
discharge?
Yes [ ] No [X]
If yes, describe the type of treatment proposed to be
conducted. Existing lessees should describe the actual
treatment conducted.
-------------------------------------------------------------
-------------------------------------------------------------
6. AIR DISCHARGES
6.1 Do you plan for any air filtration systems or stacks to be
used in your company's operations in, on or about the
Premises that will discharge into the air; and will such air
emissions be monitored? Existing lessees should indicate
whether or not there are any such air filtration systems or
stacks in use in, on or about the Premises which discharge
into the air and whether such air emissions are being
monitored.
Yes [ ] No [X]
If yes, please describe:
-------------------------------------------------------------
-------------------------------------------------------------
2
<PAGE> 24
6.2 Do you propose to operate any of the following types of
equipment, or any other equipment requiring an air emissions
permit? Existing lessees should specify any such equipment
being operated in, on or about the Premises.
Spray booth(s) Incinerator(s)
--- ---
Dip tank(s) Other (Please describe)
--- ---
Drying oven(s) X No Equipment Requiring Air Permits
--- ---
If yes, please describe:
-------------------------------------------------------------
-------------------------------------------------------------
7. HAZARDOUS MATERIALS DISCLOSURES
7.1 Has your company prepared or will it be required to prepare a
Hazardous Materials management plan ("Management Plan")
pursuant to Fire Department or other governmental or
regulatory agencies' requirements? Existing lessees should
indicate whether or not a Management Plan is required and has
been prepared.
Yes [ ] No [X]
If yes, attach a copy of the Management Plan. Existing
lessees should attach a copy of any required updates to the
Management Plan.
7.2 Are any of the Hazardous Materials, and in particular
chemicals, proposed to be used in your operations in, on or
about the Premises regulated under Proposition 65? Existing
lessees should indicate whether or not there are any new
Hazardous Materials being so used which are regulated under
Proposition 65.
Yes [ ] No [X]
If yes, please explain:
-------------------------------------------------------------
-------------------------------------------------------------
8. ENFORCEMENT ACTIONS AND COMPLAINTS
8.1 With respect to Hazardous Materials or Environmental Laws,
has your company ever been subject to any agency enforcement
actions, administrative orders, or consent decrees or has
your company received requests for information, notice or
demand letters, or any other inquiries regarding its
operations? Existing lessees should indicate whether or not
any such actions, orders or decrees have been, or are in the
process of being, undertaken or if any such requests have
been received.
Yes [ ] No [X]
If yes, describe the actions, orders or decrees and any
continuing compliance obligations imposed as a result of
these actions, orders or decrees and also describe any
requests, notices or demands, and attach a copy of all such
documents. Existing lessees should describe and attach a
copy of any new actions, orders, decrees, requests, notices
or demands not already delivered to Landlord pursuant to the
provisions of Paragraph 29 of the signed Lease Agreement.
-------------------------------------------------------------
-------------------------------------------------------------
8.2 Have there ever been, or are there now pending, any lawsuits
against your company regarding any environmental or health
and safety concerns?
Yes [ ] No [X]
If yes, describe any such lawsuits and attach copies of the
complaint(s), cross-complaint(s), pleadings and all other
documents related thereto as requested by Landlord. Existing
lessees should describe and attach a copy of any new
complaint(s), cross-complaint(s), pleadings and other related
documents not already delivered to Landlord pursuant to the
provisions of Paragraph 29 of the signed Lease Agreement.
3
<PAGE> 25
8.3 Have there been any problems or complaints from adjacent
tenants, owners or other neighbors at your company's current
facility with regard to environmental or health and safety
concerns? Existing lessees should indicate whether or not
there have been any such problems or complaints from adjacent
tenants, owners or other neighbors at, about or near the
Premises.
Yes [ ] No [X]
If yes, please describe. Existing lessees should describe
any such problems or complaints not already disclosed to
Landlord under the provisions of the signed Lease Agreement.
-------------------------------------------------------------
-------------------------------------------------------------
9. PERMITS AND LICENSES
9.1 Attach copies of all Hazardous Materials permits and licenses
issued to your company with respect to its proposed
operations in, on or about the Premises, including, without
limitation, any wastewater discharge permits, air emissions
permits, and use permits or approvals. Existing lessees
should attach copies of any new permits and licenses as well
as any renewals of permits or licenses previously issued.
The undersigned hereby acknowledges and agrees that this Hazardous
Materials Disclosure Certificate is being delivered in connection with,
and as required by, Landlord in connection with the evaluation and
finalization of a Lease Agreement and will be attached thereto as an
exhibit. The undersigned further acknowledges and agrees that this
Hazardous Materials Disclosure Certificate is being delivered in
accordance with, and as required by, the provisions of Paragraph 29 of the
Lease Agreement. The undersigned further acknowledges and agrees that the
Landlord and its partners, lenders and representatives may, and will, rely
upon the statements, representations, warranties, and certifications made
herein and the truthfulness thereof in entering into the Lease Agreement
and the continuance thereof throughout the term, and any renewals thereof,
of the Lease Agreement. I (print name) Steve Holmes, acting with full
authority to bind the (proposed) Tenant and on behalf of the (proposed)
Tenant, certify, represent and warrant that the information contained in
this certificate is true and correct.
TENANT:
AMERIQUEST TECHNOLOGIES, INC.,
a Delaware Corporation
By: /s/ ???
-----------------------------------
Title: CFO
--------------------------------
Date: 2-10-95
---------------------------------
4
<PAGE> 26
FIRST AMENDMENT TO LEASE
This First Amendment ("Amendment") is made this 19th day of June 1995
by and between Anaheim Technology Center, a California Limited
Partnership ("Landlord") and AmeriQuest Technologies, Inc., a Delaware
corporation ("Tenant").
RECITALS
WHEREAS,
A. Landlord and Tenant entered into that certain lease dated January
25, 1995 for certain property generally situated at 1051 South East
Street, Anaheim, California, which together with all amendments and
modifications is hereinafter called the Lease.
B. The parties hereto wish by this Amendment to amend the Lease.
CONSIDERATION
Therefore, in consideration of the agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
TERMS
1. Unless otherwise stated, any capitalized term is hereby given the
same meaning as set forth in the Lease.
2. Except as otherwise stated in this Amendment, the terms of the
Lease remain in full force and effect and the Lease, as hereby
amended, shall bind, and inure to the benefit of, the successors of
the parties hereto.
3. Lease Term: The term set forth in the Lease shall be adjusted as
follows:
April 10, 1995 (Commencement Date) through April 9, 2000
(Expiration Date).
4. Base Rent and Adjustments to Base Rent: The monthly Base Rent and
Adjustments to Base Rent as set forth in the Lease shall be
modified as follows to reflect the addition of $945 per month for
amortized Tenant Improvements:
4/10/95 - 5/9/95 $19,011 per month
5/10/95 - 1/9/96 $9,978 per month
1/10/96 - 4/9/96 $19,011 per month
4/10/96 - 4/9/98 $22,749 per month
4/10/98 - 4/9/2000 $24,618 per month
5. Tenant Improvements: The following language is intended to
supplement the Tenant Improvements, Exhibit B of the Lease:
Tenant's Construction: Tenant has required certain Tenant
Improvements to be constructed ("Tenant's Construction") which are
above and beyond those which, pursuant to the Lease, are the
responsibility of Landlord. Landlord agrees, subject to the
reimbursement by Tenant, to provide a total of Forty-Two Thousand
Four Hundred and Sixty-Five Dollars ($42,465) for Tenant's
Construction. This sum shall be amortized over the term of the
Lease at 12% per annum and paid monthly by Tenant at the time of
the Base Rent payments. The subject amortization results in an
addition to the monthly Base Rent of Nine Hundred Forty-Five
Dollars ($945) which is reflected in the amended Base Rent schedule
herein.
<PAGE> 27
6. All other terms and conditions of the Lease are hereby ratified and
reconfirmed and shall remain unchanged and in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Amendment.
LANDLORD
ANAHEIM TECHNOLOGY CENTER, A CALIFORNIA LIMITED PARTNERSHIP
By: PATRICIAN ASSOCIATES, INC., a California Corporation,
General Partner
By: /s/ Bill Bramwell
-----------------------------------
Name: Bill Bramwell
--------------------------------
Title: Senior regional Asset Manager
Commercial Real Estate Equities
-------------------------------
Date: July 24, 1995
--------------------------------
TENANT
AMERIQUEST TECHNOLOGIES, INC.
A DELAWARE CORPORATION
By: /s/ Thomas F. Ross
---------------------------------------
Name: Thomas F. Ross
-------------------------------------
Title: Executive Vice President
------------------------------------
Date: June 28, 1995
-------------------------------------
Page 2
<PAGE> 1
EXHIBIT 10.28
STANDARD SUBLEASE
American Industrial Real Estate Association
[LOGO]
1. PARTIES. This Sublease, dated, for reference purposes only, September
4, 1996, is made by and between Ameriquest Technologies, Inc. A Delaware
Corporation (herein called "Sublessor") and Central Video, Inc. a California
Corporation (herein called "Sublessee").
2. PREMISES. Sublessor hereby subleases to Sublessee and Sublessee hereby
subleases from Sublessor for the term, at the rental, and upon all of the
conditions set forth herein, that certain real property situated in the County
of Orange State of California, commonly known as 1051 South East Street,
Anaheim, CA 92805 and described as approximately 62,298 square feet concrete
tilt up building which is part of a larger 108,000 square foot building. Said
real property, including the land and all improvements thereon, is hereinafter
called the "Premises".
3. TERM.
3.1 TERM. The term of this Sublease shall be for Forty One Months
(41) commencing on November 10, 1996 and ending on April 9, 2000 unless sooner
terminated pursuant to any provision hereof.
3.2 DELAY IN COMMENCEMENT. Notwithstanding said commencement date,
if for any reason Sublessor cannot deliver possession of the Premises to
Sublessee on said date, Sublessor shall not be subject to any liability
therefore, nor shall such failure affect the validity of this Lease or the
obligations of Sublessee hereunder or extend the term hereof, but in such case
Sublessee shall not be obligated to pay rent until possession of the Premises
is tendered to Sublessee; provided, however, that if Sublessor shall not have
delivered possession of the Premises within thirty (30) days from said
commencement date, Sublessee may, at Sublessee's option, by notice in writing
to Sublessor within ten (10) days thereafter, cancel this Sublease, in which
event the parties shall be discharged from all obligations thereunder. If
Sublessee occupies the Premises prior to said commencement date, such occupancy
shall be subject to all provisions hereof, such occupancy shall not advance the
termination date and Sublessee shall pay rent for such period at the initial
monthly rates set forth below.
4. RENT. Sublessee shall pay to Sublessor as rent for the Premises equal
monthly payments of $25,339.91, in advance, on the 1st day of each month of the
term hereof. Sublessee shall pay Sublessor upon the execution hereof $16,893.27
as rent for the period of November 10 thru November 30, 1996 (20 Days). Rent
for any period during the term hereof which is for less than one month shall be
a prorata portion of the monthly installment. Rent shall be payable in lawful
money of the United States to Sublessor at the address stated herein or to such
other persons or at such other places as Sublessor may designate in writing.
5. SECURITY DEPOSIT. Sublessee shall deposit with Sublessor upon execution
hereof $50,679.82 as security for Sublessee's faithful performance of
Sublessee's obligations hereunder. If Sublessee fails to pay rent or other
charges due hereunder, or otherwise defaults with respect to any provision of
this Sublease, Sublessor may use, apply or retain all or any portion of said
deposit for the payment of any rent or other charge in default or for the
payment of any other sum to which Sublessor may become obligated by reason of
Sublessee's default, or to compensate Sublessor for any loss or damage which
Sublessor may suffer thereby. If Sublessor so uses or applies all or any
portion of said deposit, Sublessee shall within ten (10) days after written
demand therefore deposit cash with Sublessor in an amount sufficient to restore
said deposit to the full amount hereinabove stated and Sublessee's failure to
do so shall be a material breach of this Sublease. Sublessor shall not be
required to keep said deposit separate from its general accounts. If Sublessee
performs all of Sublessee's obligations hereunder, said deposit, or so much
thereof as has not theretofore been applied by Sublessor, shall be returned,
without payment of interest or other increment for its use to Sublessee (or at
Sublessor's option, to the last assignee, if any, of Sublessee's interest
hereunder) at the expiration of the term hereof, and after Sublessee has
vacated the Premises. No trust relationship is created herein between Sublessor
and Sublessee with respect to said Security Deposit.
6. USE.
6.1 Use. The Premises shall be used and occupied only for the
duplication and distribution of video tapes and multimedia products and related
office uses and for no other purpose.
6.2 COMPLIANCE WITH LAW.
(a) Sublessor warrants to Sublessee that the Premises, in its existing
state, but without regard to the use for which Sublessee will use the Premises,
does not violate any applicable building code regulation or ordinance at the
time that this Sublease is executed. In the event that it is determined that
this warranty has been violated, then it shall be the obligation of the
Sublessor, after written notice from Sublessee, to promptly, at Sublessor's
sole cost and expense, rectify any such violation. In the event that Sublessee
does not give to Sublessor written notice of the violation of this warranty
within 1 year from the commencement of the term of this Sublease, it shall be
conclusively deemed that such violation did not exist and the correction of the
same shall be the obligation of the Sublessee.
(b) Except as provided in paragraph 6.2(a), Sublessee shall, at Sublessee's
expense, comply promptly with all applicable statutes, ordinances, rules,
regulations, orders, restrictions of record, and requirements in effect during
the term or any part of the term hereof regulating the use by Sublessee of the
Premises. Sublessee shall not use or permit the use of the Premises in any
manner that will tend to create waste or a nuisance or, if there shall be more
than one tenant of the building containing the Premises, which shall tend to
disturb such other tenants.
6.3 CONDITION OF PREMISES. Except as provided in paragraph 6.2(a)
Sublessee hereby accepts the Premises in their condition existing as of the
date of the execution hereof, subject to all applicable zoning, municipal,
county and state laws, ordinances, and regulations governing and regulating the
use of the Premises, and accepts this Sublease subject thereto and to all
matters disclosed thereby and by any exhibits attached hereto Sublessee
acknowledges that neither Sublessor nor Sublessor's agents have made any
representation or warranty as to the suitability of the Premises for the
conduct of Sublessee's business.
7. MASTER LEASE
7.1 Sublessor is the lessee of the Premises by virtue of a lease,
hereinafter referred to as the "Master Lease", a copy of which is attached
hereto marked Exhibit 1, dated Jan. 25, 1995 wherein Anaheim Technology Center,
a California Limited Partnership is the lessor, hereinafter referred to as the
"Master Lessor."
7.2 This Sublease is and shall be at all times subject and
subordinate to the Master Lease.
7.3 The terms, conditions and respective obligations of Sublessor
and Sublessee to each other under this Sublease shall be the terms and
conditions of the Master Lease except for those provisions of the Master Lease
which are directly contradicted by this Sublease in which event the terms of
this Sublease document shall control over the Master Lease. Therefore, for the
purposes of this Sublease, wherever in the Master Lease the word "Lessor" is
used it shall be deemed to mean the Sublessor herein and wherever in the Master
Lease the word "Lessee" is used it shall be deemed to mean the Sublessee herein.
7.4 During the term of this Sublease and for all periods subsequent
for obligations which have arisen prior to the termination of this Sublease,
Sublessee does hereby expressly assume and agree to perform and comply with,
for the benefit of Sublessor and Master Lessor, each and every obligation of
Sublessor under the Master Lease except for the following paragraphs which are
excluded therefrom: Paragraph 3 to the extent it requires Subtenant to pay any
and all rental payments waived by Lessor; Paragraph 37 to the extent it
requires Subtenant to be responsible for complying with the requirements of the
ADA about Subtenant improvements.
<PAGE> 2
7.5 The obligations that Sublessee has assumed under paragraph 7.4
hereof are hereinafter referred to as the "Sublessee's Assumed Obligations".
The obligations that Sublessee has not assumed under paragraph 7.4 hereof are
hereinafter referred to as the "Sublessor's Remaining Obligations".
7.6 Sublessee shall hold Sublessor free and harmless of and from all
liability, judgments, costs, damages, claims or demands, including reasonable
attorneys fees, arising out of Sublessee's failure to comply with or perform
Sublessee's Assumed Obligations.
7.7 Sublessor agrees to maintain the Master Lease during the entire
term of this Sublease, subject, however, to any earlier termination of the
Master Lease without the fault of the Sublessor, and to comply with or perform
Sublessor's Remaining Obligations and to hold Sublessee free and harmless of and
from all liability, judgments, costs, damages, claims or demands arising out of
Sublessor's failure to comply with or perform Sublessor's Remaining Obligations.
7.8 Sublessor represents to Sublessee that the Master Lease is in full
force and effect and that no default exists on the part of any party to the
Master Lease.
8. ASSIGNMENT OF SUBLEASE AND DEFAULT.
8.1 Sublessor hereby assigns and transfers to Master Lessor the
Sublessor's interest in this Sublease and all rentals and income arising
therefrom, subject however to terms of Paragraph 8.2 hereof.
8.2 Master Lessor, by executing this document, agrees that until a
default shall occur in the performance of Sublessor's Obligations under the
Master Lease, that Sublessor may receive, collect and enjoy the rents accruing
under this Sublease. However, if Sublessor shall default in the performance of
its obligations to Master Lessor then Master Lessor may, at its option, receive
and collect, directly from Sublessee, all rent owing and to be owed under this
Sublease. Master Lessor shall not, by reason of this assignment of the Sublease
nor by reason of the collection of the rents from the Sublessee, be deemed
liable to Sublessee for any failure of the Sublessor to perform and comply with
Sublessor's Remaining Obligations.
8.3 Sublessor hereby irrevocably authorizes and directs Sublessee, upon
receipt of any written notice from the Master Lessor stating that a default
exists in the performance of Sublessor's obligations under the Master Lease, to
pay to Master Lessor the rents due and to become due under the Sublease.
Sublessor agrees that Sublessee shall have the right to rely upon any such
statement and request from Master Lessor, and that Sublessee shall pay such
rents to Master Lessor without any obligation or right to inquire as to whether
such default exists and notwithstanding any notice from or claim from Sublessor
to the contrary and Sublessor shall have no right or claim against Sublessee for
any such rents so paid by Sublessee.
8.4 No changes or modifications shall be made to this Sublease without
the consent of Master Lessor.
9. CONSENT OF MASTER LESSOR.
9.1 In the event that the Master Lease requires that Sublessor obtain
the consent of Master Lessor to any subletting by Sublessor then, this Sublease
shall not be effective unless, within 10 days of the date hereof, Master Lessor
signs this Sublease thereby giving its consent to this Subletting.
9.2 In the event that the obligations of the Sublessor under the Master
Lease have been guaranteed by third parties then this Sublease, nor the Master
Lessor's consent, shall not be effective unless, within 10 days of the date
hereof, said guarantors sign this Sublease thereby giving guarantors consent to
this Sublease and the terms thereof.
9.3 In the event that Master Lessor does give such consent then:
(a) Such consent will not release Sublessor of its obligations or alter
the primary liability of Sublessor to pay the rent and perform and comply with
all of the obligations of Sublessor to be performed under the Master Lease.
(b) The acceptance of rent by Master Lessor from Sublessee or any one
else liable under the Master Lease shall not be deemed a waiver by Master Lessor
of any provisions of the Master Lease.
(c) The consent to this Sublease shall not constitute a consent to any
subsequent subletting or assignment.
(d) In the event of any default of Sublessor under the Master Lease,
Master Lessor may proceed directly against Sublessor, any guarantors or any one
else liable under the Master Lease or this Sublease without first exhausting
Master Lessor's remedies against any other person or entity liable thereon to
Master Lessor.
(e) Master Lessor may consent to subsequent sublettings and assignments
of the Master Lease or this Sublease or any amendments or modifications thereto
without notifying Sublessor nor any one else liable under the Master Lease and
without obtaining their consent and such action shall not relieve such persons
from liability.
(f) In the event that Sublessor shall default in its obligations under
the Master Lease, then Master Lessor, at its option and without being obligated
to do so, may require Sublessee to attorn to Master Lessor in which event Master
Lessor shall undertake the obligations of Sublessor under this Sublease from the
time of the exercise of said option to termination of this Sublease but Master
Lessor shall not be liable for any prepaid rents nor any security deposit paid
by Sublessee, nor shall Master Lessor be liable for any other defaults of the
Sublessor under the Sublease.
9.4 The signatures of the Master Lessor and any Guarantors of Sublessor
at the end of this document shall constitute their consent to the terms of this
Sublease.
9.5 Master Lessor acknowledges that, to the best of Master Lessor's
knowledge, no default presently exists under the Master Lease of obligations to
be performed by Sublessor and that the Master Lease is in full force and effect.
9.6 In the event that Sublessor defaults under its obligations to be
performed under the Master Lease by Sublessor, Master Lessor agrees to deliver
to Sublessee a copy of any such notice of default. Sublessee shall have the
right to cure any default of Sublessor described in any notice of default within
ten days after service of such notice of default on Sublessee. If such default
is cured by Sublessee then Sublessee shall have the right of reimbursement and
offset from and against Sublessor.
10. BROKERS FEE.
10.1 Upon execution hereof by all parties, Sublessor shall pay to Voit
Commercial Brokerage Company, a licensed real estate broker, (herein called
"Broker"), a fee as set forth in a separate agreement between Sublessor and
Broker, or in the event there is no separate agreement between Sublessor and
Broker, the sum of $38,523.79 for brokerage services rendered by Broker to
Sublessor in this transaction.
10.2 Sublessor agrees that if Sublessee exercises any option or right of
first refusal granted by Sublessor herein, or any option or right substantially
similar thereto, either to extend the term of this Sublease, to renew this
Sublease, to purchase the Premises, or to lease or purchase adjacent property
which Sublessor may own or in which Sublessor has an interest, or if Broker is
the procuring cause of any lease, sublease, or sale pertaining to the Premises
or any adjacent property which Sublessor may own or in which Sublessor has an
interest, then as to any of said transactions Sublessor shall pay to Broker a
fee, in cash, in accordance with the schedule of Broker in effect at the time of
the execution of this Sublease. Notwithstanding the foregoing, Sublessor's
obligation under this Paragraph 10.2 is limited to a transaction in which
Sublessor is acting as a sublessor, lessor or seller.
10.3 Master Lessor agrees, by its consent to this Sublease, that if
Sublessee shall exercise any option or right of first refusal granted to
Sublessee by Master Lessor in connection with this Sublease, or any option or
right substantially similar thereto, either to extend the Master Lease, to renew
the Master Lease, to purchase the Premises or any part thereof, or to lease or
purchase adjacent property which Master Lessor may own or in which Master Lessor
has an interest, or if Broker is the procuring cause of any other lease or sale
entered into between Sublessee and Master Lessor pertaining to the Premises, any
part thereof, or any adjacent property which Master Lessor owns or in which it
has an interest, then as to any of said transactions Master Lessor shall pay to
Broker a fee, in cash, in accordance with the schedule of Broker in effect at
the time of its consent to this Sublease.
10.4 Any fee due from Sublessor or Master Lessor hereunder shall be due
and payable upon the exercise of any option to extend or renew, as to any
extension or renewal; upon the execution of any new lease, as to a new lease
transaction or the exercise of a right of first refusal to lease; or at the
close of escrow, as to the exercise of any option to purchase or other sale
transaction.
10.5 Any transferee of Sublessor's interest in this Sublease, or of
Master Lessor's interest in the Master Lease, by accepting an assignment
thereof, shall be deemed to have assumed the respective obligations of Sublessor
or Master Lessor under this Paragraph 10. Broker shall be deemed to be a
third-party beneficiary of this paragraph 10.
11. ATTORNEY'S FEES. If any party or the Broker named herein brings an
action to enforce the terms hereof or to declare rights hereunder, the
prevailing party in any such action, on trial and appeal, shall be entitled to
his reasonable attorney's fees to be paid by the losing party as fixed by the
Court. The provision of this paragraph shall inure to the benefit of the Broker
named herein who seeks to enforce a right hereunder.
<PAGE> 3
12. ADDITIONAL PROVISIONS. [If there are no additional provisions draw a line
from this point to the next printed word after the space left here. If there
are additional provisions place the same here.]
12.1 RENT: The monthly base rent and adjustments to the base rent
as set forth in the first amendment to lease shall be modified
as follows:
<TABLE>
SUBLEASE PERIOD
---------------
<S> <C> <C> <C>
Mo. 1-18 11/10/96-4/9/98 $25,339.91/MO. $.407/SF
Mo. 19-42 4/10/98-4/9/00 $27,208.67/MO. $.437/SF
</TABLE>
12.2 OFFICE SPACE: Sublessor at sublessor's sole cost and expense
shall deliver office with professionally cleaned carpet and all
interior walls newly painted.
12.3 GUARANTORS: The lease shall be guaranteed by Central De Video
S.A., C.V. and by the parent corporation Grupo Video Visa S.A.
as per the attached Guarantor forms.
12.4 HAZARDOUS MATERIALS: Subtenant shall not have any liability
for any hazardous materials, in, on, or about the premises, or
in any common areas or parking lots, that are in existence
prior to the commencement date of this Sublease. Sublessor
agrees to protect, indemnify, defend and hold this tenant
harmless from any and all claims, incidents, damages,
penalties, fines, liabilities, losses, suits, administrative
proceedings and costs arising at any time during or after the
term of this Sublease, in connection with or related to,
directly or indirectly, the presence of hazardous materials in,
on or about the premises prior to the commencement date of
this Sublease.
12.5 TRADE FIXTURES AND FURNITURE: Sublessor agrees that all
warehouse racks shall be left at the premises and shall
hereafter belong to Subtenant. Sublessor further agrees that
any and all other trade fixtures and/or office furnishings left
at the premises as of the commencement date of this Sublease
shall hereafter belong to Subtenant.
12.6 Per the Master Lease, paragraph 4.1 Security Deposit, and
paragraph 15.2 Excess Sublease Rental, not withstanding the
provisions of this sublease, Sublessee has no right to the
return of any security deposit from Lessor under the Master
lease as contemplated in paragraph 4.1 nor to the benefit of
any excess sublease rental or assignment consideration as
contemplated in paragraph 15.2
IF THIS SUBLEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION
TO YOUR ATTORNEY FOR HIS APPROVAL. NO REPRESENTATIVE OR RECOMMENDATION IS
MADE BY THE REAL ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS SUBLEASE OR THE
TRANSACTION RELATING THERETO.
Executed at Santa Ana Ameriquest Technologies, Inc.
--------------------- ---------------------------------------
on October 15, 1996 By
----------------------------- ------------------------------------
address 3 Imperial Promenade By
------------------------ ------------------------------------
- -------------------------------- "Sublessor" (Corporate Seal)
Executed at Santa Ana Central Video, Inc.
--------------------- --------------------------------------
on October 15, 1996 By
----------------------------- ------------------------------------
address 3 Imperial Promenade By
------------------------ ------------------------------------
- -------------------------------- "Sublessee" (Corporate Seal)
Executed at
--------------------
on
-----------------------------
address
-------------------------
- -------------------------------- "MASTER LESSOR" (CORPORATE SEAL)
1. Central DE Video S.A. DE C.V.
Executed at Mexiodu B.C. 2. Grupo Videovisa S.A. DE C.V.
-------------------- --------------------------------------
on Oct/17/1996 --------------------------------------
-----------------------------
address Galaxia No. 2099
- --------------------------------
- -------------------------------- "GUARANTORS"
NOTE: These forms are often modified to meet changing requirements of law and
needs of the industry. Always write or call to make sure you are
utilizing the most current form: AMERICAN INDUSTRIAL REAL ESTATE
ASSOCIATION, 345 So. Figueroa St., M-1, Los Angeles, CA 90071.
(213) 687-8777
<PAGE> 4
GUARANTEE OF LEASE [LOGO]
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
WHEREAS, Ameriquest Technologies, Inc. (SubLessor), hereinafter
referred to as "Lessor", and Central Video, Inc. (SubLessee), hereinafter
referred to as "Lessee", are about to execute a document entitled "Lease"
dated September 4, 1996 concerning the premises commonly known as 1041 So.
East Street, Anaheim, CA wherein Lessor will lease the premises to Lessee, and
WHEREAS, Grupo Video Visa, S.A. hereinafter referred to as "Guarantors"
have a financial interest in Lessee, and
WHEREAS, Lessor would not execute the Lease if Guarantors did not
execute and deliver to Lessor this Guarantee of Lease.
NOW THEREFORE, for and in consideration of the execution of the
foregoing Lease by Lessor and as a material inducement to Lessor to execute
said Lease, Guarantors hereby jointly, severally, unconditionally and
irrevocably guarantee the prompt payment by Lessee of all rentals and all other
sums payable by Lessee under said Lease and the faithful and prompt performance
by Lessee of each and every one of the terms, conditions and covenants of said
Lease to be kept and performed by Lessee.
It is specifically agreed and understood that the terms of the
foregoing Lease may be altered, affected, modified or changed by agreement
between Lessor and Lessee, or by a course of conduct, and said Lease may be
assigned by Lessor or any assignee of Lessor without consent or notice to
Guarantors and that this Guaranty shall thereupon and thereafter guarantee the
performance of said Lease as so changed, modified, altered or assigned.
This Guaranty shall not be released, modified or affected by failure or
delay on the part of Lessor to enforce any of the rights or remedies of the
Lessor under said Lease, whether pursuant to the terms thereof or at law or in
equity.
No notice of default need be given to Guarantor, it being specifically
agreed and understood that the guarantee of the undersigned is a continuing
guarantee under which Lessor may proceed forthwith and immediately against
Lessee or against Guarantors following any breach or default by Lessee or for
the enforcement of any rights which Lessor may have as against Lessee pursuant
to or under the terms of the within Lease or at law or in equity.
Lessor shall have the right to proceed against Guarantors hereunder
following any breach or default by Lessee without first proceeding against
Lessee and without previous notice to or demand upon either Lessee or
Guarantors.
Guarantors hereby waive (a) notice of acceptance of this Guaranty, (b)
demand of payment, presentation and protest, (d) any right to require the
Lessor to proceed against the Lessee or any other Guarantor or any other person
or entity liable to Lessor, (e) any right to require Lessor to apply to any
default any security deposit or other security it may hold under the Lease, (f)
any right to require Lessor to proceed under any other remedy Lessor may have
before proceeding against Guarantors, (g) any right of subrogation.
Any married woman who signs this Guaranty expressly agrees that
recourse may be had against her separate property for all of her obligations
hereunder.
The obligations of Lessee under the Lease to execute and deliver
estoppel statements and financial statements, as therein provided, shall be
deemed to also require the Guarantors hereunder to do and provide the same
relative to Guarantors.
The term "Lessor" whenever hereinabove used refers to and means the
Lessor in the foregoing Lease specifically named and also any assignee of said
Lessor, whether by outright assignment or by assignment for security, and also
any successor to the interest of said Lessor or of any assignee in such Lease or
any part thereof, whether by assignment or otherwise. So long as the Lessor's
interest in or to the leased premises or the rents, issued and profits
therefrom, or in, to or under said Lease are subject to any mortgage or deed of
trust or assignment for security, no acquisition by Guarantors of the Lessor's
interest in the leased premises or under said Lease shall affect the continuing
obligation of Guarantors under this Guaranty which shall nevertheless continue
in full force and effect for the benefit of the mortgagee, beneficiary, trustee
or assignee under such mortgage, deed of trust or assignment, of any purchase
at sale by judicial foreclosure or under private power of sale, and of the
successors and assigns of any such mortgagee, beneficiary, trustee, assignee or
purchaser.
The term "Lessee" whenever hereinabove used refers to and means the
Lessee in the foregoing Lease specifically named and also any assignee or
sublessee of said Lease and also any successor to the interests of said Lessee,
assignee or sublessee of such Lease or any part thereof, whether by assignment,
sublease or otherwise.
In the event any action be brought by said Lessor against Guarantors
hereunder to enforce the obligation of Guarantors hereunder, the unsuccessful
party in such action shall pay to the prevailing party therein a reasonable
attorney's fee which shall be fixed by the court.
If this Form has been filled in it has been prepared for submission to
your attorney for his approval. No representation or recommendation
is made by the real estate broker or its agents or employees as to the
legal sufficiency, legal effect, or tax consequences of this Form or
the transaction relating thereto.
Executed at Mexicali B.C. Grupo Videovisa S.A. DE C.V.
----------------------- ----------------------------------
on Oct/17/1996 /s/
-------------------------------- ----------------------------------
Address Galaxia 2099 /s/
--------------------------- -----------------------------------
- ----------------------------------- "GUARANTORS"
*1977--American Industrial Real Estate Association.
All rights reserved. No part of these works may be reproduced in any form
without permission in writing.
NOTE: These forms are often modified to meet changing requirements of law and
needs of the industry. Always write or call to make sure you are utilizing the
most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 345 So.
Figueroa St., M-1, Los Angeles, CA 90071, (213) 687-8777.
<PAGE> 5
GUARANTEE OF LEASE [LOGO]
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
WHEREAS, Ameriquest Technologies, Inc. (SubLessor), hereinafter
referred to as "Lessor", and Central Video, Inc. (SubLessee), hereinafter
referred to as "Lessee", are about to execute a document entitled "Lease"
dated September 4, 1996 concerning the premises commonly known as 1051 So.
East Street, Anaheim, CA wherein Lessor will lease the premises to Lessee, and
WHEREAS, Central DE Video S.A. DE., C.V. hereinafter referred to
as "Guarantors" have a financial interest in Lessee, and
WHEREAS, Lessor would not execute the Lease if Guarantors did not
execute and deliver to Lessor this Guarantee of Lease.
NOW THEREFORE, for and in consideration of the execution of the
foregoing Lease by Lessor and as a material inducement to Lessor to execute
said Lease, Guarantors hereby jointly, severally, unconditionally and
irrevocably guarantee the prompt payment by Lessee of all rentals and all other
sums payable by Lessee under said Lease and the faithful and prompt performance
by Lessee of each and every one of the terms, conditions and covenants of said
Lease to be kept and performed by Lessee.
It is specifically agreed and understood that the terms of the
foregoing Lease may be altered, affected, modified or changed by agreement
between Lessor and Lessee, or by a course of conduct, and said Lease may be
assigned by Lessor or any assignee of Lessor without consent or notice to
Guarantors and that this Guaranty shall thereupon and thereafter guarantee the
performance of said Lease as so changed, modified, altered or assigned.
This Guaranty shall not be released, modified or affected by failure or
delay on the part of Lessor to enforce any of the rights or remedies of the
Lessor under said Lease, whether pursuant to the terms thereof or at law or in
equity.
No notice of default need be given to Guarantor, it being specifically
agreed and understood that the guarantee of the undersigned is a continuing
guarantee under which Lessor may proceed forthwith and immediately against
Lessee or against Guarantors following any breach or default by Lessee or for
the enforcement of any rights which Lessor may have as against Lessee pursuant
to or under the terms of the within Lease or at law or in equity.
Lessor shall have the right to proceed against Guarantors hereunder
following any breach or default by Lessee without first proceeding against
Lessee and without previous notice to or demand upon either Lessee or
Guarantors.
Guarantors hereby waive (a) notice of acceptance of this Guaranty, (b)
demand of payment, presentation and protest, (d) any right to require the
Lessor to proceed against the Lessee or any other Guarantor or any other person
or entity liable to Lessor, (e) any right to require Lessor to apply to any
default any security deposit or other security it may hold under the Lease, (f)
any right to require Lessor to proceed under any other remedy Lessor may have
before proceeding against Guarantors, (g) any right of subrogation.
Any married woman who signs this Guaranty expressly agrees that
recourse may be had against her separate property for all of her obligations
hereunder.
The obligations of Lessee under the Lease to execute and deliver
estoppel statements and financial statements, as therein provided, shall be
deemed to also require the Guarantors hereunder to do and provide the same
relative to Guarantors.
The term "Lessor" whenever hereinabove used refers to and means the
Lessor in the foregoing Lease specifically named and also any assignee of said
Lessor, whether by outright assignment or by assignment for security, and also
any successor to the interest of said Lessor or of any assignee in such Lease or
any part thereof, whether by assignment or otherwise. So long as the Lessor's
interest in or to the leased premises or the rents, issued and profits
therefrom, or in, to or under said Lease are subject to any mortgage or deed of
trust or assignment for security, no acquisition by Guarantors of the Lessor's
interest in the leased premises or under said Lease shall affect the continuing
obligation of Guarantors under this Guaranty which shall nevertheless continue
in full force and effect for the benefit of the mortgagee, beneficiary, trustee
or assignee under such mortgage, deed of trust or assignment, of any purchase
at sale by judicial foreclosure or under private power of sale, and of the
successors and assigns of any such mortgagee, beneficiary, trustee, assignee or
purchaser.
The term "Lessee" whenever hereinabove used refers to and means the
Lessee in the foregoing Lease specifically named and also any assignee or
sublessee of said Lease and also any successor to the interests of said Lessee,
assignee or sublessee of such Lease or any part thereof, whether by assignment,
sublease or otherwise.
In the event any action be brought by said Lessor against Guarantors
hereunder to enforce the obligation of Guarantors hereunder, the unsuccessful
party in such action shall pay to the prevailing party therein a reasonable
attorney's fee which shall be fixed by the court.
If this Form has been filled in it has been prepared for submission to
your attorney for his approval. No representation or recommendation
is made by the real estate broker or its agents or employees as to the
legal sufficiency, legal effect, or tax consequences of this Form or
the transaction relating thereto.
Executed at Mexicali B.C. Central DE Video, S.A. DE, C.V.
----------------------- ----------------------------------
on Oct/17/1996 /s/
-------------------------------- ----------------------------------
Address Galaxia No. 2099
--------------------------- -----------------------------------
- ----------------------------------- "GUARANTORS"
*1977--American Industrial Real Estate Association.
All rights reserved. No part of these works may be reproduced in any form
without permission in writing.
NOTE: These forms are often modified to meet changing requirements of law and
needs of the industry. Always write or call to make sure you are utilizing the
most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 345 So.
Figueroa St., M-1, Los Angeles, CA 90071, (213) 687-8777.
<PAGE> 6
CONSENT TO SUBLETTING
This Agreement is made as of this 2nd day of October, 1996 by and
between ANAHEIM TECHNOLOGY CENTER, a CALIFORNIA LIMITED PARTNERSHIP
("Landlord"), AMERIQUEST TECHNOLOGIES, a DELAWARE CORPORATION ("Tenant"), and
CENTRAL VIDEO, INC., a CALIFORNIA CORPORATION ("Subtenant"), with reference to
the following facts:
A. Landlord and Tenant entered into that certain lease agreement
dated January 25, 1995 as amended by that certain First Amendment dated June
19, 1995 ("Master Lease"), relating to those certain premises consisting of
approximately 62,298 square feet of space located at 1051 East Street, Anaheim,
California ("Premises").
B. Tenant and Subtenant have entered into a sublease agreement in
the form of and on terms set forth in that certain Sublease Agreement attached
hereto as Exhibit A ("Sublease"). By the terms of the sublease, Tenant will
sublease to Subtenant and Subtenant will sublease from Tenant all of the
Premises.
C. Tenant has requested that Landlord consent to Tenant
subletting the Premises to Subtenant pursuant to the Sublease. Landlord has
agreed to consent to the subletting on the following terms and conditions.
NOW THEREFORE, in consideration of the foregoing, and in consideration
of the mutual agreements and covenants hereinafter set forth, Landlord, Tenant
and Subtenant agree as follows:
1. Definitions. Unless otherwise defined in this Agreement, all
defined terms used in this Agreement shall have the same meaning and definition
given them in the Master Lease.
2. Master Lease. The Sublease is and shall be at all times
subject and subordinate to the Master Lease. Subtenant acknowledges and agrees
that the term of the Sublease shall automatically terminate upon the
termination of the Master Lease for any reason whatsoever, including, without
limitation, the termination of the Master Lease prior to the expiration of the
term thereof pursuant to a written agreement by and between Landlord and
Tenant. Notwithstanding any provision to the contrary in the Sublease or in
any other agreement, Subtenant acknowledges that it shall have no right and
there shall not be vested in Subtenant any right to exercise rights of first
refusal, options, or other similar preferential rights, if any, given to Tenant
under the Master Lease.
3. Consent of Landlord. Landlord hereby consents to the
subletting of the Premises to Subtenant pursuant to the terms of the Sublease.
Landlord's consent shall not release Tenant of any of its obligations under the
Master Lease or release or alter the liability of Tenant to pay rent and all
other sums due under the Master Lease. As between Landlord and Tenant, the
Sublease shall not alter, amend or otherwise modify any provisions of the
Master Lease. Landlord shall have no obligations to any party in connection
with the [Premises] [Sublease Premises] other than those obligations set forth
in the Master Lease.
4. Assignment of Rent.
4.1 Subject to the terms of Section 4.1, Tenant hereby irrevocably
assigns and transfers to Landlord Tenant's rights under the Sublease to all
rentals and other sums due Tenant under the Sublease. However, if Tenant shall
default in the performance of its obligation under the Master Lease, then
Landlord may, at its option, receive and collect, directly from Subtenant, all
rentals and other sums due or to be due Tenant under the Sublease. Landlord
shall not by reason of the assignment of all rentals and other sums due Tenant
under the Sublease nor by reason of the collection of said rentals or other
sums from the Subtenant, (a) be bound by or become a party to the Sublease, (b)
be deemed to have accepted the attornment of Subtenant, or (c) be deemed liable
to Subtenant for any failure of the Tenant to perform and comply with Tenant's
obligations under the sublease. Tenant hereby irrevocably authorizes and
directs Subtenant, upon receipt of any written notice from Landlord, stating
that a default exists in the performance of Tenant's obligations under the
Master Lease, to pay to Landlord the rents and other income due and to become
due under the Sublease. Tenant agrees that Subtenant shall have the right to
rely solely upon such notice from Landlord.
Sublease Page 1
<PAGE> 7
5. Indemnification: Insurance.
5.1 Tenant shall indemnify and hold harmless Landlord and its
Agents, against and from any and all claims, liabilities, judgments, costs,
demands, causes of action, and expenses (including, without limitation,
reasonable attorneys' fees and consultants' fees) (collectively "Claims")
arising from or related to the following: (a) Subtenant's use of the
Premises or from any activity done, permitted or suffered by Subtenant in, on
or about the Premises, the Building, or the Property; (b) any act or omission
by Subtenant or its Agents in connection with or related to the Sublease, the
Premises, the Building, or the Property; (c) any breach or default in the terms
of the Sublease; (d) any Hazardous Material used, stored, released, disposed,
generated, or transported by Subtenant or its Agents in, on, or about the
Premises, including without limitation, any Claims arising from or related to
any Hazardous Material investigations, monitoring, cleanup or other remedial
action; and (e) any action or proceeding brought on account of any matter
referred to in items (a), (b), (c) and/or (d). If any action or proceeding is
brought against Landlord by reason of any such Claims, upon notice from
Landlord, Tenant shall defend the same at Tenant's expense with counsel
reasonably satisfactory to Landlord. The obligations of Tenant under this
Section 5.1 shall survive any termination of the Sublease or the Master Lease.
5.2 Notwithstanding any provision to the contrary in the
Sublease, Subtenant shall, at Subtenant's expense, secure and keep in force
during the term of the Sublease such insurance as required of Tenant under
Paragraph 12 of the Master Lease. Without limiting the generality of the
immediately preceding sentence, the policy or policies of such insurance shall
name Landlord and its lenders, if any, as additional insureds. A certificate
evidencing such insurance shall be delivered to Landlord prior to the
commencement of the term of the Sublease.
6. Miscellaneous Provisions:
6.1 Tenant hereby confirms its agreement as contained in
Paragraph 6 of the Master Lease to pay the Landlord, as Additional Rent, (a)
all of the Additional Rent allocable to the Premises, and as contained in
Paragraph 15.2 of the Master Lease (b) the rent and any additional rent payable
by the Subtenant to Tenant, after deducting the costs incurred by Tenant in
connection with the subletting to Subtenant.
6.2 As required by Paragraph 15.1 of the Master Lease, Tenant
shall pay to Landlord, upon Landlord's demand, Landlord's reasonable fees
incurred in connection with Landlord's review and processing of documents
relating to the subletting of the Premises to Subtenant.
6.3 Tenant and Subtenant agree not to amend, modify,
supplement, or otherwise change in any respect the Sublease except with the
prior consent of Landlord, which consent shall not be unreasonably withheld.
6.4 This Agreement, together with the provisions of the
Master Lease relating to subletting or assigning, contains the entire agreement
of the parties hereto relative to the matters which are the subject of this
Agreement. In the event of a permitted assignment under the Master Lease by
Landlord or Tenant of its interest in the Master Lease, then the assignee of
either Landlord or Tenant shall automatically be deemed to be the assignee of
Landlord or Tenant under this Agreement. No other assignment of this Agreement
shall be permitted, except with the written consent of all parties hereto. The
terms, covenants and conditions of this Agreement shall apply to and bind the
heirs, successors, the executors, administrators and permitted assigns of all
of the parties hereto. The parties acknowledge and agree that no rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall be employed in the interpretation of this Agreement. If
any provision of this Agreement is determined to be illegal or unenforceable,
such determination shall affect any other provisions of this Lease and all such
other provisions shall remain in full force and effect.
6.5 In the event that any legal action or proceeding,
including, without limitation, arbitration and declaratory relief, is commenced
for the purpose of enforcing any rights or remedies pursuant to this Agreement,
the prevailing party or parties shall be entitled to recover from the
non-prevailing party or parties reasonable attorneys' fees, as well as cost of
suit, in such action or proceeding, whether or not such action is prosecuted to
judgment.
Sublease Page 2
<PAGE> 8
IN WITNESS WHEREOF, Landlord, Tenant and Subtenant have executed this Agreement
as of the day and year first hereinabove written.
LANDLORD:
ANAHEIM TECHNOLOGY CENTER, a California Limited Partnership
By: PATRICIAN ASSOCIATES, INC., a California Corporation, General Partner
By: /s/ Michael S. Duffy
----------------------------------------------------
Title: Vice President
----------------------------------------------------
Date:
----------------------------------------------------
TENANT:
AMERIQUEST TECHNOLOGIES, INC., a Delaware Corporation
By: /s/ [XXXXXXXXXXXXXX]
----------------------------------------------------
Title: Corporate Secretary
----------------------------------------------------
Date: October 18, 1996
----------------------------------------------------
SUBTENANT:
CENTRAL VIDEO, INC., a California Corporation
By: /s/ [XXXXXXXXXXXXXX]
----------------------------------------------------
Title: General Manager
----------------------------------------------------
Date: October 15, 1996
----------------------------------------------------
GUARANTORS:
CENTRAL VIDEO S.A. DE C.V.
By: /s/ [XXXXXXXXXXXXXX]
----------------------------------------------------
Title: Executive Vice President
----------------------------------------------------
Date: October 17, 1996
----------------------------------------------------
GRUPO VIDEOVISA S.A.
By: /s/ [XXXXXXXXXXXXXX]
----------------------------------------------------
Title: Chief Financial Officer
----------------------------------------------------
Date: October 23, 1996
----------------------------------------------------
By: /s/ [XXXXXXXXXXXXXX]
----------------------------------------------------
Title: Controller
----------------------------------------------------
Date: October 23, 1996
----------------------------------------------------
Sublease Page 3
<PAGE> 9
EXHIBIT A
Copy of Sublease Agreement
Sublease Page 4
<PAGE> 1
EXHIBIT 10.29
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL COMMERCIAL SINGLE-TENANT LEASE-NET
(Do not use this form for Multi-Tenant Property)
1. BASIC PROVISIONS ("BASIC PROVISIONS")
1.1 PARTIES: This Lease ("Lease"), dated for reference purposes only,
October 1, 1996, is made by and between ICM INVESTMENTS, LTD., a California
limited partnership ("LESSOR") AND CMS ENHANCEMENTS, INC., a California
corporation, a wholly-owned subsidiary of AmeriQuest Technologies, Inc., a
Delaware corporation ("LESSEE"), (collectively the "PARTIES," or individually a
"PARTY").
1.2 PREMISES: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease and commonly
known by the street address of 3095 Redhill Avenue, Costa Mesa, CA 92626
located in the County of Orange, State of California and generally described as
(describe briefly the nature of the property) an approx. 30,287 SF corporate
headquarters building located on approx. 68,607 SF parcel of land AP#
427-033-05. ("PREMISES"). (See Paragraph 2 for further provisions.)
1.3 TERM: Five (5) years and one-half (1/2) months ("ORIGINAL TERM")
commencing November 15, 1996 ("COMMENCEMENT DATE") and ending November 30,
2001 ("EXPITATION DATE"). (See Paragraph 3 for further provisions.)
1.4 EARLY POSSESSION: See Section 1.4 of Addendum to Lease ("EARLY
POSSESSION DATE"). (See Paragraphs 3.2 and 3.3 for further provisions.)
1.5 BASE RENT: $16,658.00 per month ("BASE RENT"), payable on the first
(1st) day of each month commencing November 15, 1996 (See Paragraph 4 for
further provisions.)
[X] If this box is checked, there are provisions in this Lease for the Base
Rent to be adjusted
1.6 BASE RENT PAID UPON EXECUTION: $16,658.00 as Base Rent for the
period November 15, 1996 through December 14, 1996
1.7 SECURITY DEPOSIT: $99,948.00 ("SECURITY DEPOSIT"). (See Paragraph 5 for
further provisions.)
1.8 PERMITTED USE: Corporate headquarters for a computer products
company including its general office, warehousing, assembly, and distribution
of products. (See paragraph 6 for further provisions.)
1.9 INSURING PARTY: Lessor is the "INSURING PARTY" unless otherwise
stated herein. (See Paragraph 8 for further provisions.)
1.10 REAL ESTATE BROKERS: The following real estate brokers
(collectively, the "BROKERS") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):
Loren Marsh represents
[ ] Lessor exclusively ("LESSOR'S BROKER"); [XX] both Lessor and Lessee, and
represents
[ ] Lessee exclusively ("LESSEE'S BROKER"); [ ] both Lessee and Lessor.
(See Paragraph 15 for further provisions.)
1.11 GUARANTOR. The obligations of the Lessee under this Lease are to
be guaranteed by, AmeriQuest Technologies Inc. a Delaware corporation
("GUARANTOR"). (See Paragraph 37 for further provisions)
1.12 ADDENDA. Attached hereto is an Addendum or Addenda consisting
of Paragraphs ________through________ and Exhibits___________ See Exhibit
"C" - Addendum to Lease all of which constitute a part of this Lease.
2. PREMISES.
2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental,is an approximation which Lessor
and Lessee agree is reasonable and the rental based thereon is not subject to
revision whether or not the actual square footage is more or less.
2.2 CONDITION. Lessor shall deliver the Premises to Lessee clean and
free of debris on the Commencement Date and warrants to Lessee that the
existing plumbing, fire sprinkler system, lighting, air conditioning, heating,
and loading doors, it any, in the Premises, other than those constructed by
Lessee, shall be in good operating condition on the Commencement Date. If a
non-compliance with said warranty exists as of the Commencement Date, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify same at Lessor's expense. If Lessee does not
give Lessor written notice of a non-compliance with this warranty with this
within thirty (30) days after the Commencement Date, correction of that
non-compliance shall be the obligation of Lessee at Lessee's sole cost and
expense. See also Section 2.2 of Addendum to Lease.
2.3 COMPLIANCE WITH CONVENANTS, RESTRICTIONS AND BUILDING CODE. Lessor
warrants to Lessee that the improvements on the Premises comply with all
applicable covenants or restrictions of record and applicable building codes,
regulations and ordinances in effect on the Commencement Date. Said warranty
does not apply to the use to which Lessee will put the Premises or to any
Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made or
to be made by Lessee. If the Premises do not comply with said warranty, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify the same at Lessor's expense. If Lessee does
not give Lessor written notice of a non-compliance with this warranty within
six (6) months following the Commencement Date, correction of that
non-compliance shall be the obligation of Lessee at Lessee's sole cost and
expense. See also Section 2.3 of Addendum to Lease.
2.4 ACCEPTANCE OF PREMISES. Lessee hereby acknowledges: (a) that
it has been advised by the Brokers to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical and fire
sprinkler systems, security, environmental aspects, compliance with Applicable
Law, as defined in Paragraph 6.3) and the present and future suitability of the
Premises for Lessee's intended use, (b) that Lessee has made such investigation
as it deems necessary with reference to such matters and assumes all
responsibility therefor as the same relate to Lessee's occupancy of the
Premises and/or the term of this Lease, and (c) that neither Lessor, nor any of
Lessor's agents, has made an oral or written representations or warranties with
respect to the said matters other than as set forth in this Lease. See also
Section 2.4 of Addendum to Lease.
2.5 LESSEE PRIOR OWNER/OCCUPANT. The warranties made by Lessor in
this Paragraph 2 shall be of no force or effect if immediately prior to the
date set forth in Paragraph 1.1 Lessee was the owner or occupant of the
Premises. In such event, Lessee shall, at Lessee's sole cost and expense,
correct any non-compliance of the Premises with said warranties.
3. TERM.
3.1 TERM. The Commencement Date, Expiration Date and Original Term
of this Lease are as specified in Paragraph 1.3.
3.2 EARLY POSSESSION. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated for the period of such early possession. All other terms of this
Lease, however, (including but not limited to the obligations to pay Real
Property Taxes and insurance premiums and to maintain the Premises) shall be in
effect during such period. Any such early possession shall not affect nor
advance the Expiration Date of the Original Term.
Initials
--------
NET PAGE 1
--------
<PAGE> 2
3.3 DELAY IN POSSESSION. If for any reason Lessor cannot deliver
possession of the Premises to Lessee as agreed herein by the Early Possession
Date, if one is specified in Paragraph 1.4, or, if no Early Possession Date is
specified, by the Commencement Date, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease,
or the obligations of Lessee hereunder, or extend the term hereof, but in such
case, Lessee shall not, except as otherwise provided herein, be obligated to
pay rent or perform any other obligation of Lessee under the terms of this
Lease until Lessor delivers possession of the Premises to Lessee. If
possession of the Premises is not delivered to Lessee within sixty (60) days
after the Commencement Date, Lessee may, at its option, by notice in writing to
Lessor within ten (10) days thereafter, cancel this Lease, in which event the
Parties shall be discharged from all obligations hereunder; provided, however,
that if such written notice by Lessee is not received by Lessor within said ten
(10) day period, Lessees right to cancel this Lease shall terminate and be of
no further force or effect. Except as may be otherwise provided, and
regardless of when the term actually commences, if possession is not tendered
to Lessee when required by this Lease and Lessee does not terminate this Lease,
as aforesaid, the period free of the obligation to pay Base Rent, if any, that
Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would otherwise have
enjoyed under the terms hereof, but minus any days of delay caused by the acts,
changes or omissions of Lessee.
4. RENT.
4.1 BASE RENT. Lessee shall cause payment of Base Rent and other
rent or charges, as the same may be adjusted from time to time, to be received
by Lessor in lawful money of the United States, without offset or deduction, on
or before the day on which it is due under the terms of this Lease. Base Rent
and all other rent and charges for any period during the term hereof which is
for less than one (1) full calendar month shall be prorated based upon the
actual number of days of the calendar month involved. Payment of Base Rent and
other charges shall be made to Lessor at its address stated herein or to such
other persons or at such other addresses as Lessor may from time to time
designate in writing to Lessee.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or
retain all or any portion of said Security Deposit for the payment of any
amount due Lessor or to reimburse or compensate Lessor for any liability, cost,
expense, loss or damage (including attorneys' fees which Lessor may suffer or
incur by reason thereof. If Lessor uses or applies all or any portion of said
Security Deposit, Lessee shall within ten (10) days after written request
therefor deposit moneys with Lessor sufficient to restore said Security Deposit
to the full amount required by this Lease. Any time the Base Rent increases
during the term of this Lease, Lessee shall, upon written request from Lessor,
deposit additional moneys with Lessor sufficient to maintain the same ratio
between the Security Deposit and the Base Rent as those amounts are specified
in the Basic Provisions. Lessor shall not be required to keep all or any part
of the Security Deposit separate from its general accounts. Lessor shall, at
the expiration or earlier termination of the term hereof and after Lessee has
vacated the Premises, return to Lessee (or, at Lessor's option, to the last
assignee, if any, of Lessee's interest herein), that portion of the Security
Deposit not used or applied by Lessor. Unless otherwise expressly agreed in
writing by Lessor, no part of the Security Deposit shall be considered to be
held in trust, to bear interest or other increment for its use, or to be
prepayment for any moneys to be paid by Lessee under this Lease.
6. USE.
6.1 USE. Lessee shall use and occupy the Premises only for the purposes
set forth in Paragraph 1.8, or any other use which is comparable thereto, and
for no other purpose. Lessee shall not use or permit the use of the Premises
in a manner that creates waste or a nuisance, or that disturbs owners and/or
occupants of, or causes damage to, neighboring premises or properties. Lessor
hereby agrees to not unreasonably withhold or delay its consent to any written
request by Lessee, Lessees assignees or subtenants, and by prospective
assignees and subtenants of the Lessee, its assignees and subtenants, for a
modification of said permitted purpose for which the premises may be used or
occupied, so long as the same will not impair the structural integrity of the
improvements on the Premises, the mechanical or electrical systems therein, is
not significantly more burdensome to the Premises and the improvements thereon,
and is otherwise permissible pursuer it to this Paragraph 6. If Lessor elects
to withhold such consent, Lessor shall within five (5) business days give a
written notification of same, which notice shall include an explanation of
Lessor's reasonable objections to the change in use.
6.2 HAZARDOUS SUBSTANCES.
(a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS
SUBSTANCE" as used in this Lease shall mean any product, substance, chemicals
material or waste whose presence, nature, quantity and/or intensity of
existence, use, manufacture, disposal, transportation, spill, release or
effect, either by itself or in combination with other materials expected to be
on the Premises, is either: (i) potentially injurious to the public health,
safety or welfare, the environment or the Premises, (ii) regulated or monitored
by any governmental authority, or (iii) a basis for liability of Lessor to any
governmental agency or third party under any applicable statute or common law
thereof. Hazardous Substance shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, crude oil or any products, by-products or
fractions thereof. Lessee shall not engage in any activity in, on or about the
Premises which constitutes a Reportable Use (as hereinafter defined) of
Hazardous Substances without the express prior written consent of Lessor and
compliance in a timely manner (at Lessee's sole cost and expense) with all
Applicable Law (as defined in Paragraph 6.3). "REPORTABLE USE" shall mean (i)
the installation or use of any above or below ground storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of a
Hazardous Substance that requires a permit from, or with respect to which a
report, notice, registration or business plan is required to be filed with, any
governmental authority. Reportable Use shall also include Lessee's being
responsible for the presence in, on or about the Premises of a Hazardous
Substance with respect to which any Applicable Law requires that a notice be
given to persons entering or occupying the Premises or neighboring properties.
Notwithstanding the foregoing, Lessee may, without Lessor's prior consent, but
in compliance with all Applicable Law, use any ordinary and customary materials
reasonably required to be used by Lessee in the normal course of Lessee's
business permitted on the Premises, so long as such use is not a Reportable Use
and does not expose the Premises or neighboring properties to any meaningful
risk of contamination or damage or expose Lessor to any liability therefor. In
addition, Lessor may (but without any obligation to do so) condition its
consent to the use or presence of any Hazardous Substance, activity or storage
tank by Lessee upon Lessee's giving Lessor such additional assurances as Lessor,
in its reasonable discretion, deems necessary to protect itself, the public,
the Premises and the environment against damage, contamination or injury and/or
liability therefrom or therefor, including, but not limited to, the
installation (and removal on or before Lease expiration or earlier termination)
of reasonably necessary protective modifications to the Premises (such as
concrete encasements) and/or the deposit of an additional Security Deposit
under Paragraph 5 hereof.
(b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable
cause to believe, that a Hazardous Substance, or a condition involving or
resulting from same, has come to be located in, on, under or about the
Premises, other than as previously consented to by Lessor, Lessee shall
immediately give written notice of such fact to Lessor. Lessee shall also
immediately give Lessor a copy of any statement, report, notice, registration,
application, permit, business plan, license, claim, action or proceeding given
to, or received from, any governmental authority or private party, or persons
entering or occupying the Premises, concerning the presence, spill, release,
discharge of, or exposure to, any Hazardous Substance or contamination in, on,
or about the Premises, including but not limited to all such documents as may
be involved in any Reportable Uses involving the Premises.
(c) INDEMNIFICATION. Lessee shall indemnify, protect, defend and
hold Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all loss of rents and/or damages,
liabilities, judgments, costs, claims, liens, expenses, penalties, permits and
attorney's and consultant's fees arising out of or involving any Hazardous
Substance or storage tank brought onto the Premises by or for Lessee or under
Lessee's control. Lessee's obligations under this Paragraph 6 shall include,
but not be limited to, the effects of any contamination or injury to person,
property or the environment created or suffered by Lessee, and the cost of
investigation (including consultant's and attorney's fees and testing),
removal, remediation, restoration and/or abatement thereof, or of any
contamination therein involved, and shall survive the expiration or earlier
termination of this Lease. No termination, cancellation or release agreement
entered into by Lessor and Lessee shall release Lessee from its obligations
under this Lease with respect to Hazardous Substances or storage tanks, unless
specifically so agreed by Lessor in writing at the time of such agreement.
6.3 LESSEE'S COMPLIANCE WITH LAW. Except as otherwise provided in this
Lease, Lessee, shall, at Lessee's sole cost and expense, fully, diligently and
in a timely manner, comply with all "APPLICABLE LAW," which term is used in
this Lease to include all laws, rules, regulations, ordinances, directives,
covenants, easements and restrictions of record, permits, the requirements of
any applicable fire insurance underwriter or rating bureau, and the
recommendations of Lessor's engineers and/or consultants, relating in any
manner to the Premises (including but not limited to matters pertaining to (i)
industrial hygiene, (ii) environmental conditions on, in, under or about the
Premises, including soil and groundwater conditions, and (iii) the use,
generation, manufacture, production, installation, maintenance, removal,
transportation, storage, spill or release of any Hazardous Substance or storage
tank), now in effect or which may hereafter come into effect, and whether or
not reflecting a change in policy from any previously existing policy. Lessee
shall, within five (5) days after receipt of Lessor's written request, provide
Lessor with copies of all documents and information, including, but not limited
to, permits, registrations, manifests, applications, reports and certificates,
evidencing Lessee's compliance with any Applicable Law specified by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving failure by Lessee or
the Premises to comply with any Applicable Law.
6.4 INSPECTION; COMPLIANCE. Lessor and Lessor's Lender(s) (as
defined in Paragraph 8.3(a)) shall have the right to enter the Premises at any
time, in the case of an emergency, and otherwise at reasonable times, for the
purpose of inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease and all Applicable Laws (as defined in
Paragraph 6.3), and to employ experts and/or consultants in connection
therewith and/or to advise Lessor with respect to Lessee's activities,
including but not limited to the installation, operation, use, monitoring,
maintenance, or removal of any Hazardous Substance or storage tank on or from
the Premises. The costs and expenses of any such inspections shall be paid by
the party requesting same, unless a Default or Breach of this Lease, violation
of Applicable Law, or a contamination, caused or materially contributed to by
Lessee is found to exist or be imminent, or unless the inspection is requested
or ordered by a governmental authority as the result of any such existing or
imminent violation or contamination. In any such case, Lessee shall upon
request reimburse Lessor or Lessor's Lender, as the case may be, for the costs
and expenses of such inspections.
7. MAINTENANCE; REPAIRS; UTILITY INSTALLATIONS; TRADE FIXTURES AND ALTERATIONS.
See also Section .
7.1 LESSEE'S OBLIGATIONS.
(a) Subject to the provisions of Paragraphs 2.2 (Lessor's warranty
as to condition), 2.3 (Lessor's warranty as to compliance with covenants, etc),
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7.2 (Lessor's obligations to repair), 9 (damage and destruction), and 14
(condemnation), Lessee shall, at Lessees sole cost and expense and at all
times, keep the Premises and every part thereof in good order, condition and
repair, structural and non-structural (whether or not such portion of the
Premises requiring repairs, or the means of repairing the same, are reasonably
or readily accessible to Lessee, and whether or not the need for such repairs
occurs as a result of Lessee's use, any prior use, the elements or the age of
such portion of the Premises), including, without limiting the generality of
the foregoing, all equipment or facilities serving the Premises, such as
plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire sprinkler and/or
standpipe and hose or other automatic fire extinguishing system, including fire
alarm and/or smoke detection systems and equipment, fire hydrants, fixtures,
walls (interior and exterior), foundations, ceilings, roofs, floors, windows,
doors, plate glass, skylights, landscaping, driveways, parking lots, fences,
retaining walls, signs, sidewalks and parkways located in, on, about, or
adjacent to the Premises. Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly,
at Lessee's expense, take all investigatory and/or remedial action reasonably
recommended, whether or not formally ordered or required, for the cleanup of
any contamination of, and for the maintenance, security and/or monitoring of
the Premises, the elements surrounding same, or neighboring properties, that
was caused or materially contributed to by Lessee, or pertaining to or
involving any Hazardous Substance and/or storage tank brought onto the Premises
by or for Lessee or under its control. Lessee, in keeping the Premises in good
order, condition and repair, shall exercise and perform good maintenance
practices. Lessee's obligations shall include restorations, replacements or
renewals when necessary to keep the Premises and all improvements thereon or a
part thereof in good order, condition and state of repair. If Lessee occupies
the Premises for seven (7) years or more, Lessor may require Lessee to repaint
the exterior of the buildings on the Premises as reasonably required, but not
more frequently than once every seven (7) years.
(b) Lessee shall, at Lessee's sole cost and expense, procure and
maintain contracts, with copies to Lessor, in customary form and substance for,
and with contractors specializing and experienced in, the inspection,
maintenance and service of the following equipment and improvements, if any,
located on the Premises: (i) heating, air conditioning and ventilation
equipment, (ii) boiler, fired or unfired pressure vessels, (iii) fire sprinkler
and/or standpipe and hose or other automatic fire extinguishing systems,
including fire alarm and/or smoke detection, (iv) landscaping and irrigation
systems, (v) roof covering and drain maintenance and (vi) asphalt and parking
lot maintenance.
7.2 LESSOR'S OBLIGATIONS. Except for the warranties and agreements of
Lessor contained in Paragraphs 2.2 (relating to condition of the Premises),
2.3 (relating to compliance with covenants, restrictions and building code),
9 (relating to destruction of the Premises) and 14 (relating to condemnation of
the Premises), it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises, the
improvements located thereon, or the equipment therein, whether structural or
non structural, all of which obligations are intended to be that of the Lessee
under Paragraph 7.1 hereof. It is the intention of the Parties that the terms
of this Lease govern the respective obligations of the Parties as to
maintenance and repair of the Premises. Lessee and Lessor expressly waive the
benefit of any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease with respect to, or which affords
Lessee the right to make repairs at the expense of Lessor or to terminate this
Lease by reason of any needed repairs.
7.3 UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.
(a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY INSTALLATIONS"
is used in this Lease to refer to all carpeting, window coverings, air lines,
power panels, electrical distribution, security, fire protection systems,
communication systems, lighting fixtures, heating, ventilating, and air
conditioning equipment, plumbing, and fencing in, on or about the Premises.
The term "TRADE FIXTURES" shall mean Lessee's machinery and equipment that can
be removed without doing material damage to the Premises. The term
"ALTERATIONS" shall mean any modification of the improvements on the Premises
from that which are provided by Lessor under the terms of this Lease, other
than Utility Installations or Trade Fixtures, whether by addition or deletion.
"LESSEE OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined as
Alterations and/or Utility Installations made by lessee that are not yet owned
by Lessor as defined in Paragraph 7.4(a). Lessee shall not make any Alterations
or Utility Installations in, on, under or about the Premises without Lessor's
prior written consent. Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof), as long as
they are not visible from the outside, do not involve puncturing, relocating or
removing the roof or any existing walls, and the cumulative cost thereof during
the term of this Lease as extended does not exceed $25,000.
(b) CONSENT. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with proposed detailed plans. All consents
given by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent
specific consent, shall be deemed conditioned upon: (i) Lessees acquiring all
applicable permits required by governmental authorities, (ii) the furnishing of
copies of such permits together with a copy of the plans and specifications for
the Alteration or Utility Installation to Lessor prior to commencement of the
work thereon, and (iii) the compliance by Lessee with all conditions of said
permits in a prompt and expeditious manner. Any Alterations or Utility
Installations by Lessee during the term of this Lease shall be done in a good
and workmanlike manner, with good and sufficient materials, and in compliance
with all Applicable Law. Lessee shall promptly upon completion thereof furnish
Lessor with as-built plans and specifications therefor. Lessor may (but
without obligation to do so) condition its consent to any requested Alteration
or Utility Installation that costs $10,000 or more upon Lessee's providing
Lessor with a lien and completion bond in an amount equal to one and one-half
times the estimated cost of such Alteration or Utility Installation and/or upon
Lessee's posting an additional Security Deposit with Lessor under Paragraph 36
hereof.
(c) INDEMNIFICATION. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are or may be secured by any
mechanics' or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on or about the Premises, and Lessor shall have
the right to post notices of non-responsibility in or on the Premises as
provided by law. If Lessee shall, in good faith, contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense defend and
protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof against the Lessor or the Premises. If Lessor shall
require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in
an amount equal to one and one-half times the amount of such contested lien
claim or demand, indemnifying Lessor against liability for the same, as
required by law for the holding of the Premises free from the effect of such
lien or claim. In addition, Lessor may require Lessee to pay Lessor's
attorney's fees and costs in participating in such action if Lessor shall
decide it is to its best interest to do so.
7.4 OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.
(a) OWNERSHIP. Subject to Lessor's right to require their removal
or become the owner thereof as hereinafter provided in this Paragraph 7.4, all
Alterations and Utility Additions made to the Premises by Lessee shall be the
property of and owned by Lessee, but considered a part of the Premises. Lessor
may, at any time and at its option, elect in writing to Lessee to be the owner
of all or any specified part of the Lessee Owned Alterations and Utility
Installations. Unless otherwise instructed per subparagraph 7.4(b) hereof, all
Lessee Owned Alterations and Utility Installations shall, at the expiration or
earlier termination of this Lease, become the property of Lessor and remain
upon and be surrendered by Lessee with the Premises.
(b) REMOVAL. Unless otherwise agreed in writing, Lessor may
require that any or all Lessee Owned Alterations or Utility Installations be
removed by the expiration or earlier termination of this Lease, notwithstanding
their installation may have been consented to by Lessor. Lessor may require
the removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent of Lessor.
(c) SURRENDER/RESTORATION. Lessee shall surrender the Premises by
the end of the last day of the Lease term or any earlier termination date, with
all of the improvements, parts and surfaces thereof clean and free of debris
and in good operating order, condition and state of repair, ordinary wear and
tear excepted. "ORDINARY WEAR AND TEAR" shall not include any damage or
deterioration that would have been prevented by good maintenance practice or by
Lessee performing all of its obligations under this Lease. Except as otherwise
agreed or specified in writing by Lessor, the Premises, as surrendered, shall
include the Utility Installations. The obligation of Lessee shall include the
repair of any damage occasioned by the installation, maintenance or removal of
Lessee's Trade Fixtures, furnishings, equipment, and Alterations and/or Utility
Installations, as well as the removal of any storage tank installed by or for
Lessee, and the removal, replacement, or remediation of any soil, material or
ground water contaminated by Lessee, all as may then be required by Applicable
Law and/or good service practice. Lessee's Trade Fixtures shall remain the
property of Lessee and shall be removed by Lessee subject to its obligation to
repair and restore the Premises per this Lease.
8. INSURANCE; INDEMNITY.
8.1 PAYMENT FOR INSURANCE. Regardless of whether the Lessor or Lessee is
the Insuring Party, Lessee shall pay for all insurance required under this
Paragraph 8 except to the extent of the cost attributable to liability
insurance carried by Lessor in excess of $1,000,000 per occurrence. Premiums
for policy periods commencing prior to or extending beyond the Lease term shall
be prorated to correspond to the Lease term. Payment shall be made by Lessee
to Lessor within ten (10) days following receipt of an invoice for any amount
due.
8.2 LIABILITY INSURANCE. See also Section 8.2 of Addendum to Lease.
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force
during the term of this Lease a Commercial General Liability policy of
insurance protecting Lessee and Lessor (as an additional insured) against
claims for bodily injury, personal injury and property damage based upon,
involving or arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be on an
occurrence basis providing single limit coverage in an amount not less than
$1,000,000 per occurrence with an "Additional Insured-Managers or Lessors of
Premises" Endorsement and contain the "Amendment of the Pollution Exclusion"
for damage caused by heat, smoke or fumes from a hostile fire. The policy
shall not contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this
Lease as an "insured contract" for the performance of Lessee's indemnity
obligations under this Lease. The limits of said insurance required by this
Lease or as carried by Lessee shall not, however, limit the liability of Lessee
nor relieve Lessee of any obligation hereunder. All insurance to be carried by
Lessee shall be primary to and not contributory with any similar insurance
carried by Lessor, whose insurance shall be considered excess insurance only.
(b) CARRIED BY LESSOR. In the event Lessor is the Insuring Party,
Lessor shall also maintain liability insurance described in Paragraph 8.2(a),
above, in addition to, and not in lieu of, the insurance required to be
maintained by Lessee. Lessee shall not be named as an additional insured
therein.
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8.3 PROPERTY INSURANCE -- BUILDING, IMPROVEMENTS AND RENTAL VALUE.
(a) BUILDING AND IMPROVEMENTS. The Insuring Party shall obtain
and keep in force during the term of this Lease a policy or policies in the
name of Lessor, with loss payable to Lessor and to the holders of any
mortgages, deeds of trust or ground leases on the Premises ("LENDER(S)"),
insuring loss or damage to the Premises. The amount of such insurance shall be
equal to the full replacement cost of the Premises, as the same shall exist
from time to time, or the amount required by Lenders, but in no event more than
the commercially reasonable and available insurable value thereof if, by reason
of the unique nature or age of the improvements involved, such latter amount is
less than full replacement cost. If Lessor is the Insuring Party, however,
Lessee Owned Alterations and Utility Installations shall be insured by Lessee
under Paragraph 8.4 rather than by Lessor. If the coverage is available and
commercially appropriate, such policy or policies shall insure against all
risks of direct physical loss or damage (except the perils of flood and/or
earthquake unless required by a Lender), including coverage for any additional
costs resulting from debris removal and reasonable amounts of coverage for the
enforcement of any ordinance or law regulating the reconstruction or
replacement of any undamaged sections of the Premises required to be demolished
or removed by reason of the enforcement of any building, zoning, safety or land
use laws as the result of a covered cause of loss. Said policy or policies
shall also contain an agreed valuation provision in lieu of any coinsurance
clause, waiver of subrogation, and inflation guard protection causing an
increase in the annual property insurance coverage amount by a factor of not
less than the adjusted U.S. Department of Labor Consumer Price Index for All
Urban Consumers for the city nearest to where the Premises are located. If
such insurance coverage has a deductible clause, the deductible amount shall
not exceed $1,000 per occurrence, and Lessee shall be liable for such
deductible amount in the event of an Insured Loss, as defined in Paragraph
9.1(c).
(b) RENTAL VALUE. The Insuring Party shall, in addition, obtain
and keep in force during the term of this Lease a policy or policies in the
name of Lessor, with loss payable to Lessor and Lender(s), insuring the loss of
the full rental and other charges payable by Lessee to Lessor under this Lease
for one (1) year (including all real estate taxes, insurance costs, and any
scheduled rental increases). Said insurance shall provide that in the event
the Lease is terminated by reason of an insured loss, the period of indemnity
for such coverage shall be extended beyond the date of the completion of
repairs or replacement of the Premises, to provide for one full year's loss of
rental revenues from the date of any such loss. Said insurance shall contain
an agreed valuation provision in lieu of any coinsurance clause, and the amount
of coverage shall be adjusted annually to reflect the projected rental income,
property taxes, insurance premium costs and other expenses, if any, otherwise
payable by Lessee, for the next twelve (12) month period. Lessee shall be
liable for any deductible amount in the event of such loss.
(c) ADJACENT PREMISES. If the Premises are part of a larger
building, or if the Premises are part of a group of buildings owned by Lessor
which are adjacent to the Premises, the Lessee shall pay for any increase in
the premiums for the property insurance of such building or buildings if said
increase is caused by Lessee's acts, omissions, use or occupancy of the
Premises.
(d) TENANT'S IMPROVEMENTS. If the Lessor is the Insuring Party,
the Lessor shall not be required to insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease. If Lessee is the Insuring Party, the policy
carried by Lessee under this Paragraph 8.3 shall insure Lessee Owned
Alterations and Utility Installations.
8.4 LESSEE'S PROPERTY INSURANCE. Subject to the requirements of
Paragraph 8.5, Lessee at its cost shall either by separate policy or at
Lessor's option, by endorsement to a policy already carried, maintain insurance
coverage on all of Lessee's personal property, Lessee Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by the Insuring Party under Paragraph 8.3. Such insurance shall be full
replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for
the replacement of personal property or the restoration of Lessee Owned
Alterations and Utility Installations. Lessee shall be the Insuring Party with
respect to the insurance required by this Paragraph 8.4 and shall provide
Lessor with written evidence that such insurance is in force.
8.5 INSURANCE POLICIES. See Section 8.5 of Addendum to Lease.
8.6 WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor ("WAIVING PARTY") each hereby release and relieve
the other, and waive their entire right to recover damages (whether in contract
or in tort) against the other, for loss of or damage to the Waiving Party's
property arising out of or incident to the perils required to be insured
against under Paragraph 8. The effect of such releases and waivers of the right
to recover damages shall not be limited by the amount of insurance carried or
required, or by any deductibles applicable thereto.
8.7 INDEMNITY. Except for Lessor's negligence and/or breach of
express warranties, Lessee shall indemnify, protect, defend and hold harmless
the Premises, Lessor and its agents, Lessor's master or ground lessor, partners
and Lenders, from and against any and all claims, loss of rents and/or damages,
costs, liens, judgments, penalties, permits, attorney's and consultant's fees,
expenses and/or liabilities arising out of, involving, or in dealing with, the
occupancy of the Premises by Lessee, the conduct of Lessee's business, any act,
omission or neglect of Lessee, its agents, contractors, employees or invitees,
and out of any Default or Breach by Lessee in the performance in a timely
manner of any obligation on Lessee's part to be performed under this Lease.
The foregoing shall include, but not be limited to, the defense or pursuit of
any claim or any action or proceeding involved therein, and whether or not (in
the case of claims made against Lessor) litigated and/or reduced to judgment,
and whether well founded or not. In case any action or proceeding be brought
against Lessor by reason of any of the foregoing matters, Lessee upon notice
from Lessor shall defend the same at Lessee's expenses by counsel reasonably
satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense.
Lessor need not have first paid any such claim in order to be so indemnified.
See Section 8.7 of Addendum to Lease.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable
for injury or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee's employees, contractors, invitees, customers, or
any other person in or about the Premises, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water or rain, or from
the breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from any
other cause, whether the said injury or damage results from conditions arising
upon the Premises or upon other portions of the building of which the Premises
are a part, or from other sources or places, and regardless of whether the
cause of such damage or injury or the means of repairing the same is accessible
or not. Lessor shall not be liable for any damages arising from any act or
neglect of any other tenant of Lessor. Notwithstanding Lessor's negligence or
breach of this Lease, Lessor shall under no circumstances be liable for injury
to Lessee's business or for any loss of income or profit therefrom.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to
the improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations, the repair cost of which damage or destruction is less
than 50% of the then Replacement Cost of the Premises immediately prior to such
damage or destruction, excluding from such calculation the value of the land
and Lessee Owned Alterations and Utility Installations.
(b) "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction
to the Premises, other than Lessee Owned Alterations and Utility Installations
the repair cost of which damage or destruction is 50% or more of the then
Replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(c) "INSURED LOSS" shall mean damage or destruction to improvements
on the Premises, other than Lessee Owned Alterations and Utility Installations,
which was caused by an event required to be covered by the insurance described
in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits
involved.
(d) "REPLACEMENT COST" shall mean the cost to repair or
rebuild the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of applicable building codes,
ordinances or laws, and without deduction for depreciation.
(e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 PARTIAL DAMAGE - INSURED LOSS. If a Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair
such damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and
Utilty Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect; provided, however, that Lessee shall, at
Lessor's election, make the repair of any damage or destruction the total cost
to repair of which is $10,000 or less, and, in such event, Lessor shall make
the insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds (except as to
the deductible which is Lessee's responsibility) as and when required to
complete said repairs. In the event, however, the shortage in proceeds was due
to the fact that, by reason of the unique nature of the improvements, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such shortage and
request therefor. If Lessor receives said funds or adequate assurance thereof,
within said ten (10) day period, the party responsible for making the repairs
shall complete them as soon as reasonably possible and this Lease shall remain
in full force and effect. If Lessor does not receive such funds or assurance
within said period, Lessor may nevertheless elect by written notice to Lessee
within ten (10) days thereafter to make such restoration and repair as is
commercially reasonable with Lessor paying any shortage in proceeds, in which
case this Lease shall remain in full force and effect. If in such case Lessor
does not so elect, then this Lease shall terminate sixty (60) days following
the occurrence of the damage or destruction. Unless otherwise agreed, Lessee
shall in no event have any right to reimbursement from Lessor for
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any funds contributed by Lessee damage or destruction. Premises Partial Damage
due to flood or earthquake shall be subject to Paragraph 9.3 rather than
Paragraph 9.2, notwithstanding that to repair any such there may be some
insurance coverage, but the net proceeds of any such insurance shall be made
available for the repairs if made by either Party.
9.3 PARTIAL DAMAGE - UNINSURED LOSS. If a Premises Partial Damage
that is not an Insured Loss occurs, unless caused by an negligent or willful
act of Lessee (in which event Lessee shall make the repairs at Lessee's expense
and this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 13), Lessor may at Lessor's option, either: (i) repair
such damage as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) give written notice
to Lessee within thirty (30) days after receipt by Lessor of knowledge of the
occurrence of such damage of Lessor's desire to terminate this Lease as of the
date sixty (60) days following the giving of such notice. In the event Lessor
elects to give such notice of Lessor's intention to terminate this Lease,
Lessee shall have the right within ten (10) days after the receipt of such
notice to give written notice to Lessor of Lessee's commitment to pay for the
repair of such damage totally at Lessee's expense and without reimbursement
from Lessor. Lessee shall provide Lessor with the required funds or
satisfactory assurance thereof within thirty (30) days following Lessee's said
commitment. In such event this Lease shall continue in full force and effect,
and Lessor shall proceed to make such repairs as soon as reasonably possible
and the required funds are available. If Lessee does not give such notice and
provide the funds or assurance thereof within the times specified above, this
Lease shall terminate as of the date specified in Lessor's notice of
termination.
9.4 TOTAL DESTRUCTION. Notwithstanding any other provision
hereof, if a Premises Total Destruction occurs (including any destruction
required by any authorized public authority), this Lease shall terminate sixty
(60) days following the date of such Premises Total Destruction, whether or not
the damage or destruction is an Insured Loss or was caused by a negligent or
willful act of Lessee. In the event, however, that the damage or destruction
was caused by Lessee, Lessor shall have the right to recover Lessor's damages
from Lessee except as released and waived in Paragraph 8.6.
9.5 DAMAGE NEAR END OF TERM. If at any time during the last six
(6) months of the term of this Lease there is damage for which the cost to
repair exceeds one (1) month's Base Rent, whether or not an Insured Loss,
Lessor may, at Lessor's option, terminate this Lease effective sixty (60) days
following the date of occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within thirty (30) days after the date of
occurrence of such damage. Provided, however, if Lessee at that time has an
exercisable option to extend this Lease or to purchase the Premises, then
Lessee may preserve this Lease by, within twenty (20) days following the
occurrence of the damage, or before the expiration of the time provided in such
option for its exercise, whichever is earlier ("EXERCISE PERIOD"), (i)
exercising such option and (ii) providing Lessor with any shortage in insurance
proceeds (or adequate assurance thereof) needed to make the repairs. If Lessee
duly exercises such option during said Exercise Period and provides Lessor with
funds (or adequate assurance thereof) to cover any shortage in insurance
proceeds, Lessor shall, at Lessor's expense repair such damage as soon as
reasonably possible and this Lease shall continue in full force and effect. If
Lessee fails to exercise such option and provide such funds or assurance during
said Exercise Period, then Lessor may at Lessor's option terminate this Lease
as of the expiration of said sixty (60) day period following the occurrence of
such damage by giving written notice to Lessee of Lessor's election to do so
within ten (10) days after the expiration of the Exercise Period,
notwithstanding any term or provision in the grant of option to the contrary.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event of damage described in Paragraph 9.2
(Partial Damage--Insured), whether or not Lessor or Lessee repairs or restores
the Premises, the Base Rent, Real Property Taxes, insurance premiums, and other
charges, if any, payable by Lessee hereunder for the period during which such
damage, its repair or the restoration continues (not to exceed the period for
which rental value insurance is required under Paragraph 8.3(b)), shall be
abated in proportion to the degree to which Lessee's use of the Premises is
impaired. Except for abatement of Base Rent, Real Property Taxes, insurance
premiums, and other charges, if any, as aforesaid, all other obligations of
Lessee hereunder shall be performed by Lessee, and Lessee shall have no claim
against Lessor for any damage suffered by reason of any such repair or
restoration.
(b) If Lessor shall be obligated to repair or restore the
Premises under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises
within ninety (90) days after such obligation shall accrue, Lessee may, at any
time prior to the commencement of such repair or restoration, give written
notice to Lessor and to any Lenders of which Lessee has actual notice of
Lessee's election to terminate this Lease on a date not less than sixty (60)
days following the giving of such notice. If Lessee gives such notice to
Lessor and such Lenders and such repair or restoration is not commenced within
thirty (30) days after receipt of such notice, this Lease shall terminate as of
the date specified in said notice. If Lessor or a Lender commences the repair
or restoration of the Premises within thirty (30) days after receipt of such
notice, this Lease shall continue in full force and effect. "COMMENCE" as used
in this Paragraph shall mean either the unconditional authorization of the
preparation of the required plans, or the beginning of the actual work on the
Premises, whichever first occurs.
9.7 HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance
Condition occurs, unless Lessee is legally responsible therefor (in which case
Lessee shall make the investigation and remediation thereof required by
Applicable Law and this Lease shall continue in full force and effect, but
subject to Lessor's rights under Paragraph 13), Lessor may at Lessor's option
either (i) investigate and remediate such Hazardous Substance Condition, if
required, as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) if the estimated
cost to investigate and remediate such condition exceeds twelve (12) times
the then monthly Base Rent or $100,000, whichever is greater, give written
notice to Lessee within thirty (30) days after receipt by Lessor of knowledge
of the occurrence of such Hazardous Substance Condition of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the giving of
such notice. In the event Lessor elects to give such notice of Lessor's
intention to terminate this Lease, Lessee shall have the right within ten (10)
days after the receipt of such notice to give written notice to Lessor of
Lessee's commitment to pay for the investigation and remediation of such
Hazardous Substance Condition totally at Lessee's expense and without
reimbursement from Lessor except to the extent of an amount equal to twelve
(12)times the then monthly Base Rent or $100,000, whichever is greater, give
written notice to Lessee within thirty (30) days after receipt by Lessor of
knowledge of the occurence of such Hazardous Substance Condition of Lessor's
desire to terminate this Lease as of the date sixty (60) days following the
giving of such notice. In the event Lessor elects to give such notice of
Lessor's intention to terminate this Lease, Lessee shall have the right within
ten (10) days after the receipt of such notice to give written notice to Lessor
of Lessee's commitment to pay for investigation and remediation of such
Hazardous Substance Condition totally at Lessee's expense and without
reimbursement from Lessor except to the extent of an amount equal to twelve
(12) times the then monthly Base Rent or $100,000, whichever is greater. Lessee
shall provide Lessor with the funds required of Lessee or satisfactory
assurance thereof within thirty (30) days following Lessee's said commitment.
In such event this Lease shall continue in full force and effect, and Lessor
shall proceed to make such investigation and remediation as soon as reasonably
possible and the required funds are available. If Lessee does not give such
notice and provide the required funds or assurance thereof within the times
specified above, this Lease shall terminate as of the date specified in
Lessor's notice of termination. If a Hazardous Substance Condition occurs for
which Lessee is not legally responsible, there shall be abatement of Lessee's
obligations under this Lease to the same extent as provided in Paragraph 9.6(a)
for a period of not to exceed twelve (12) months.
9.8 TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made concerning
advance Base Rent and any other advance payments made by Lessee to Lessor.
Lessor shall, in addition, return to Lessee so much of Lessee's Security
Deposit as has not been, or is not then required to be, used by Lessor under
the terms of this Lease.
9.9 WAIVE STATUTES. Lessor and Lessee agree that the terms of
this Lease shall govern the effect of any damage to or destruction of the
Premises with respect to the termination of this Lease and hereby waive the
provisions of any present or future statute to the extent inconsistent
herewith.
10. REAL PROPERTY TAXES.
10.1(a) PAYMENT OF TAXES. Lessee shall pay the Real Property
Taxes, as defined in Paragraph 10.2, applicable to the Premises during the term
of this Lease. Subject to Paragraph 10.1(b), all such payments shall be made
at least ten (10) days prior to the delinquency date of the applicable
installment. Lessee shall promptly furnish Lessor with satisfactory evidence
that such taxes have been paid. If any such taxes to be paid by Lessee shall
cover any period of time prior to or after the expiration or earlier
termination of the term hereof, Lessee's share of such taxes shall be equitably
prorated to cover only the period of time within the tax fiscal year this Lease
is in effect, and Lessor shall reimburse Lessee for any overpayment after such
proration. If Lessee shall fail to pay any Real Property Taxes required by this
Lease to be paid by Lessee, Lessor shall have the right to pay the same, and
Lessee shall reimburse Lessor therefor upon demand.
(b) ADVANCE PAYMENT. In order to insure payment when due
and before delinquency of any or all Real Property Taxes, Lessor reserves the
right, at Lessor's option, to estimate the current Real Property Taxes
applicable to the Premises, and to require such current year's Real Property
Taxes to be paid in advance to Lessor by Lessee, either: (i) in a lump sum
amount equal to the installment due, at least twenty (20) days prior to the
applicable delinquency date, or (ii) monthly in advance with the payment of the
Base Rent. If Lessor elects to require payment monthly in advance, the monthly
payment shall be that equal monthly amount which, over the number of months
remaining before the month in which the applicable tax installment would become
delinquent (and without interest thereon), would provide a fund large enough to
fully discharge before delinquency the estimated installment of taxes to be
paid. When the actual amount of the applicable tax bill is known, the amount
of such equal monthly advance payment shall be adjusted as required to provide
the fund needed to pay the applicable taxes before delinquency. If the amounts
paid to Lessor by Lessee under the provisions of this Paragraph are
insufficient to discharge the obligations of Lessee to pay such Real Property
Taxes as the same become due, Lessee shall pay to Lessor, upon Lessor's demand,
such additional sums as are necessary to pay such obligations. All moneys paid
to Lessor under this Paragraph may be intermingled with other moneys of Lessor
and shall not bear interest. In the event of a Breach by Lessee in the
performance of the obligations of Lessee under this Lease, then any balance of
funds paid to Lessor under the provisions of this Paragraph may, subject to
proration as provided in Paragraph 10.1(a), at the option of Lessor, be treated
as an additional Security Deposit under Paragraph 5.
10.2 Definition of "REAL PROPERTY TAXES": As used herein, the term
"REAL PROPERTY TAXES" shall include any form of real estate tax or
assessment, general, special, ordinary or extraordinary, and any license fee,
commercial rental tax, improvement bond or bonds, levy or tax (other than
inheritance, personal income or estate taxes) imposed upon the Premises by any
authority having the direct or indirect power to tax, including any city, state
or federal government, or any school, agricultural, sanitary, fire, street,
drainage or other improvement district thereof, levied against any legal or
equitable interest of Lessor in the Premises or in the real property of which
the Premises are a part, Lessor's right to rent or other income therefrom,
and/or Lessor's business of leasing the Premises. The term "REAL PROPERTY
TAXES" shall also include any tax, fee, levy, assessment or charge, or any
increase therein, imposed by reason of events occurring, or changes in
applicable law taking effect, during the term of this Lease, including but not
limited to a change in the ownership of the Premises or in the improvements
thereon, the execution of this Lease, or any modification, amendment or
transfer thereof, and whether or not contemplated by the Parties.
10.3 JOINT ASSESSMENT. If the Premises are not separately
assessed, Lessee's liability shall be an equitable proportion of the Real
Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the respective
valuations
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assigned in the assessor's work sheets or such other information as may be
reasonably available. Lessor's reasonable determination thereof, in good
faith, shall be conclusive.
10.4 PERSONAL PROPERTY TAXES. Lessee shall pay prior to
delinquency all taxes assessed against and levied upon Lessee Owned
Alterations, Utility Installations, Trade Fixtures, furnishings, equipment and
all personal property of Lessee contained in the Premises or elsewhere. When
possible, Lessee shall cause its Trade Fixtures, furnishings, equipment and all
other personal property to be assessed and billed separately from the real
property of Lessor. If any of Lessee's said personal property shall be
assessed with Lessor's real property, Lessee shall pay Lessor the taxes
attributable to Lessee within ten (10) days after receipt of a written
statement setting forth the taxes applicable to Lessee's property or, at
Lessor's option, as provided in Paragraph 10.1(b).
11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered with other premises.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED.
(a) Lessee shall not voluntarily or by operation of law
assign, transfer, mortgage or otherwise transfer or encumber (collectively,
"ASSIGNMENT") or sublet all or any part of Lessee's interest in this Lease or
in the Premises without Lessor's prior written consent given under and subject
to the terms of Paragraph 36.
(b) A change in the control of Lessee shall constitute an
assignment requiring Lessor's consent. The transfer, on a cumulative basis, of
twenty-five percent (25%) or more of the voting control of Lessee shall
constitute a change in control for this purpose.
(c) The involvement of Lessee or its assets in any
transaction, or series of transactions (by way of merger, sale, acquisition,
financing, refinancing, transfer, leveraged buy-out or otherwise), whether or
not a formal assignment or hypothecation of this Lease or Lessee's assets
occurs, which results or will result in a reduction of the Net Worth of Lessee,
as hereinafter defined, by an amount equal to or greater than twenty-five
percent (25%) of such Net Worth of Lessee as it was represented to Lessor at
the time of the execution by Lessor of this Lease or at the time of the most
recent assignment to which Lessor has consented, or as it exists immediately
prior to said transaction or transactions constituting such reduction, at
whichever time said Net Worth of Lessee was or is greater, shall be considered
an assignment of this Lease by Lessee to which Lessor may reasonably withhold
its consent. "NET WORTH OF LESSEE" for purposes of this Lease shall be the net
worth of Lessee (excluding any guarantors) established under generally accepted
accounting principles consistently applied.
(d) An assignment or subletting of Lessee's interest in
this Lease without Lessor's specific prior written consent shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1(c), or a
noncurable Breach without the necessity of any notice and grace period. If
Lessor elects to treat such unconsented to assignment or subletting as a
noncurable Breach, Lessor shall have the right to either: (i) terminate this
Lease, or (ii) upon thirty (30) days written notice ("Lessor's Notice"),
increase the monthly Base Rent to fair market rental value or one hundred ten
percent (110%) of the Base Rent then in effect, whichever is greater. Pending
determination of the new fair market rental value, if disputed by Lessee,
Lessee shall pay the amount set forth in Lessor's Notice, with any overpayment
credited against the next installment(s) of Base Rent coming due, and any
underpayment for the period retroactively to the effective date of the
adjustment being due and payable immediately upon the determination thereof.
Further, in the event of such Breach and market value adjustment, (i) the
purchase price of any option to purchase the Premises held by Lessee shall be
subject to similar adjustment to the then fair market value (without the Lease
being considered an encumbrance or any deduction for depreciation or
obsolescence, and considering the Premises at its highest and best use and in
good condition), or one hundred ten percent (110%) of the price previously in
effect, whichever is greater, (ii) any index-oriented rental or price
adjustment formulas contained in this Lease shall be adjusted to require that
the base index be determined with reference to the index applicable to the time
of such adjustment, and (iii) any fixed rental adjustments scheduled during the
remainder of the Lease term shall be increased in the same ratio as the new
market rental bears to the Base Rent in effect immediately prior to the market
value adjustment.
(e) Lessee's remedy for any breach of this Paragraph 12.1
by Lessor shall be limited to compensatory damages and injunctive relief.
12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(a) Regardless of Lessor's consent, any assignment or
subletting shall not: (i) be effective without the express written assumption
by such assignee or sublessee of the obligations of Lessee under this Lease,
(ii) release Lessee of any obligations hereunder, or (iii) alter the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval
of an assignment. Neither a delay in the approval or disapproval of such
assignment nor the acceptance of any rent or performance shall constitute a
waiver or estoppel of Lessor's right to exercise its remedies for the Default
or Breach by Lessee of any of the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting
shall not constitute a consent to any subsequent assignment or subletting by
Lessee or to any subsequent or successive assignment or subletting by the
sublessee. However, Lessor may consent to subsequent sublettings and
assignments of the sublease or any amendments or modifications thereto without
notifying Lessee or anyone else liable on the Lease or sublease and without
obtaining their consent, and such action shall not relieve such persons from
liability under this Lease or sublease.
(d) In the event of any Default or Breach of Lessee's
obligations under this Lease, Lessor may proceed directly against Lessee, any
Guarantors or any one else responsible for the performance of the Lessee's
obligations under this Lease, including the sublessee, without first exhausting
Lessor's remedies against any other person or entity responsible therefor to
Lessor, or any security held by Lessor or Lessee.
(e) Each request for consent to an assignment or
subletting shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not
limited to the intended use and/or required modification of the Premises, if
any, together with a non-refundable deposit of $1,000 or ten percent (10%) of
the current monthly Base Rent, whichever is greater, as reasonable
consideration for Lessor's considering and processing the request for consent.
Lessee agrees to provide Lessor with such other or additional information
and/or documentation as may be reasonably requested by Lessor.
(f) Any assignee of, or sublessee under, this Lease
shall, by reason of accepting such assignment or entering into such sublease,
be deemed, for the benefit of Lessor, to have assumed and agreed to conform and
comply with each and every term, covenant, condition and obligation herein to
be observed or performed by Lessee during the term of said assignment or
sublease, other than such obligations as are contrary to or inconsistent with
provisions of an assignment or sublease to which Lessor has specifically
consented in writing.
(g) The occurrence of a transaction described in
Paragraph 12.1(c) shall give Lessor the right (but not the obligation) to
require that the Security Deposit be increased to an amount equal to six (6)
times the then monthly Base Rent, and Lessor may make the actual receipt by
Lessor of the amount required to establish such Security Deposit a condition to
Lessor's consent to such transaction.
(h) Lessor, as a condition to giving its consent to any
assignment or subletting, may require that the amount and adjustment structure
of the rent payable under this Lease be adjusted to what is then the market
value and/or adjustment structure for property similar to the Premises as then
constituted.
12.3 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all
or any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all rentals and income arising from any sublease of all or
a portion of the Premises heretofore or hereafter made by Lessee, and
Lessor may collect such rent and income and apply same toward Lessee's
obligations under this Lease; provided, however, that until a Breach (as
defined in Paragraph 13.1) shall occur in the performance of Lessee's
obligations under this Lease, Lessee may, except as otherwise provided in this
Lease, receive, collect and enjoy the rents accruing under such sublease.
Lessor shall not, by reason of this or any other assignment of such sublease to
Lessor, nor by reason of the collection of the rents from a sublessee, be
deemed liable to the sublessee for any failure of Lessee to perform and comply
with any of Lessee's obligations to such sublessee under such sublease. Lessee
hereby irrevocably authorizes and directs any such sublessee, upon receipt of a
written notice from Lessor stating that a Breach exists in the performance of
Lessee's obligations under this Lease, to pay to Lessor the rents and other
charges due and to become due under the sublease. Sublessee shall rely upon
any such statement and request from Lessor and shall pay such rents and other
charges to Lessor without any obligation or right to inquire as to whether such
Breach exists and notwithstanding any notice from or claim from Lessee to the
contrary. Lessee shall have no right or claim against said sublessee, or,
until the Breach has been cured, against Lessor, for any such rents and other
charges so paid by said sublessee to Lessor.
(b) In the event of a Breach by Lessee in the performance
of its obligations under this Lease, Lessor, at its option and without any
obligation to do so, may require any sublessee to attorn to Lessor, in which
event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of said option to the expiration of such
sublease; provided, however, Lessor shall not be liable for any prepaid rents
or security deposit paid by such sublessee to such sublessor or for any other
prior Defaults or Breaches of such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the
sublessor under a sublease shall also require the consent of Lessor herein.
(d) No sublessee shall further assign or sublet all or
any part of the Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default
or Breach by Lessee to the sublessee, who shall have the right to cure the
Default of Lessee within the grace period, if any, specified in such notice.
The sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee.
13. DEFAULT; BREACH; REMEDIES.
13.1 DEFAULT; BREACH. Lessor and Lessee agree that if an attorney
is consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in
said notice as rent due and payable to cure said Default. A "DEFAULT" is
defined as a failure by the Lessee to observe, comply with or perform any of
the terms, covenants, conditions or rules applicable to Lessee under this
Lease. A "BREACH"
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is defined as the occurrence of any one or more of the following Defaults, and,
where a grace period for cure after notice is specified herein, the failure by
Lessee to cure such Default prior to the expiration of the applicable grace
period, shall entitle Lessor to pursue the remedies set forth in Paragraphs
13.2 and/or 13.3:
(a) The vacating of the Premises without the intention to
reoccupy same, or the abandonment of the Premises.
(b) Except as expressly otherwise provided in this Lease,
the failure by Lessee to make any payment of Base Rent or any other monetary
payment required to be made by Lessee hereunder, whether to Lessor or to a
third party, as and when due, the failure by Lessee to provide Lessor with
reasonable evidence of insurance or surety bond required under this Lease, or
the failure of Lessee to fulfill any obligation under this Lease which
endangers or threatens life or property, where such failure continues for a
period of three (3) days following written notice thereof by or on behalf of
Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease,
the failure by Lessee to provide Lessor with reasonable written evidence (in
duly executed original form, if applicable) of (i) compliance with Applicable
Law per Paragraph 6.3, (ii) the inspection, maintenance and service contracts
required under Paragraph 7.1(b), (iii) the recission of an unauthorized
assignment or subletting per Paragraph 12.1(b), (iv) a Tenancy Statement per
Paragraphs 16 or 37, (v) the subordination or non-subordination of this Lease
per Paragraph 30, (vi) the guaranty of the performance of Lessee's obligations
under this Lease if required under Paragraphs 1.11 and 37, (vii) the execution
of any document requested under Paragraph 42 (easements), or (viii) any other
documentation or information which Lessor may reasonably require of Lessee
under the terms of this Lease, where any such failure continues for a period of
ten (10) days following written notice by or on behalf of Lessor to Lessee.
(d) A Default by Lessee as to the terms, covenants,
conditions or provisions of this Lease, or of the rules adopted under Paragraph
40 hereof, that are to be observed, complied with or performed by Lessee, other
than those described in subparagraphs (a), (b) or (c), above, where such
Default continues for a period of thirty (30) days after written notice thereof
by or on behalf of Lessor to Lessee; provided, however, that if the nature of
Lessee's Default is such that more than thirty (30) days are reasonably
required for its cure, then it shall not be deemed to be a Breach of this Lease
by Lessee if Lessee commences such cure within said thirty (30) day period and
thereafter diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i)
The making by lessee of any general arrangement or assignment for the benefit
of creditors; (ii) Lessee's becoming a "debtor" as defined in 11 U.S.C. Section
101 or any successor statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within sixty (60) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all
of Lessee's assets located at the Premises or of Lessee's interest in this
Lease, where possession is not restored to Lessee within thirty (30) days; or
(iv) the attachment, execution or other judicial seizure of substantially all
of Lessee's assets located at the Premises or of Lessee's interest in this
Lease, where such seizure is not discharged within thirty (30) days; provided,
however, in the event that any provision of this subparagraph (e) is contrary
to any applicable law, such provision shall be of no force or effect, and not
affect the validity of the remaining provisions.
(f) The discovery by Lessor that any financial statement
given to Lessor by Lessee or any Guarantor of Lessee's obligations hereunder
was materially false.
(g) If the performance of Lessee's obligations under this
Lease is guaranteed: (i) the death of a guarantor, (ii) the termination of a
guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty, (iii) a guarantor's becoming insolvent or the
subject of a bankruptcy filing, (iv) a guarantor's refusal to honor the
guaranty, or (v) a guarantor's breach of its guaranty obligation on an
anticipatory breach basis, and Lessee's failure, within sixty (60) days
following written notice by or on behalf of Lessor to Lessee of any such event,
to provide Lessor with written alternative assurance or security, which, when
coupled with the then existing resources of Lessee, equals or exceeds the
combined financial resources of Lessee and the guarantors that existed at the
time of execution of this Lease.
13.2 REMEDIES. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written
notice to Lessee (or in case of an emergency, without notice), Lessor may at
its option (but without obligation to do so), perform such duty or obligation
on Lessee's behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee to Lessor upon invoice therefor. If any check given
to Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require all future payments to be made under this
Lease by Lessee to be made only by cashier's check. In the event of a Breach
of this Lease by Lessee, as defined in Paragraph 13.1, with or without further
notice or demand, and without limiting Lessor in the exercise of any right or
remedy which Lessor may have by reason of such Breach, Lessor may:
(a) Terminate Lessee's right to possession of the
Premises by any lawful means, in which case this Lease and the term hereof
shall terminate and Lessee shall immediately surrender possession of the
Premises to Lessor. In such event Lessor shall be entitled to recover from
Lessee: (i) the worth at the time of the award of the unpaid rent which had
been earned at the time of termination; (ii) the worth at the time of award of
the amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
the Lessee proves could have been reasonably avoided; (iii) the worth at the
time of award of the amount by which the unpaid rent for the balance of the
term after the time of award exceeds the amount of such rental loss that the
Lessee proves could be reasonably avoided; and (iv) any other amount necessary
to compensate Lessor for all the detriment proximately caused by the Lessee's
failure to perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, including but not limited
to the cost of recovering possession of the Premises, expenses of reletting,
including necessary renovation and alteration of the Premises, reasonable
attorneys' fees, and that portion of the leasing commission paid by Lessor
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the prior sentence shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%). Efforts by
Lessor to mitigate damages caused by Lessee's Default or Breach of this Lease
shall not waive Lessor's right to recover damages under this Paragraph. If
termination of this Lease is obtained through the provisional remedy of
unlawful detainer, Lessor shall have the right to recover in such proceeding
the unpaid rent and damages as are recoverable therein, or Lessor may reserve
therein the right to recover all or any part thereof in a separate suit for
such rent and/or damages. If a notice and grace period required under
subparagraphs 13.1(b), (c) or (d) was not previously given, a notice to pay
rent or quit, or to perform or quit, as the case may be, given to Lessee under
any statute authorizing the forfeiture of leases for unlawful detainer shall
also constitute the applicable notice for grace period purposes required by
subparagraphs 13.1(b), (c) or (d). In such case, the applicable grace period
under subparagraphs 13.1(b), (c) or (d) and under the unlawful detainer
statute shall run concurrently after the one such statutory notice, and the
failure of Lessee to cure the Default within the greater of the two such grace
periods shall constitute both an unlawful detainer and a Breach of this Lease
entitling Lessor to the remedies provided for in this Lease and/or by said
statute.
(b) Continue the Lease and Lessee's right to possession
in effect (in California under California Civil Code Section 1951.4) after
Lessee's Breach and abandonment and recover the rent as it becomes due,
provided Lessee has the right to sublet or assign, subject only to reasonable
limitations. See Paragraphs 12 and 36 for the limitations on assignment and
subletting which limitations Lessee and Lessor agree are reasonable. Acts of
maintenance or preservation, efforts to relet the Premises, or the appointment
of a receiver to protect the Lessor's interest under the Lease, shall not
constitute a termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the Premises
are located.
(d) The expiration or termination of this Lease and/or
the termination of Lessee's right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.
13.3 INDUCEMENT RECAPTURE IN EVENT OF BREACH. Any agreement by
Lessor for free or abated rent or other charges applicable to the Premises, or
for the giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "INDUCEMENT PROVISIONS," shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Breach of this Lease by Lessee, as defined in Paragraph 13.1, any such
inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lessor,
and recoverable by Lessor as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance
by Lessor of rent or the cure of the Breach which initiated the operation of
this Paragraph shall not be deemed a waiver by Lessor of the provisions of this
Paragraph unless specifically so stated in writing by Lessor at the time of
such acceptance.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any ground lease, mortgage or trust deed covering the
Premises. Accordingly, if any installment of rent or any other sum due from
Lessee shall not be received by Lessor or Lessor's designee within five (5)
days after such amount shall be due, then, without any requirement for notice
to Lessee, Lessee shall pay to Lessor a late charge equal to six percent (6%)
of such overdue amount. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by
reason of late payment by Lessee. Acceptance of such late charge by Lessor
shall in no event constitute a waiver of Lessee's Default or Breach with
respect to such overdue amount, nor prevent Lessor from exercising any of the
other rights and remedies granted hereunder. In the event that a late charge is
payable hereunder, whether or not collected, for three (3) consecutive
installments of Base Rent, then notwithstanding Paragraph 4.1 or any other
provision of this Lease to the contrary, Base Rent shall, at Lessor's option,
become due and payable quarterly in advance.
13.5 BREACH BY LESSOR. Lessor shall not be deemed in breach of
this Lease unless Lessor fails within a reasonable time to perform an
obligation required to be performed by Lessor. For purposes of this Paragraph
13.5, a reasonable time shall in no event be less than thirty (30) days after
receipt by Lessor, and by the holders of any ground lease, mortgage or deed of
trust covering the Premises whose name and address shall have been furnished
Lessee in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days after
such notice are reasonably required for its performance, then Lessor shall not
be in breach of this Lease if performance is commenced within such thirty (30)
day period and thereafter diligently pursued to completion.
14. CONDEMNATION. If the Premises or any portion thereof are taken under
the power of eminent domain or sold under the threat of the exercise of said
power (all of which are herein called "CONDEMNATION"), this Lease shall
terminate as to the part so taken as of the date the condemning authority takes
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title or possession, whichever first occurs. If more than ten percent (10%)
of the floor area of the Premises, or more than twenty-five percent (25%) of
the land area not occupied by any building, is taken by condemnation, Lessee
may, at Lessee's option, to be exercised in writing within ten (10) days after
Lessor shall have given Lessee written notice of such taking (or in the absence
of such notice, within ten (10) days after the condemning authority shall have
taken possession) terminate this Lease as of the date the condemning authority
takes such possession. If Lessee does not terminate this Lease in accordance
with the foregoing, this Lease shall remain in full force and effect as to the
portion of the Premises remaining, except that the Base Rent shall be reduced
in the same proportion as the rentable floor area of the Premises taken bears
to the total rentable floor area of the building located on the Premises. No
reduction of Base Rent shall occur if the only portion of the Premises taken is
land on which there is no building. Any award for the taking of all or any
part of the Premises under the power of eminent domain or any payment made
under threat of the exercise of such power shall be the property of Lessor,
whether such award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance damages; provided,
however, that Lessee shall be entitled to any compensation separately awarded
to Lessee for Lessee's relocation expenses and/or loss of Lessee's Trade
Fixtures. In the event that this Lease is not terminated by reason of such
condemnation, Lessor shall to the extent of its net severance damages received,
over and above the legal and other expenses incurred by Lessor in the
condemnation matter, repair any damage to the Premises caused by such
condemnation, except to the extent that Lessee has been reimbursed therefor by
the condemning authority. Lessee shall be responsible for the payment of any
amount in excess of such net severance damages required to complete such
repair.
15. BROKER'S FEE.
15.1 The Brokers named in Paragraph 1.10 are the procuring causes
of this Lease. See also Section 15 of Addendum to Lease.
16. TENANCY STATEMENT.
16.1 Each Party (as "RESPONDING PARTY") shall within ten (10) days
after written notice from the other Party (the "REQUESTING PARTY") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "TENANCY STATEMENT" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.
16.2 If Lessor desires to finance, refinance, or sell the Premises,
any part thereof, or the building of which the Premises are a part, Lessee and
all Guarantors of Lessee's performance hereunder shall deliver to any potential
lender or purchaser designated by Lessor such financial statements of Lessee
and such Guarantors as may be reasonably required by such lender or purchaser,
including but not limited to Lessee's financial statements for the past three
(3) years. All such financial statements shall be received by Lessor and such
lender or purchaser in confidence and shall be used only for the purposes
herein set forth.
17. LESSOR'S LIABILITY. The term "LESSOR" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or,
if this is a sublease, of the Lessee's interest in the prior lease. In the
event of a transfer of Lessor's title or interest in the Premises or in this
Lease, Lessor shall deliver to the transferee or assignee (in cash or by
credit) any unused Security Deposit held by Lessor at the time of such transfer
or assignment. Except as provided in Paragraph 15, upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or
covenants under this Lease thereafter to be performed by the Lessor. Subject
to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined.
18. SEVERABLILTY. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within thirty (30)
days following the date on which it was due, shall bear interest from the
thirty-first (31st) day after it was due at the rate of 12% per annum, but not
exceeding the maximum rate allowed by law, in addition to the late charge
provided for in Paragraph 13.4.
20. TIME OF ESSENCE. Time is of the essence with respect to the
performance of all obligations to be performed or observed by the Parties under
this Lease.
21. RENT DEFINED. All monetary obligations of Lessee to Lessor under the
terms of this Lease are deemed to be rent.
22. NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains
all agreements between the Parties with respect to any matter mentioned herein,
and no other prior or contemporaneous agreement or understanding shall be
effective. Lessor and Lessee each represents and warrants to the Brokers that
it has made, and is relying solely upon, its own investigation as to the
nature, quality, character and financial responsibility of the other Party to
this Lease and as to the nature, quality and character of the Premises.
Brokers have no responsibility with respect thereto or with respect to any
default or breach hereof by either Party.
23. NOTICES. Addresses for Notices as per Section 23 of Addendum to Lease.
23.1 All notices required or permitted by this Lease shall be in
writing and may be delivered in person (by hand or by messenger or courier
service) or may be sent by regular, certified or registered mail or U.S. Postal
Service Express Mail, with postage prepaid, or by facsimile transmission, and
shall be deemed sufficiently given if served in a manner specified in this
Paragraph 23. The addresses noted adjacent to a Party's signature on this
Lease shall be that Party's address for delivery or mailing of notice purposes.
Either Party may by written notice to the other specify a different address for
notice purposes, except that upon Lessee's taking possession of the Premises,
the Premises shall constitute Lessee's address for the purpose of mailing or
delivering notices to Lessee. A copy of all notices required or permitted to
be given to Lessor hereunder shall be concurrently transmitted to such party or
parties at such addresses as Lessor may from time to time hereafter designate
by written notice to Lessee.
23.2 Any notice sent by registered or certified mail, return
receipt requested, shall be deemed given on the date of delivery shown on the
receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail the notice shall be deemed given forty-eight (48) hours after
the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantees next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the United States Postal Service or courier. If any
notice is transmitted by facsimile transmission or similar means, the same
shall be deemed served or delivered upon telephone confirmation of receipt of
the transmission thereof, provided a copy is also delivered via delivery or
mail. If notice is received on a Sunday or legal holiday, it shall be deemed
received on the next business day.
24. WAIVERS. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof.
Lessor's consent to, or approval of, any act shall not be deemed to render
unnecessary the obtaining of Lessor's consent to, or approval of, any
subsequent or similar act by Lessee, or be construed as the basis of an
estoppel to enforce the provision or provisions of this Lease requiring such
consent. Regardless of Lessor's knowledge of a Default or Breach at the time
of accepting rent, the acceptance of rent by Lessor shall not be a waiver of
any preceding Default or Breach by Lessee of any provision hereof, other than
the failure of Lessee to pay the particular rent so accepted. Any payment
given Lessor by Lessee may be accepted by Lessor on account of moneys or
damages due Lessor, notwithstanding any qualifying statements or conditions
made by Lessee in connection therewith, which such statements and/or conditions
shall be of no force or effect whatsoever unless specifically agreed to in
writing by Lessor at or before the time of deposit of such payment.
25. RECORDING. Lessee shall not record this or any memorandum thereof.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease.
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27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
at law or in equity.
28. COVENANTS AND CONDITIONS. All provisions of this Lease to be observed
or performed by Lessee are both covenants and conditions.
29. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
30.1 SUBORDINATION. This Lease and any Option granted hereby shall
be subject and subordinate to any ground lease, mortgage, deed of trust, or
other hypothecation or security device (collectively, "SECURITY DEVICE"), now
or hereafter placed by Lessor upon the real property of which the Premises are
a part, to any and all advances made on the security thereof, and to all
renewals, modifications, consolidations, replacements and extensions thereof.
Lessee agrees that the Lenders holding any such Security Device shall have no
duty, liability or obligation to perform any of the obligations of Lessor under
this Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default and
allow such Lender thirty (30) days following receipt of such notice for the
cure of said default before invoking any remedies Lessee may have by reason
thereof. If any Lender shall elect to have this Lease and/or any Option
granted hereby superior to the lien of its Security Device and shall give
written notice thereof to Lessee, this Lease and such Options shall be deemed
prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.
30.2 ATTORNMENT. Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who
acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and that in the event of such foreclosure, such new owner shall not:
(i) be liable for any act or omission of any prior lessor or with respect to
events occurring prior to acquisition of ownership, (ii) be subject to any
offsets or defenses which Lessee might have against any prior lessor, or (iii)
be bound by prepayment of more than one (1) month's rent.
30.3 NON-DISTURBANCE. With respect to Security Devices entered
into by Lessor after the execution of this Lease, Lessee's subordination of
this Lease shall be subject to receiving assurance (a "NON-DISTURBANCE
AGREEMENT") from the Lender that Lessee's possession and this Lease, including
any options to extend the term hereof, will not be disturbed so long as Lessee
is not in Breach hereof and attorns to the record owner of the Premises.
30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection with
a sale, financing or refinancing of the Premises, Lessee and Lessor shall
execute such further writings as may be reasonably required to separately
document any such subordination or non-subordination, attornment and/or non-
disturbance agreement as is provided for herein.
31. ATTORNEY'S FEES. If any Party or Broker brings an action or
proceeding to enforce the terms hereof or declare rights hereunder, the
Prevailing Party (as hereafter defined) or Broker in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorney's fees.
Such fees may be awarded in the same suit or recovered in a separate suit,
whether or not such action or proceeding is pursued to decision or judgment.
The term, "PREVAILING PARTY" shall include, without limitation, a Party or
Broker who substantially obtains or defeats the relief sought, as the case may
be, whether by compromise, settlement, judgment, or the abandonment by the
other Party or Broker of its claim or defense. The attorney's fees award shall
not be computed in accordance with any court fee schedule, but shall be such as
to fully reimburse all attorney's fees reasonably incurred. Lessor shall be
entitled to attorney's fees, costs and expenses incurred in the preparation and
service of notices of Default and consultations in connection therewith,
whether or not a legal action is subsequently commenced in connection with such
Default or resulting Breach.
32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's
agents shall have the right to enter the Premises at any time, in the case of
an emergency, and otherwise at reasonable times for the purpose of showing the
same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises or to the
building of which they are a part, as Lessor may reasonably deem necessary.
Lessor may at any time place on or about the Premises or building any ordinary
"For Sale" signs and Lessor may at any time during the last one hundred twenty
(120) days of the term hereof place on or about the Premises any ordinary "For
Lease" signs. All such activities of Lessor shall be without abatement of rent
or liability to Lessee.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted,
either voluntarily or involuntarily, any auction upon the Premises without
first having obtained Lessor's prior written consent. Notwithstanding anything
to the contrary in this Lease, Lessor shall not be obligated to exercise any
standard of reasonableness in determining whether to grant such consent.
34. SIGNS. See Section 34 of Addendum to Lease.
35. TERMINATION; MERGER. Unless specifically stated otherwise in writing
by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for
Breach by Lessee, shall automatically terminate any sublease or lesser estate
in the Premises; provided, however, Lessor shall, in the event of any such
surrender, termination or cancellation, have the option to continue any one or
all of any existing subtenancies. Lessor's failure within ten (10) days
following any such event to make a written election to the contrary by written
notice to the holder of any such lesser interest, shall constitute Lessor's
election to have such event constitute the termination of such interest.
36. CONSENTS.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise
provided herein, wherever in this Lease the consent of a Party is required to
an act by or for the other Party, such consent shall not be unreasonably
withheld or delayed. Lessor's actual reasonable costs and expenses (including
but not limited to architects', attorneys', engineers' or other consultants'
fees) incurred in the consideration of, or response to, a request by Lessee for
any Lessor consent pertaining to this Lease or the Premises, including but not
limited to consents to an assignment, a subletting or the presence or use of a
Hazardous Substance, practice or storage tank, shall be paid by Lessee to
Lessor upon receipt of an invoice and supporting documentation therefor.
Subject to Paragraph 12.2(e) (applicable to assignment or subletting), Lessor
may, as a condition to considering any such request by Lessee, require that
Lessee deposit with Lessor an amount of money (in addition to the Security
Deposit held under Paragraph 5) reasonably calculated by Lessor to represent
the cost Lessor will incur in considering and responding to Lessee's request.
Except as otherwise provided, any unused portion of said deposit shall be
refunded to Lessee without interest. Lessor's consent to any act, assignment
of this Lease or subletting of the Premises by Lessee shall not constitute an
acknowledgement that no Default or Breach by Lessee of this Lease exists, nor
shall such consent be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the time
of such consent.
(b) All conditions to Lessor's consent authorized by this Lease
are acknowledged by Lessee as being reasonable. The failure to specify herein
any particular condition to Lessor's consent shall not preclude the imposition
by Lessor at the time of consent of such further or other conditions as are
then reasonable with reference to the particular matter for which consent is
being given.
37. GUARANTOR.
37.1 If there are to be any Guarantors of this Lease per Paragraph
1.11, the form of the guaranty to be executed by each such Guarantor shall be
in the form most recently published by the American Industrial Real Estate
Association, and each said Guarantor shall have the same obligations as Lessee
under this Lease, including but not limited to the obligation to provide the
Tenancy Statement and information called for by Paragraph 16.
37.2 It shall constitute a Default of the Lessee under this Lease
if any such Guarantor fails or refuses, upon reasonable request by Lessor to
give: (a) evidence of the due execution of the guaranty called for by
this Lease, including the authority of the Guarantor (and of the party signing
on Guarantor's behalf) to obligate such Guarantor on said guaranty, and
including in the case of a corporate Guarantor, a certified copy of a
resolution of its board of directors authorizing the making of such guaranty,
together with a certificate of incumbency showing the signature of the persons
authorized to sign on its behalf, (b) current financial statements of Guarantor
as may from time to time be requested by Lessor, (c) a Tenancy Statement, or
(d) written confirmation that the guaranty is still in effect.
38. QUIET POSSESSION. Upon payment by Lessee of the rent for the Premises
and the observance and performance of all of the covenants, conditions and
provisions on Lessee's part to be observed and performed under this Lease,
Lessee shall have quiet possession of the Premises for the entire term hereof
subject to all of the provisions of this Lease.
39. OPTIONS. See Section 39 of Addendum to Lease.
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40. MULTIPLE BUILDINGS. If the Premises are part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by, keep and observe all
reasonable rules and regulations which Lessor may make from time to time for
the management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of such other buildings and their
invitees, and that Lessee will pay its fair share of common expenses incurred
in connection therewith.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable
to Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
42. RESERVATIONS. Lessor reserves to itself the right, from time to time,
to grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay under the
provisions of this Lease.
44. AUTHORITY. If either Party hereto is a corporation, trust, or general
or limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. CONFLICT. Any conflict between the printed provisions of this Lease
and the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
46. OFFER. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to lease to Lessee.
This Lease is not intended to be binding until executed by all Parties hereto.
47. AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. The parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional, insurance company, or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the
property of which the Premises are a part.
48. Multiple Parties. Except as otherwise expressly provided herein, if
more than one person or entity is named herein as either Lessor or Lessee, the
obligations of such Multiple Parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or
Lessee.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION
TO YOUR ATTORNEY FOR HIS APPROVAL. FURTHER, EXPERTS SHOULD BE
CONSULTED TO EVALUATE THE CONDITION OF THE PROPERTY AS TO THE POSSIBLE
PRESENCE OF ASBESTOS, STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO
REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL
REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER(S) OR THEIR
AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES; THE
PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO
THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY
IS LOCATED IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE
STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.
The parties hereto have executed this Lease at the place on the dates specified
above to their respective Signatures.
Signatures of Lessor, Lessee and Guarantor are contained at the conclusion of
Addendum to Lease.
NET PAGE 10
NOTICE: These forms are often modified to meet changing requirements
of law and industry needs. Always write or call to make sure
you are utilizing the most current form: American Industrial
Real Estate Association, 700 South Flower Street, Suite 600,
Los Angeles, CA 90017. (213) 687-8777. Fax No. (213)
687-8616.
Copyright 1990-By American Industrial Real Estate Association. All rights
reserved. No part of these works may be reproduced in any form without
permission in writing.
<PAGE> 1
EXHIBIT 21.01
AmeriQuest Technologies, Inc.
100% 100%
AmeriQuest/Kenfil Inc. CMS Enchancements, Inc.
Kenfil Distribution AnyBus Technology Corporation
(Far East) Ltd. CMS Enhancement Systems, Inc.
Kenfil Distribution
(M) SDN.BHD
<PAGE> 1
EXHIBIT 23.01
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K into the Company's
previously filed Registration Statements, SEC File Nos. 33-23809, 33-85752,
33-76538, 33-74034, 33-61987, 333-1707 and 333-2745.
ARTHUR ANDERSEN LLP
Los Angeles, California
December 16, 1996
<PAGE> 1
EXHIBIT 24.01
APPOINTMENT OF ATTORNEY-IN-FACT
AND
CONSENT OF DIRECTOR
I hereby authorize, as the President and as a director of
AmeriQuest Technologies, Inc. (the "Corporation"), the filing with the
Securities and Exchange Commission of the Corporation's Annual Report on Form
10-K for the fiscal year ended September 30, 1996 (the "Annual Report"), and any
and all amendments thereto as management deems advisable in response to SEC
comments or otherwise, inasmuch as the Annual Report is deemed to be
incorporated by reference in the Corporation's Registration Statements on Forms
S-3, S-4 and S-8.
I hereby consent to the filing by the Corporation of such
Annual Report, and to reference to my name in the Annual Report as a "Director"
of the Corporation. I hereby appoint Holger Heims as my attorney-in-fact with
power to sign any and all amendments or documents required to complete any
amendments to the Annual Report filed on behalf of the Corporation.
DATED the 27th day of November, 1996.
/s/ Michael Dressen
----------------------------------
Michael Dressen
<PAGE> 2
APPOINTMENT OF ATTORNEY-IN-FACT
AND
CONSENT OF DIRECTOR
I hereby authorize, as Executive Vice President and as a
director of AmeriQuest Technologies, Inc. (the "Corporation"), the filing with
the Securities and Exchange Commission of the Corporation's Annual Report on
Form 10-K for the fiscal year ended September 30, 1996 (the "Annual Report"),
and any and all amendments thereto as management deems advisable in response to
SEC comments or otherwise, inasmuch as the Annual Report is deemed to be
incorporated by reference in the Corporation's Registration Statements on Forms
S-3, S-4 and S-8.
I hereby consent to the filing by the Corporation of such
Annual Report, and to reference to my name in the Annual Report as a "Director"
of the Corporation. I hereby appoint Michael Dressen as my attorney-in-fact with
power to sign any and all amendments or documents required to complete any
amendments to the Annual Report filed on behalf of the Corporation.
DATED the 20th day of November, 1996.
/s/ Holger Heims
----------------------------------
Holger Heims
<PAGE> 3
APPOINTMENT OF ATTORNEY-IN-FACT
AND
CONSENT OF DIRECTOR
I hereby authorize, as a director of AmeriQuest Technologies,
Inc. (the "Corporation"), the filing with the Securities and Exchange Commission
of the Corporation's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996 (the "Annual Report"), and any and all amendments thereto as
management deems advisable in response to SEC comments or otherwise, inasmuch as
the Annual Report is deemed to be incorporated by reference in the Corporation's
Registration Statements on Forms S-3, S-4 and S-8.
I hereby consent to the filing by the Corporation of such
Annual Report, and to reference to my name in the Annual Report as a "Director"
of the Corporation. I hereby appoint Michael Dressen and Holger Heims as my
attorneys-in-fact with power to either of them to sign any and all amendments or
documents required to complete any amendments to the Annual Report filed on
behalf of the Corporation.
DATED the 10th day of December, 1996.
/s/ Dr. Harry Krischik
----------------------------------
Dr. Harry Krischik
<PAGE> 4
APPOINTMENT OF ATTORNEY-IN-FACT
AND
CONSENT OF DIRECTOR
I hereby authorize, as a director of AmeriQuest Technologies,
Inc. (the "Corporation"), the filing with the Securities and Exchange Commission
of the Corporation's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996 (the "Annual Report"), and any and all amendments thereto as
management deems advisable in response to SEC comments or otherwise, inasmuch as
the Annual Report is deemed to be incorporated by reference in the Corporation's
Registration Statements on Forms S-3, S-4 and S-8.
I hereby consent to the filing by the Corporation of such
Annual Report, and to reference to my name in the Annual Report as a "Director"
of the Corporation. I hereby appoint Michael Dressen and Holger Heims as my
attorneys-in-fact with power to either of them to sign any and all amendments or
documents required to complete any amendments to the Annual Report filed on
behalf of the Corporation.
DATED the 6th day of December, 1996.
/s/ Manfred H. Guenzel
----------------------------------
Manfred H. Guenzel
<PAGE> 5
APPOINTMENT OF ATTORNEY-IN-FACT
AND
CONSENT OF DIRECTOR
I hereby authorize, as a director of AmeriQuest Technologies,
Inc. (the "Corporation"), the filing with the Securities and Exchange Commission
of the Corporation's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996 (the "Annual Report"), and any and all amendments thereto as
management deems advisable in response to SEC comments or otherwise, inasmuch as
the Annual Report is deemed to be incorporated by reference in the Corporation's
Registration Statements on Forms S-3, S-4 and S-8.
I hereby consent to the filing by the Corporation of such
Annual Report, and to reference to my name in the Annual Report as a "Director"
of the Corporation. I hereby appoint Michael Dressen and Holger Heims as my
attorneys-in-fact with power to either of them to sign any and all amendments or
documents required to complete any amendments to the Annual Report filed on
behalf of the Corporation.
DATED the 5th day of December, 1996.
/s/ Robert H. Beckett
----------------------------------
Robert H. Beckett
<PAGE> 6
APPOINTMENT OF ATTORNEY-IN-FACT
AND
CONSENT OF DIRECTOR
I hereby authorize, as a director of AmeriQuest Technologies,
Inc. (the "Corporation"), the filing with the Securities and Exchange Commission
of the Corporation's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996 (the "Annual Report"), and any and all amendments thereto as
management deems advisable in response to SEC comments or otherwise, inasmuch as
the Annual Report is deemed to be incorporated by reference in the Corporation's
Registration Statements on Forms S-3, S-4 and S-8.
I hereby consent to the filing by the Corporation of such
Annual Report, and to reference to my name in the Annual Report as a "Director"
of the Corporation. I hereby appoint Michael Dressen and Holger Heims as my
attorneys-in-fact with power to either of them to sign any and all amendments or
documents required to complete any amendments to the Annual Report filed on
behalf of the Corporation.
DATED the 27th day of November, 1996.
/s/ Marc L. Werner
----------------------------------
Marc L. Werner
<PAGE> 7
APPOINTMENT OF ATTORNEY-IN-FACT
AND
CONSENT OF DIRECTOR
I hereby authorize, as a director of AmeriQuest Technologies,
Inc. (the "Corporation"), the filing with the Securities and Exchange Commission
of the Corporation's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996 (the "Annual Report"), and any and all amendments thereto as
management deems advisable in response to SEC comments or otherwise, inasmuch as
the Annual Report is deemed to be incorporated by reference in the Corporation's
Registration Statements on Forms S-3, S-4 and S-8.
I hereby consent to the filing by the Corporation of such
Annual Report, and to reference to my name in the Annual Report as a "Director"
of the Corporation. I hereby appoint Michael Dressen and Holger Heims as my
attorneys-in-fact with power to either of them to sign any and all amendments or
documents required to complete any amendments to the Annual Report filed on
behalf of the Corporation.
DATED the 2nd day of December, 1996.
/s/ J. R. Dick Iverson
----------------------------------
J. R. Dick Iverson
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AND INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,300
<SECURITIES> 0
<RECEIVABLES> 56,492
<ALLOWANCES> 0
<INVENTORY> 38,019
<CURRENT-ASSETS> 99,648
<PP&E> 6,134
<DEPRECIATION> 0
<TOTAL-ASSETS> 116,372
<CURRENT-LIABILITIES> 124,456
<BONDS> 0
670
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 116,372
<SALES> 424,708
<TOTAL-REVENUES> 424,708
<CGS> 401,165
<TOTAL-COSTS> 401,165
<OTHER-EXPENSES> 62,398
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,754
<INCOME-PRETAX> (33,609)
<INCOME-TAX> 0
<INCOME-CONTINUING> (33,609)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (33,609)
<EPS-PRIMARY> (0.76)
<EPS-DILUTED> (0.76)
</TABLE>
