U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended: March 31, 2000
Commission File Number: 0-23100
LOGISOFT CORP.
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(Exact name of small business issuer as specified in its charter)
DELAWARE 22-2649848
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(State of Incorporation) (IRS Employer ID No)
375 Woodcliff Drive, Fairport, NY 14450
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(Address of principal executive office)
(716) 249-8600
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes X No
The number of shares outstanding of registrant's common stock, par value $.0001
per share, as of May 12, 2000 was 30,452,553.
Transitional Small Business Disclosure Format (Check one): Yes No X
LOGISOFT CORP.
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<PAGE>
INDEX
Page
No.
----
Part I. Financial Information
Item 1. Financial Statements (unaudited) 3
Balance Sheet -
March 31, 2000 (unaudited) and December 31, 1999 3
Statement of Income and Operations -
Three months ended March 31, 2000 and 1999 (unaudited) 5
Statements of changes in Stockholders' Equity March 31, 2000
(unaudited) 6
Statement of cash flows -
Three months ended March 31, 2000 and 1999 (unaudited) 7
Notes to Financial Statements -
Three months ended March 31, 2000 and 1999 (unaudited) 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 18
Item 3. Qualitative and Quantitative Disclosures about Market Risk 27
Part II. Other Information 28
Item 2. Changes in Securities and use of Proceeds 28
Item 6. Exhibits and reports on Form 8-K 28
- 2 -
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
<TABLE>
<CAPTION>
LOGISOFT CORP.
--------------
COMBINED AND CONSOLIDATED BALANCE SHEETS
----------------------------------------
December 31, March 31,
------------- ----------
1999 2000
------------- ----------
<S> <C> <C>
(unaudited)
ASSETS
- --------------------------------------------
CURRENT ASSETS:
Cash and equivalents $ 59,550 $5,040,519
Accounts receivable 1,003,495 988,958
Note receivable - 720,000
Due from officer 6,909 -
Unbilled revenues 12,000 20,000
Inventory 6,542 9,858
Prepaid expenses and other current assets 4,884 13,474
Deferred tax asset 37,640 37,640
------------- ----------
Total current assets 1,131,020 6,830,449
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PROPERTY AND EQUIPMENT, net 367,041 376,641
------------- ----------
OTHER ASSETS:
Intangible assets, net 11,424 1,969,035
Other assets - 28,684
------------- ----------
11,424 1,997,719
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$ 1,509,485 $9,204,809
============= ==========
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
LOGISOFT CORP.
--------------
COMBINED AND CONSOLIDATED BALANCE SHEETS
----------------------------------------
(CONTINUED)
-----------
December 31, March 31,
-------------- -----------
1999 2000
-------------- -----------
<S> <C> <C>
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
- ---------------------------------------------------
CURRENT LIABILITIES:
Line-of-credit $ 350,000 $ 400,000
Current portion of long-term debt 9,428 8,400
Note payable - officer 12,000 -
Accounts payable 628,000 399,558
Accrued expenses and other current liabilities 389,529 159,915
Advanced billings 14,800 23,900
-------------- -----------
Total current liabilities 1,403,757 991,773
LONG-TERM DEBT, net of current portion 199,736 197,167
DEFERRED TAX LIABILITY 19,354 27,831
-------------- -----------
Total liabilities 1,622,847 1,216,771
-------------- -----------
MINORITY INTEREST 1,002 -
-------------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock, $2.75 par value, 2,000,000
shares authorized, no shares issued - -
Common stock, $.0001 par value, 60,000,000
shares authorized, 12,000,000
and 30,434,553 shares issued
and outstanding, respectively 1,200 3,044
Additional paid-in capital 264,550 8,342,706
Retained earnings (379,112) (357,712)
-------------- -----------
(113,362) 7,988,038
Less: Minority interest (1,002) -
-------------- -----------
Total stockholders' equity (114,364) 7,988,038
-------------- -----------
$ 1,509,485 $9,204,809
============== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
LOGISOFT CORP.
--------------
COMBINED AND CONSOLIDATED STATEMENTS OF INCOME AND OPERATIONS
-------------------------------------------------------------
(UNAUDITED)
-----------
Quarter ended March 31,
-----------------------
1999 2000
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<S> <C> <C>
REVENUE:
E-commerce/retail $550,719 $ 924,520
Strategic internet services 80,320 266,721
--------- -----------
Total revenue 631,039 1,191,241
--------- -----------
COST OF REVENUE:
E-commerce/retail 467,879 800,259
Strategic internet services 69,126 107,228
--------- -----------
Total cost of revenue 537,005 907,487
--------- -----------
Gross profit 94,034 283,754
--------- -----------
OPERATING EXPENSES:
Sales and marketing 65,542 108,411
General and administrative 56,768 115,187
Stock based compensation - -
Depreciation 6,759 11,931
Amortization 87 22,389
--------- -----------
Total operating expenses 129,156 257,918
--------- -----------
Income (loss) from operations (35,122) 25,836
--------- -----------
OTHER INCOME (EXPENSE):
Interest expense (6,069) (13,495)
Interest income - 21,188
Other 325 83
--------- -----------
(5,744) 7,776
--------- -----------
Income (loss) before income taxes
and minority interest (40,866) 33,612
INCOME TAXES (637) (12,212)
--------- -----------
Income (loss) before minority interest (41,503) 21,400
MINORITY INTEREST 18,241 1,002
--------- -----------
NET INCOME (LOSS) $(23,262) $ 22,402
========= ===========
NET INCOME (LOSS)
PER COMMON SHARE:
BASIC AND DILUTED $ - $ -
========= ===========
</TABLE>
The accompanying notes are an integral part of these statements.
-5-
<PAGE>
<TABLE>
<CAPTION>
LOGISOFT CORP.
--------------
CONSOLIDTED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
---------------------------------------------------------
(Unaudited)
Common Stock Paid-in Retained Minority
Shares Amount Capital Earnings Interest Total
------------ ------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1999 12,000,000 1,200 264,550 (379,112) (1,002) (114,364)
Issuance of shares in merger 18,434,553 1,844 6,218,156 - - 6,220,000
Stock issuance costs - - (120,000) - - (120,000)
Acquisition of eStorefronts
minority interest - - 1,980,000 - - 1,980,000
Net income (loss) - - - 21,400 1,002 22,402
------------ ------- ----------- ---------- ---------- -----------
BALANCE, March 31, 2000 30,434,553 $ 3,044 $8,342,706 $(357,712) $ - $7,988,038
============ ======== =========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
-6-
<PAGE>
<TABLE>
<CAPTION>
LOGISOFT CORP.
--------------
COMBINED AND CONSOLIDATED STATEMENT OF CASH FLOWS
-------------------------------------------------
(Unaudited)
Quarter ended March 31,
-----------------------
1999 2000
--------- -----------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) $(23,262) $ 22,402
Adjustments to reconcile net income (loss) to
net cash flow from operating activities:
Minority interest (18,241) (1,002)
Depreciation and amortization 6,846 34,320
Deferred taxes - 8,477
Stock based compensation - -
Changes in:
Accounts receivable (96,661) 14,537
Inventory 215 (3,316)
Prepaid expenses and other current assets (11,609) (8,590)
Unbilled revenues, net of advanced billings 23,700 1,100
Accounts payable 82,000 (228,442)
Accrued expenses (744) (324,614)
--------- -----------
Net cash flow from (used in) operating activities (37,756) (485,128)
CASH FLOW FROM INVESTING ACTIVITIES:
Increase in other assets - (28,684)
Purchases of property and equipment (3,589) (21,531)
Repayments - due from officer - 6,909
--------- -----------
Net cash flow from investing activities (3,589) (43,306)
--------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Borrowings on line-of-credit, net 50,000 50,000
Repayment of long-term debt (3,453) (3,597)
Repayments of note payable - officer - (12,000)
Proceeds from sale of stock 15,000 -
Cash acquired in merger transactions - 5,500,000
Stock issuance costs - (25,000)
--------- -----------
Net cash flow from (used in) financing activities 61,547 5,509,403
--------- -----------
CHANGE IN CASH AND EQUIVALENTS 20,202 4,980,969
CASH AND EQUIVALENTS - beginning of year 105,808 59,550
--------- -----------
CASH AND EQUIVALENTS - end of year $126,010 $5,040,519
========= ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash interest paid $ 4,639 $ 14,034
========= ===========
Cash taxes paid $ 979 $ 1,212
========= ===========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
LOGISOFT CORP.
--------------
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------
(Unaudited)
(1) Description of Business
The combined and consolidated financial statements include LogiSoft
Computer Products Corp. (LCP), formerly known as LogiSoft Corp., and
eStorefronts.net Corp. (eStorefronts), which are under common control,
together the Companies. The shareholders of LCP owned 56% of the shares of
eStorefronts through March 10, 2000, when LCP and eStorefronts shares were
exchanged in transactions with LogiSoft Corp., formerly known as
Reconversion Technologies, Inc. (LogiSoft or the Company), as discussed
below. After these transactions, LCP and eStorefronts were wholly-owned
subsidiaries of LogiSoft.
Business -
Together, LCP and eStorefronts are a full-spectrum Internet business
development enterprise. The Companies offer comprehensive strategic
Internet services with core competencies being sophisticated interactive
web development and domestic/international e-commerce solutions.
Additionally, the Companies develop and operate a variety of
e-commerce/retail businesses through subsidiaries and strategic
partnerships that leverage their knowledge of technology, e-commerce and
Internet marketing.
The Companies provide comprehensive, sophisticated Internet capabilities to
both traditional middle market and pure e-business companies. LCP provides
up front planning with our strategic consulting services, custom front-end
architecture and web development as well as comprehensive back end support
upon web site completion. LCP's competitive advantage is the unique ability
to deliver these services on a global scale which includes a proprietary
e-commerce solution that allows for transactions in multiple languages and
currencies, settlement in multiple countries and multiple transactions
methods - all automated and updated in real time.
LCP was founded in 1989 as a software and hardware provider to corporate
customers and educational entities such as universities and school
districts. In 1996, LCP launched its Internet division, "LogiSoft
Interactive" or "LGI", and found immediate success, winning both local and
national awards in 1997. In 1999, LogiSoft Interactive completed its
development of a proprietary e-commerce platform that enables it to roll
out turn-key domestic and international websites that allow companies
to penetrate international markets on a cost effective basis. The software
and hardware solutions business is being migrated to an internet based
platform. eStorefronts partners with both traditional and pure web-based
businesses to take businesses to the Internet. It participates in the
development and execution of the business plan in exchange for
revenue-sharing and/or equity-based arrangements.
Merger Transactions -
On March 10, 2000, LCP was acquired by Reconversion Technologies, Inc. (now
known as LogiSoft), a public shell company registered in Delaware in a
reverse triangular merger, in which the shareholders of LCP received
7,500,000 shares of LogiSoft for all of the outstanding common stock of
LCP. For accounting purposes, this transaction has been recorded as an
issuance of stock by LCP in exchange for the assets of LogiSoft. At the
time of acquisition, LogiSoft had no operations and its assets consisted of
$5,500,000 in cash and a note receivable for $720,000. Effective May 1,
2000, Reconversion Technologies, Inc. changed its name to LogiSoft Corp.
and its ticker symbol to 'LGST' to better reflect its business.
- 8 -
<PAGE>
Merger Transactions - (Continued)
Consistent with the accounting for this transaction as an issuance of
shares by LCP for the assets of LogiSoft, the historical financial
statements of LCP replace those of the legal issuer, LogiSoft, and the
assets and activity of LogiSoft are included in the consolidated financial
statements of the Company from March 10, 2000. The Company will maintain
LCP's December 31 fiscal year end. LogiSoft's fiscal year end was June 30.
The $5,500,000 cash in LogiSoft on the date of acquisition represents the
proceeds received from the sale of 2,750,000 shares of its stock and the
exercise of 2,750,000 existing warrants to purchase registered shares of
its common stock at $1 per share by nine unrelated investors on March 9,
2000.
Also on March 10, 2000 and in conjunction with the LCP transaction,
LogiSoft acquired all of the outstanding common stock of eStorefronts for
4,500,000 shares of LogiSoft in a share exchange. LCP shareholders owned
56% of eStorefronts common stock at the time of this transaction. The share
exchange between the shareholders of eStorefronts and LogiSoft has been
accounted for at historical cost for the 56% of eStorefronts controlled by
the LCP shareholders. The acquisition of the minority interest of 44% by
LogiSoft has been accounted for using purchase accounting.
The purchase price of the 44% minority interest in eStorefronts in excess
of fair value of net assets acquired has been reflected as goodwill.
Certain eStorefronts shareholders have assumed key executive management
roles in LogiSoft. This goodwill of approximately $1,980,000 is being
amortized over its estimated useful life of five years.
In connection with the merger transactions, shareholders owning 50.4% of
the Company including the LCP shareholders, certain eStorefronts
shareholders and other investors entered into voting agreements. The
agreements are effective for two years from the date of the reverse merger
transaction and require the parties to vote to maintain the number of
directors of the Company at four and to vote for the two candidates for
board of directors seats nominated by (1) the former LCP shareholders and
(2) certain investors in the 5,500,000 shares issued on March 9, 2000. The
pre-transaction shareholders of LCP and eStorefronts occupy the key
executive management positions of the Company.
On March 7, 2000, LogiSoft entered into an agreement for the sale of
Keystone Laboratories, Inc. (Keystone), a drug screening and confirmatory
testing laboratory business, to its former president for a $720,000
promissory note. Keystone's business was operated in the normal course up
to the time of its disposal and was LogiSoft's only operating business at
that time. This disposal was a condition precedent to completing the
transactions with LCP and eStorefronts.
- 9 -
<PAGE>
(2) Basis and Presentation of Financial Statements
----------------------------------------------
The combined balance sheet as of December 31, 1999 and the unaudited
statements of operations and cash flows for the quarter ended March 31,
1999 include the historical combined financial statements of LCP and
eStorefronts giving effect to the 44% minority interest in eStorefronts.
The unaudited consolidated financial statements for the quarter ended March
31, 2000 include the historical combined accounts of LCP and eStorefronts
for the period from January 1, 2000 through March 9, 2000 and reflect the
issuance of stock for the assets of LogiSoft and the acquisition of the
minority interest in eStorefronts on March 10, 2000. Accordingly, net
income for the quarter ended March 31, 2000 includes 56% of the
eStorefronts operations through March 9, 2000 and 100% thereafter. The
$5,500,000 in cash and the $720,000 note receivable are recorded as
proceeds from the issuance of 18,434,553 shares of LCP on March 10, 2000.
The Company has prepared the accompanying unaudited consolidated financial
statements pursuant to the rules and regulations of the Securities and
Exchange Commission regarding interim financial reporting. Accordingly,
they do not contain all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
These interim financial statements should be read in conjunction with the
audited combined financial statements and notes thereto for the year ended
December 31, 1999 included in the Company's Form 8-K filed on May 22, 2000.
In the opinion of management, the accompanying unaudited consolidated
financial statements reflect all adjustments (consisting of only normal
recurring adjustments) considered necessary for a fair presentation of the
Company's financial condition as of March 31, 2000, the results of its
operations and cash flows for the three month periods ended March 31, 2000
and 1999. Operating results for the three month period ended March 31, 2000
are not necessarily indicative of the operating results that may be
expected for the year ending December 31, 2000.
All significant intercompany accounts and transactions have been
eliminated.
Revenue Recognition and Related Expenses -
Revenue from uncollateralized e-commerce/retail sales is recognized upon
passage of title of the related goods to the customer.
Strategic internet services revenue is recognized on a percentage of
completion basis for fixed fee contracts, based on the ratio of costs
incurred to total estimated costs for individual projects. Revenue is
recognized as services are performed for time and material contracts.
Cost of revenue for the e-commerce/retail business is comprised primarily
of the purchased cost of products sold.
Cost of revenue for strategic internet services consists primarily of
project personnel costs such as salaries, employee benefits and incentive
compensation of billable employees and the cost of any third-party hardware
or software included in an Internet solution.
Sales and marketing expenses include product and service research,
advertising, brand name promotions, lead-generation activities and
shipping/logistics as well as salaries, employee benefits and incentive
compensation of personnel in these functions.
- 10 -
<PAGE>
General and administrative expenses are comprised of the salaries, employee
benefits and incentive compensation of personnel responsible for
administrative, accounting, legal, human resources functions, the costs of
the Company's facilities and other general and administrative expense.
Cash and Equivalents -
The Company considers all highly liquid investments with an original
maturity of 90 days or less to be cash and equivalents. The Company
maintains its cash in bank demand deposit accounts, which at times may
exceed federally insured limits. The Company has not experienced any losses
in such accounts and believes it is not exposed to any significant credit
risk on cash and equivalents.
Inventory -
Inventory consists of computer hardware and software supplies and is stated
at the lower of cost, determined on a first-in, first-out (FIFO) basis, or
market.
Property and Equipment -
Property and equipment is recorded at cost. Expenditures for renewals and
improvements that significantly add to the productive capacity or extend
the useful life of an asset are capitalized. Expenditures for maintenance
and repairs are charged to operations as incurred. Depreciation is provided
using the straight-line method over the estimated useful lives of the
assets as follows:
Buildings and improvements 40 years
Computers and office equipment 3 - 5 years
Furniture and fixtures 10 years
The Company reviews quarterly its properties in accordance with the
Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long Lived Assets" to determine if its carrying costs will be
recovered from future operating cash flows. In cases where the Company does
not expect to recover its carrying costs, the Company recognizes an
impairment loss.
Intangible Assets -
Intangible assets consist of goodwill, deferred financing costs and prepaid
licensing fees. Goodwill is being amortized over its estimated useful life
of five (5) years. Deferred financing fees are amortized on a straight-line
basis over the term of the related mortgage. Prepaid licensing fees are
amortized over the estimated useful life of the licensing agreement of five
(5) years.
The carrying value of goodwill and other intangible assets are reviewed if
facts and circumstances suggest that they may be impaired. If this review
indicates goodwill or other intangibles will not be recoverable, as
determined based on future expected cash flows or other fair market value
determinations, the Company's carrying value of the goodwill or other
intangibles are reduced to fair value.
Advertising Costs -
The Company expenses advertising costs as incurred. The Company recorded
advertising expense $700 and $3,300 for the quarters ended March 31, 1999
and March 31, 2000, respectively.
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<PAGE>
Income Taxes -
The Company applies the asset and liability approach for financial
accounting and reporting purposes for income taxes. The Company accounts
for certain items of income and expense in different time periods for
financial reporting and income tax purposes. Provisions for deferred income
taxes are made in recognition of such temporary differences, where
applicable. A valuation allowance is established against deferred tax
assets unless the Company believes it is more likely than not that the
benefit will be realized.
Net Income (Loss) per Common Share -
The Company computes net income (loss) per share in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings per Share"
(SFAS No. 128). Under the provisions of SFAS No. 128 basic net income
(loss) per share (Basic EPS) is computed by dividing net income (loss) by
the weighted average number of common shares outstanding. Diluted net
income (loss) per common share (Diluted EPS) is computed by dividing net
income (loss) by the weighted average number of common shares and dilutive
common shares equivalents then outstanding.
Weighted average common shares outstanding are as follows:
<TABLE>
<CAPTION>
Quarters Ended
March 31,
----------------------
1999 2000
---------- ----------
<S> <C> <C>
Weighted average shares 10,018,875 14,628,509
Dilutive potential shares - 958,765
---------- ----------
Adjusted weighted
average shares 10,018,875 15,587,274
========== ==========
</TABLE>
Fair Value of Financial Instruments -
The carrying amounts of financial instruments including cash and
equivalents, accounts receivable, notes receivable, accounts payable and
accrued expenses approximate fair value. The carrying amount of long-term
debt approximates fair value based on current rates of interest available
to the Company for loans of similar maturities.
New Accounting Pronouncements -
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
which is required to be adopted in years beginning after June 15, 1999. In
July, 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
statement No. 133, " which amends SFAS No. 133 to be effective for all
fiscal quarters of all fiscal years beginning after June 15, 2000. The
Company will be required to adopt SFAS 133 for the quarter ending March 31,
2001. The Company anticipates that the adoption of SFAS No. 133 will not
have a significant effect on the financial condition or results of
operations of the Company.
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<PAGE>
Estimates -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. The estimates and assumptions used in the
accompanying combined financial statements are based upon management's
evaluation of the relevant facts and circumstances as of the date of the
financial statements. Actual results could differ from those estimates.
(3) Property and Equipment
----------------------
Property and equipment consists of the following:
<TABLE>
<CAPTION>
December 31, March 31,
-------------- -----------
1999 2000
-------------- -----------
<S> <C> <C>
Land, building and improvements $ 290,531 $ 292,945
Computers and office equipment 163,946 182,221
Furniture and fixtures 16,584 17,426
-------------- -----------
471,061 492,592
Less: Accumulated depreciation (104,020) (115,951)
-------------- -----------
$ 367,041 $ 376,641
============== ===========
</TABLE>
(4) Intangible Assets
------------------
Intangible assets consist of the following:
<TABLE>
<CAPTION>
December 31, March 31,
-------------- -----------
1999 2000
-------------- -----------
<S> <C> <C>
Goodwill $ - $1,980,000
Deferred financing costs 7,147 7,147
Prepaid licensing fees 6,000 6,000
-------------- -----------
13,147 1,993,147
Less: Accumulated amortization (1,723) (24,112)
-------------- -----------
$ 11,424 $1,969,035
============== ===========
</TABLE>
(5) Other Assets
------------
Other assets consists of a deposit paid in March, 2000 relating to a lease
agreement for additional office space.
- 13 -
<PAGE>
(6) Financing Arrangements
----------------------
Long-Term Debt -
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31, March 31,
1999 2000
------------ ---------
<S> <C> <C>
Mortgage payable to a bank in
monthly installments of $1,751,
including interest at 7.96% through
October, 2015. $ 198,154 $195,658
Capital lease obligation payable in
monthly installments of $367,
including interest at 7.00% through
June, 2002. 11,010 9,909
------------ ---------
209,164 205,567
Less: Current portion (9,428) (8,400)
------------ ---------
199,736 $197,167
============ =========
</TABLE>
Line-of-Credit -
The Company may borrow $400,000 under the terms of an annually renewable
working capital line-of-credit agreement. Amounts borrowed bear interest at
the prime rate plus 1% (9.75% at March 31, 2000), are collateralized by all
assets of the Company and are guaranteed by certain shareholders.
(7) Stockholder's Equity
--------------------
Equity Transactions -
All equity transactions have been retroactively restated to reflect the
exchange ratios from the March 10, 2000 merger transactions.
Quarter ended March 31, 2000 -
As described in Note 1, LCP and eStorefronts entered into transactions with
LogiSoft on March 10, 2000. For accounting purposes, these transactions
have been reflected as an issuance of 18,434,553 common shares by LCP in
exchange for the assets of LogiSoft and the purchase of the 44% minority
interest in eStorefronts. Transactions costs of $120,000 were incurred
related to the merger transactions which have been recorded as a reduction
in paid-in capital.
Warrants -
On November 13, 1997, LogiSoft's Disclosure Statement and Plan of
Reorganization (the Plan) was confirmed. In connection with the Plan,
LogiSoft issued the following warrants to purchase LogiSoft's common stock:
- 14 -
<PAGE>
- Class A warrants to purchase 1,624,172 shares of common stock at $1
per share exercisable through June 7, 2000.
- Class B warrants to purchase 1,475,973 shares of common stock at $1
per share exercisable through June 7, 2000.
- Upon the exercise of a Class B warrant, a Class C warrant will be
issued allowing the purchase of the number of shares of common stock
equal to the number of shares purchased upon exercise of the Class B
warrants. Class C warrants are exercisable at $1.75 per share through
December 7, 2000.
In the quarter ended March 31, 2000 and prior to the merger transactions,
227,500 Class A warrants were exercised and an additional 1,300,000 Class B
warrants were issued under the Plan. These Class B warrants and 1,450,000
of the previously issued Class B warrants were exercised as a part of the
sale of 2,750,000 shares of LogiSoft on March 9, 2000 in conjunction with
the merger transactions.
The exercise of the 2,750,000 Class B warrants resulted in the issuance of
the same number of Class C warrants, which are exercisable at $1.75 per
share on or before December 7, 2000.
At March 31, 2000, Class A and B warrants to purchase 1,422,145 shares and
Class C warrants to purchase 2,767,500 shares were outstanding.
Preferred Stock -
The Company has authorized the issuance of 2,000,000 shares of Series A
non-voting, cumulative preferred stock with a par value of $2.75.
A 6% cumulative dividend is payable quarterly to stockholders of record in
the last day of the month prior to the dividend date. The Series A stock
has a liquidation preference over the Company's common stock as well as any
other classes of stock established by the Company.
Stock Option Plan -
In April, 2000, the Company adopted its 2000 Stock Option Plan (the Plan).
The Plan is subject to approval by the shareholders. Under the Plan, the
Board of Directors is authorized to grant options to purchase up to
3,000,000 shares of the Company's common stock. The Board of Directors is
authorized to establish the exercise price and vesting terms of individual
grants under the Plan.
(8) Income Taxes
------------
Income taxes for the quarters ended March 31, 1999 and 2000 have been
provided at the effective income tax rate expected for the calendar year.
- 15 -
<PAGE>
(9) Commitments and Contingencies
-----------------------------
Lease -
In March, 2000, the Company entered into an agreement to lease office space
under a non-cancelable lease arrangement. The future minimum lease payments
required under this lease are as follows:
2000 $ 90,376
2001 147,740
2002 166,012
2003 172,104
2004 172,104
Thereafter 143,420
--------
$891,756
========
Consulting -
During April, 2000, the Company entered into a 12 month non-cancelable
consulting agreement requiring monthly payments of $10,000.
(10) Business Segments
-----------------
The Company operates in two business segments: e-commerce/retail and
strategic internet services. The Company's reportable segments are
strategic business units that offer different products and services. They
are managed separately because each segment requires different technology,
strategic competencies and marketing strategies.
A summary of the Company's two business segments are as follows:
Quarter ended March 31, 1999:
<TABLE>
<CAPTION>
Strategic
e-Commerce/ Internet
Retail Services Corporate
------------ ---------- -----------
<S> <C> <C> <C>
Revenue $ 550,719 $ 80,320 $ -
Income (loss) from operations 4,026 (37,000) (2,148)
Depreciation and amortization 2,167 2,531 2,148
Identifiable assets 347,314 91,700 410,953
Capital expenditures - 1,245 2,344
</TABLE>
Quarter ended March 31, 2000:
<TABLE>
<CAPTION>
Strategic
e-Commerce/ Internet
Retail Services Corporate
------------- --------- -----------
<S> <C> <C> <C>
Revenue $ 924,520 $ 266,721 $ -
Income (loss) from operations (32,088) 61,910 (3,986)
Depreciation and amortization 27,627 2,707 3,986
Identifiable assets 2,890,817 222,500 6,091,492
Capital expenditures 8,042 13,489 -
</TABLE>
The loss in e-Commerce/Retail in the quarter ended March, 2000 includes
$22,000 of goodwill amortization and is also impacted by seasonably low
sales in the first quarter and the cost of additional sales staff hired
during the quarter, who were being trained.
- 16 -
<PAGE>
(10) Business Segments (Continued)
-----------------------------
The large increase in identifiable assets in the e-commerce segment as of
March 31, 2000 is due to the recording of goodwill of $1,980,000 from the
purchase of the 44% minority interest in eStorefronts.
The corporate assets consist primarily of cash and cash equivalents, the
note receivable arising from the March, 2000 merger transactions, deferred
tax assets, the Company's building and land located in Fairport, NY and
certain equipment that is not allocated to the business segments.
(11) Concentrations
--------------
Revenue from one customer accounted for 15% and revenue from two customers
individually accounted for 12% of total revenue in the quarters ended March
31, 2000 and 1999, respectively.
(12) Note Receivable
---------------
At March 31, 2000, the Company has a non-interest bearing $720,000 note
receivable from the sale of a laboratory business by LogiSoft on March 7,
2000, prior to the merger transactions. This note is payable in twelve
equal monthly installments of $60,000 and is collateralized by the assets
of the business sold.
(13) Pro-forma information (unaudited)
---------------------------------
The following information presents the pro forma results of operations for
the Company for the quarters ended March 31, 2000 and 1999 as if the merger
transactions had occurred on January 1, 1999:
<TABLE>
<CAPTION>
Three Months Three Months
Ended March 31, Ended March 31,
2000 1999
--------------- ---------------
<S> <C> <C>
Revenues $ 1,191,241 $ 631,039
Income (loss) from operations $ (51,164) $ (134,122)
Net income (loss) $ (55,600) $ (140,503)
Per share information:
Net income (loss) per share:
Basic and diluted $ - $ -
=============== ===============
Weighted average common shares outstanding:
Basic and diluted 30,434,553 30,095,928
</TABLE>
The pro forma information above reflects the amortization of goodwill of
$1,980,000 resulting from the acquisition of the 44% minority interest in
eStorefronts over five (5) years, the elimination of the minority interest
in eStorefronts' loss from operations and the weighted average shares
amount reflects the number of shares issued in the merger transactions
(18,434,553).
- 17 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
THE INFORMATION IN THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS WITHIN
THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE
SECURITIES ACT OF 1934, AS AMENDED. SUCH STATEMENTS ARE BASED UPON CURRENT
EXPECTATIONS THAT INVOLVE RISKS AND UNCERTAINTIES. ANY STATEMENTS CONTAINED
HEREIN THAT ARE NOT STATEMENTS OF HISTORICAL FACT MAY BE DEEMED TO BE
FORWARD-LOOKING STATEMENTS. FOR EXAMPLE, THE WORDS "BELIEVES", "ANTICIPATES",
"PLANS", "EXPECTS", "INTENDS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. LOGISOFT'S ACTUAL RESULTS AND THE TIMING OF CERTAIN
EVENTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE
FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DISCREPANCY
INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN "LIQUIDITY AND CAPITAL
RESOURCES" BELOW, AS WELL AS "RISK FACTORS" INCLUDED IN LOGISOFT'S FORM 8-K/A
DATED MAY 22, 2000, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. ALL
FORWARD-LOOKING STATEMENTS IN THIS DOCUMENT ARE BASED ON INFORMATION AVAILABLE
TO LOGISOFT AS OF THE DATE HEREOF AND LOGISOFT ASSUMES NO OBLIGATION TO UPDATE
ANY SUCH FORWARD-LOOKING STATEMENTS.
Changes in Control of LogiSoft. Pursuant to the merger of LogiSoft Corp.,
--------------------------------
formerly known as Reconversion Technologies, Inc., a Delaware corporation
("LogiSoft" or the "Company") and LogiSoft Computer Products Corp., a New York
corporation formerly known as LogiSoft Corp. ("LCP") and the share exchange
between LogiSoft and eStorefronts.net Corp., a New York corporation
("eStorefronts"), both of which were effective on March 10, 2000 (together, the
"Transactions"), control of LogiSoft was acquired by the principals of LCP and
eStorefronts. In anticipation of the Transactions, all but one member of
LogiSoft's Board of Directors-W. Leo Morris, Clark Bundren, John Sams and Robert
Garner-resigned from the Board, effective March 9, 2000. The sole remaining
member of the Board, Joel Holt, appointed Robert Lamy, Scott Fox, Alan
Kleinmaier(1) and Gene Divine to the Board of Directors of LogiSoft. Joel Holt
resigned from the Board effective March 10, 2000. In connection with the
Transactions, certain of LCP and eStorefront's shareholders assumed the key
officer and executive management positions in LogiSoft. Robert Lamy became
President of LogiSoft, Scott Fox became Vice President of Marketing, Robert
Ballard became President of LogiSoft's Computer Products division and William
Lamy became Director of Technology. Robert Lamy acquired 4,191,750 shares of
LogiSoft common stock (13.8%), William Lamy received 2,826,750 shares of
LogiSoft common stock (9.3%), Michael Pruitt acquired 2,100,000 shares of
LogiSoft common stock (6.9%) and Robert Ballard acquired 907,407 shares of
LogiSoft common stock (3.0%).
Further, Robert Lamy, William Lamy and Robert Ballard ("Purchasers")
executed a Voting Agreement with Michael Pruitt, Bruce Goldfarb, Darien Road,
Ltd., Michael Cimino, Corsica Marketing, Inc., Avenel Financial Group (together,
the "Shareholders") and LogiSoft on March 10, 2000, pursuant to which for a
period of up to two (2) years from the date of the Transactions (i) they agreed
that LogiSoft would have four (4) directors or such greater number as the
Purchasers and the Shareholders would unanimously agree; (ii) the Purchasers
agreed to vote in favor of the election as directors of LogiSoft, two persons
nominated by the Shareholders; and (iii) the Shareholders agreed to vote in
favor of the election as directors of LogiSoft, two persons nominated by the
Purchasers. In addition, the Purchasers and David Wilkerson, Scott Fox, David
White, Walter Robb, Carl Mozak and Van Ernst Jakobs Securities have executed a
Second Voting Agreement that allows Robert Lamy, William Lamy and Robert Ballard
to vote shares of those shareholders for purposes of the determination of the
number of directors and election of the individuals nominated, pursuant to the
Voting Agreement. As a result, 50.4% of the outstanding common stock of the
LogiSoft are controlled under by the Purchasers and Shareholders these voting
agreements.
- -----------------
(1) Alan Kleinmaier resigned from the LogiSoft Board on April 27, 2000 and the
seat on the Board remains vacant.
- 18 -
<PAGE>
ACQUISITION OR DISPOSITION OF ASSETS
Keystone Sale. The majority shareholders of LCP and eStorefronts
--------------
required as a pre-condition of the Transactions that LogiSoft sell its
wholly-owned subsidiary, Keystone Laboratories, Inc. ("KLI"). KLI is a forensic
urine drug screening and confirmatory testing laboratory located in Asheville,
North Carolina. Urine laboratory tests are used primarily by employers to
detect the use of illegal substances by employees and/or prospective employees.
On March 7, 2000, LogiSoft executed a Purchase and Sale Agreement to sell all of
its issued and outstanding shares of the capital stock of KLI. Joel Holt, a
former president of LogiSoft and a director of LogiSoft until the closing of the
Transactions, purchased KLI from LogiSoft for a purchase price of $720,000. At
the closing of the KLI sale on March 9, 2000, Mr. Holt issued a promissory note
(the "Note") in the principal amount of the purchase price, payable in twelve
(12) equal monthly installments of $60,000 each, commencing April 1, 2000. The
purchase price for KLI was determined as a result of arms-length negotiations
between Mr. Holt and the LogiSoft Board of Directors. (2)
New Capital. The majority shareholders of LCP and eStorefronts also
------------
required as part of the Transactions that LogiSoft have at least $5,000,000 in
cash equity at the closing of the Transactions. To meet this pre-condition,
LogiSoft issued 5,500,000 shares of LogiSoft common stock at a purchase price of
$1.00 per share to nine (9) unrelated investors on March 9, 2000. Thus, at the
time of the closing of the Transactions, LogiSoft's assets consisted of
$5,500,000 in cash equity plus the Note, and LogiSoft maintained no operations.
LCP Merger. On March 10, 2000, LogiSoft consummated a merger with LCP.
-----------
Pursuant to the Agreement and Plan of Reorganization, a wholly-owned New York
subsidiary of LogiSoft was merged with and into LCP in a reverse triangular
merger, the surviving corporation of the merger, becoming a wholly-owned
subsidiary of LogiSoft (the "LCP Merger"). Prior to the LCP Merger, Robert
Lamy, William Lamy, Robert Ballard and Michael Pruitt were the sole shareholders
of LCP. Upon consummation of the LCP Merger, all of the outstanding common stock
of LCP was converted into 7,500,000 shares of LogiSoft common stock. The
conversion ratio of LCP stock into LogiSoft stock was determined as a result of
arms-length negotiations between unrelated parties and was based upon a review
of financial statements, business plans and the recent valuations placed on
e-commerce companies.
eStorefronts Exchange. On March 10, 2000, LogiSoft also consummated the
---------------------
acquisition of eStorefronts, an affiliate of LCP. Pursuant to the Agreement and
Plan of Reorganization, LogiSoft exchanged 4,500,000 shares of LogiSoft common
stock for all of the issued and outstanding shares of eStorefronts' common stock
(the "eStorefronts Exchange"). Prior to the eStorefronts Exchange, the
shareholders of eStorefronts were Robert Lamy, William Lamy, Robert Ballard,
Walter Robb, James Tusty, David White, Scott Fox, David Wilkerson, Jeff Sorenson
and Matthew Bailey. Upon consummation of the eStorefronts Exchange,
eStorefronts became a wholly-owned subsidiary of LogiSoft. The conversion ratio
of eStorefronts stock into LogiSoft stock was determined as a result of
arms-length negotiations between unrelated parties and was based upon a review
of financial statements, business plans and the recent valuations placed on
e-commerce companies.
Effective May 1, 2000, LogiSoft changed its name from Reconversion
Technologies, Inc. to LogiSoft Corp. to better reflect its business.
- -------------
(2) The prior audited financial results of KLI, together with the evaluation
of expected future results, were the primary factors utilized in
determining the purchase price.
- 19 -
<PAGE>
Overview
On March 10, 2000 and following the Transactions, LCP and eStorefronts, two
emerging Internet, e-commerce and technology solutions/service companies, became
wholly-owned subsidiaries of LogiSoft, a public shell company. At the time of
the Transactions, LCP shareholders owned 56% of eStorefronts common stock.
The LCP Merger has been accounted for as an issuance of stock by LCP for
the assets of LogiSoft. The share exchange between the shareholders of
eStorefronts and LogiSoft has been accounted for at historical cost for the 56%
of eStorefronts controlled by the LCP shareholders. Accordingly, the historical
combined financial statements of LCP and eStorefronts replace those of LogiSoft.
The acquisition of the 44% minority interest in eStorefronts has been recorded
at the fair value of the shares issued to the eStorefronts minority
shareholders, resulting in goodwill of $1,980,000, which is being amortized over
its estimated useful life of five years.
The Company is a full-spectrum Internet business development enterprise
that offers comprehensive strategic Internet services with its core competencies
being sophisticated Interactive web development and domestic/international
e-commerce solutions. Additionally, LogiSoft develops and operates a variety of
e-commerce/retail businesses through subsidiaries and strategic partnerships
that leverage its knowledge of technology, e-commerce and Internet marketing.
LogiSoft operates its business through its two wholly-owned subsidiaries.
LCP, which encompasses the Computer Products division and the Strategic Internet
Services ("LogiSoft Interactive" or "LGI") and eStorefronts, which contains the
company's e-commerce activities.
Our global e-business solutions provide comprehensive, sophisticated
Internet capabilities to both traditional middle market and pure e-business
companies. LogiSoft Interactive provides up front planning with our strategic
consulting services, custom front-end architecture and web site development as
well as comprehensive back end support upon web site completion. LGI's
competitive advantage is the unique ability to deliver these services on a
global scale which includes a proprietary e-commerce solution that allows for
transactions in multiple languages and currencies, settlement in multiple
countries and in multiple transaction methods - all automated and updated in
real time.
LCP was founded in 1989 as a software and hardware provider to corporate
customers and educational entities such as universities and school districts.
This business is operated as LogiSoft Computer Products ("Computer Products").
Computer Products has grown consistently for the past 10 years and is being
migrated to an Internet-based platform.
In 1996, LCP launched its Internet division, LGI, and found immediate
success, winning both local and national awards in 1997. In 1999, the LGI
completed its development of a proprietary e-commerce platform that enables it
to roll out turn-key domestic and international web sites that allow companies
to penetrate international markets on a cost-effective basis.
- 20 -
<PAGE>
eStorefronts partners with traditional and pure web-based businesses to
take businesses to the Internet. It participates in the development and
implementation of the business plan in exchange for revenue-sharing and/or
equity-based arrangements.
LogiSoft's goal is to become a best in class provider of true vertically
integrated global web solutions for middle market companies (sub Fortune 500).
The equity funding raised by the Company in connection with the
transactions discussed above will allow the Company to aggressively pursue its
Internet and e-commerce growth strategy through expansion of our client base and
headcount and increased investment in our engagement methodology,
product/solution development and brand awareness. The impact of the
transactions on the Company's operations for the quarter ended March 31, 2000
was not significant because they were consummated during March 2000.
In the first quarter of fiscal 2000, operating margins and profitability
improved, despite the amortization charge of $22,000. However, investments in
infrastructure to support the implementation of our business plan will make
short-term profitability a challenge during this year of transition.
BASIS AND PRESENTATION OF FINANCIAL STATEMENTS
The Company will maintain LCP's December 31 fiscal year end. LogiSoft's
fiscal year end was June 30.
The combined balance sheet as of December 31, 1999 and the unaudited
combined statements of operations and cash flows for the quarter ended March 31,
1999 include the historical combined financial statements of LCP and
eStorefronts, giving effect to the 44% minority interest in eStorefronts. The
unaudited consolidated financial statements for the quarter ended March 31, 2000
include the historical combined accounts of LCP and eStorefronts for the period
from January 1, 2000 through March 9, 2000 and reflect the issuance of stock for
the assets of LogiSoft and the acquisition of the minority interest in
eStorefronts on March 10, 2000. Accordingly, net income for the quarter ended
March 31, 2000 includes 56% of the eStorefronts operations through March 9, 2000
and 100% thereafter. The $5,500,000 in cash and the $720,000 note receivable
are recorded as proceeds from the issuance of 18,434,553 shares of LCP on March
10, 2000.
Presentation of information in the financial statements
Revenues from uncollateralized e-commerce/retail sales are recognized upon
passage of title of the related goods to the customer.
Strategic Internet services revenues are recognized on a percentage of
completion basis for fixed fee contracts based on the ratio of costs incurred to
total estimated costs for individual projects. Revenues are recognized as
services are performed for time and material contracts.
Costs of revenues for our e-commerce/retail business are comprised
primarily of the purchased cost of products sold.
Cost of revenues for strategic Internet services consist primarily of
project personnel costs such as salaries, employee benefits and incentive
compensation of billable employees and the cost of any third-party hardware or
software included in an Internet solution.
- 21 -
<PAGE>
Sales and marketing expenses include product and service research,
advertising, brand name promotions and lead-generation activities,
shipping/logistics as well as salaries, employee benefits and incentive
compensation of personnel in these functions.
General and administrative expenses are comprised of the salaries, employee
benefits and incentive compensation of personnel responsible for administrative,
accounting, legal, human resources functions, the costs of the company's
facilities and other general and administrative expense.
- 22 -
<PAGE>
RESULTS OF OPERATIONS
Comparison of the Three Months Ended March 31, 2000 and March 31, 1999
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH MARCH MARCH MARCH
1999 2000 1999 2000
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
e-commerce/retail revenues 550,719 924,520 87.3% 77.6%
Strategic Internet services 80,320 266,721 12.7% 22.4%
---------- ---------- ---------- ----------
TOTAL REVENUE 631,039 1,191,241 100.0% 100.0%
COST OF REVENUES:
e-commerce/retail costs 467,879 800,259 74.1% 67.2%
Project personnel costs 69,126 107,228 11.0% 9.0%
---------- ---------- ---------- ----------
TOTAL COST OF REVENUES 537,005 907,487 85.1% 76.2%
GROSS PROFIT 94,034 283,754 14.9% 23.8%
OPERATING EXPENSES:
Sales and marketing 65,542 108,411 10.4% 9.1%
General and administrative 56,768 115,187 9.0% 9.7%
Stock based compensation - - 0.0% 0.0%
Depreciation 6,759 11,931 1.1% 1.0%
Amortization 87 22,389 0.0% 1.9%
---------- ---------- ---------- ----------
Total operating costs 129,156 257,918 20.5% 21.7%
OPERATING INCOME (35,122) 25,836 -5.6% 2.2%
Interest expense (6,069) (13,495) -1.0% -1.1%
Interest income - 21,188 0.0% 1.8%
Other income / (expense) 325 83 0.1% 0.0%
---------- ---------- ---------- ----------
Income before taxes (40,866) 33,612 -6.5% 2.8%
Income taxes provision (benefit) 637 12,212 0.1% 1.0%
---------- ---------- ---------- ----------
Income before minority interest (41,503) 21,400 -6.6% 1.8%
Minority interest in (income) / loss 18,241 1,002 2.9% 0.1%
---------- ---------- ---------- ----------
NET INCOME (23,262) 22,402 -3.7% 1.9%
========== ========== ========== ==========
</TABLE>
REVENUES. Revenues increased $560,202 or 89% to $1,191,241 for the quarter
ended March 31, 2000 from $631,039 for the quarter ended March 31, 1999. The
increase was attributable to substantial increases in both e-commerce/retail
sales and strategic Internet services.
Sales of computer products to industrial, health care and educational markets,
increased $373,801 or 68% to $924,520 for the quarter ended March 31, 2000 from
$550,719 for the quarter ended March 31, 1999. This increase was due to greater
penetration of key accounts, including increased purchases of client licenses by
a significant customer as a part of that customer's program to achieve licensing
compliance with certain software makers. During the quarter ended March 31,
2000, sales to this customer accounted for approximately 15% of total revenues
for the period. The customer's licensing compliance program also resulted in
increased sales during the last half of 1999 and is expected be completed in
fiscal 2000. Historically, computer products sales in the first quarter have
been low compared with other quarters.
- 23 -
<PAGE>
Revenues from strategic Internet services revenues increased $186,401 or 232% to
$266,721 for the quarter ended March 31, 2000 from $80,320 for the quarter ended
March 31, 1999. This revenue growth was due to a significant increase in our
client base and an increase in headcount. In the quarter ended March 31, 2000,
the number of active engagements for sophisticated web site development more
than tripled from the prior year period and the average size of these
engagements increased. For the quarter ended March 31, 2000, strategic Internet
services revenues represented 22% of total revenues, up from 13% in the quarter
ended March 31, 1999 and 14% for the year ended December 31, 1999.
Two e-commerce/retail customers each accounted for 12% of total Company revenues
in the quarter ended March 31, 1999.
COST OF REVENUES. Cost of revenues increased $370,482 or 69% to $907,487 for the
quarter ended March 31, 2000 from $537,005 for the quarter ended March 31, 1999.
The dollar increase was attributable to the higher revenues for both
e-commerce/retail and strategic Internet services. As a percentage of revenues,
cost of revenues decreased from 85% in the quarter ended March 31, 1999 to 76%
in the quarter ended March 31, 2000. The decrease in the cost of revenues as a
percentage of revenues is attributable to the strategic Internet services
business, where higher billing rates, increased utilization and improvements in
efficiency and engagement processes positively impacted margins. During the
quarter ended March 31, 2000, the gross margin in the strategic Internet
services business was 59% versus 14% for the quarter ended March 31, 1999.
Margins for the prior year quarter were depressed as a result of the significant
investment in developing the Company's proprietary international e-commerce
platform, which resulted in reduced average billing rates realized in the
strategic Internet services business.
SALES AND MARKETING. Sales and marketing costs increased $42,869 or 65% to
$108,411 for the quarter ended March 31, 2000 from $65,542 for the quarter ended
March 31, 1999. The dollar increase was attributable to higher numbers of sales
and marketing personnel and increased marketing activities to support the growth
of our Computer Products and strategic Internet services businesses. As a
percentage of revenues, sales and marketing expenses decreased to 9% in the
quarter ended March 31, 2000 from 10% in the year earlier period.
GENERAL AND ADMINISTRATIVE. General and administrative costs increased $58,419
or 103% to $115,187 for the quarter ended March 31, 2000 from $56,768 for the
quarter ended March 31, 1999. The dollar increase was attributable to increased
headcount, higher compensation and spending on infrastructure to support the
growth of the business. As a percentage of revenues, general and administrative
expenses increased slightly from 9% in the quarter ended March 31, 1999 to 10%
in the quarter ended March 31, 2000.
DEPRECIATION. Depreciation expense increased $5,172 in the quarter ended March
31, 2000 to $11,931 as a result of increased purchases of computer and other
equipment to support the growth of the strategic Internet services business and
facilities. The company invested $21,531 in capital equipment during the
quarter ended March 31, 2000 and $3,589 in the quarter ended March 31, 1999.
AMORTIZATION. Amortization expenses increased $22,302 in the quarter ended
March 31, 2000 versus the prior year period as a result of the amortization of
the goodwill of $1,980,000 recorded for the acquisition of the 44% minority
interest in eStorefronts on March 10, 2000.
- 24 -
<PAGE>
INTEREST INCOME AND INTEREST EXPENSE. Interest expense increased from $6,069
for the quarter ended March 31, 1999 to $13,495 for the quarter ended March 31,
2000. This increase was due to higher average outstanding balances on our
line-of-credit during the March 2000 quarter as a result of increased
investments and the growth of the business. During the quarter ended March 31,
2000, the Company recorded $21,188 in interest income. Investment balances at
March 31, 2000 relate to the proceeds of $5,500,000 received as a result of the
Transactions.
PROVISION FOR INCOME TAXES. For the quarters ended March 31, 2000 and 1999, net
tax provisions were recorded of $12,212 and $637, respectively. The tax charges
in Income tax expense represents combined federal and state income taxes. In
1999, we recorded a net tax provision despite the financial statement loss due
to non-deductible permanent differences and valuation allowances recorded on
deferred tax assets. Our effective tax rate for the quarter ended March 31,
2000 was 36%. Our effective tax rate may vary from period to period based on
the Company's future expansion into areas with varying income tax rates and
deductibility of certain costs and expenses by jurisdiction.
MINORITY INTEREST. As noted previously, the LCP shareholders owned 56% of
eStorefronts common stock prior to the mergers. Accordingly, the combined
financial statements reflect the minority interest's portion of the operating
losses of eStorefronts for the quarters ended March 31, 1999 and 1998, $1,002
and $18,241, respectively. The loss in 1999 is attributable to the launch of
eStorefronts and the costs of development of its initial web-sites.
NET INCOME (Loss). The Company recorded net income of $22,402 for the quarter
ended March 31, 2000 versus a net loss of $23,262 for the quarter ended March
31, 1999. The improved results reflect the strong performance of the strategic
Internet services business, for which gross margins grew from 14% to 59% and
lower net financing costs, offset by lower profitability in the Computer
Products division and amortization expenses of $22,000 (non-cash) related to the
eStorefronts goodwill. Lower net income in 1999 reflects the investments the
Company had undertaken in developing its proprietary international e-commerce
platform and in growing its strategic Internet services business.
LIQUIDITY AND CAPITAL RESOURCES
On March 10, 2000, LCP completed a reverse triangular merger with LogiSoft,
which for accounting purposes was treated as an issuance of shares by LCP to
shareholders of LogiSoft for $5.5 million in cash and a promissory note of
$720,000.
The Company may borrow up to $400,000 under the terms of an annually renewable
working capital line-of-credit agreement. Amounts borrowed bear interest at the
prime rate plus 1%, (9.75% at March 31, 2000) are collateralized by all of the
assets of the Company and are guaranteed by certain of the Company's
shareholders. At March 31, 2000, borrowings under the line-of-credit agreement
totaled $400,000, up from $350,000 at December 1999. The line of credit was
repaid in April 2000.
The Company also has a mortgage payable to a bank on its office facility in
Rochester, NY that houses its Computer Products division and certain
administrative functions. The amount outstanding on this mortgage was $195,658
at March 31, 2000. This mortgage requires annual payments of $21,000 through
October 2015.
The Company invests predominantly in instruments that are highly liquid,
investment grade, and have maturities of less than one year, with the intent to
make such funds readily available for operating purposes. At March 31, 2000,
the Company had $5,040,519 million in cash and cash equivalents including
$3,500,000 that was invested in certificates of deposit with a 90 day term, at a
6% rate. The remainder of the Company's cash and cash equivalents was held in
available funds as discussed above.
- 25 -
<PAGE>
In the quarter ended March 31, 2000, the Company used $485,128 in cash in its
operations, primarily due to the payment of accounts payable and accrued
expenses, offset by positive operating results. The reduction of trade
creditors and accrued expenses was financed principally by the proceeds from the
Transactions. As noted above, the Company repaid its line of credit of $400,000
in April 2000.
Historically, accounts receivable balances are high at quarter ends due to
customer ordering patterns for computer products. Customer payment terms range
from net 30 days to net 180 days, for certain of the Company's large municipal
and health care computer products customers. For strategic Internet services
projects, a 25% to 50% customer deposit is generally required prior to
commencing work and subsequent billings are made as pre-established milestones
are completed. Billings for strategic Internet services projects are generally
due upon presentation of invoices.
At March 31, 2000, the Company had outstanding capital expenditure commitments
totaling approximately $115,000. These capital expenditure commitments relate
primarily to the expansion of our Rochester facilities and additional equipment
required for planned additions to the Company's staff.
In March 2000, the Company signed a lease for 8,500 square feet of additional
office space in Rochester, NY related to the expansion of our headquarters and
strategic Internet services staffs. The lease commences in May 2000 and runs
for 66 months. The Company paid a $28,684 deposit for this lease. This amount
is recorded in Other Assets. Monthly payments under this lease increase from
$12,000 initially to $14,000 after two years.
The Company believes its available cash resources and credit facilities will be
sufficient to meet its anticipated working capital and capital expenditure
requirements for at least the next twelve months. However, the Company may need
to raise additional funding sooner in order to support its growth, develop new
or enhance existing products and services, respond to competitive pressures,
acquire complementary businesses or take advantage of unanticipated
opportunities. Certain investors who purchased shares of LogiSoft, prior to the
merger transaction through the exercise of 2.75 million existing Class B
warrants, received Class C warrants to purchase an additional 2.75 million
shares of the Company's stock exercisable through December 7, 2000 at $1.75 per
share. If all of these warrants and other existing warrants were exercised,
the Company would receive proceeds of approximately $6.2 million.
Year 2000 risk
Prior to December 31, 1999, many installed computer systems and software
products were coded to accept only two-digit entries to identify a year in the
date code field. Consequently, as of January 1, 2000, many of these systems
could fail or malfunction because they may not be able to distinguish between
20th century dates and 21st century dates. Accordingly, many companies,
including LogiSoft and LogiSoft's customers, potential customers, vendors and
strategic partners, have upgraded their systems to comply with applicable "Year
2000" requirements.
- 26 -
<PAGE>
Because LogiSoft and its clients are dependent, to a very substantial degree,
upon the proper functioning of its and their computer systems, a failure of its
or their systems to correctly recognize dates beyond December 31, 1999 could
materially disrupt operations, which could materially and adversely affect
LogiSoft's business, results of operations and financial condition.
Additionally, LogiSoft's failure to provide Year 2000 compliant products and
services to our clients could result in financial loss, reputation harm and
legal liability.
In 1998 and 1999, LogiSoft completed a review of its information technology
systems, hardware and software, and its non-information technology systems, and
took action to remediate systems, where necessary. LogiSoft believes it has
identified its mission critical systems. LogiSoft has obtained confirmations
from the providers of these systems that they are Year 2000 compliant and has
conducted internal tests of such systems as part of its Year 2000 efforts.
LogiSoft has confirmed Year 2000 compliance of all material existing LogiSoft
systems supplied by third party providers and continues to test new products.
LogiSoft has obtained written certification regarding the critical hardware and
software systems used to assemble client solutions or to support LogiSoft's
internal electronic infrastructure. LogiSoft has also obtained written
certification regarding facilities items and other non-standard applications and
systems.
LogiSoft has not examined third party readiness. LogiSoft has not researched and
is not researching its clients' readiness, except to the extent clients request
LogiSoft to examine solutions delivered by LogiSoft.
Prior to December 31, 1999, LogiSoft completed contingency plans for critical
individual information technology systems and non-information technology systems
for implementation. LogiSoft has not to date experienced any material adverse
effects of its systems. Furthermore, management believes that the Year 2000 risk
will not pose significant future operational problems for LogiSoft's computer
systems.
However, there is no guarantee that LogiSoft's Year 2000 program, including
consulting with third parties, will avoid any future material adverse effects on
LogiSoft's operations, customer relations or financial condition. LogiSoft's
total cost of its year 2000 readiness program was not significant.
There is no guarantee that additional costs will not be incurred.
RISK FACTORS
LogiSoft stockholders may be exposed to risks inherent in our business. The
value of such an investment may increase or decline and could result in a loss.
Prospective investors should carefully consider the information contained in our
Form 8-K/A filed on May 22, 2000 before deciding to invest in LogiSoft Common
Stock.
Item 3. Qualitative and Quantitative Disclosures about Market Risk
LogiSoft is exposed to a variety of risks including changes in interest
rates affecting the return on its investments. This risk results primarily from
our short-term investments. To minimize this risk, the Company invests in
highly liquid instruments that are of investment grade. At March 31, 2000, the
Company owned a certificate of deposit for $3.5 million earning a 6% return for
a term of 90 days.
The Company also maintains its cash in bank demand deposit accounts, which
at times may exceed federally insured limits. The Company has not experienced
any losses in such accounts and believes it is not exposed to any significant
credit risk on cash and equivalents.
- 27 -
<PAGE>
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On March 9, 2000, LogiSoft issued 5,500,000 shares of LogiSoft common stock to
nine (9) unrelated investors for an aggregate purchase price of $5,500,000. On
March 10, 2000, all of the issued and outstanding shares of LCP were converted
into 7,500,000 shares of LogiSoft common stock pursuant to an Agreement and Plan
of Reorganization. As a result of the transaction, LCP became a wholly-owned
subsidiary of Logisoft. Also on March 10, 2000, LogiSoft exchanged 4,500,000
shares of Logisoft common stock for all of the issued and outstanding shares of
eStorefronts.
A more detailed description of each of these transactions is included in the
Company's 8-K/A filing dated May 22, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
1 See the Report on Form 8-K filed on May 22, 2000 for the merger and
voting agreements related to the Transactions.
2 Renewal Promissory Note dated May 15, 1998 by and between Keybank
National Association and Logisoft Corp.
3 Standard Office Space Lease for 375 Woodcliff Drive, Fairport, New York
by and between 375 Woodcliff Drive Company, LLC and Logisoft Corp.
27 Financial Data Schedule
(b) Reports on Form 8-K
On March 27, 2000 the Company filed Form 8-K to disclose the transactions
involving LCP and eStorefronts which resulted in LCP and eStorefronts becoming
wholly-owned subsidiaries of the Company.
In May of 2000 we engaged Bonadio & Co.,LLP as our independent public
accountants to audit our financial statements for the years ended December 31,
1999 and 1998. Our prior management had most recently used a public accounting
firm located in Tulsa, OK to perform the audit. Subsequent to the Transactions,
management desired to have accounting services provided by a firm that has a
local presence in Rochester, N.Y., the location of our headquarters and our
primary operations. Therefore, we engaged Bonadio & Co., LLP. On May 15, 2000
LogiSoft filed its notice of change of accountants on a Report on Form 8-K.
On May 22, 2000, the Company filed its Amended Report on Form 8-K to file
the financial statements and pro forma information for LogiSoft reflecting the
mergers of LogiSoft and LCP and the share exchange between LogiSoft and
eStorefronts, both of which were effective on March 10, 2000. The Amended Form
8-K amended Items 1, 2, 7(a) and 7(b) of the Company's report on Form 8-K, filed
with the Commission on March 27, 2000.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
LOGISOFT CORP.
Date: May 22, 2000 By: /s/ John Van Heel
----------- --------------------------------------
John Van Heel, Chief Financial Officer
- 28 -
<PAGE>
RENEWAL
PROMISSORY NOTE
---------------
(VARIABLE RATE; SECURED)
$210,000.00 Rochester, New York
Dated: May 15, 1998
--
FOR VALUE RECEIVED, LOGISOFT CORP., a New York corporation with an office
for the transaction of business located at 6605 Pittsford Palmyra Road,
Fairport, New York 14450 (the "Borrower") promises to pay to the order of
KEYBANK NATIONAL ASSOCIATION, a national banking association, with its principal
office and place of business at 127 Public Square, Cleveland, Ohio 44114 (the
"Bank") the principal sum of Two Hundred Ten Thousand and 00/100 Dollars
($210,000.00) or so much thereof as may be advanced from time to time in
accordance with the terms of this Note, with interest on the unpaid principal
balance of such amount from the date of this Note or such advance, as the case
may be, at the Interest Rate (hereinafter defined). This Note evidences a loan
(the "Loan") made, or so much thereof as may be made, by the Bank to Borrower,
in the principal amount hereof, and is secured by (a) a mortgage from Borrower
to the Bank dated on even date herewith in the amount of $210,000.00 (the
"Mortgage") which creates a first lien on certain real property located in the
Town of Perinton, Monroe County, State of New York (the "Real Property"); (b) an
assignment of rents and leases dated on even date herewith from Borrower to the
Bank (the "Assignment") which will conditionally assign all rents and absolutely
assign all leases applicable to the Real Property to the Bank; (c) the
irrevocable, unconditional, guaranty of payment by Robert E. Lamy (the
"Guarantor') of the Loan set forth in a guaranty of payment dated on even date
herewith from the Guarantor to the Bank (the "Guaranty") and (d) such other
security as may now or hereafter be given to the Bank by Borrower as collateral
for the Loan (the Mortgage, the Security Agreement, the Financing Statements,
the Assignment, the Guaranty, this Note and such other documents evidencing such
other security which may hereafter be given as further security for, or in
connection with, the Loan, being hereinafter collectively referred to as the
"Loan Documents").
<PAGE>
I
DEFINITIONS
-----------
Except as otherwise defined herein, capitalized terms used herein shall
have the following definitions:
"CLOSING DATE" shall mean May 15, 1998.
-------------
"DEFAULT INTEREST RATE" shall mean the interest rate applicable after an
-----------------------
event of default or after maturity (whether by acceleration or otherwise), the
principal of the Loan and the unpaid interest and fees thereon shall bear
interest at a rate per annum equal to the greater of three percent (3%) in
excess of the highest applicable interest rate provided for herein or sixteen
percent (16%), except as limited by laws of the State of New York.
"FIRST LOAN TERM" shall mean the period beginning on the Closing Date and
-----------------
ending on June 1, 2003.
"FIRST INTEREST ADJUSTMENT DATE" shall mean June 1, 2003.
---------------------------------
"INITIAL FIXED RATE" shall mean seven and ninety-six one-hundredths percent
------------------
(7.96%) per annum.
"MATURITY DATE" shall mean June 1, 2018.
--------------
"SECOND INTEREST ADJUSTMENT DATE" shall mean June 1, 2008.
----------------------------------
"SECOND LOAN TERM" shall mean the period beginning on the First Interest
------------------
Adjustment Date and ending on the Second Interest Adjustment Date.
"SECOND FIXEDRATE" shall mean the floating rate of interest which is equal
-----------------
to the weekly average yield on United States Treasury Securities adjusted to a
constant maturity of five (5) years plus two hundred and twenty five basis
points (2.25%) as of one week prior to the First Interest Adjustment Date.
"THIRD INTEREST ADJUSTMENT DATE" shall mean June 1, 2013.
---------------------------------
"THIRD LOAN TERM" shall mean the period beginning on the Second Interest
-----------------
Adjustment Date and ending on the Third Interest Adjustment Date.
"THIRD FIXED RATE" shall mean the floating rate of interest which is equal
-----------------
to the weekly average yield on United States Treasury Securities adjusted to a
constant maturity of five (5) years plus two hundred and twenty five basis
<PAGE>
points (2.25 %) as of one week prior to the Second Interest Adjustment Date.
"FOURTH LOAN TERM" shall mean the period beginning on the Third Interest
-----------------
Adjustment Date and ending on the Maturity Date.
"FOURTH FIXED RATE" shall mean the floating rate of interest which is equal
-----------------
to the weekly average yield on United States Treasury Securities adjusted to a
constant maturity of five (5) years plus two hundred and twenty five basis
points (2.25%) as of one week prior to the Third Interest Adjustment Date.
II
COMPUTATION OF INTEREST
-----------------------
Interest on the outstanding principal balance of this Note shall be
computed on the basis of "a 360-day year for the actual number of days elapsed"
(such phrase, as used throughout this Note, shall mean that in computing
interest for the subject period, the interest rate shall be multiplied by a
fraction, the denominator of which is 360 and the numerator of which is the
actual number of days elapsed from the date of the first disbursement of the
Loan or the date of the preceding interest and/or principal due date, as the
case may be, to the date of the next interest and/or principal due date).
Interest shall accrue until the Loan is paid in full.
PAYMENT OF PRINCIPAL AND INTEREST
---------------------------------
Interest shall accrue at the Initial Fixed Rate during the First Loan Term.
On June 1, 1998, the Borrower shall make a payment of interest only at the
Initial Fixed Rate. Commencing on July 1, 1998 and on the first day of each and
every month thereafter to and including the First Intercst Adjustment Date,
Borrower shall make constant equal monthly payments of principal and interest in
the amount of One Thousand Seven Hundred Fifty One and 30/100 Dollars
($1,751.30) each.
During the Second Loan Term, interest shall accrue at the Second Fixed
Rate. Commencing on July 1, 2003 and on the first day of each and every month
thereafter to and including the Second Interest Adjustment Date, Borrower shall
make constant monthly payments of principal and interest in an amount sufficient
to amortize the unpaid principal balance of the Loan in full over the remaining
fifteen (15) years of the original twenty (20) year amortization.
During the Third Loan Term, interest shall accrue at the Third Fixed Rate,
Commencing on July 1, 2008 and on the first day of each month thereafter
continuing to and including the Third Interest Adjustment Date, Borrower shall
make constant monthly payments of principal and interest in an amount sufficient
to amortize the unpaid principal balance of the Loan in full over the remaining
ten (10) years of the original twenty (20) year amortization.
<PAGE>
During the Fourth Loan Term, interest shall accrue at the Fourth Fixed
Rate. Commencing on July 1, 2013 and on the First day of each month thereafter
continuing to and including the Maturity Date, Borrower shall make constant
monthly payments of principal and interest in an amount sufficient to amortize
the unpaid principal balance of the Loan in full over the remaining five (5)
years of the original twenty (20) year amortization.
At anytime during the Second, Third or Fourth Loan Term, the Bank, at its
option, may adjust the amount of Borrower's constant monthly payments of
principal and interest to an amount sufficient to amortize the unpaid principal
balance of the Loan in full over the number of years remaining of the original
twenty (20) year amortization.
At any time during the term of this Loan, the Bank reserves the right to
adjust the amount of Borrower's monthly principal and interest payment in
accordance with changes in the Initial Fixed Rate, Second Fixed Rate, Third
Fixed Rate or Fourth Fixed Rate.
III
GENERAL CONDITIONS
------------------
(a) METHOD OF PAYMENT. All payments under this Note are payable at 25
-----------------
East Main Street, Rochester, New York 14614, or at such other place as the Bank
shall notify Borrower in writing. The Bank reserves the right to require any
payment on this Note, whether such payment is of a regular installment or
represents a prepayment, to be wired federal funds or other immediately
available funds or to be paid at a place other than the above address. All
payments under this Note will be made by automatic debit by the Bank to
Borrower's account established with the Bank.
(b) APPLICATION OF PAYMENTS RECEIVED. Except as otherwise provided in
----------------------------------
this Note, payments received by the Bank on this Note may be applied by the Bank
against any sums due and owing from Borrower in its sole discretion, including
without limitation as follows:
FIRST, to any of the Bank's fees, costs, and expenses, including
-----
unpaid Late Payment Charges or Prepayment Fee (each hereinbelow defined);
SECOND, to accrued and unpaid interest under this Note then due and
------
owing; and
THIRD, to the reduction of principal of this Note.
-----
(c) LATE PAYMENT CHARGES. If Borrower fails to pay any amount of
----------------------
principal and/or interest on this Note for ten (10) days after such payment
becomes due, whether by acceleration or otherwise, the Bank may, at its option,
<PAGE>
whether immediately or at the time of final payment of the amounts evidenced by
this Note, impose a late payment charge (the "Late Payment Charge") equal to the
greater of five percent (5%) of the amount of such payment or Fifty Dollars
($50.00), but not more than One Thousand Dollars ($1,000.00). Until any and all
Late Payment Charges are paid in full, the amount thereof shall be added to the
Indebtedness secured by any of the Loan Documents. The Late Payment Charge is
not a penalty and is deemed to be liquidated damages for the purpose of
compensating the Bank for the difficulty in computing the actual amount of
damages incurred by the Bank as a result of the late payment by Borrower.
(d) PREPAYMENT. In the event the Bank receives proceeds of condemnation
----------
or insurance proceeds for application against the Loan, such prepayments and
proceeds shall be applied to installments of principal in the inverse order of
maturity and no prepayment fee shall be deducted from such condemnation or
insurance proceeds.
Borrower may prepay this Note in full or in part at any time without
premium or penalty.
All prepayments shall be applied to the reduction and payment in the
inverse order of maturity.
(e) EVENTS OF DEFAULT. The occurrence of any one or more of the
-------------------
following shall, at the option of the Bank, constitute an event of default.
(i) Borrower fails to pay any sum due on this Note within ten (10)
days after the date it is due;
(ii) Borrower shall fail to perform any other obligation when required
to be performed by Borrower under this Note within ten (10) days after the date
performance is due;
(iii) Any warranty, representation or other written statement by or on
behalf of Borrower, or any guarantor in any instrument furnished in compliance
with or in reference to this Note be false or misleading in any material respect
when made;
(iv) Borrower or any guarantor shall generally not be paying debts as
they become due or file a petition or seek relief under or take advantage of any
insolvency law; make an assignment for the benefit of creditors; commence a
proceeding for the appointment of a receiver, trustee, liquidator, custodian or
conservator of Borrower or any guarantor or of the whole or substantially all of
Borrower's or any guarantors' property or of any collateral pledged as security
for this Note; or if Borrower or any guarantor shall file a petition or an
answer to a petition under any chapter of the Bankruptcy Reform Act of 1978, as
amended (or any successor statute thereto), or file a petition or seek relief
under or take advantage of any other similar law or statute of the United States
of America, any State thereof, or any foreign country or subdivision thereof;
<PAGE>
(v) A court of competent jurisdiction shall enter an order, judgment
or decree appointing or authorizing a receiver, trustee, liquidator, custodian
or conservator of Borrower or any guarantor or of the whole or substantially all
of Borrower's or any guarantors' property, or any portion of the collateral
pledged as security for this Note, or enter an order for relief against Borrower
or any guarantor in any case commenced under any chapter of the Bankruptcy
Reform Act of 1978, as amended (or any successor statute thereto), or grant
relief under any other similar law or statute of the United States of America,
any state thereof, or any foreign country or subdivision thereof;
(vi) Under the provisions of any law for the relief or aid of debtors,
a court of competent jurisdiction or a receiver, trustee, liquidator, custodian
or conservator shall assume custody or control or take possession from Borrower
or any guarantor of all or substantially all of Borrower's or any guarantors'
property or any portion of any collateral pledged as security for this Note;
(vii) There is commenced against Borrower or any guarantor any
proceeding for any of the foregoing relief or if a petition is filed against
Borrower or any guarantor under any chapter of the Bankruptcy Reform Act of
1978, as amended (or any successor statute thereto), or under any other similar
law or statute of the United States of America, any State thereof, or any
foreign country or subdivision thereof, and such proceeding or petition remains
undismissed for a period of sixty (60) days or if Borrower or any guarantor by
any act indicates consent to, approval of or acquiescence in any such proceeding
or petition;
(viii) The Bank receives a notice to creditors with regard to a bulk
transfer by Borrower or any guarantor pursuant to Article VI of the Uniform
Commercial Code;
(ix) Borrower or any guarantor fails to comply with any of the
provisions set forth in the commitment letter from the Bank dated March 20,
1998, it being understood that the terms of said commitment letter are hereby
incorporated in this Note and to the extent that any of the terms of the
commitment letter are in conflict with the terms of this Note, the terms of this
Note shall prevail;
(x) Borrower fails to maintain or operate the business or dissolves
the business or otherwise disposes of all or substantially all of the business
assets;
(xi) An "Event of Default", as said term is defined in any other Loan
Documents, shall have occurred;
(xii) Borrower or any guarantor fails to comply with the terms of or
an event of default occurs under any other loan transaction or credit
arrangement of any kind with the Bank:
(xiii) There is a material adverse change in the financial condition
of Borrower, any guarantor, the Real Property, Personal Property, or any
material lease assigned to the Bank, then, and in any such event (an "Event of
Default"), interest will accrue at the Default
<PAGE>
Interest Rate, and the Bank may, at its option, refuse to make any further
advances under this Note and/or declare the entire unpaid balance of this Note
together with interest accrued thereon and any other sums due hereunder or under
the Loan Documents, to be immediately due and payable and the Bank may proceed
to exercise any rights or remedies that it may have under this Note or any other
Loan Documents, or such other rights and remedies which the Bank may have at
law, equity or otherwise. In the event of such acceleration, Borrower may
discharge its obligations to the Bank by paying:
(1) the unpaid principal balance hereof as at the date of such
payment, plus
(2) accrued interest computed in the manner set forth above, plus
(3) any Late Payment Charge and Prepayment Fee computed in the
manner set forth above, plus
(4) any other sum due and owing the Bank under this Note or any
other Loan Document.
(f) COSTS AND EXPENSES ON DEFAULT. In addition to principal, interest
-------------------------------
and any Late Payment Charge, the Bank shall be entitled to collect all costs of
collection, including, but not limited to, reasonable attorneys' fees, incurred
in connection with the protection or realization of collateral or in connection
with any of the Bank's collection efforts, whether or not suit on this Note or
any foreclosure proceeding is filed, and all such costs and expenses shall be
payable on demand and until paid shall also be secured by the Loan Documents and
by all other collateral held by the Bank as security for Borrower's obligations
to the Bank.
(g) NO WAIVER BYTHEBANK. No failure by any Borrower or any guarantor of
-------------------
the Loan to make any payments or comply with its obligations shall be deemed a
waiver or release of Borrower's obligations hereunder. No failure on the part of
the Bank or other holder hereof to exercise any right or remedy hereunder,
whether before or after the happening of a default, shall constitute a waiver
thereof, and no waiver of any past default shall constitute waiver of any future
default or of any other default. No failure to accelerate the Loan evidenced
hereby by reason of default hereunder, or acceptance of a past due installment,
or indulgence granted from time to time shall be construed to be a waiver of the
right to insist upon prompt payment thereafter, or shall be deemed to be a
novation of this Note or as a reinstatement of the Loan evidenced hereby or as a
waiver of such right of acceleration or any other right, or be construed so as
to preclude the exercise of any right which the Bank may have, whether by the
laws of the state governing this Note, by agreement or otherwise; and Borrower
and each endorser or any guarantor hereby expressly waive the benefit of any
statute or rule of law or equity which would produce a result contrary to or in
conflict with the foregoing. This Note may not be changed orally, but only by an
agreement in writing signed by the party against whom such agreement is sought
to be enforced.
<PAGE>
(h) FINANCIAL INFORMATION. Borrower shall at all times keep proper
----------------------
books of record and account in which full, true and correct entries shall be
made in accordance with generally accepted accounting principles. In the event
Borrower fails to pay when due any sums due the Bank under the terms of the Loan
Documents or if Borrower defaults under any other term of the Loan Documents.
Borrower, upon such failure or default and upon notification by the Bank, shall
provide copies of Borrowers' personal and business annual financial statements
and income tax returns, complete with all schedules, including but not limited
to, the balance sheets as at the end of such fiscal year and the related income
statements, statements of retained earnings and statements of changes in the
financial position of the Borrower for such fiscal year. Borrower also agrees to
furnish such additional information, reports or statements and such other
financial information with respect to the Borrower, from time to time, at the
request of the Bank, as the Bank may reasonably request.
(i) WAIVER BY BORROWER. Borrower, each endorser and all guarantors of
--------------------
this Note hereby waive presentment, protest, demand, diligence, notice of
dishonor and of nonpayment, and waive and renounce all rights to the benefits of
any statute of limitations and any moratorium, appraisement, exemption and
homestead now provided or which may hereafter be provided by any federal or
state statute, including but not limited to exemptions provided by or allowed
under the United States Bankruptcy Code, both as to itself personally and as to
all of its or their property, whether real or personal, against the enforcement
and collection of the obligations evidenced by this Note and any and all
extensions, renewals and modifications hereof.
(j) COMPLIANCE WITH USURY LAWS. It is the intention of the parties to
----------------------------
conform strictly to the usury laws, whether state or federal, that are
applicable to this Note. All agreements between Borrower and the Bank, whether
now existing or hereafter arising and whether oral or written, are hereby
expressly limited so that in no contingency or event whatsoever, whether by
acceleration of maturity hereof or otherwise, shall the amount paid or agreed to
be paid to the Bank or the holder hereof, or collected by the Bank or such
holder, for the use, forbearance or detention of the money to be loaned
hereunder or otherwise, or for the payment or performance of any covenant or
obligation contained herein, or in any of the Loan Documents, exceed the maximum
amount permissible under applicable federal or state usury laws. If under any
circumstances whatsoever fulfillment of any provision hereof or of the Loan
Documents, at the time performance of such provision shall be due, shall involve
exceeding the limit of validity prescribed by law, then the obligation to be
fulfilled shall be reduced to the limit of such validity; and if under any
circumstances the Bank or other holder hereof shall ever receive an amount
deemed interest by applicable law, which would exceed the highest lawful rate,
such amount that would be excessive interest under applicable usury laws shall
be applied to the reduction of the principal amount owing hereunder or to other
indebtedness secured by the Loan Documents and not to the payment of interest,
or if such excessive interest exceeds the unpaid balance of principal and such
other indebtedness, the excess shall be deemed to have been a payment made by
mistake and shall be refunded to Borrower or to any other person making such
payment on Borrower's behalf. All sums paid or agreed to be paid to the holder
hereof for the use, forbearance or detention of the indebtedness of Borrower
evidenced hereby, outstanding from time to time shall, to the extent permitted
<PAGE>
by applicable law, and to the extent necessary to preclude exceeding the
limit of validity prescribed by law, be amortized, pro-rated, allocated and
spread from the date of disbursement of the proceeds of this Note until payment
in full of the Loan evidenced hereby and thereby so that the actual rate of
interest on account of such indebtedness is uniform throughout the term hereof
and thereof. The terms and provisions of this paragraph shall control and
supersede every other provision of all agreements between Borrower, any
endorser, any guarantor and the Bank.
(k) GOVERNING LAW; SUBMISSION TO JURISDICTION. This Note shall be 6
---------------------------------------------
governed by and construed under the laws of the State of New York. Borrower,
each endorser and all guarantors hereby submit to personal jurisdiction in said
State for the enforcement of its obligations hereunder or under any other Loan
Document and waives any and all personal rights under the law of any other state
to object to jurisdiction within such State for the purposes of litigation to
enforce such obligations of Borrower.
(l) WAIVER OF JURY TRIAL. The Bank and the Borrower hereby waive trial
---------------------
by jury in any litigation in any court with respect to, in connection with, or
arising out of this Note, any other Loan Document or the Loan, or any instalment
or document delivered in connection with the Loan, or the validity, protection,
interpretation, collection or enforcement thereof, or any other claim or dispute
howsoever arising between the Borrower and the Bank.
(m) NOTICES Any notices required or permitted to be given hereunder
-------
shall be: personally delivered or (ii) given by registered or certified mail,
postage prepaid, return receipt requested, or (iii) forwarded by overnight
courier service, in each instance addressed to the addresses set forth herein or
such other addresses as the parties may for themselves designate in writing as
provided herein for the purpose of receiving notices hereunder. All notices
shall be in writing and shall be deemed given, in the case of notice by personal
delivery, upon actual delivery, and in the case of appropriate mail or courier
service, upon deposit with the U.S. Postal Service or delivery to the courier
service.
(n) LIABILITY IFMORETHAN ONE BORROWER. If more than one person or
------------------------------------
entity executes this Note as a Hot-rower, all of said persons or entities are
jointly and severally liable hereunder.
(o) ENTIRE AGREEMENT. This Note and the other Loan Documents constitute
----------------
the entire understanding between Borrower, guarantors, and the Bank and to the
extent that any writings not signed by the Bank or oral statements or
conversations at any time made or had shall be inconsistent with the provisions
of this Note and the other Loan Documents, the same shall be null and void.
<PAGE>
(p) RENEWAL: This Note is given in renewal and not in repayment of the
-------
following notes held by Lender: (a) a Note dated December 30, 1994 given by
David A. White to Key Bank of New York in the amount of $75,000.00; (b) a Note
dated December 21, 1995 given by Logisoft Computer Services, Inc. to Key Bank of
New York in the amount of $104,000.00 and (c) a Note dated of even date herewith
given by Logisoft Corp. to KeyBank National Association in the amount of
$52,827.84, upon which Notes there is a present unpaid principal balance of
$210,000.00.
IN WITNESS WHEREOF, Borrower has executed this instrument the date first
above written.
LOGISOFT CORP.
By: /s/ Robert E. Lamy
------------------------------
Robert E. Lamy, President
STATE OF NEW YORK)
COUNTY OF MONROE) ss.:
On the 15 day of May, 1998, before me the subscriber personally appeared
--
Robert E. Lamy, to me known and by me being duly sworn, did depose and say that
he resides at and is the President of Logisoft Corp., the corporation described
in and which executed the foregoing instrument, and that such person signed his
name thereto by authorization of the Board of Directors of said corporation.
/s/ David A. White
-------------------------------
Notary Public
<PAGE>
RECORD AND RETURN TO: Tax Map Nos. 165.20-4-2and
165.20-4-1
Phillips, Lytle, Hitchcock, Premises Known As:
Blame & Huber, LLP Units W-1 and W-2
Attention: Karen A. DiNardo, Esq. 6605 Pittsford Palmyra Rd.
Box 170 Fairport, New York
ASSUMPTION, CONSOLIDATION, MODIFICATION
AND EXTENSION AGREEMFNT
THIS AGREEMENT made and executed this 15 day of May, 1998 by and between
--
KEYBANK NATIONAL ASSOCIATION, a national banking association, with a principal
office located at 127 Public Square, Cleveland, Ohio 44114, (party of the first
part), and LOGISOFT CORP., a New York corporation, with an address at 6605
Pittsford Palmyra Road, Fairport, New York 14450 (party of the second part),
W I T N E S S E T H:
WHEREAS, the party of the first part is the holder of the following
Mortgages and
Notes:
1. Mortgage dated December 30, 1994 made and delivered by David A White
to Key Bank of New York to secure a Note dated on even date therewith in the
amount of Seventy-five Thousand and 00/100 Dollars ($75,000.00) which mortgage
was recorded in the Monroe County Clerk's Office on December 30, 1994 in Liber
12465 of Mortgages, at page 144;
2. Mortgage dated December 21, 1995 made and delivered by Logisoft
Computer Products. Inc. to Key Bank of New York to secure a Note dated on even
date therewith in the amount of One Hundred Four Thousand and 00/100 Dollars
($104,000.00) which mortgage was recorded in the Monroe County Clerk's Office on
December 22, 1995 in Liber 12796 of Mortgages. at page 150.
WHEREAS. party of the first part is also the holder of a certain
Mortgage made and delivered by the party of the second part dated of even date
herewith, securing a Note of even date herewith in the amount of Fifty Two
Thousand Eight Hundred Twenty Seven and 84/100 Dollars ($52,827.84) covering the
premises described therein, which mortgage is to he recorded in Monroe County
Clerk's Office of even date herewith: and
WHEREAS. Were is now due and owing to the date of this Agreement on
the aforesaid notes and mortgages. the sum of One Hundred Fifty Seven Thousand
One Hundred Seventy Two and 16/100 Dollars ($157,172.16) together with interest;
and
<PAGE>
WHEREAS, the party of the second part is the owner in fee simple of
the premises covered by said mortgages, which premises are commonly known as
Units W-1 and W-2, 6605 Pittsford Palmyra Road. Town of Perinton. Monroe County,
New York; and as more particularly described on Schedule A attached hereto; and
WHEREAS, the party of the second part desires to ratify and assume the
outstanding principal balance of the notes set forth above, together with
interest thereon, and to modify and extend the same in accordance herewith and
further to assume all obligations, terms, and provisions of said notes and the
mortgages and collateral documents executed concurrently therewith, as modified
hereby; and
WHEREAS, the parties hereto desire to combine, consolidate and make
equal and coordinate the liens of the mortgages hereinbefore described so that
they shall form a single. coordinate, equal first lien on the said premises of
Two Hundred Ten Thousand and 00/100 Dollars ($210,000.00) and to spread the lien
over the entire premises described in Schedule A
hereto:
NOW, THEREFORE, in consideration of the sum of $1.00 to each in hand
paid, the receipt whereof is hereby acknowledged, and of the premises and other
good and valuable consideration, it is hereby mutually covenanted and agreed by
and between the parties hereto as follows:
1. That the above described mortgages be, and the same hereby are
combined. consolidated and made equal and coordinate liens on the premises
described in Schedule A hereto, without priority of any one over any other
indebtedness secured by the said mortgages, so that together they shall
constitute in law but one first mortgage.
2. That and the party of the first part does hereby extend and modify
the terms of payment of the principal indebtedness secured by the said
mortgages, and the party of the second part ratifies and assumes the
indebtedness and agrees that it shall be obligated to and promises to pay to the
party of the first part, or order, at its address above, the principal sum
remaining unpaid as aforesaid namely, Two Hundred Ten Thousand and 00/100
Dollars ($210,000.00) with interest thereon at the rates and to be repaid in the
manner set forth in a Renewal Promissory Note executed simultaneously herewith.
3. That the lien of the mortgages as consolidated and modified by this
Agreement is spread to cover and be a lien on all of premises described in
Schedule A attached hereto.
4. It is expressly agreed that the combined and consolidated
indebtedness evidenced by this Agreement and secured by the combined.
consolidated, co-equal and coordinate liens on the premises hereinbefore
mentioned is to be repaid in accordance with, and the rights and obligations of
the parties shall be governed by. the terms, agreements, provisions, covenants
and
<PAGE>
conditions contained in the mortgage executed concurrently herewith and to be
recorded in the Office of the Clerk of the County of Monroe on even date
herewith, the Renewal Promissory Note, this Agreement and the collateral loan
documents executed concurrently herewith, all of which are hereby made a part of
this Agreement to the same extent and of the same effect as if the terms thereof
were fully set forth herein and all of which shall supersede and control over
all of the provisions set forth in the aforesaid prior notes, mortgages and the
collateral documents executed concurrently therewith.
The party of the second part further covenants with the party of the first
part that the mortgages referenced in this Agreement are recorded in the Office
of the Clerk of the County of Monroe and constitute a good and valid combined,
consolidated and coordinate first priority lien on the premises described
herein.
This Agreemcnt cannot be changed orally.
The obligations of the parties of the second part shall be joint and
several.
IN WITNESS WHEREOF, the parties hereto have executed or have caused this
Agreement to be executed by its duly authorized representatives or officers and
its corporate seal to be affixed, if applicable, on the day and year first above
written.
KEYBANK NATIONAL ASSOCIATION
a national banking association
By: /s/ Kathryn R. Rucinski
--------------------------
Kathryn R. Rucinski
Vice President
LOGISOFT CORP.
a New York corporation
By: /s/ Robert E. Lamy
---------------------------
Robert E. Lamy, President
<PAGE>
STATE OF NEW YORK)
COUNTY OF MONROE) ss.:
On this 15 day of May, 1998, before me came Kathryn R . Rucinski, to me
--
known and who, being by me duly sworn, did depose and say that she resides at
Rochester New York, that she is a Vice President of KeyBank National
- --------
Association, the corporation described in and which executed the foregoing
instrument; and that she signed her name thereto by order of the Board of
Directors of said corporation.
/s/ David A. White
---------------------------
Notary Public
STATE OF NEW YORK)
COUNTY OF MONROE) ss.:
On this 15 day of May, 1998, before me came Robert E. Lamy, to me known and
--
who, being by me duly sworn, did depose and say that he resides at Fairport, New
-------------
York that he is the President of Logisoft Corp., the New York corporation
- ----
described in and which executed the foregoing instrument: and that he signed his
name thereto by order of the Board of Directors of said corporation.
/s/ David A. White
--------------------------------------
Notary Public DAVlD A. WHITE
NOTARY PUBLIC, STATE OF NEW YORK
QUALIFIED IN MONROE COUNTY
COMMISSlON EXPIRES JULY 31, 1999
<PAGE>
SCHEDULE A
PARCEL I:
- ----------
The Unit designated as Unit No. W-1 together with the undivided interest int be
common elements as described in the Declaration comprising the Condominium known
as Black Watch Office Park Condominium located in the Town of Perinton, County
of Monroe, New York, (hereinafter called the "Property") made under the
Condominium Act of the State of New York, as amended (Article 9-B of the Real
Property Law of the State of New York), dated September 22, 1986 and recorded in
the Office of the County Clerk of Monroe County on the 22nd day of September,
1.986, in Liber 6979 of Deeds, at page 224 (hereinafter called the
"Declaration"), which unit is also designated as Tax Account No. 165-200-04-001
on the Floor Plans of the Buildings, certified by John Bigenwald, P.E., and
filed simultaneously with said Declaration in the Office of the County Clerk of
Monroe County in Civil Action File NO. 11636/86 (hereinafter called the "Unit").
The land area of the property is described as follows:
ALL THAT TRACT OR PARCEL OF LAND, situate in the Town at Perinton, Monroe
County, New York, being part of Lot #46, Township 12, Range 4, and more
particularly bounded and described as follows: beginning at a point which is
described by commencing at the intersection of the south line of
Pittsford-Palmyra Road with the north end of the curve at the east line of Black
Watch Trail; thence running S 66 13' 20" E along the south line of
Pittsford-Palmyra Road a distance of 130.04 feet to the place of beginning of
the parcel hereby intended to be described; thence (1) running S 66 13' 20" E
along the south line of Pittsford-Palmyra Road a distance of 195.45 feet to an
angle point therein; thence (2) running S 80 16' 59" E along the south line of
Pittsford-Palmyra Road a distance of 65.86 feet to an angle point therein;
thence (3) running S 66 13' 20" E along the south line of Pittsford-Palmyra Road
a distance of 125.47 feet to a point; thence (4) running S 21 17' 40" W a
distance of 317.38 feet to a point; thence (5) running N 66 08' 20" W a distance
of 400.00 feet to a point; thence (6) running N 23 51' 40" E a distance of
300.50 feet to the place of beginning, all as shown on a survey made by Dominic
J. Parrone & Associates, P.C., dated April 15, 1985.
TOGETHER with all rights and interest contained or acquired under the
Declaration of Covenants, Easements and Restrictions recorded in the Monroe
County Clerk's Office on September 22, 1986 in Liber 6979 of Deeds, at page 224.
<PAGE>
PARCEL II:
- -----------
Conveys all that tract or parcel of land situate in the Town of Perinton, Monroe
County, New York and more particularly described as Unit No. W-2, together with
the undivided interest in the Common Elements as described in the Declaration
comprising the Condominium known as Black Watch Office Park Condominium located
in the Town of Perinton, County of Monroe, State of New York, (hereinafter
called the "Property" made under the Condominium Act of the State of New York,
as amended (Article 9-B of the Real Property Law of the State of New York),
dated September 22, 1986, and recorded in the Office of the County Clerk of
Monroe County on the 22nd day of September, 1986, in Liber 6979 of Deeds, page
224 (hereinafter called the "Declaration") which Unit is also designated as Tax
Account No. 165.200-04-002, attached to the floor plans of the buildings,
certified by John Rigenwald P.E. and filed similtaneously with said Declaration
in the Office of the County Clerk of Monroe County in Civil Action File No.
11636/86 (hereinafter called the "Unit"). The land area of the property is
described as follows:
All that tract or parcel of land situate in the Town of Perinton, Monroe County,
New York, being part of Lot #46, Township 12, Range 4, and more particularly
bounded and described as follows:
Beginning at a point which is described by commencing at the intersection of the
south line of Pittsford-Palmyra Road with the end of the curve at the east line
of Black Watch Trail; thence running S 66 13' 20" E, along the south line of
Pittsford-Palmyra Road a distance of 130.04 feet to the place of beginning of
the parcel hereby intended to be described; thence (1) running S 66 13' 20" E
along the south line of Pittsford-Palmyra Road a distance of 196.45 feet to an
angle point therein; thence (2) running S. 80 16' 59" E, along the south line of
Pittsford-Palmyra Road a distance of 65.86 feet to an angle point therein;
thence (3) running S 66 13' 20" E, along the south line of Pittsford-Palinyra
Road a distance of 125.47 feet to a point; thence (4) running S 21 17' 40" W, a
distance of 317.38 feet to a point; thence (5) running N 66 08' 20" W a distance
of 400.00 feet to a point; thence (6) running N 23 51' 40" E a distance of
300.50 feet to the place of beginning, all as shown on a survey made by Dominic
J. Parrone and Associates, P.C. dated April 15, 1985.
TOGETHER with all rights and interest contained or acquired under the
Declaration of Covenants, Easements and Restrictions recorded in the Monroe
County Clerk's Office on September 22, 1986 in Liber 6979 of Deeds, at page 224.
<PAGE>
STANDARD
OFFICE SPACE LEASE
Name of Office Building Woodcliff IV Office Building
Location of Office Building: 375 Woodcliff Drive, Fairport, New York
Landlord: 375 Woodcliff Drive Company, LLC
Tenant: Logisoft Corp.
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Term of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Rent, Taxes and Lease Year . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Construction, Financing and Alterations . . . . . . . . . . . . . . . 6
ARTICLE 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Use of Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Operating Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Energy Costs and Water . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Repairs and Compliance . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Fire and Other Casualties . . . . . . . . . . . . . . . . . . . . . . 11
ARIICLE 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Eminent Domain . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Bankruptcy and Default Provisions . . . . . . . . . . . . . . . . . . 12
ARTICLE 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Mechanic's Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICI.E 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Mortgages, Assignments, Subleases and Transfers of Tenant's Interest . . 14
ARTICLE 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Subordination of Lease . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Entry to Premises . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Notices and Certificates . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Covenant of Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Certain Rights Reserved to Landlord . . . . . . . . . . . . . . . . 18
ARTICLE 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . 18
<PAGE>
STANDARD
OFFICE SPACE LEASE
This Lease made this 8th day of March, 2000, is by and between the following
--- -----
parties:
Landlord: 375 WOODCLIFF Drive Company, LLC, a limited liability company
organized and existing under the laws of the State of New York
with its mailing address for notices and a principal office at:
c/o The Widewaters Group, Inc.
5786 Widewaters Parkway
P.O. Box 3
DeWitt, New York 13214-0003
Attention: Lease Administration
hereinafter referred to as the "Landlord", and
Tenant: Logisoft Corp., a corporation organized and existing under the
laws of the State of New York with a Fed. Tax ID number of
---------
16-1462161 and its principal office or residence at:
----------
6605 Pittsford-Palmyra Road
Pittsford, New York 14450
Attn.: Robert Lamy
-----------------------
hereinafter referred to as the "Tenant".
Landlord has appointed The Widewaters Group, Inc. the Managing Agent, and
Landlord has granted to line Widewaters Group, Inc. the authority to remit,
operate and manage the Building on behalf of and in the name of Landlord.
2
<PAGE>
WITNESSETH:
ARTICLE I
Premises
1.01 - Premises
Landlord hereby leases to Tenant and Tenant hereby leases and hires from
Landlord those certain premises in the Woodcliff IV Office Building (hereinafter
called the ''Building'') which is located in the town of Pittsford, County of
Monroe, and State of New York, which premises are located on the first (1st)
floor(s) of the Building and are outlined on the floor plan(s) attached hereto
and made a part hereof as Exhibit "A" (said premises being hereinafter called
the "Premises"), together with the right to use, in common with others, the
Building Common Areas and Outside Common Areas as hereinafter defined. For
purposes of this Section 1.01, the sum of the square feet in the Premises and
Tenant's share of Building Common Areas (as defined in Section 1.02 hereof)
shall be 8,499 leaseable square feet. The Premises shall include the area
bounded by: the center line of any walls common to adjacent tenants, the
Building Common Area side of any wall adjoining Building Common Areas (but not
the surface thereof), the line established by the exterior face of the exterior
walls of the Building, the concrete floor surface and the lower surface of the
next higher floor (or roof). Landlord reserves unto itself, its successors and
assigns, the right to install, maintain, use, repair and replace pipes, ducts,
conduits, wires and structural elements leading through the Premises in
locations which will not materially interfere with Tenant's use of the Premises.
No right to use any part of the exterior of the Building and no easement for
light or air are included in the lease of the Premises hereby made.
1.02 - Definition of Building COMMON Areas
"Building Common Areas" shall be defined to mean all areas, space,
equipment, signs and special services provided by Landlord specifically for the
Building or for line common or joint use and benefit of all the tenants in the
Building, their employees, agents, customers, visitors and other invitees,
including without limitation, hallways, corridors, trash rooms, mechanical and
electrical rooms, storage rooms, stairways, entrances, elevators, rest rooms,
lobbies, stairs, loading docks, pedestrian walks, roofs and basements, janitor's
and storage closets within the Building and all other common rooms and common
facilities within the Building.
1.03 - Definition of Outside Common AREAS
The term "Outside Common Areas" is defined to mean the land described on
Exhibit "B" attached hereto and made a part hereof, or such portion thereof as
is from time to time devoted to uses associated with the Building, and any
adjacent, contiguous or other land which may from time to time be devoted to
uses associated within the Building, together with such improvements as may from
time to time be erected upon or under any of such lands, including, but not
limited to, parking areas, lighting facilities, utility lines, sidewalks,
covered walkways, underground walkways, driveways, plazas, courts, retaining
walls, access roads, truck serviceways and landscaped areas, signs and
equipment.
ARTICLE 2
Term of Lease
2.01 - Term
The initial term of this Lease shall be sixty-six (66) full ' calendar
months following the "Term Commencement Date" (defined in and determined in
accordance with the provisions of Section 2.02 below) unless earlier terminated
pursuant to the provisions hereof. The last day of the month in which the term
shall expire is herein referred to as the "Expiration Date".
The word "term" shall, unless otherwise expressly provided to the contrary,
be deemed to include the initial and any renewal term.
2.02 - Term Commencement Date
A. The initial term of this Lease shall commence on date which is the
---
earlier of: (i) the date the Premises are Ready For Occupancy (defined below);
or (ii) the date Tenant first occupies the Premises, (the earlier of such dates
is herein referred to as the "Term Commencement Date'').
B. The Premises shall be deemed "Ready For Occupancy'' on the date that
---
there is delivered to Tenant a statement in writing by Landlord stating that
possession of the Premises is available to Tenant and that the following
conditions have been fulfilled:
(a) That the Landlord has "Substantially Completed" all of
Landlord's Work mentioned in Exhibit "C" annexed hereto. Substantially
Completed shall mean that Tenant may commence the installation of its
fixtures and equipment without significant interference from
Landlord's workmen and that facilities shall have been installed in
3
<PAGE>
the Premises to insure reasonable security of said fixtures and
equipment; and
(b) That adequate facilities exist for sate and convenient access
to and egress front the Premises by persons for the purposes of
readying the Premises for the conduct of Tenant's business therein.
C. If the Premises are not ready for occupancy on or before May 1, 2000
- --------------------------------------------------------------------------------
for any reason other than an event of Force Majeure or Tenant delay, then,
- --------------------------------------------------------------------------------
Tenant shall have the option of terminating this Lease upon written notice to
- --------------------------------------------------------------------------------
Landlord given within five (5) days from May 1, 2000. If Tenant fails to timely
- --------------------------------------------------------------------------------
exercise its option to terminate as aforesaid Tenant shall be deemed to waived
- --------------------------------------------------------------------------------
its right to terminate this Lease pursuant to this paragraph, and this Lease
- --------------------------------------------------------------------------------
shall continue in full force and effect through the remainder of the Lease term.
- --------------------------------------------------------------------------------
2.03 - Stipulation of Term
The parties agree to execute and deliver a written Stipulation of Term of
Lease in the form attached hereto as Exhibit "G" ("Stipulation"), prepared by
Landlord, once the Term Commencement Date and Expiration Date have been
determined. Tenant shall have a period of thirty (30) days from receipt of the
completed Stipulation within which to either: (i) execute, acknowledge and
deliver the same to landlord; or (ii) notify landlord in writing of any dispute
Tenant may have regarding the information therein contained. If Tenant fails to
duly respond within such thirty (30) day period, Tenant shall pay to Landlord,
as liquidated damages, the sum of ten dollars ($10.00) per day, as Additional
Rent (defined below), until the executed and acknowledged Stipulation shall have
been delivered to Landlord. Nothing contained herein shall be construed to be a
limitation of or in substitution of Landlord's rights and remedies under this
Lease.
2.04 - Condition of Premises
Tenant's taking possession shall he conclusive evidence as against Tenant
that the Premises was in good order and satisfactory conditions when Tenant took
possession. At the termination of this Lease, Tenant shall return the Premises
broom clean and in as good condition as when Tenant took possession, ordinary
wear and loss by fire or other casualty excepted, failing which the Landlord may
restore the Premises to such condition and Tenant shall pay the cost thereof.
2.05 - Tenant's Trade Fixtures and Personal Property
Upon the expiration or sooner termination of this Lease, Tenant shall
remove all of its trade fixtures and other property from the Premises and shall
promptly repair any damage caused to the Premises or to the Building by stick
removal. If the Tenant fails to so remove any trade fixtures or other property
of 'tenant prior to vacating the Premises, such fixtures and/or other property
shall be deemed abandoned by 'tenant and shall become the property of Landlord
or, at Landlord's option, Landlord may cause line fixtures or property to be
removed at Tenant's expense.
ARTICLE 3
Rent, Taxes and Lease Year
3.01 - Fixed Monthly Rent and additional Rent
(a) Tenant agrees to pay to Landlord at the offices of Landlord, or at
such other place designated by Landlord, without any prior demand therefore and
without any deduction or set-off whatsoever, and as fixed monthly rent
(sometimes referred to herein as "Fixed Monthly Rent"), the sums set forth
below:
<TABLE>
<CAPTION>
MONTH OF TERM FIXED MONTHLY RENT - Total 891756
--------------- --------------------
<S> <C>
1 - 12, inclusive 135564 $11,296.59 - 5/1/00 - 12/31 - 90376
13 - 24, inclusive 153828 $12,819.33 - 1/1/01 - 12/31 - 45188 + 102552 = 147740
25 - 66, inclusive 602364 $14,342.06 - 1/1/02 - 12/31 - 51276 + 114736 = 166012
(3+4+5+1/2 of 6) 1/1/03 - 12/31 - 172104
1/1/04 - 12/31 - 172104
1/1/05 - 11/01/05 - 143420
</TABLE>
Fixed Monthly Rent shall he payable in advance upon the first day of each
calendar month during the term hereof. The monthly installment shall be deemed
to have been paid upon such first day only if actually received by such first
day
(b) All rents, charges, costs, expenses, reimbursements, fees,
interest, and other payments to be made by Tenant to Landlord under this Lease,
other than Fixed Monthly Rent, shall be deemed to be "Additional Rent".
If the term or payment of rent shall commence or terminate upon a day other
than the first (or in the case of termination the last) day of a calendar month,
Tenant shall pay, upon the Term Commencement Date, or the date payment of rent
shall commence, and on the first day of the last calendar month, a pro rata
portion of the Fixed Monthly Rent for the first and last fractional calendar
month, respectively, prorated on a per diem basis with respect to such
fractional calendar month(s).
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3.02 - Taxes
(a) Landlord shall, in the first instance, pay during the term of this
Lease, to the public officers charged with the collection thereof, all Building
Taxes as hereinafter defined.
The term "Building Taxes" shall be deemed to include (i) all real property
taxes (which shall be deemed to include all property taxes and assessments,
water and sewer rents, rates and charges, parking and environmental surcharges
and any other governmental charges, general and special, ordinary and
extraordinary), which may he levied or assessed by any lawful authority against
the Building, the Building Common Areas and the Outside Common Areas, plus (ii)
twelve percent (12%) of such real property taxes for overhead expenses. The
amounts required to be paid by Landlord or any tenant or occupant of the
Building pursuant to any Payment in Lieu of Tax Agreement entered into with a
taxing authority having jurisdiction over the Building shall be considered for
the purposes of this Lease to be included within the definition of Building
Taxes.
(b) During the term of this Lease, Tenant agrees to pay to Landlord as
Additional Rent, Tenant's Allocable Share (computed pursuant to Section 22.10(b)
hereof) of the amount by which Building Taxes payable by Landlord under Section
3.02(a) above for each lease year exceeds said Building Taxes payable during the
Tax Base Year as hereinafter defined. 'line term "Tax Base Year" for purposes of
this Lease shall mean the 1999-2000 school for School Taxes and the 2000
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calendar for State, Town and County Taxes. At the beginning of each lease year,
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Landlord will submit to Tenant Landlord's estimate of the increases in Building
Taxes for the following lease year. Within ten (10) days after receipt of such
estimate, (and thereafter on the first day of each month without invoice) Tenant
shall pay to Landlord an amount equal to one twelfth (1/12) of Tenant's
Allocable Share of such estimated increase. At the end of each lease year or
partial lease year, Landlord will furnish to Tenant a statement setting forth
the actual Building Taxes payable during such lease year, comparing such actual
Building Taxes with the Building Taxes for the Tax Base Year and also comparing
Tenant's Allocable Share of the increase as estimated by Landlord and paid by
Tenant with Tenant's Allocable share of the actual increase in Building Taxes
for such lease year. Any underpayment by tenant shall be promptly adjusted by
payment to Landlord within fifteen (15) days of the balance of any underpayment
for such year, and any overpayment by Tenant shall either be applied as a credit
to the next succeeding monthly installment of increases in Building Taxes, or
applied to offset any then existing monetary default by Tenant under this Lease.
In the event of any over payment by Tenant in the last lease year or last
partial lease year, Tenant shall be entitled to receive a refund of the monies
overpaid after application to any then existing monetary default, if any, by
Tenant under this Lease. A copy of a tax bill or assessment bill submitted by
Landlord to Tenant shall at all times be sufficient evidence of the amount of
Building Taxes levied or assessed against the property to which stick bill
relates
(c) Tenant shall at all times be responsible for and pay, before
delinquency, all municipal, county, state or federal taxes assessed against its
leasehold interest or any fixtures, furnishings, equipment, stock-in-trade or
other personal Property of any kind owned, installed or used in or on the
Premises.
(d) Should any governmental taxing authority acting under any present
or future law, ordinance or regulation, levy, assess or impose a tax, excise,
surcharge and/or assessment (other than a tax on net rental income or franchise
tax) upon or against the rents payable by Tenant to Landlord, or upon or against
the Building, the Building Common Areas or the Outside Common Areas, either by
way of substitution for or in addition to any existing tax on land or buildings
or otherwise, Tenant shall be responsible for and shall pay Tenant's Allocable
Share of such tax, excise, surcharge and/or assessment in the manner provided in
Subsection (h) above.
(e) Landlord may seek a reduction in the assessed valuation (for real
estate tax purposes) of the Building in which the Premises is situate by
administrative or legal proceeding. Tenant shall pay to Landlord Tenant's
Allocable Share of Landlord's costs for said proceedings including but not
limited to, special counsel, counsel's reimbursable expenses, and special
appraisers if required, Tenant's Allocable Share of Landlord's costs being
computed under Section 22.10(b). In the event that the assessed valuation of the
Building is reduced as aforementioned or in any other manner, all future
computations of Tenant's Allocable Share of Building Taxes shall be made with
respect to the new assessed valuation. Upon receipt of any refund resulting from
any proceeding for which Tenant has paid Tenant's Allocable Share of Landlord's
costs and has paid Tenant's Allocable Share of excess Building Taxes under
Section 3.02(b) above, Landlord shall recompute the amount that would have been
due from Tenant and pay to Tenant the amount by which Building Taxes originally
paid by Tenant exceed such recomputed amount.
(f) Should any alteration or improvement performed by Tenant during the
term of this Lease cause an increase in assessment, Tenant shall pay to Landlord
the cost of all taxes resulting from such increase in assessment. Any amount
paid separately hereunder by Tenant to Landlord shall be in addition to any
amounts paid by Tenant pursuant to Section 3.02(b) above.
3.03 - Past Due Rent
If, during the term of this Lease, Tenant shall fail to pay any installment
of Fixed Monthly Rent or Additional Rent or any other charge hereunder when the
same is due and payable, Tenant shall pay to Landlord, in addition to such
installment of Fixed Monthly Rent or Additional Rents or any other charge,
without notice or demand by Landlord and/or, a sum equal to one-tenth (1/10) of
the payment due, said additional sum payable as herein required being the agreed
liquidated damages for Tenant's late payment of any installment not paid when
due. If
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Tenant's failure to pay any such installment continues for more than thirty (30)
days from the original date such installment was due, Landlord shall have the
right to impose as additional liquidated damages a sum equal to one-tenth (1/10)
of the amount then due. Nothing contained in this Section 3.03 shall be
construed to be a limitation of or in substitution of Landlord's rights and
remedies under Article 13. Any payments by Tenant to Landlord shall first be
applied to satisfy any past due rent charges under this Section before being
applied for any OTHER purpose. Tenant shall pay to Landlord an administrative
fee of $100.00 for each and every check submitted by Tenant which is dishonored.
If Landlord receives from Tenant two or more checks which have been dishonored,
all checks from Tenant thereafter shall, at Landlord's option, be either
certified or cashier's checks.
3.04 - Definition of Lease Year and Partial Lease Year
The term "lease year" is defined to mean a period of twelve (12)
consecutive calendar months, the first full lease year commencing on the first
day of January following the Term Commencement Date, and each succeeding lease
year commencing on the anniversary of the commencement of the first full lease
year. Any portion of the term which is less than a lease year shall be deemed a
"partial lease year" and computations requiring proration shall be pro rated on
a per diem basis using a 365 day year.
Landlord reserves the right to designate and change the beginning and
ending day of the lease year, notice of which shall be given to Tenant.
3.05 - Security Deposit
Tenant agrees to deposit with Landlord, upon Tenant's execution and return
of this Lease, the sum of $28,684.13 ("Security Deposit")as security for the
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faithful performance and observance by Tenant of the terms, provisions and
conditions of this Lease. _ If Tenant completes, executes and delivers to
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Landlorda Certification of Taxpayer Identification Number for,- Rental Security
--------------------------------------------------------------------------
Accounts, simultaneously with the delivery of this Lease, Landlord agrees it
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shall deposit the Security Deposit into a Key Bank Custodial Account which shall
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then earn interest at the rate established by the bank. It is agreed that in the
- ------------------------------------------------------
event Tenant defaults in respect of any of the terms, provisions and conditions
of this Lease, including, but not limited to, the payment of Fixed Monthly Rent
and Additional Rent, Landlord may use, apply or retain the whole or any part of
the security so deposited, to the extent required, for the payment of any Fixed
Monthly Rent and Additional Rent or any other sum as to which Tenant is in
default, or for any sum which Landlord may expend or may be required to expend
by reason of Tenant's default in respect of any of the terms, covenants and
conditions of this Lease, including but not limited to, any damages or
deficiency in the re-letting of the Premises, whether such damages or deficiency
occurred before or after summary proceedings or other re-entry by Landlord. If
Landlord uses, applies or retains any part of the security so deposited, Tenant
shall promptly replenish the security deposit to its full original amount upon
demand by Landlord. In the event that Tenant shall fully and faithfully comply
with all of the terms, provisions, covenants and conditions of this Lease, the
security (and any accrued interest)shall be returned to Tenant after the date
---------------------------
fixed as the end of the term of the Lease, after surrender of the Premises to
Landlord in accordance with Sections 2.04 and 2.05, and within sixty (60) days
of Tenant s request. In the event of a sale of the land and Building or leasing
of the Building, Landlord shall have the right to transfer the security to the
vendee or lessee and Landlord shall thereupon be released by Tenant from all
liability for the return of such security; and Tenant agrees to look to the new
Landlord solely for the return of said security; and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Landlord. Tenant further covenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security, and that neither Landlord nor its successors or assigns shall be bound
by any such assignment, encumbrance attempted assignment or attempted
encumbrance.
3.06 - PLACE FOR PAYMENTS
(a) Tenant shall deliver to landlord all payments of Fixed Monthly
Rent, Additional Rent, and other sums at the office of Landlord shown on page 1
of this Lease or such other place as may be designated by Landlord. Checks
should be made payable to The Widewaters Group, Inc.
(b) Tenant may elect to make rental payments due under this Lease by
the electronic funds transfer method. In such event, Tenant shall:
(i) open and maintain an account in a financial institution ("Tenant's
financial institution") which is authorized to transmit entries to an
Automated Clearing House of a member of the National Automated Clearing
House Association;
(ii) execute promptly any and all agreements and authorizations and supply
any and all information, necessary to provide for automatic payment
of Fixed Monthly Rent, Additional Rent, and other sums by electronic
funds transfer from Tenant's financial institution to a financial
institution designated by Landlord; and
(iii) take all actions necessary to insure that any and all such payments
will he received by Landlord's financial institution from Tenant's
Financial institution by the dates due as specified in this Lease.
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Tenant agrees to maintain an account containing sufficient funds at all times
during the term of this Lease. In the event such account fails to contain
sufficient funds necessary to pay amounts then due, such that said amounts
become delinquent, the outstanding amounts shall be subject to liquidated
damages as set forth in Section 3.03 of this Lease. Nothing contained in this
Section 3.06(b) shall relieve Tenant of the obligation to pay by the dates due,
any and all such payments payable by Tenant under this Lease.
ARTICLE 4
Construction, Financing and Alterations
4.01 - - Landlord's Obligation
Landlord shall, at its cost and expense (except as otherwise specified),
construct the Premises for Tenant's rise and occupancy in accordance with plans
and specifications prepared by Landlord or Landlord's architect, incorporating
in such construction all items of work described in Exhibit ''C'', attached
hereto and made a part hereof, as "Landlord's Work". Any work in addition to any
of the items specifically enumerated in Exhibit "C" shall be performed by Tenant
at its own cost and expense, or if Landlord installs or constructs any of such
additional work in the Premises at Tenant's request it shall be paid for by
Tenant within fifteen (15) days after receipt of a bill therefore.
4.02 - Financing
If Landlord can obtain mortgage financing or refinancing only upon the
basis of modifications of the terms and provisions of this Lease, Landlord shall
have the right to cancel this Lease if Tenant refuses to approve in writing any
such modifications within thirty (30) days after Landlord's request therefore.
The lease modifications referred to herein shall not relate to those provisions
pertaining to length of the term of the Lease, amount of rent, Additional Rent,
and other charges. If such right to cancel is exercised, this Lease shall
thereafter be null and void, any money or prepaid rent deposited hereunder shall
be returned to Tenant, and neither party shall have any liability to the other
by reason of such cancellation.
In the event of a refinancing or a bona fide sale of the Building by
Landlord, Tenant shall, immediately upon request therefore, provide to Landlord
a balance sheet and a statement of income and expenses for Tenant's last fiscal
year.
4.03 - Tenant's Obligation
Any alterations, additions or improvements which are in addition to
Landlord's Work (set forth in Exhibit "C", attached hereto and made a part
hereof) which Tenant desires to make in the Premises either before or after the
Term Commencement Date of this Lease shall be deemed 'Tenant's Work". Tenant's
Work shall be performed by Tenant at its sole cost and expense, shall require
prior written approval from Landlord, and be in full compliance with Section
4.04 and the general conditions and specifications described in Exhibit "D",
attached hereto and made a part hereof. Tenant acknowledges its ability to
perform such work and no delay in its performance shall cause or be denied to
cause any delay or postponement of the Term Commencement Date.
Tenant agrees to, at Tenant's expense, obtain and maintain for so bug as
Tenant's Work continues, insurances of the types and in the amounts set forth in
Exhibit "D" to fully protect Landlord as well as Tenant from and against any and
all liability for death or personal injury or damage to property caused in or
about the Premises by reason of the performance of Tenant's Work. Tenant shall
furnish to Landlord certificates evidencing said coverage prior to the
commencement of Tenant's Work.
4.04 - Alterations, Additions and Improvements
Tenant shall not make any alterations, additions or improvements in or to
the Premises without the prior written consent of Landlord, and then only by
contractors approved by Landlord. If Landlord shall grant its consent, Tenant
shall provide Landlord with certificates evidencing the insurance coverages and
limits required by Exhibit "D" prior to the commencement of any such work.
Tenant shall not make nor permit any defacement, injury or waste in, to or about
the Premises or any part of the Building. Tenant agrees that any improvements as
may be installed within the Premises by Tenant pursuant to this Section 4.04
shall, at the option of Landlord, remain as part of the Premises at the
expiration of the Lease or any extension or renewal thereof. Landlord, however,
shall have the right to require Tenant to remove any alterations, additions or
improvements so made. Tenant shall, at its expense, repair or cause to be
repaired any damage to the Premises caused by such removal.
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ARTICLE 5
Use of Premises
5.01 - Use of Premises
Tenant agrees to use the Premises for general office purposes and for no
other purpose whatsoever. Tenant further agrees to comply with the rules and
regulations set forth in Exhibit "E" attached hereto and made a part hereof, and
with such reasonable modifications thereof and additions thereto as Landlord may
hereafter from time to time make for the Building Common Areas or the Outside
Common Areas. Landlord shall not be responsible for the non-observance by any
other tenant of any of said rules and regulations and shall not be responsible
to Tenant for any violation of the rules and regulations, or the covenants or
agreements contained in any other lease, by any other tenant of the Building, or
its agents or employees.
ARTICLE 6
Operating Costs
6.01 - Definitions
The term "Operating Costs" shall be deemed to include (i) the costs of
operating, managing, and maintaining the Building, the Building Common Areas and
the Outside Common Areas, including, but without limiting the generality of the
foregoing, the cost of: gardening and landscaping; parking lot repair,
maintenance and line restriping; janitorial and cleaning services (which shall
be deemed to include labor, materials and supplies for cleaning any office space
in the Building, whether or not leased to tenants, including the Premises);
insurance premiums; repairs to the Building and roof; painting and caulking;
refinishing; glass repair; the maintenance and repair of lighting, utilities,
sanitary control facilities, and heating, ventilating and air-conditioning
systems and equipment; removal of snow, ice, trash, waste and refuse in
compliance with any and all recycling laws, rules and regulations imposed by the
municipality in which the Building is located and specifically excluding any
hazardous or toxic wastes including but not limited to petroleum products,
medical waste, etc.) which shall be disposed of by Tenant at Tenant's own cost
and expense; traffic control and policing; fire and security protection; the
cost, as reasonably amortized by Landlord, with annual interest at the prime
rate in existence at the time of completion of the improvement, of any capital
improvement made after calendar year 2000 in compliance with the requirements of
any federal, state or local law or governmental regulation; the cost, as
reasonably amortized by Landlord, with interest at the rate of fourteen percent
(14 %) per annum, of any other capital improvement made after calendar year
2000; maintenance, replacement and rental of signs and equipment; depreciation
of the capital cost of any machinery, equipment and vehicles used in connection
with the operation and maintenance of the Outside Common Areas and Building
Common Areas; repair and/or replacement of on-site water lines, sanitary and
storm sewer lines; rental and other charges paid to third parties; personnel
costs; holiday and other decorations; and related costs to implement such
services, plus (ii) twelve percent (12%) of the foregoing for overhead expenses.
Operating Costs shall not include franchise or income taxes imposed on
Landlord, except to the extent hereinbefore provided, or the cost to Landlord
for any work or service performed in any instance for any tenant (including
Tenant) at the cost of such tenant, or the cost of improvements performed for
tenants as Landlord's Work.
6.02 - Tenant to Share Increases in Operating Costs
(a) Tenant agrees to pay to Landlord, as Additional Rent, monthly (or
less frequently as Landlord shall determine) within ten (10) days after receipt
of Landlord's estimate therefor (and thereafter on the first day of each month
without invoice) an amount equal to one twelfth (1/12) of Tenant's Allocable
Share (computed pursuant to Section 22.10(a) hereof) of the estimated amount by
which Operating Costs for each lease year exceed the Operating Costs for the
Base Period as hereinafter defined. The "Base Period" for purposes of this Lease
shall mean the_2000 calendar year. In determining the amount of Operating Costs
----------------------
for any lease year or partial lease year, (1) if less than 100% of the square
feet leaseable in the Building shall have been occupied by tenants at any time
during a lease year or partial lease year, Operating Costs shall be deemed, for
purposes of this Article 6, to be increased to an amount equal to like operating
costs which would normally be expected to be incurred, had such occupancy been
100% during the period, or (2) if Landlord is not furnishing any particular work
or service (the cost of which if performed by Landlord would constitute
Operating Costs) to a tenant who has undertaken to perform such work or service
in lieu of the performance thereof by Landlord, Operating Costs shall be deemed
for the purposes of this Article to be increased by an amount equal to the
additional Operating Costs which would reasonably have been incurred during such
period by Landlord if it had at its own expense furnished such work or service
to such tenant
(b) Following the end of each lease year (or partial lease year),
Landlord shall furnish to Tenant a comparative statement showing Tenant's
Allocable Share of the Operating Costs during such year and the amounts paid by
Tenant (based on Landlord's estimate of increases in Operating Costs)
attributable to such year. Any underpayment by Tenant shall be promptly adjusted
by payment to Landlord within fifteen (15) days of the balance
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of any underpayment for such year. and any overpayment by Tenant shall either be
applied as a credit to the next succeeding monthly installment of increases in
Operating Costs, or applied to offset any then existing monetary default by
Tenant under this Lease. In the event of any over payment by Tenant in the last
lease year or last partial lease year, Tenant shall be entitled to receive a
refund of the monies overpaid after application to any then existing monetary
default, if any, by Tenant under this Lease. Landlord and Tenant shall use
commercially reasonable efforts to minimize such costs of operation, management
and maintenance in a manner consistent with generally accepted office building
practices.
(c) Tenant covenants and agrees to promptly pay Landlord as Additional
Rent, upon demand, the amount of any increase in costs for trash removal from
the Premises or any other part of the Building that results by reason of
Tenant's extraordinary trash removal requirements, including but not limited to
the removal of Tenant's purged files, the disposal of boxes, and any
governmental fines resulting from Tenant's non-compliance with local recycling
laws, rules or regulations.
ARTICLE 7
Energy Costs and Water
7.01 - Definitions
As used in this Lease, "Building Utilities" shall mean the cost of all
energy of any kind and water which is consumed for the purposes of operating the
Building, Building Common Areas, and Outside Common Areas, during the Normal
Operating hours for the Building as set forth in Section 20.01 of this Lease,
except for the cost of electric energy paid by tenants of the Building. "Tenant
Electric Energy" shall mean the cost of all electric energy which is consumed by
all electrically operated equipment within the Premises, including but not
limited to heating, ventilating and air conditioning equipment ("IIVAC"),
lighting fixtures, and electrical convenience plugs and outlets etc., during all
hours of each day. "Tenant Extra Energy" shall mean the cost of all energy,
other than Tenant Electric Energy, consumed in the operation of the Building,
Building Common Areas and Outside Common Areas, during hours which are in
addition to the Normal Operating Hours for the Building.
7.02 - Tenant to Share Increases in Building Utilities
(a) Tenant agrees to pay Landlord as Additional Rent, monthly, within
ten (10) days after receipt of Landlord's estimate therefore (and thereafter on
the first day of each month, without invoice) an amount equal to one-twelfth
(1/12) of Tenant's Allocable Share (computed under Section 22. 10(a) hereof) of
the estimated amount by which Building Utilities for each lease year exceed the
Base Amount as hereinafter defined. The term "Base Amount" for purposes of this
Lease shall be (i) the amount computed by applying the electrical rate in effect
during the month of January 2000 to the total kilowatt hours of usage (computed
------------
monthly) during the twelve (12) consecutive month period commencing with the
month following the Term Commencement Date, plus (ii) twelve percent (12%) of
such costs for overhead expenses. In determining the amount of Building
Utilities for the purpose of this Article 7 for any lease year or partial lease
year, (1) if less than 100% of the square feet leasable in the Building shall
have been occupied by tenants at any time during a lease year or partial lease
year, Building Utilities shall be deemed for the purposes of this Article to be
increased to an amount equal to the like Building Utilities which would normally
be expected to be incurred, had such occupancy been 100% during the, entire
period, or (2) if Landlord is not furnishing any particular work or service (the
cost of which if performed by Landlord would constitute Building Utilities) to a
tenant who has undertaken to perform such work or service in lieu of the
performance thereof by Landlord, Building Utilities shall be deemed for the
purposes of this Article to be increased by an amount equal to the additional
Building Utilities which would reasonably have been incurred during such period
by Landlord if it had at its own expense furnished such work or service to such
tenant.
(b) Following the end of each lease year (or partial lease year),
Landlord shall furnish to Tenant a comparative statement showing Tenant's
Allocable Share of the Building Utilities during such year and the amounts paid
by Tenant (based on Landlord's estimates of increases in the Building Utilities)
attributable to such year. Any underpayment by Tenant shall be promptly adjusted
by payment to Landlord within fifteen (15) days of the balance of any
underpayment for such year, and any overpayment by Tenant shall either be
applied as a credit to the next succeeding monthly installment of increases in
Building Utilities, or applied to offset any then existing monetary default by
Tenant under this Lease. In the event of any over payment by Tenant in the last
lease year or last partial lease year, Tenant shall be entitled to receive a
refund of the monies overpaid after application to any then existing monetary
default, if any, by Tenant under this Lease. Landlord and Tenant shall use their
commercially reasonable efforts to minimize Building Utilities.
7.03 - Charge for Tenant Electric Energy
Tenant agrees to pay to Landlord, as Additional Rent, an annual charge for
Tenant Electric Energy equal to One Dollar ($1.00) per leaseable square foot of
Premises, plus twelve percent (12%) of such costs for overhead expenses, payable
in twelve (12) equal consecutive monthly installments, each payable in advance
on the first day of each calendar month during the term hereof. The charge for
Tenant Electric Energy as herein set forth was estimated by Landlord based upon
an estimate of Tenant's metered usage and current utility rates. Following the
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end of each lease year (or partial lease year), Landlord shall furnish to Tenant
a comparative statement showing Tenant's actual consumption of electric energy
and the amounts paid by Tenant for the same under this Section 7.03 attributable
to such year. Based on Tenant's actual usage, any underpayment by Tenant shall
be promptly adjusted by payment to Landlord within fifteen (15) days of the
balance of any underpayment for such year, and any overpayment by Tenant shall
either be applied as a credit to the next succeeding monthly installment of
Tenant Electric Energy, or applied to offset any then existing monetary default
by Tenant under this Lease. In the event of any over payment by Tenant in the
last lease year or last partial lease year, Tenant shall be entitled to receive
a refund of the monies overpaid after application to any then existing monetary
default, if any, by Tenant under this Lease.
7.04 - Charge for Tenant Extra Energy
In the event Tenant shall occupy and/or use the Premises during hours which
are in addition to the Normal Operating hours for the Building, Tenant agrees to
pay to Landlord, as Additional Rent, the Tenant Extra Energy consumed during
such period of time, as estimated by Landlord based upon energy requirements
considering Tenant's use of the Premises, and its location, size, and equipment
contained therein, plus twelve percent (12%) of such costs for overhead
expenses, within ten (10) days following Tenant's receipt of Landlord's invoice
therefore.
ARTICLE 8
Repairs and Compliance
8.01 - Repairs
Tenant shall give to Landlord prompt notice of any damage to, or defective
condition in any part of or appurtenance to the Building's plumbing, electrical,
heating, air-conditioning or other systems serving, located in, or passing
through the Premises. Subject to the provisions of Article 11, Tenant shall, at
Tenant's own expense, keep the Premises, including everything therein (except
the heating and air-conditioning systems), in good order, condition and repair
during the term. Landlord shall, as part of the Operating Costs set forth in
Article 6, maintain the heating and air-conditioning systems through out the
Building (including the Premises) and the outside walls, outside windows, roof
and foundation of the Building containing the Premises in good order and repair.
Repairs made by Landlord required due to negligence or fault of Tenant, its
contractors, agents or employees shall be made at Tenant's expense, plus
nineteen percent (19%) administrative charge.
Tenant, at Tenant's expense, shall comply with all laws or ordinances, and
all rules and regulations of all governmental authorities and of all insurance
bodies at any time in force, applicable to the Premises or to Tenant's use
thereof, except that Tenant shall not hereby be under any obligation to comply
within any law, ordinance, rule or regulation requiring any structural
alteration of or in connection with the Premises, unless such alteration is
required by reason of a condition which has been created by, or at the instance
of, Tenant, or is required by reason of a breach of any of Tenant's covenants
and agreements hereunder. All repairs made by Tenant shall he made using
contractors approved by Landlord, which approval shall not be unreasonably
withheld. If Tenant fails or neglects to comply within any laws or ordinances,
rules and regulations of any governmental authority or insurance body as herein
required of Tenant, then Landlord or its agents may enter the Premises and make
said repairs and comply with any laws or ordinances, or the rules and
regulations of any governmental authority or insurance body at the cost and
expense of the Tenant, plus a nineteen percent (19%) administrative charge, and
in case Tenant fails to pay therefore upon notice within five (5) days
thereafter, the said cost and expenses shall be added to the next month's
installment of Fixed Monthly Remit and be due and payable as such or Landlord
may deduct the same from any balance remaining in Landlord's hands. This
provision is in addition to the right of Landlord to terminate this Lease by
reason of default on the part of Tenant.
8.02 - Hazardous Materials
Tenant shall, at all times, comply with all local and federal laws, rules
and regulations governing the use, handling and disposal of Hazardous Materials
in the Premises including, but not limited to Section 1004 of the Federal
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et. Seq. (42
U.S.C. Section 6903) and any additions, amendments, or modifications thereto. As
used herein, the term "Hazardous Materials" shall mean any hazardous or toxic
substance, material or waste including but not limited to petroleum products,
which is, or becomes, regulated by any local or state government authority in
which the Premises is located or the United States Government. Landlord and its
agents shall have the right, but not the duty, to inspect the Premises at any
time to determine whether Tenant is complying with the terms of this Section. If
Tenant is not in compliance with this Section, Landlord shall have the right to
immediately enter upon the Premises and take whatever actions reasonably
necessary to comply including, but not limited to, the removal from the Premises
of any Hazardous Materials and the restoration of the Premises to a clean, neat,
attractive, healthy and sanitary condition. Tenant shall pay all such costs
incurred by Landlord within ten (10) days of receipt of a bill therefor, plus
nineteen percent (19%) administrative charge.
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8.03 - Compliance with ADA
Landlord agrees that it shall be responsible for the compliance of (i) the
Premises prior to the date Landlord delivers possession of the Premises to
Tenant, and (ii) the Building, and Building and Outside Common Areas, and
alterations thereto, in accordance with the applicable requirements of Title III
of the Americans with Disabilities Act ("ADA"), and applicable Federal, State,
and Local laws. Tenant agrees that it shall be responsible for the compliance of
all alterations to the Premises undertaken by Tenant with the applicable
requirements of the ADA, and all applicable Federal, State and Local laws. In
the event Tenant shall discover a condition(s) of the Premises which is/are
shown (a) to have existed prior to the date Landlord delivers possession of the
Premises to Tenant, and (b) to have been in violation of the ADA as of the date
Landlord delivers possession of the Premises to Tenant, Tenant shall promptly
notify Landlord in writing of such violations, and upon Landlord's verification
to its satisfaction of (a) and (b) of this Section 8.03, it shall promptly bring
such violations into compliance with the ADA.
ARTICLE 9
Indemnity
9.01 - Indemnification
Tenant does hereby agree to indemnify Landlord, Landlord's managing agent,
and such other persons as are in privity of estate with Landlord, defend and
save it harmless from and against any and all claims, actions, damages,
liability and expense in connection with loss of life, personal injury and/or
damage to property arising from or out of any occurrence in, upon or at the
Premises, from or out of the occupancy or use by Tenant of the Premises, the
Building Common Areas and/or Outside Common Areas or any part thereof, or
occasioned wholly or in part by any act or omission of Tenant, its agents,
contractors, employees, lessees or concessionaires. In case Landlord (and such
other persons as are in privity of estate with Landlord) shall, without fault on
its part, be made a party to any litigation commenced by or against Tenant, then
Tenant agrees to protect and hold Landlord harmless and to pay all costs,
expenses and reasonable attorney's fees incurred or paid by Landlord in
connection with such litigation. Tenant agrees also to pay all, costs, expenses,
and reasonable attorney's fees that may be incurred or paid by Landlord in
enforcing the covenants and agreements in this Lease.
ARTICLE 10
Insurance
10.01 - Liability Insurance
At all times during the term of this Lease, Tenant shall, at its sole cost
and expense, maintain personal injury and property damage liability insurance,
naming the Landlord and its managing agent as primary additionally insured
parties, against claims for personal injury, death or property damage occurring
on, in or about the Premises during the term of this lease of not less than Two
Million Dollars ($2,000,000.00) with respect to personal injury, death or
property damage, and including contractual liability coverage. In the event that
Tenant shall not have delivered to Landlord a policy or certificate evidencing
such insurance fifteen (15) days prior to the Term Commencement Date and fifteen
(15) days prior to the expiration dates of each expiring policy, Landlord may
obtain such insurance as it may reasonably require to protect its interest, and
the cost for such policies shall be paid by Tenant TO Landlord as Additional
Rent upon demand, plus nineteen percent (19%) administrative charge.
10.02 - All Risks and Difference in Conditions Insurance
At all times during the term of this Lease, Landlord shall keep the
Building insured for the benefit of Landlord against loss or damage by risks now
or hereafter embraced by "All Risks", 'Difference in Conditions", and loss of
remit coverages, and against such other risks as Landlord from time to time
reasonably may designate in amounts sufficient to prevent Landlord from becoming
a coinsurer.
In any event, the amount applicable to "All Risks" shall be ninety percent
(90%) of the then full replacement cost being the cost of replacing the
Building, exclusive of the costs of excavations and footings below the lowest
grade level). Such full replacement cost shall be determined from time to time
(but not more frequently than once in any twelve (12) calendar months) by an
appraiser, architect or other person or firm designated by Landlord.
10.03 - Insurance on Common Areas
At all times during the term of this Lease, Landlord shall keep the Common
Areas insured for personal injury and property damage liability, "All Risk"
property coverage, Difference in Conditions", workers' compensation, employer's
liability and any other casualty or risk insurance which Landlord or Land1ord's
insurance carrier deems necessary or appropriate.
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10.04 - Increase in Fire Insurance Premium
Tenant covenants and agrees to promptly pay to Landlord as Additional Rent,
upon demand, tine amount of any increase in tine rate of insurance on the
Premises or on any part of tine I3uihdimng that (but for Tenant's act(s) or
Tennant's permitting certain activities to take place which result in an
increase in said rate (if insurance) would otherwise have been in effect.
10 05 - Waiver of Subrogation
Each party hereto hereby waives on behalf of the insurers of such party's
property, any and all claims or rights of subrogation of any such insurer
against the other party hereto for loss of or damage to the property so insured
other titan loss or damage resulting from the willful act of such other party,
and each party hereby agrees to maintain insurance upon its property, it being
understood, however, (a) that such waiver shall be ineffective as to any insurer
whose policy of insurance does not authorize such waiver, (b) that it small be
the obligation of each party seeking tire benefit of tine foregoing waiver to
request the other party (i) to submit copies of its insurance, and (ii) in case
such waiver results in an additional charge from the insurer thereunder, the
additional charge for such waiver shall be paid by the party requesting the
benefit of said waiver; and (c) that no party shall be liable to the other under
clause (h) hereof except for willful failure to comply with any request pursuant
to said clause (h).
10.06- Tenant's Property
At all times during the term of this Lease, Tenant shall, at Tenant's sole
cost and expense, carry "all-risk" insurance coverage for 'Tenant's trade
fixtures, furnishings, equipment amid other personal property of tenant.
ARTICLE II
Fire and Other Casualties
11.01 - Untenantability
If the Premises is made untenantable in whole or in part by fire or other
casualty, the Fixed Monthly Rent, Additional Rent and other charges, until
repairs shall be made or the Lease terminated as hereinafter provided, shall be
apportioned on a per diem basis according to the part of the Premises which is
usable by Tenant, if, but only if, such fire or other casualty not be caused by
Tenant's fixtures or equipment or by fault or negligence of Tenant, its
contractors, agents or employees. If such damage shall be so extensive that the
Premises cannot be restored by Landlord within a period of nine (9) six (6)
months either party small have the right to cancel this Lease by notice to the
other given at any time within thirty (30) days after the date of such damage,
except that if such fire or casualty be due to Tenant's fixtures or equipment or
due to Tenant's fault or negligence Tenant shall have no right to cancel. If
Tenant does not elect to terminate this Lease as aforesaid, then Tenant may
request in writing, within thirty (30) days after the date of the fire or other
casualty, that Landlord provide Tenant with temporary alternative premises
("Temporary Premises") until the restoration of the Premises is substantially
complete. Landlord shall use commercially reasonable efforts to provide Tenant
with Temporary Premises. Landlord shall be under no obligation to relocate any
existing tenant to accommodate Tenant, or to build-out or make any improvements
to the Temporary Premises. If the Landlord provides Tenant with Temporary
Premises, and the parties mutually agree upon the terms of Tenant's occupancy of
the Temporary Premises, including rent for the Temporary Premises, and such
other terms and conditions upon which Landlord and Tenant shall mutually agree,
then the parties shall execute a written agreement prepared by Landlord's
counsel that confirms the understanding of Landlord and Tenant. Upon the date
that Tenant occupies the Temporary Premises, the term of this Lease and all
obligations hereunder shall toll until restoration of the Premises is
substantially compete.
If a portion of the Building other than the Premises shall be damaged
that in the opinion of Landlord the Building should be restored in such a way as
to alter the Premises materially, Landlord or Tenant may cancel this Lease by
notice to the other party given at any time within thirty (30) days after the
date of such damage, except that if such fire or casualty be due to Tenant's
fixtures or equipment or due to Tenant's fault or negligence Tenant shall have
no right to cancel. In the event of giving effective notice pursuant to this
Section, this Lease and the term and the estate hereby granted shall expire on
the date fifteen (15) days after the giving of such notice as this Lease is not
so terminated, Landlord will promptly (taking into account the time necessary to
obtain required permits and approvals and the time necessary to effectuate a
satisfactory settlement with Landlord's insurance company) restore the damage
insured by Landlord pursuant to Section 10.02. Tenant hereby expressly waives
the provisions of Section 227 of the New York Real Property Law and agrees that
the foregoing provisions of this Section 11.01 shall govern and control in lieu
thereof.
11.02 - Loss of Property and Water Damage
Landlord shall not be responsible to Tenant for any loss or theft of
property in or from the Premises, or for any loss or theft or damage of or to
any property left with any employee of Landlord, however occurring Landlord
shall not be liable for any damage caused by water, rain, snow or ice, or by
breakage, stoppage or leakage of water, gas, heating, air-conditioning, sewer or
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other pipes or conduits, or arising from any other cause, in, upon, about or
adjacent to the Premises or the Building.
ARTICLE 12
Eminent Domain
12.01 - Eminent Domain
(a) In the event that title to the whole or any part of the
Premises shall be lawfully condemned or taken in any manner for any public or
quasi-public use, this Lease and the term and estate hereby granted shall
forthwith cease and terminate as of the date of vesting of title, and Landlord
shall be entitled to receive the entire award, Tenant hereby assigning to
Landlord Tenant's interest therein, if any.
(b) In the event that title to a part of the Building other than
the Premises shall be so condemned or taken, and if in the opinion of Landlord,
the Building should be restored in such a way as to alter the Premises
materially, or in the event that title to all or a material part of the Outside
Common Areas shall be so condemned or taken, Landlord may terminate this Lease
and the term and estate hereby granted by notifying Tenant of such termination
within sixty (60) days following the date of vesting the title, and this Lease
and the term and estate hereby granted shall expire on the date specified in the
notice of termination, which date shall be not less than sixty (60) days
following the date of vesting of title, and this Lease and the term and estate
hereby granted shall expire on the date specified in the notice of termination,
which date shall be not less than sixty (60) days after the giving of such
notice, as fully and completely as if such date were the date hereinbefore set
for the expiration of the term of this Lease, and the Fixed Monthly Rent,
Additional Rent, and other charges hereunder shall be apportioned as such date.
In such event, Tenant shall not entitled to any portion of Landlord's award
hereunder, if any, nor shall Tenant have any claim against Landlord for the
unexpired portion of the term.
ARTICLE 13
Bankruptcy and Default Provisions
13.01 - Conditional Limitations
(a) This Lease and the demised terms are subject to the limitation
that if, at any time prior to or during the term, any one or more of the
following events (herein called an "event of default") shall occur, that is to
say:
(i) If Tenant shall make an assignment for the benefit of its
creditors; or
(ii) If the leasehold estate hereby created shall be taken on
execution or by other process of law; or
(iii) If any petition shall be filed against Tenant in any
court, whether or not pursuant to any statute of the United States or of any
State, in any bankruptcy, reorganization, composition, extension, arrangement,
or insolvency proceedings, and Tenant shall thereafter be adjudicated bankrupt,
or such petition shall be approved by the court, or the court shall assume
jurisdiction of the subject matter and if such proceedings shall not be
dismissed within ninety (90) days after the institution of the same, or if any
such petition shall be so filed by the Tenant; or
(iv) If in any proceedings a receiver or trustee be appointed
for Tenant's property, and such receivership or trusteeship shall not be vacated
or set aside within ninety (90) days after tine appointment of such receiver or
trustee; or
(v) If Tenant shall vacate or abandon the Premises and
permit the same to remain unoccupied or closed for business for more than thirty
(30) days; or
(vi) If Tenant shall be in default of any other lease that
Tenant is a party to with Landlord or an affiliate of Landlord; or
(vii) If Tenant shall fail to pay any installment of the
Fixed Monthly Rent or any part thereof when the same shall become due and
payable, and such failure shall continue for Five (5) days without notice from
landlord; or
(viii) If Tenant shall fail to pay any outer charge required
to be paid by Tenant hereunder, and such failure small continue for Five (5)
days after notice from Landlord; or
(ix) If Tenant shall fail to timely deliver to Landlord any
Subordination Agreement or any Estoppel Certificate, as required hereunder; or
(x) Tenant fails to perform or observe any other requirement
of this 1.ease (not hereinbefore specifically referred to) on the pant of Tenant
to be performed or observed and such failure continues for thirty (30) days
after receipt of notice from Landlord to Tenant.
(b) This Lease and the term are expressly subject to the
conditional limitation that upon the happening of any one or more of the
aforementioned events of default, Landlord, in addition to the other rights and
remedies it may have, shall have the right to immediately declare this Lease
terminated and the term ended, in which event all of the right, title and
interest of Tenant hereunder shall wholly cease and expire upon service by
Landlord of a Notice of Termination. Tenant shall then quit and surrender the
Premises to Landlord in the manner and under the conditions as provided for
under this Lease, but Tenant shall remain liable as hereinafter provided.
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(c) If the Landlord shall not be permitted to terminate this Lease
as hereinabove provided because of Title 11 of the United States Code, as
amended, relating ("to Bankruptcy Code"), then Tenant or any trustee for Tenant
agrees promptly, within no more than fifteen (15) days after the request of
Landlord to the Bankruptcy Court to assume or reject this Lease so made by
Landlord. In such event, Tenant or any trustee for Tenant may only assume this
Lease if it (1) cures or provides adequate assurance that the trustee will
promptly cure any default hereunder, (2) compensates or provides adequate
assurance that the Tenant will promptly compensate Landlord for any actual
pecuniary loss Landlord resulting from Tenant's default, and (3) provides
adequate assurance of future performance under this Lease by Tenant. In no
event after the assumption of this Lease by Tenant or any trustee for Tenant
shall any then existing default remain uncured for a period in excess of ten
(10) days. Adequate assurance of future performance of this Lease shall
include, without limitation, adequate assurance (a) of the source of the Fixed
Monthly Rent required to be paid to Landlord hereunder, and (b) that the
assumption or any permitted assignment of this Lease will not constitute a
breach of any provision of this Lease.
13.02 - Landlord's Remedies
(a) If this Lease shall be terminated as provided in Section
13.01, Landlord or Landlord's agents or employees may immediately or at any time
thereafter re-enter the Premises and remove therefrom Tenant, its agents,
employees, licensees, and any subtenants and other persons, firms or
corporations, and all or any of its or their property therefrom either by
summary dispossess proceedings or by any suitable action or proceeding at law or
by force or otherwise, without being liable to indictment, prosecution or
damages therefor, and repossess and enjoy the Premises, together with all
alterations, additions and improvements thereto.
(b) In case of any such termination, re-entry or dispossession by
summary proceedings or otherwise, the rents and all other charges required to be
paid up to the time of such termination, re-entry or dispossession, shall be
paid by Tenant, and Tenant shall also pay to Landlord all expenses which
Landlord may then or thereafter incur for legal expenses, attorneys' fees,
brokerage commissions and all other costs paid or incurred by Landlord for
restoring the Premises to good order and condition and for altering and
otherwise preparing the same for reletting thereof. Landlord may, at any time
and from time to time, relet the Premises, in whole or in part, for any rental
then obtainable either in its own name or as agent of Tenant, for a term or
terms which, at Landlord's option, may be for the remainder of the then current
term of this Lease or for any longer or shorter period.
(c) If this Lease be terminated as aforesaid, Tenant nevertheless
covenants and agrees, notwithstanding any entry or re-entry by Landlord, whether
by summary proceedings, termination, or otherwise, to pay and be liable for on
the days originally fixed herein for the payment thereof, amounts equal to the
several installments of Fixed Monthly Rent, Additional Rent and other Charges as
they would under the terms of this Lease become due if this Lease had not been
terminated or if Landlord had not entered or re-entered as aforesaid, whether
the Premises be relet or remain vacant in whole or in part for a period less
than the remainder of the term or for the excess of the Fixed Monthly Rent, and
Additional Rent reserved under the terms of this Lease) in the net amount of
rent received by Landlord in reletting the Premises after deduction of all
expenses and costs incurred or paid as aforesaid in reletting the Premises and
in collecting the rent in connection therewith. As an alternative, at the
election of Landlord, Tenant shall pay to Landlord as damages, such a sum as at
the time of such termination represent: (i) the unamortized costs of Landlord's
leasehold improvements (including, but not limited to, any costs of design,
materials and construction) within the Premises and any brokerage and/or other
fees paid by Landlord in connection with Lease, as such costs shall have been
amortized over the term of the Lease at an interest rate of ten percent (10%),
and (ii) the amount o f the then present value of the total Fixed Monthly Rent
and Additional Rent and other benefits which would have accrued to Landlord
under this Lease for the remainder of the term (including all renewal terms
whether or not Tenant had elected to renew) if the Lease terms had been fully
complied with by Tenant.
(d) Tenant hereby expressly waives, so far as permitted by law,
the service of any notice of intention to re-enter provided for in any statute,
or of the institution of legal proceedings to that end, and Tenant, for an on
behalf of itself and all persons claiming through or under Tenant also waives
any and all rights of redemption or re-entry or repossession under present or
future laws, including specifically but without limitation, Section 761 of the
New York Real Property Law and Rules. In case Tenant shall be dispossessed by a
judgment or by warrant of this Lease, Landlord and Tenant, so far as permitted
by law, waive and will 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 connected with this Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of said Premises,
or any claim of injury or damage. The terms "enter," "entry," or "re-entry" as
used in this Lease are not restricted to their technical legal meaning.
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(e) No failure by Landlord to insist upon time strict
performance of any covenant, agreement, term or condition of this lease or to
exercise any right or remedy consequent upon a breath thereof, and no acceptance
of full or partial rent during the continuance of any such breach, shall
constitute a waiver of any such breach or of such covenant, agreement, term or
condition. No waiver of any breach shall affect or alter this Lease, but each
and every covenant, agreement, term and condition of this Lease shall continue
in full force and effect with respect to any other then existing or subsequent
breach thereof. No payment by Tenant or receipt by Landlord of a lesser amount
than the monthly installments of rent or Additional Rent stipulated in this
Lease shall be deemed to be other than on account of the earliest stipulated
rent, nor shall any endorsement or statement on any check or letter accompanying
a check for payment of rent be deemed any 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 to pursue any other remedy provided by this
Lease.
(f) In the event of any breach or threatened breach by Tenant of any of
the covenants, agreements, terms or conditions contained in this Lease, Landlord
shall be entitled to enjoin such breach or threatened breach and shall have the
right to invoke any right or remedy allowed at law or in equity or by statute or
otherwise.
(g) Each right or remedy of Landlord provided for in this Lease shall
be cumulative and shall be in addition to every other right or remedy provided
for in this Lease, or now or hereafter existing at law or in equity or by
statute or otherwise.
ARTICLE 14
Mechanic's Liens
14.01 - Mechanic's Liens
Tenant agrees to pay when due all sums of money that may become due for, or
purporting to be due for, any labor, services, materials, supplies or equipment
alleged to have been furnished or to be furnished to or for Tenant in, upon or
about the Premises and/or Landlord's interest therein.
If any mechanic's lien shall be-filed against the Premises or the Building
based upon any act of Tenant or anyone claiming through Tenant, Tenant, after
notice thereof from Landlord (or any person in privity of estate with Landlord),
shall forthwith take whatever action by bonding, deposit, payment or otherwise,
as will remove or satisfy such lien within five (5) days. In the event Tenant
does not remove or satisfy said lien within said Five (5) day period, Landlord
shall have the right to do so by posting a bond or undertaking, and Tenant
agrees to reimburse Landlord for any and all expenses incurred by Landlord in
connection therewith within five (5) days after receipt by Tenant of Landlord's
invoice therefor. These expenses shall include, but not be limited to, Filing
fees, legal fees and bond premiums.
However, nothing in this Article 14 shall be deemed or construed as (a)
Landlord's consent to any person, firm or corporation for the performance of any
work or services, or the supply of any materials to the Premises, or (b) giving
Tenant or any other person, firm or corporation any right to contract for or to
perform or supply any work, services or materials that would permit or give rise
to a lien against the Premises or the Building.
ARTICLE 15
Mortgages, Assignments, Subleases and Transfers of Tenant's Interest
15.01 -Limitation on Tenant's Rights
Except as hereinafter otherwise provided, during the term of this Lease,
neither this Lease nor the interest of Tenant in this Lease or in the Premises,
or in any sublease, or in any rentals under any sublease shall be sold,
assigned, transferred, mortgaged, pledged, hypothecated or otherwise disposed
of, whether by operation of law or otherwise, unless Landlord's prior written
consent is obtained in each case, nor shall the Premises be sublet in any case
unless such prior written consent is obtained.
It is understood and agreed between the parties that, should Tenant request
Landlord's consent to a proposed assignment of this Lease or a subletting of all
or any portion of the Premises, Landlord will, in addition to any other
requirements which may be imposed as conditions to Landlord's consent, require
that Tenant execute and deliver to Landlord an agreement prepared by Landlord
whereby Tenant obligates itself, as Additional Rent, to pay over to landlord the
amount, if any, of all rent, Additional Rent and any other consideration paid by
such assignee or sublessee to Tenant pursuant to such assignment or sublease
which is in excess of the rent and Additional Rent due and payable from time to
time from Tenant to Landlord pursuant to this Lease.
Should Tenant request Landlord's consent to a proposed assignment of this
Lease or a subletting of all or part of the Premises, Landlord shall have the
right at Landlord's option to recapture the Premises by written notice given to
Tenant within thirty (30) days after Landlord's receipt of Tenant's request for
Landlord's consent. If Landlord exercises its right to recapture the Premises,
or any part thereof, this Lease shall be cancelled and terminated as of the date
that is proposed by Tenant for the requested assignment or subletting as fully
and
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effectively as if such date were the date originally specified herein for the
expiration of this Lease. If this lease shall be cancelled with respect to less
than the entire Premises, the Fixed Monthly Rent reserved herein shall be
prorated on the basis of the number of leaseable square feet retained by Tenant
in proportion to the number of leaseable square feet contained in the Premises,
and this Lease shall continue thereafter in full force and effect with respect
to the proportion to the Premises retailed by Tenant, and the parties shall
execute an amendment of this :Lease to provide for the reduction in square
footage and rental.
No consent by Landlord to an assignment of this Lease and no assignment
made as hereinafter permitted, shall be effective until there shall have been
delivered to Landlord (a) an agreement, in recordable form, prepared by
Landlord, executed by Tenant and the proposed assignee, wherein and whereby such
assignee assumes due performance of the obligations on Tenant's part to be
performed under this Lease to the end of the term hereof, and (b) the written
consent to such assignment by the holder of any fee or leasehold mortgage to
which this Lease is then subject shall have been obtained and delivered to
Landlord if so required by the terms of such fee or leasehold mortgage.
Notwithstanding the assumption by such assignee of due performance, Tenant
shall continue to be fully responsible for the due performance of Tenant's
obligations hereunder in the same manner and to the same extent as if no such
assignment had been made.
Any assignment, mortgage, pledge, sublease or hypothecation of this Lease,
or of the interest of Tenant hereunder, without full compliance with any and all
requirements set forth in this Lease shall be a breach of this Lease and a
default hereunder, shall be null and void, and shall confer no rights upon any
third party.
15.02 - Effect of Landlord's Consent
Any consent by Landlord to a sale, assignment, sublease, mortgage,
pledging, hypothecation, or transfer of this lease, shall apply only to the
specific transaction thereby authorized and shall not relieve Tenant from the
requirement of obtaining the prior written consent of Landlord to any further
sale, assignment, sublease, mortgage, pledge, hypothecation, or transfer of this
lease. In instances where the consent of Landlord is required hereunder to any
proposed assignment or sublease of this Lease, or to the mortgaging, pledging or
hypothecation of this Lease, contemporaneously with the request of Tenant
therefore, Tenant shall submit in writing information reasonably sufficient to
enable landlord to decide with respect thereto including, but not limited to,
(i) the name and address of the proposed transferee, (ii) a current financial
statement of the proposed transferee, (iii) the consideration to be paid by the
proposed transferee to Tenant, and (iv) the use intended to be made of the
Premises by the proposed transferee. Landlord shall reply to Tenant within ten
(10) days after receipt of the request and information as aforementioned.
With respect to any of the consents requested by Tenant under the
provisions of this Article 1 5, whether or not the Landlord shall have consented
thereto, Tenant shall pay to Landlord all reasonable counsel fees and other
out-of-pocket expenses incurred by the Landlord in connection therewith.
15.03 - Sale of Stock or Partnership Interest
Tenant agrees that if (i) Tenant or any Guarantor of Tenant's obligations
under this Lease is a corporation and there shall be a sale of stock
constituting a controlling interest in Tenant or any Guarantor of Tenant's
obligations under this Lease (whether such sale occurs at one time or at
intervals so that, in the aggregate, over the term of this Lease, such a sale
shall have occurred), or (ii) Tenant or any Guarantor of Tenant's obligations
under this Lease is a partnership or other legal business entity and there shall
be a sale of a partnership or ownership Interest constituting a controlling
interest in Tenant or any Guarantor of Tenant's obligations under this Lease
(whether such sale occurs at one time or at intervals so that, in the aggregate,
over the term of this Lease, such a sale shall have occurred), then and in any
of such events, Landlord shall have the right, at its sole election, to deem
such sale a default pursuant to Article 13 of this Lease and to cancel and
terminate this Lease at any time thereafter by giving notice of Landlord's
intention to do so and this Lease shall terminate upon the expiration of thirty
(30) days after such notice of intention from Landlord to Tenant, but Tenant
shall remain liable for its obligations under this Lease as provided in Article
13 hereof.
The term "sale" shall include any transfer of the stock, partnership and/or
ownership interest in Tenant or its Guarantor, as the case may be, other than a
transfer by operation of law occurring upon the death of a stockholder or
partner and the devolution of the stock or interest held by such stockholder or
partner or member or other owner to his legal representative, heirs or legatees,
but shall not include a stock offering whereby an aggregate of greater than
fifty percent (50%) of Tenant's stock shall be offered publicly. to parties who
are non-stockholders as the date of this Lease, through a recognized security
exchange.
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ARTICLE 16
Subordination of Lease
16.01 - Subordination to Mortgages and Ground Leases
This Lease and all the rights of Tenant hereunder are and shall be subject
and subordinate to the lien of any ground or underlying leases and to any
mortgage or mortgages, whether fee or leasehold mortgages, which may now or
hereafter affect the Premises or the Building or the land under the Building,
and to all renewals, modifications, consolidations, replacements and extensions
thereof, and advances thereunder. however, Tenant agrees to execute and deliver
to Landlord, within fifteen (15) days after request therefor, such Instrument(s)
as may be requested by any such ground lessor, mortgagee, or trustee for such
purposes (any such instrument(s) are hereinafter referred to as "Subordination
Agreement"). In the event Tenant fails to execute and deliver any such
Subordination Agreement within the fifteen (15) day period Tenant does hereby
make, constitute and irrevocably appoint Landlord as its attorney-in-fact for
the purpose of executing any such Subordination Agreement in Tenant's name,
place and stead.
Tenant will not do, suffer or permit any act, happening or occurrence or
any condition to occur or remain which may be prohibited under the terms or
provisions of any ground or underlying lease or mortgage to which this Lease is
subject or which will create a default thereunder except that Tenant shall not
be obligated to pay the principal indebtedness or any installment thereof or
interest thereon.
So long as any such mortgage or lease shall remain a lien on the Premises,
Tenant agrees simultaneously with the giving of any notice to Landlord which is
required to be given by this Lease, to give a duplicate copy thereof to any
mortgagee or ground lessor, notice of whose name and address have been given to
Tenant. Further, Tenant agrees that if Landlord defaults in the performing of
any of its covenants under this Lease and if such default allows Tenant to
cancel or surrender said Lease, the mortgagee or ground lessor may cure said
default with the same effect as if cured by landlord, and if necessary, enter
upon the Premises for the purpose of curing any such default, provided that the
mortgagee or ground lessor must cure the default within the time in which
Landlord is obligated to cure such default under this Lease. The giving of any
such notice to Landlord shall not be properly given under the terms of this
Lease and shall be of no force and effect until a duplicate copy thereof shall
also have been given to the mortgagee or ground lessor pursuant to this Section.
ARTICLE 17
Entry to Premises
17.01 - Entry to Premises by Landlord
Landlord shall have the right to enter the Premises at all reasonable times
upon reasonable prior notice
(except in case of emergency and then at any time without notice for the
purposes of:
(a) inspecting the same, and/or
(b) making any repairs to the Premises and performing any work
therein that may be necessary by reason of Tenant's default
under the terms of this Lease continuing beyond any
applicable period of grace, and/or
(c) exhibiting the Premises for the purpose of sale, ground
lease or mortgage
ARTICLE 18
Notices and Certificates
18.01 - Notices and Certificates
Any notice, statement, certificate, request or demand required or permitted
to be given under this Lease shall be in writing sent either by an overnight
express mail service (such as Federal Express) designated for "next day
delivery", or by registered or certified mail, postage prepaid, return receipt
requested, addressed as the case may be, to landlord in care of the Managing
Agent (see Page 1) at the address shown at the beginning of this Lease, and to
Tenant at the address shown at the beginning of this Lease or to such other
addresses as Landlord or Tenant shall designate in the manner herein provided.
Such notice, statement, certificate, request or demand shall be deemed to have
been given on the date mailed as aforesaid by such express mail service or on
the date deposited in any post office or branch post office regularly maintained
by the United States Government, except for notice of change of address or
revocation of a prior notice, which shall only be effective upon receipt or
refusal to accept receipt of such notice. Anything contained in the foregoing to
the contrary notwithstanding, in order for any notice of change of address to be
effective, the notice must be express and clearly state that it is intended to
change Tenants address for billing purposes and/or for receipt of notices and
documents.
At any time or times when tenant's interest herein shall be vested in more
than one person, firm or Corporation, jointly, in common or in severalty, a
notice given by Landlord to any one such person, firm or corporation shall be
conclusively deemed to have been given to all such persons, firms or
corporations Any notice
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by Tenant pursuant to the provisions hereof shall be void and ineffective unless
signed by all such persons, firms and corporations, unless all such persons,
firms and corporations shall have previously given notice to Landlord, signed by
each of them designating and authorizing one or more of them to give the notice
referred to, and such notice shall then be unrevoked by any notice to Landlord.
18.02 - Certificate by Tenant
Within fifteen (15) days after request by Landlord, Tenant, from time to
time (but no more than three times per year)and without charge, shall deliver to
-------------------------------------
Landlord or to a person, firm or corporation, specified by Landlord, a duly
executed and acknowledged instrument certifying:
(a) that this Lease is unmodified and in full force and effect, or
if there has been any modification, that the Lease is in
full force and effect, as modified, and identifying the date
of any such modification; AND
(b) whether Tenant knows or does not know, as the case may be,
of any default by Landlord in the performance by Landlord of
the terms, covenants, and conditions of this Lease, and
specifying the nature of such defaults, if any; and
(c) whether or not there are any then existing set-offs or
defenses by Tenant to the enforcement by Landlord of the
terms, covenants, and conditions of this Lease and any
modification thereof, and if so, specifying them; and
(d) the date to which the Fixed Monthly Rent has been paid.
Any such instrument(s) is sometimes referred to herein as "Estoppel
Certificate".
ARTICLE 19
Covenant of Quiet Enjoyment
19.01 - Covenant of Quiet Enjoyment
Tenant, subject to the terms and provisions of this Lease, on payment of
the rent and observing, keeping and performing all the terms and provisions of
this Lease on its part to be observed, kept and performed, shall law fully,
peaceably and quietly have, hold and enjoy the Premises during the term hereof
on and after the Term Commencement Date without hindrance or ejection by
Landlord and any persons lawfully claiming under Landlord, subject nevertheless
to the terms and conditions of this Lease and to any ground or underlying lease
and/or mortgage(s); but it is understood and agreed that this covenant, and any
and all other covenants of Landlord contained in this Lease shall be binding
upon Landlord and its successors only with respect to breaches occurring during
its and their respective ownership of Landlord's interest hereunder.
ARTICLE 20
Services
20.01 - Services
During the term of this Lease, while Tenant is not in default hereunder,
Landlord shall furnish to the Premises electricity, lighting, heating,
ventilating, air conditioning, elevator service and water to the plumbing
fixtures, if any, on Monday through Friday from 8 am. to 6 p.m., principal legal
holidays excepted (herein referred to as the "Normal Operating Hours") and
Tenant shall have twenty-four-hour access to the Premises Building and the
Building parking facilities. Landlord shall also furnish janitorial services
consisting of cleaning floors, removing waste paper each business day and window
cleaning.
20.02 - Interruption of Service
No diminution or abatement of rent or other compensation shall be claimed
or allowed for inconvenience or discomfort arising from the making of repairs or
improvements to the Premises, the Building or its appurtenances. There shall be
no diminution or abatement of rent or any other compensation for interruption or
curtailment of any service or utility herein expressly or impliedly agreed to be
furnished by Landlord when such interruption or curtailment shall be due to
accident, alterations, repairs (desirable or necessary), or to inability or
difficulty in securing supplies or labor, or to some other cause not resulting
from GROSS negligence on the part of Landlord. No such interruption or
curtailment shall be deemed a constructive eviction. Tenant agrees that Landlord
shall not be responsible for interruption of utility service caused by any
utility company or governmental regulatory agency.
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ARTICLE 21
Certain Rights Reserved to Landlord
21.01 -Certain RightsReserved to Landlord
Landlord reserves time following rights:
(a) To name the Building and to change the name or sired address of the
Building;
(b) To install and maintain a sign or signs on the exterior or interior of
the Building;
(c) To designate all sources furnishing sign painting and lettering, ice,
drinking water, towels, toilet supplies, shoe shining, vending machines, mobile
vending service, catering, and like services used on the Premises;
(d) During the last ninety (90) days of the term, if during or prior to that
time Tenant vacates the Premises, to decorate, remodel, repair, alter or
otherwise prepare the Premises for reoccupancy, including the placing of a
notice of reasonable size on or in time Premises offering the premises "For
Rent" or For Lease", all without affecting Tenant's obligation to pay rental for
the Premises;
(e) To constantly have pass keys to the Premises;
(f) At any time in the event of an emergency, or otherwise at reasonable
times, to take any and all measures, including inspections, repairs,
alterations, additions and improvements to the Premises or to the Building, as
may be necessary or desirable for the safety, protection or preservation of the
Premises or the Building or the Landlord's interests, or as may be necessary or
desirable in the operation or improvement of the Building or in order to comply
with all laws, orders and requirements of governmental or other authority;
(g) At any reasonable time and from time to time throughout the term of the
Lease to show the Premises to persons wishing to rent same or to purchase time
Building.
ARTICLE 22
Miscellaneous Provisions
22.01 - Occupancy After Expiration Term
(a) Should Tenant continue to occupy the Premises after the expiration
or earlier termination of the term, such tenancy shall be from month-to-month,
amid such month-to-month tenancy shall be under the same terms, covenants and
conditions as set forth in this Lease, except that the Tenant shall pay double
the Fixed Monthly Rent reserved herein.
(b) The aforementioned month-to-month tenancy may be terminated by
either party notifying the other of its intention to terminate the
month-to-month tenancy at least one calendar month prior to the last day of the
term. Tenant's continued occupancy of the Premises after time expiration of the
time period specified in said notice to terminate shall confer no rights
whatsoever upon Tenant, who shall then be deemed a holdover tenant. Tenant
hereby consents in advance to the immediate entry of an order and warrant of
eviction, together with judgment for unpaid rent or Additional Rent due and
owing under the terms of this Lease, or for compensation due and owing to the
Landlord for Tenant's use and occupation of the Premises during the time of
occupancy as a holdover Tenant, by any court of competent jurisdiction. Tenant
shall indemnify and save harmless Landlord from any claim, damage, expense,
attorney fee, or loss which Landlord may incur by reason of such holding over,
including without limitation, any claim of a succeeding tenant, or any loss by
Landlord with respect to a lost opportunity to re-let Premises.
22.02 - Limitation on Personal Liability
(a) It is understood and agreed that Tenant shall look solely to the
estate and property of Landlord in the Building for the satisfaction of Tenant's
remedies for the collection of a judgment (or other judicial process) requiring
the payment of money by Landlord in the event of any default or breach by
Landlord with respect to any of the terms, covenants and conditions of this
Lease to be observed and/or performed by Landlord and any other obligation of
Landlord stated by or under this Lease, and no other property or assets of
Landlord or of its partners, members, beneficiaries, co-tenants, shareholders,
or principals (as the case may be) shall be subject to levy, execution or oilier
enforcement procedures.
(b) The term "Landlord," as used in Subsection 22.02(a) above and
throughout this Lease, so far as covenants and agreements on the part of
Landlord arc concerned, shall be limited to mean and include only the owner or
owners of the Building at the time in question, and at the time of the Lease.
Further, in the event of any transfer or transfers of the title to the Lease
and/or the Building, Landlord herein named (and in case of any subsequent
transfers or conveyances, the then grantor), including each of its members,
partners, beneficiaries, en-tenants, shareholders, or principals (as the case
may be), shall be automatically freed and relieved from and after the date of
such transfer and conveyance of all liability as respects the performance of any
covenants and agreements on the part of Landlord. Landlord or the grantor shall
turn over to the grantee all monies and security, if any, then held
18
by Landlord or such grantor on behalf of Tenant, Landlord thereby being relieved
of and from all responsibility for such monies and security, and shall assign to
such grantee all right, title and interest of Landlord or such grantor thereto,
it being intended that the covenants and agreements contained in this Lease on
the part of Landlord to be performed shall, subject as aforesaid, be binding on
Landlord, its successors and assigns.
22.03 - - No Representations by Landlord
Landlord and Landlord's agents have made no representations or promises
with respect to the Building, the land upon which the Building is erected or the
Premises except as herein expressly set forth, and no rights, easements, or
licenses are acquired by Tenant by implication or otherwise except as expressly
set forth in the provisions of this Lease.
22.04 - - Lease Binding
All covenants in this Lease which are binding upon Tenant shall be
construed to be equally applicable to and binding upon Tenant's agents,
employees and others claiming the right to be in the Premises or in the Building
through or under Tenant. If more than one individual, firm or corporation shall
join as Tenant, the singular context shall be construed to be plural wherever
necessary, and the covenants of Tenant shall be the joint and several
obligations of each party signing as Tenant; and, when the parties signing as
Tenant are partners, it shall be the joint and several obligations of the Firm
and of the individual members thereof.
22.05 - Failure to Give Possession
Notwithstanding anything to the contrary contained in this Lease, Landlord
shall not in any manner be liable to Tenant for damages or any other damn
resulting from failure to deliver the Premises or for any delay in commencing or
completing any work Landlord is to perform or is authorized by Tenant to perform
under Exhibit C, and Tenant hereby waives any such liability whatsoever and any
right it may have to terminate this Lease.
(a) If Landlord shall be unable to give possession of the Premises on
the Term Commencement Date by reason of the fact that the Premises is located ml
a building being constructed which has not been sufficiently completed to make
the Premises ready for occupancy or by reason of the fact that a certificate of
occupancy has not been procured or for any other reason, then Landlord shall not
be subject to any liability for the failure to give possession on said date.
Under such circumstances the rent reserved and covenanted to be paid herein
shall not commence until possession of the Premises is given or the Premises is
available for occupancy by Tenant. Notwithstanding the forgoing, if the 'Term
Commencement Date shall not have occurred within two (2) years after use date
hereof, then this Lease shall automatically become null and void. In either
case, Landlord shall reimburse Tenant for any advance rent paid or security
deposit posted, and except for items which have been theretofore accrued and not
yet paid and both parties hereto shall be relieved of all obligations hereunder,
in which event each party will, at the other's request, execute an instrument in
recordable form containing a release and surrender of all right, title and
interest in and to this Lease.
(b) If the Building is not in the course of construction, and Landlord
is unable to give possession of the Premises on the Term Commencement Date by
reason of the holding over or retention of possession by any tenant, tenants, or
occupants, or for any other reason, or if repairs, improvements or decoration of
the Premises or of the Building are not completed, such inability by Landlord
shall not constitute a default under this Lease but the Term Commencement Date
shall be postponed until such date as such holdover tenant or occupant shall
give up possession of the Premises, and/or the repairs, improvements or
decorations have been completed, and the term of this Lease shall be deemed to
commence on such Term Commencement Date as postponed (and the expiration date of
the term of the Lease shall be extended by the same period as the Term
Commencement Date is postponed).
22.06 - Relocation of Tenant
Landlord shall have the right to relocate Tenant to other premises
substantially similar in size substantially similar or better in design and
quality as the Premises (including, improvements) and located within the
Building or any building in the office park in which the Building is located
upon sixty (60) days' written notice to Tenant. Such relocation shall be at
Landlord's cost and expense and shall it no way affect the obligations or duties
of either party hereunder. Landlord's cost shall include costs and expenses
related to moving the furniture; office equipment and other contents of the
Premises to the new premises, and telecommunications lines.
22.07 - Force Majeure
The period of the during which either party is prevented or delayed in the
performance or the making of any improvements or repairs or fulfilling any
obligation (other than the payment of Fixed Monthly Rent or Additional
Rent required under this Lease) due to unavoidable delays caused by fire,
catastrophe, strikes or labor
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trouble, civil commotion, Acts of God or the public enemy, governmental
prohibitions or regulation or inability to obtain materials or labor, or other
causes beyond such party's reasonable control, shall be added to such party's
the for performance thereof, and such party shall have no liability by reason
thereof.
22.08 - Attornment by Tenant
If at any the dusting the term of this Lease the Building is sold through a
mortgage foreclosure proceeding, or if Landlord hereunder shall be the holder of
a leasehold estate covering premises which include the Premises and if such
leasehold estate shall be cancelled or otherwise terminated prior to the
expiration date thereof and prior to the expiration of the term of this Lease,
or in the event of the surrender thereof whether voluntary, involuntary or by
operation of law, Tenant shall make full and complete attornment to the
purchaser at the foreclosure sale or to the lessor of such leasehold estate for
the balance of the term of this Lease upon the same covenants and conditions as
are contained herein so as to establish direct privity between such purchaser or
lessor and Tenant and with the same force and effect as though this Lease was
made directly from such purchaser or lessor to Tenant. Tenant shall make all
rent payments thereafter directly to such purchaser or lessor.
22.09 - Landlord May Pay Tenant's Obligations
All costs and expenses which Tenant assumes or agrees to pay under tine
provisions of this Lease shall at Landlord's election be treated as Additional
Rent, and in the event of non-payment, Landlord shall have all the rights and
remedies herein provided for in case of non-payment of rent or of a breach of
covenant. If Tenant shall default in making any payment required to be made by
Tenant (other than the payment of rent as provided by Article 3 above) or shall
default in performing any term, covenant or condition of this Lease on the part
of Tenant to be performed which shall involve the expenditure of money by
Tenant, Landlord at Landlord's option may, but shall not be obligated to, make
such payment or, on behalf of Tenant, expend such sums as may be necessary to
perform and fulfill such term, covenant or condition, and any and all sums so
expended by Landlord, with interest thereon at the rate of one and one-half
percent (1 1/2%) per month front the date of such expenditure, shall be and be
deemed to be Additional Rent, in addition to the rent provided in Article 3 and
shall be repaid by Tenant to Landlord on demand, but no such payment or
expenditures by Landlord shall be deemed a waiver of Tenant's default nor shall
it affect any other remedy of Landlord by reason of such default.
22.10 - Definition of "Tenant's Allocable Share"
(a) For purposes of determining Tenant's Allocable Share herein, except
as provided in Subsection (b) below, such share shall be the percentage
resulting from dividing the number of square feet set forth in Section 1.01
above, by the total number of square feet leased in the Building as of the
beginning of each lease year or partial lease year.
(b) For purposes of determining Tenant's Allocable Share for Section
3.02, such share shall be the percentage resulting from dividing the number of
square feet set forth in Section 1.01 above, by the total number of square feet
leasable in the Building as of the beginning of each lease year or partial lease
year.
22.11 - Division of Costs
Landlord may construct and operate other office buildings located within
the office park in which the Building is located. Tenant agrees that Landlord
may treat the Building and the adjacent office buildings as one unit for the
purpose of purchasing and providing energy and water, insurance and the common
services included within Operating Costs. Landlord shall equitably divide such
costs between the Building and the adjacemit office buildings
for each lease year (or partial lease year) and the allocation of such costs
shall be subject to 'erification by Tenant at Landlord's offices.
22.12 - Effect of Captions
The captions or legends on this Lease are inserte(l only for convenient
reference or identification of the particular Sections. lltey are in no way
intended to describe, interpret, define or limit the scope, OF Cxtemut or
imitemit of this Lease, or army Section or provision thereof.
20
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22.13 - Tenant Authorized to Do Business
Tenant represents and covenants that it is and throughout the term of this
Lease shall he authorized to do business in the state in which the Building is
located. In the event Tenant hereunder is a corporation Tenant hereby covenants
arid warrants that: the Tenant is a duly constituted corporation qualified to do
business in time state in which time Building is located, all Tenant's franchise
and corporate taxes have been paid to date; all future forms, reports, fees aim
other documents necessary for Tenant to comply with applicable laws will be
filed by Tenant when due; and Tenant's signatory(s) to this lease is/are duly
authorized by the governing body of such corporation to execute and deliver this
Lease on behalf of the corporation. The person executing this Lease on behalf of
Tenant hereby covenants, represents and warrants to Landlord that (s)he is duly
authorized to execute and deliver this Lease to Landlord. Tenant, if a
partnership or corporation, Tenant agrees to furnish to Landlord, upon request,
evidence of authority for entering into this Lease.
22.14 - Execution in Counterparts
This Lease may be executed in one or more counterparts, any one or all of
which shall constitute hut one agreement.
22.15 - Memorandum of Lease
upon request by either party, Landlord and Tenant agree to execute a
Memorandum or Notice of lease in recordable form pursuant to applicable state
law. Upon the expiration or earlier termination or this Lease, time party wino
shall have recorded such Memorandum or Notice of' Lease shall promptly execute
any necessary instrument and remove time Memorandum or Notice of 1,easc from
time public records, and upon failure to do so, time other party, upon ten (10)
days prior notice to the party who recorded time aforesaid instrument, is hereby
appointed attorney-in fact to execute army such instrument in the recording
party's name, place and stead. 'lime requesting party shall pay for all
recording fees and attorney's fees in connection with lime preparation and
recording of the Memorandum or Notice of Lease.
22.16 - Law Governing. Effect and Gender
This Lease shall be construed in accordance with time laws of the state in
which the Building is located and small be binding upon time parties hereto and
their respective legal representatives, successors and assigns except as
expressly provided otherwise. Should any provisions of this Lease require
judicial interpretation, it is agreed that the court interpreting or construing
time same shall not apply a presumption that the terms of any such provisions
shall be more strictly construed against one party or the other by reason of the
rule of construction that a document is to he construed most strictly against
time party who itself or its agent prepared time same, it being agreed that time
agents of all parties have participated in time preparation of this 1.ease. Use
of the neuter gender shall he deemed to include the masculine or feminine, as
the sense requires. Any reference to successors and assigns of Tenant is not
intended to constitute a consent to any assignment by Tenant but has reference
only to those instances in which Landlord may later give consent to a particular
assignment as required by the provisions of Article I 5 hereof.
22.17 - Security Agreement
Tenant hereby grants to Landlord a security interest in all appliances,
equipment, fixtures, improvements, now or hereafter located in time Premises,
and all proceeds and accounts receivable there from, to secure time payment of
time 'lermant's obligation set forth in this Lease. Such security interest will
be deemed to apply to all of time foregoing, notwithstanding that Tenant may
have reimbursed Landlord for all or any portion of the costs of time same in
Exhibit ~C" of this Lease. Tenant authorizes Landlord to sign a Financing
Statement as it may be required under time Uniform Commercial Code to perfect
such security interest. Upon the occurrence of any event of default pursuant to
Section 15.01, landlord shall be entitled to exercise all of the rights and
remedies of a secured party under time Uniform Commercial Code. Reasonable
attorney's fees of time Landlord in enforcing any right or exercising any remedy
under this Security Agreement shall be deemed a part of the obligation secured
hereby.
22.18- Amendments
Except as may be specifically provided otherwise in any mortgage on time
Building, the parties hereto mutually agree that so long as a mortgage or army
extension thereof shall be a lien upon the Premises, they will not reduce time
rents from that provided for in this Lease, provide for payments of rents prior
to time set forth herein, not terminate said Lease prior to the end of the term,
except as otherwise provided in this Lease, without first obtaining time consent
of the mortgage in writing, and that any such proposed modification or
termination without said mortgage's consent shall be void as against said
mortgage.
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22.19 Brokerage
Tenant warrants that it has had no dealings with any broker or agent in
connection with this Lease and covenants and agrees to pay any commission,
compensation or charge claimed by any real estate broker, salesman or agent with
respect to this Lease or the negotiation thereof, and Tenant further covenants
to hold harmless and indemnify Landlord from and against any and all costs,
expense or liability in connection therewith.
22.20 - Complete Agreement
This Lease contains and embraces the entire Agreement between the parties
hereto and it or any part of it may not be changed, altered, modified, limited,
terminated, or extended orally or by any agreement between the parties unless
such agreement be expressed in writing, signed and acknowledged by the parties
hereto, their legal representative, successors or assignees, except as ma be
expressly otherwise provided herein.
22.21 Arbitration
Any controversy or claims arising or relative to any matter in connection
with this Lease, with reference to which this Lease shall expressly provide that
this section governs, shall be settled by arbitration in the City of Syracuse,
New York in accordance with the rules of the American Arbitration Association or
its successor organization, and judgment upon the award rendered by the
arbitration may be entered in any court having jurisdiction hereof.
22.22 - Guarantee of Lease
Intentionally deleted.
22.23 - Invalidity of Particular Provisions
If any term or provision of this Lease or the application there of to any
person or circumstances shall to any extent be invalid or unenforceable, the
remainder of this Lease, or the application of such term or provision to persons
or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term and provision of this
Lease shall be valid and be enforced to the fullest extent permitted by law.
22.24 - Execution of Lease by Landlord
The submission of this document for examination and negotiation does not
constitute an offer to lease , or a reservation of, or option for, the Premises,
and this document shall be effective and binding only upon such date that this
lease shall have been executed and delivered by both Landlord and Tenant ("Lease
Date"). All negotiations, considerations, representations and understandings
between Landlord and Tenant are incorporated herein and may be modified or
altered only by an agreement in writing between Landlord and Tenant, and no act
or omission of any employee or other agent of Landlord shall later, change or
modify any of the provisions hereof. Notwithstanding the fact that the term of
this lease shall commence on the Term Commencement Date, this Lease and all of
the obligations of Landlord and Tenant arc binding, and arc, and shall be in
full force and effect from and after the Lease Date.
22.25 Relationship of the Parties
Nothing contained herein shall be deemed or construed by the parties hereto
nor by any third party as creating the Relationship of principal and agent or of
partnership of joint venture between the parties hereto, it being understood and
agreed that neither the method of computation of rent nor any other provision
herein contained nor any ___ of the parties hereto, shall be deemed to create
any relationship between the parties hereto other than Landlord and Tenant. _
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the date
first above written.
LANDLORD: TENANT:
375 Woodcliff Drive Company, LLC Logisoft Corp.
By: /s/ Joseph R Scudesi By: /s/ Robert E Lamy
----------------------- -------------------
Joseph R Scudesi name: Robert E Lamy
Authorized Person title: President
22
<PAGE>
STATE OF NEW YORK )
SS.;
COUNTY OF ONONDAGA )
ON THE 8TH DAY OF MARCH IN THE YEAR 2000, BEFORE ME, THE UNDERSIGNED, A NOTARY
--- -----
PUBLIC IN AND FOR SAID STATE, PERSONALLY APPEARED JOSEPH R. SCUDERI, PERSONALLY
KNOWN TO ME OR PROVED TO ME ON THE BASIS OF SATISFACTORY EVIDENCE TO BE THE
INDIVIDUAL WHOSE NAME IS SUBSCRIBED TO THE WITHIN INSTRUMENT AND ACKNOWLEDGED TO
ME THAT HE EXECUTED THE SAME IN HIS CAPACITY. AND THAT BY HIS SIGNATURE ON THE
INSTRUMENT THE INDIVIDUAL, OR THE PERSON UPON BEHALF OF WHICH THE INDIVIDUAL
ACTED, EXECUTED THE INSTRUMENT.
/S/ TERESA L KELLER
-----------------------------
NOTARY PUBLIC.
TERESA L KELLER
STATE OF NEW YORK
NO. 01KE6001531
QUALIFIED IN ONONDOGA COUNTY
COMMISSION EXPIRES JANUARY 20. 2002
(ACKNOWLEDGEMENT OF TENANT)
STATE OF FLORIDA )
-------
SS.:
COUNTY OF SARASOTA )
--------
ON THE 6TH DAY OF MARCH IN THE YEAR 2000, BEFORE ME, THE UNDERSIGNED, A NOTARY
PUBLIC IN AND FOR SAID STATE, PERSONALLY APPEARED ROBERT LAMY, PERSONALLY KNOWN
TO ME OR PROVED TO ME ON THE BASIS OF SATISFACTORY EVIDENCE TO BE THE
INDIVIDUAL(S) WHOSE NAME(S) IS/ARE SUBSCRIBED TO THE WITHIN INSTRUMENT AND
ACKNOWLEDGED TO ME THAT HE/SHE/THEY EXECUTED THE SAME IN HIS/HER/THEIR
CAPACITY(IES), AND THAT BY HIS/HER/THEIR SIGNATURE(S) ON THE INSTRUMENT, THE
INDIVIDUAL (S), OR THE PERSON UPON BEHALF OF WHICH THE INDIVIDUAL(S) ACTED,
EXECUTED THE INSTRUMENT.
[SEAL] /S/ SIGNED
---------------------
NOTARY PUBLIC
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TABLE OF EXHIBITS
EXHIBIT A FLOOR PLAN
EXHIBIT B LEGAL DESCRIPTION OR SITE PLAN
OR OUTSIDE COMMON AREAS
EXHIBIT C LANDLORD'S WORK
EXHIBIT D TENANT'S WORK
EXHIBIT E RULES AND REGULATIONS
EXHIBIT G STIPULATION OF TERM OF LEASE
<PAGE>
EXHIBIT B
ALL THAT TRACT OR PARCEL OF LAND SITUATED IN THE TOWN OF PERINTON, COUNTY OF
MONROE, STATE OF NEW YORK; ALSO BEING PART OF TOWN LOT 49, TOWNSHIP 12, RANGE 4,
AS SHOWN ON THE FINAL PLAT FOR LOT 3 OF WOODCLIFF DEVELOPMENT, AS RULED IN THE
MONROE COUNTY CLERK'S OFFICE LIBBER 242 OF MAPS, PAGE 34 AND MORE PARTICULARLY
DESCRIBED AS FOLLOWS:
BEGINNING AT THE POINT OF INTERSECTION OF THE WESTERLY RIGHT-OF-WAY LINE OF
WOODCLIFF DRIVE (60' WIDE) AND LIME NORTH RIGHT-OF-WAY LINE OF NYS ROUTE 96
(PITTSFORD-VICTOR ROAD VARIABLE WIDTH); THENCE,
1. N 57 degrees 47' 39" W, A DISTANCE OF 353.74 FEET ON THE NORTHERLY
RIGHT-OR-WAY OF NYS RT. 96, TO A POINT; THENCE,
2. N 51 degrees 25' 49" W, A DISTANCE OF 45.11 FEET ON THE NORTHERLY
RIGHT-OF-WAY OF NYS RT. 96, TO A POINT; THENCE,
3. N 57 degrees 16' 06" W, A DISTANCE OF 104.01 FEET ON THE NORTHERLY
RIGHT-OF-WAY OF NYS RT. 96, TO A POINT; THENCE,
4. N 42 degrees 47' 29" W, A DISTANCE OF 128.34 FEET ON THE NORTHERLY
RIGHT-OF-WAY OF NYS RT. 96, TO A POINT; THENCE,
5. N 64 degrees 03' 21" W, A DISTANCE OF 162.99 FEET ON THE NORTHERLY
RIGHT-OF-WAY OF NYS RT. 96, TO A POINT; THENCE,
6. N 25 degrees 37' 39" E, A DISTANCE OF 1.00 FEET ON THE NORTHERLY
RIGHT-OF-WAY OF NYS RT. 96, TO A POINT; THENCE,
7. N 64 degrees 25' 09" W, A DISTANCE OF 21.41 FEEL ON THE NORTHERLY
RIGHT-OF-WAY OF NYS RT. 96, TO A POINT; THENCE,
8. N 54 degrees 01' 28" W, A DISTANCE OF 187.49 FEET ON THE NORTHERLY
RIGHT-OF-WAY OF NYS RT. 96, IN A POINT; THENCE,
9. N 36 degrees 46' 05" W, A DISTANCE OF L82.P9 FEET ON THE NORTHERLY
RIGHT-OF-WAY OF NYS RT. 96, TO A POINT OF INTERSECTION OF THE EASTERLY
RIGHT-OF-WAY LINE OF INTERSTATE 490 AND THE NORTHERLY RIGHT-OF-WAY LINE
OF NYS RT. 96; THENCE;
10. N 07 degrees 51' 06" W, A DISTANCE OF 192.13 FEET ON SAID INTERSTATE
490 RIGHT-OF-WAY TO A POINT ON THE SOUTHERLY LINE OF LOT 1 (LIBER 237 OF
MAPS, PG. 2); THENCE,
11. S 57 degrees 51' 06" E, A DISTANCE OF 437.TIB FEET ON THE SOUTHERLY
BOUNDARY LINE OF LOT 1 OF WOODCLIFF DEVELOPMENT TO A POINT; THENCE,
12. S 86 degrees 51' 06" E, A DISTANCE OF 128.00 FEET ON THE SOUTHERLY
BOUNDARY LINE TO A POINT; THENCE,
13. N 32 degrees 08' 54" E, A DISTANCE OF 123.00 FEET, ON SAID SOUTHERLY
BOUNDARY LINE TO A POINT; THENCE,
14. S 7O degrees 51' 06" II, A DISTANCE OF 315.98 FEET, ON SAID SOUTHERLY
BOUNDARY LINE TO A POINT; THENCE,
15. N 68 degrees 22' 27" E, A DISTANCE OF 107.31 FEET, ON SAID SOUTHERLY
BOUNDARY LINE TO A POINT ON THE WESTERLY RIGHT-OF-WAY OF WOODCLIFF
DRIVE; THENCE,
16. S 21 degrees 37' 32" E, A DISTANCE OF 323.85 FEET ON SAID RIGHT-OF-WAY TO
A POINT OF CURVATURE; THENCE,
17. SOUTHERLY ON A CURVE TO THE RIGHT HAVING A RADIUS OF 270.00 FEET, A
CENTRAL ANGLE OF 53 degrees 49' 54", AND AN ARC LENGTH OF 253.68 TO A
POINT OF TANGENCY; THENCE,
18. S 32 degrees 12' 21" W, A DISTANCE OF 179.67 FEET, TO THE POINT OF
BEGINNING.
193.02-3-3
375 WOODCLIFF DRIVE
<PAGE>
EXHIBIT C
February 18, 2000
Landlord's Work
The Tenant acknowledges that it has inspected the existing office space, and
that said Premises are hereby accepted by the Tenant in its existing "AS
IS"condition with the exception of the following items.
1. Landlord shall provide new identity signage at the Tenant's entry and on
the building directory, In order to ensure aesthetic continuity said signage
shall be designed and installed in accordance with building standards as
determined by Landlord.
REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK.
<PAGE>
EXHIBIT D
TENANT'S WORK
All items of Tenant's Work shall be performed by Tenant at its sole cost and
expense, and shall require prior written approval from Landlord.
Tenant, at its sole cost and expense, shall perform all labor, services and
management and furnish all labor, material, plans and equipment necessary to
complete in a good, substantial and approved manner, the or herein described,
and shall bring the Premises to a finished condition for the conduct of Tenant's
business therein.
All of tenants Work shall be governed by Section 4.04 of this Lease and,
additionally, shall he subject to the following general conditions:
1. COMPLIANCE WITH LAWS
----------------------
Tenant shall, at its own expense, comply with all applicable statutes,
ordinances, rules, orders, laws, codes, regulations and recommendations of
governments and their authorized agents which have jurisdiction over Tenant's
Work, and, with respect to the prevention of fire and the exposure of liability
risks, of the Board of Fire underwriters, Rating Board and Landlord's and
Tenant's insurance companies. Tenant shall apply for, pay all fees for, and
obtain all necessary permits, licenses and certificates required by Tenant's
Work. A copy of same shall be delivered to landlord and shall be posted in a
prominent place within the Premises before Tenant commences its work. Tenant
shall furnish Landlord with a copy of a Certificate of Occupancy prior to
opening for business.
2. INTERFERENCES
-------------
Tenant shall perform its work so as to cause no interference with the completion
of Landlord's Work or other tenants' work.
3. DESIGN AND CONSTRUCTION
-------------------------
Tenant shall retain the services of a competent experienced architect (and
engineers) licensed in the stale in which the 0111cc Building is located for the
design of Tenant's Work. Tenant shall retain competent and skilled contractors
for the completion of Tenant's Work, and Tenant and its contractors shall employ
people who at all times will work in harmony with the people employed by
Landlord, its contractors, oilier tenants and their contractors. Tenant's
architect and engineer shall design all tenant's Work in full compliance with
all federal, state and local codes, ordinances, miles and zoning regulations
which are applicable to the Office Building and Tenant's Premises.
4. TENANT'S DESIGN
----------------
All submissions shall hear the seal and signature of an architect (and engineer
if applicable) licensed to practice in
tine State in which the Office Building is located.
No less than 30 days prior to the date of commencement of Tenant's Work, Tenant
shall submit to Landlord for review "Preliminary Design Drawings," showing the
intended design concept and character of proposed finishes. Tenant's submission
shall consist of one reproducible print and three (3) blue line sets of prints.
Preliminary Design Drawings shall contain basic dimensions and shall include,
but not necessarily be limited to, the following:
1 Preliminary floor plan with featuring layout.
2. Preliminary reflected ceiling plan.
3. Preliminary electrical layout.
landlord will return to Tenant one set of prints marked with Landlord's comments
on Tenants preliminary submission within ten (10) days alter Landlord's receipt
tenant shall incorporate Landlord's comment's into tenants final submission.
Within ten (10) days of the receipt by Tenant of Landlord's comments, Tenant
shall submit to landlord one reproducible print an(t three (3) sets of blue line
prints of Tenants Design Drawings' showing final design, character and finishes.
Tenant's design drawings shall include, without limitation, the following:
1 Architectural: Floor plan, fixating layout, room finish schedule, door
schedule, partition types, ceiling plan, shop drawings, sections, and details as
may be appropriate.
2. Mechanical: All equipment, locations, distributions and return systems,
diffuser locations, load calculations, controls and details as may be
appropriate.
3. Electrical: Floor and ceiling plans showing type and location of power
and lighting, equipment, controls, projected loads, panel schedules, riser
diagram and details as may be appropriate.
4. Plumbing: Location~ and type of fixtures, supply and waste, piping
schematics, details as may he appropriate.
Exhibit D page 1 of 4
<PAGE>
5. Specializations on materials and methods of construction for above items
6. Material and color finish sample board(s).
landlord will return to Tenant one (1) set of prints of Tenant's Design
Drawings, marked with approvals and required modifications. II Tenant's Design
Drawings are returned to Tenant with comments, hut not barring approval of
Landlord, Tenant's Design Drawings shall be revised by Tenant and re-submitted
to Landlord for review within ten (10) days of receipt.
landlord's design review is solely for the purpose of assisting the Tenant, of
coordinating the office design of use various tenants its the office Building,
and insuring that each office in the office Building will be consistent wills
the overall image and theme of the Office Building. If in the design review
process Landlord docs not discover items that arc not in compliance with any
code, statute, rule or regulation, or the provisions of the Tenant's Lease, this
oversight will not relieve the Tenant, Tenant's architect or engineer of their
obligations under any such code, statute, rule or regulation or under Tenant's
Lease.
If Tenant's final drawing submission is not modified in accordance with final
comments, the landlord may make necessary modifications to Tenant's drawings, at
Tenant's additional cost, and return subject drawings to Tenant for its use.
5. Certificate OF COMPLETION
----------- --------------
As a conditions of I .landlord's approval for Tenant to initially open for
business in the Office Building, Tenant shall deliver to Landlord a certificate
of Completion and as built mechanical and architectural drawings signed by
leii~iiit and tenant's architect certifying that the Premises has beers
constructed and completed in accordance with the Tenant's final design Drawings
as approved by Landlord. landlord shall be entitled to rely on this certificate
as evidence of Tenant's completion of construction of the Premises pursuant to
the provisions of this Lease.
6. GENERAL CONI)ITIONS
------- -----------
1. Ready for Occupancy
---------------------
landlord shall notify Tenant of the date on which tire Premises shall be Ready
its Occupancy and available for the construction of Tenant's Wonk. Tenant agrees
that time is of the essence and agrees to commence installation of Tenant's Work
as soon as possible, but in no event later than five (5) days following the date
referenced in the notification from landlord.
2. Occupancy Period
-----------------
Tenant's occupancy shall run from the date the Premises is Ready For Occupancy
though the expiration or earlier termination of the Lease.
3. Establishment of Schedules
----------------------------
Tenant, its agents, contractors and employees shall comply with reasonable
schedules which Landlord shall establish from time to time, governing submittals
by Tenant of design information for Landlords approval, construction operations,
occupancy by Tenant, opening for business, and other occurrences for the purpose
of coordination efforts of Tenants, contractors, and Landlord. i<hl parties
shall cooperate with the landlord in expediting work, and shall provide Landlord
Lipoids request, with schedule and status repost updates, until such tinkle as
Tenant opens for business.
4. Failure to Meet Schedule
---------------------------
Any cost incurred by Landlord as a result of Tenant's failure to meet the
schedule requirements herein described shall he reimbursed by Tenant and shall
be payable to landlord upon demand. Any modification to landlord's Work or
Tenant's Work necessitated by failure of Tenant to undertake or complete
Tenant's Work as require under this Lease Shall become the responsibility of
Tenant. Upon three (3) days written notice thereof, the Landlord may complete,
at Tenant's expense any work deemed by the Landlord to jeopardize the Tenant's
required opening date.
7. CONSTRUCTION RULEES AND REGULATIONS
--------------------------------------
1. No jack hammering, or use of other equipment producing a high noise
level, as determined by Landlord, shall he permitted during usual business
hours.
2. All materials shall enter via Landlord designated entrances. For
office spaces without service entrances, all materials shall enter either before
or after normal business hours.
3. Doors are not to be wedged in art open position.
4. Contractor and employee vehicles shall be parked in designated
employee areas or as directed by the Landlord.
Exhibit D page 2 of 4
<PAGE>
5. Tenant shall properly dispose of all waste materials pursuant to the
direction of the landlord.
6. Tenant shall notify Landlord of the following, prior to starling
work:
a. Name, address, and temporary residence location of contractors
working in the space, and b. Starting date and anticipated
completion date of work.
8. QUALITY OF MATERIALS
----------------------
All materials furnished or incorporated in Tenant's Work shall be new,
unused, and of the quality and characteristics customarily used in first class
work of similar nature and character. Tenant shall guarantee and shall require
all parties 1~tn~islting and incorporating materials in Tenant's Work to
guarantee said work to he free from any and all defects in workmanship and
material by a period of one (I) year from the date of completion thereof. Tenant
shall be responsible for the costs of correction of such defects, ~vehicle costs
shall include all expenses and damages resulting from said defects. Tenant's
agreements with its contractors shall contain language so providing and further
to providing that all guarantees and warranties shall inure to the benefit of
both Landlord and Tenant, as their respective interest appear, and can be
directly enforced by either.
9. INSURANCE
---------
In fulfillment of its obligations pursuant to Section 4.04 of this Lease, Tenant
shall carry, at its own expense, and shall name landlord and its managing agent
as primary additionally insured parties upon the following insurance coverage's
in the following amounts:
a) Comprehensive General Liability including completed operations,
explosions, collapse and underground operations, if any; broad form property
damage including completed operations, protective liability, contractual
liability and indemnity:
$1,000,000 Bodily Injury $500,000/$1,000,000 Property Damage
b) Personal Injury (with-employment exclusion deleted and contractual
exclusion deleted):
$1,000,000 Occurrence and Aggregate
c) Auto Liability (including non-owned and hired vehicles):
$250,000/$S00,000 Bodily Injury $250,000 Properly Damage
d) Statutory Worker's Compensation, Employer's Liability and Disability
Benefits:
Unlimited
c) Excess Liability, Umbrella Form:
$5,000,000
and any other special insurance as required by Landlord so as to fully protect
landlord against loss or damage throughout the period (luring which the Tenants
Work is being performed.
All of such insurance shall be written by a casualty insurance company
authorized under the laws of New York State, and satisfactory to the Landlord.
Tenant shall furnish landlord, prior to commencement (if Tenant's Work,
certificates and certified copies of such policies showing that the said
insurance will not be cancelled or change until after at least thirty (30) days'
written notice to I .landlord. the event of the failure of Tenant to furnish
and maintain such insurance, Landlord shall have the right to procure and
maintain the said insurance for and in the name of the Tenant, and Tenant agrees
to pay the cost then of and to furnish all necessary information to permit
landlord to procure and maintain such insurance for the account of the Tenant. 1
he cost of such policies shall be paid by tenant to landlord as A additional
upon demand. Compliance by tenant with the foregoing requirements to carry
insurance and furnish certificates shall not relieve Tenant from liability under
any provisions of this Lease.
10. INDEMNITY
---------
hick provisions of Article 9 of this Lease shall apply during the period Tenant
performs Tenant's Work, even it cinch work is performed prior to the
commencement of the term of this lease.
11. MECHANIC'S LIENS
-----------------
the provisions of Article 14 of this Lease shall apply during the period Tenant
performs Tenant's Work, even if such work is performed prior to the commencement
of the terns of this Lease.
Exhibit D page 3 of 4
<PAGE>
12. PLUMBING
--------
Tenant shall furnish and install any additional plumbing, piping, fixtures,
fittings and equipment necessary to complete Tenant's plumbing beyond
Landlord's scope of work as defined in Exhibit C.
13. ELETRICAL
---------
Tenant shall furnish and install all conduit, wiring, boxes, fixtures and
equipment necessary to complete Tenant's electrical work beyond Landlords scope
of work as defined in Exhibit C, including "Tennant's telephone system, computer
data/paging, music, security, alarm emergency power or other special systems.
All wire provided by the Tenant or Tenant's vendor and installed in or through
the ceiling plenum shall be Teflon coated wire.
14. HVAC
----
Tenant shall be responsible for any additional HVAC or exhaust equipment
required for special meeting. conference, computer or equipment rooms. Landlord
shall install this equipment at Tenant's expense.
15. HAZARDOUS MATERIALS
--------------------
Tenant shall not install or use any Hazardous Materials, as defined in Section 8
02 of the Lease, Tenant's Work Tenant shall guarantee and require all parties
furnishing and incorporating materials in Tenant's Work to guarantee that
Hazardous Materials have not been furnished and incorporated in Tenant's Work.
Tenant shall be responsible for any cost of correction which shall include all
expenses and damages whether direct or indirect, resulting from the use of
hazardous Materials. Tenant's agreements with its contractor shall contain
language so providing arid further providing a warranty of non-use hazardous
Materials which shall inure to the benefit of both Landlord and Tenant
respective interests appear, and can be directly enforced by either.
16. UTILITIES
---------
Commencing on the date the Premises Ready For Occupancy through the expiration
or termination of the Lease, Tenant shall pay for any utility charges associated
with the Premises in accordance with the provisions of Article 7.
Exhibit D page 4 of 4
<PAGE>
EXHIBIT E
RULES AND REGULITIONS
(a) Tenant shall occupy and use the Premises during the term for tire use
set forth in Section 5.01 and for no other purpose whatsoever.
(b) Tenant shall not exhibit, sell or offer for sale on the Premises or in
the Building any article or tiring except those articles and things essentially
connected with the stated use of the Premises by the Tenant without the advance
consent of Landlord, nor shall Tenant install or permit to be installed any
vending machines in the Premises.
(c) Tenant will not make or permit to be made any use of the Premises or any
part thereof which would violate any of the covenants, agreements, terms
provisions and conditions of this Lease or which directly or indirectly is
forbidden by public law, ordinance or governmental regulation or which may be
dangerous to life, limb, or property, or which may invalidate or increase the
premium cost of any policy of insurance carried on the building or covering its
operation or which will suffer or permit the Premises or any part thereof to be
used in any maimed including storage therein which, iii the judgment of
Landlord, shall in any way impair or tend to impair the character, reputation or
appearance of the Building as a high quality office building or which will
impair or interfere with or tend to impair or interfere with any of the services
performed by Landlord for the Building.
(d) tenant shall not display, inscribe, print, paint, maintain or affix on
any place in or about the Building any sign, notice, legend, direction, figure
or advertisement, except at the doors of the Premises and on the I)directory
Board, and then only such name(s) and matter, arid in such color, size, style,
place and materials, as shall first have been approved by the Landlord. Landlord
acknowledges that Tenant may have signage within its Premises, provided that the
same shall not be attached, affixed, or displayed, on or adjacent to the glass
walls in Tenant's reception area. lire listing of any name other than that of
Tenant, whether at the doors of the Premises, on the Building directory, or
otherwise, shall not operate to vest any right or interest in this Lease or in
the Premises or be deemed to be the written consent of Landlord mentioned in
Article 15, ii being expressly understood that any such listing is a privilege
extended by Landlord revocable at will by written notice to Tenant.
(e) Tenant shall not advertise the bursitis, profession or activities of
Tenant conducted in the Building in any mariner which violates tire letter
spirit of any code of ethics adopted by any recognized association or
organization pertaining to such business profession or activities, and shall not
use the name of the building fur any purposes oilier than that of the business
address of Tenant, and shall never use any picture or likeness of the Building
in any circulars, notices, advertisements or correspondence without Landlord's
consent.
(f) No additional locks or similar devices shall be attached to any door or
window without Landlord's 'written consent. No keys for any door other than
those provided by the Landlord shall be made. If more than two keys for one lock
are desired, Landlord will provide the same upon payment by Tenant. All keys
must be returned to Landlord at the expiration or termination of this Lease.
(g) All persons entering or leaving the Building between the hours of 4 p.m.
and 8 am , Monday through Friday, or at any time nit Saturdays, Sundays, or
holidays, may be required to do so under such regulations as Landlord may
impose. Landlord may exclude or expel any peddler.
(h) Tenant shall not overload any floor. Landlord may direct the time and
instance of delivery, routing and removal of all items that are delivered to the
Building for Tenant's use and may specify the location of safes and other heavy
articles.
(i) Unless Landlord gives advance written notice, Tenant shall not install
or operate any steam or internal combustion engine, machinery, refrigeration or
heating device or air-condition apparatus in or about the Premises, or carry on
any mechanical business therein, or use the Premises for housing accommodations
or lodging or sleeping purposes, or do any cooking therein, or use arty
illumination other titan electric light, or use or permit to be brought into the
Building arty flammable fluids such as gasoline, kerosene, naphtha, benzene and
solvents, or any explosives, radioactive materials or other articles deemed
extra-hazardous to life, limb or property except in a manner which would not
violate any ordinance or regulation or any condition imposed by the standard
fire insurance policy issued 11r office buildings in the municipality where the
Building is located, or do or permit anything to be done, or keep or permit
anything to be kept, in tire Premises, which would increase the fire or other
casualty insurance rate on tire Building or the property therein, or which would
result in insurance companies of good standing restating to insure the Building
or air such property in amounts reasonably 5:11 is factory to Landlord. Tenant
shall not rise the Premises for any illegal or immoral purpose.
(j) Tenant shall cooperate fully with Landlord to assure the effective
operation of the Buildings air conditioning system, including tire closing of
blinds and drapes, and if windows and operable to keep them closed when
air-conditioning system is in use.
(k) Tenant shall not contract for any work or service which might involve
tire employment of labor incompatible with the Building employees or contractors
doing work or performing services by or on behalf of Landlord.
<PAGE>
(l) The sidewalks, halls, passages, exits, entrance, elevators and stairways
shall not be obstructed by Tenant or used for any purpose other than for ingress
to and egress from its Premises. The halls, passages, exits, entrances,
elevators, stairways and roof arc flat for the use of the general public and
Landlord shall in all cases retain the right to control and prevent access
thereto by all persons whose presence, in the judgment of Landlord, shall he
prejudicial to the safety, character reputation and interests of the Building
and its tenants; provided that nothing herein contained shall be construed to
prevent such access to persons with whom Tenant normally deals in the ordinary
course of Tenant's business unless such persons are engaged in illegal
activities. No tenant and no employees or invites of any tenant shall go upon
the roof or into the mechanical room of the Building.
(m) Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance in the Premises, or permit or suffer the Premises to be
occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Building by reason of noise, odors and/or vibrations, or
interfere in any way with other tenants or those having business therein, nor
shall any animals or birds be brought in or kept in or about the Premises or the
Building.
(n) With respect to the Premises and the Building Common Area, Tenant shall
see that the doors, and windows, if operable, are closed and securely locked
before leaving the Building and must observe strict care and caution that all
water faucets or water apparatus are entirely shut off before Tenant or Tenant's
employees leave the Building, and that all electricity shall likewise be
carefully shut off so as to prevent waste or damage. Tenant shall, upon
Landlord's request, install seven-day time clocks to automatically shut off any
equipment installed by Tenant which, by its nature, is not shut off by Tenant's
employees at the end of each business day, but specifically excluding Tenant's
-----------------------------------
computer servers and the like.
- ---------------------------------
(o) There shall not be used in any space, or in the public halls of the
building, either by any tenant or by jobbers or others, in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and side guards. All removals, or time carrying in or out of any safes, freight,
furniture or bulky matter of any description must take place during the hours
which the Landlord or its Manager may determine from time-to-time. The Landlord
reserves time right to inspect all freight to be brought into the building and
to exclude from the building all freight which violates any or these Rules and
Regulations or the lease of which these Rules and Regulations are a part.
(p) All parking areas in or about the Building provided by Landlord shall be
subject to the exclusive control and management of the Landlord. Tenant's their
employees, agents and visitors shall park only in areas designated by Landlord
front time-to-time.
(q) Tenant and its employees, agents, customers, visitors and other invitees
shall he prohibited from smoking cigarettes or any other tobacco product in any
of the Building Common Areas or in any of the Outside Common Areas adjacent to
any Building entrances or exits.
(r) Tenant (not including subsidiaries clients and associates) is hereby
given the non-exclusive right, in common with all other tenants of the Building,
to use the conference room, if any, located in the Building. If the Tenant
wishes to reserve such conference room for Tenant's use, Tenant shall contact
Landlord's management office at Landlord's address shown on page 1 of this Lease
or any other address provided by Landlord or Landlord's agent, and shall inform
Landlord's management office of the date and time that Tenant wishes to use such
conference room. If the conference room is available at such date and time,
Landlord shall reserve the conference room for Tenant's use at such date and
time; if such conference room is not available, Landlord and Tenant shall
determine if another date and time agreeable to Tenant is available. It Tenant
has reserved the conference room and then finds that it does not require the
conference room at the reserved date and time, Tenant shall promptly call
Landlord's management office to cancel Tenant's reservation of the conference
room. Tenant's use of the conference room shall be subject to the following:
A. Landlord may, at its sole discretion, take steps to insure that
there is equitable use of the conference room among the tenants
of the Building;
B. Landlord reserves the right to (i) regulate the hours the conference
room shall be available for use (ii) impose a charge for use of
the conference room beyond the hours contained in Article 20 of this
Lease and (iii) hereafter, from time-to-time, impose other
reasonable rules pertaining to the conference room;
C. After use by Tenant, the conference room shall be left in a neat
and orderly condition which shall include but not be limited to the
removal of all materials, equipment, clothing, papers, food and
catering materials; and
D. Failure of Tenant to abide by these rules regarding the conference
room and other rules the Landlord may from time-to-time impose,
shall result in the suspension of Tenant's right to use the
conference room.
(s) Tenant, its representatives and agents shall not dispose of any trash
whatsoever in any of Landlord's construction dumpsters which may be located on
or in the Common Area.
(t) Tenant shall breakdown all corrugated cardboard boxes (these are
recyclable) before placing such boxes out for removal.
(u) Tenant shall design and construct its Premises in accordance with the
requirements of The Americans with Disabilities Act.
<PAGE>
EXHIBIT F
GUARANTY OF LEASE
Intentionally deleted.
<PAGE>
EXHIBIT G
STIPULATION OF TERM OF LEASE
AGREEMENT made this 3rd day of 2000 by and between the following parties:
Landlord 375 Woodcliff Drive Company, LLC, a limited liability company
organized and existing under the laws of the State of New York with its mailing
address for notices and a principal office at:
c/o The Widewaters Group. Inc.
5786 Widewaters Parkway
P.O. Box 3
DeWitt, New York 13214-0003
Attention: Lease Administration
hereinafter referred to as the "Landlord", and
Tenant: LOGISOFT., a corporation organized and existing under the laws of
the State of NEW YORK-with a Fed. Tax ID number of 16-1462161 and its principal
office or residence at:
6605 Pittsford. Palmyra Road
Pittsford, New York 14450
Attn.: Rob Lamy
hereinafter referred to as the "Tenant".
WHEREAS. Landlord and Tenant have entered into a lease dated the 3rd day of
March 2000, relating to Premises located at 375 Woodcliff , as more fully
described in said Lease; and
WHEREAS, Landlord and Tenant now desire to stipulate and agree to the Term
Commencement Date of the tem as defined in the Lease.
NOW THERFORE. it is hereby mutually stipulated and agreed by the ponies
hereto that the Term Commencement Date under the aforesaid Lease is the 1st
Day of 2000 and that the initial term expires on the 1stday of November, 2005 is
Further agreed and stipulated by Tenant that Tenant hereby accepts or has
accepted the Premises, that it is in possession of the Premises, and that the
Lease is in full force and effect.
IN WITNESS Whereof, the parties hereto have executed this Stipulation of
Term of tease as of the date first above written.
LANDLORD: TENANT:
375 Woodcliff Drive Company. LLC Logisoft Corp.
By: /s/ Joseph R. Scuderi By: /s/ Robert Lamy
------------------------- -------------------
Joseph R. Scuderi name: Robert Lamy
Authorized Person title: President
LORI MINER
Notary Public. Sate of New, York
Monroe County My, Commission expires 12/31/2000
EXHIBIT G
Page 1 of 2
<PAGE>
(Acknoledgment of Landlord)
STATE OF NEW YORK
SS.:
COUNTY OF ONONDAGA
On the __________ day of ___________________ in the year 2000, before me, the
undersigned, a Notary Public in and for said State, personally appeared Josedh
R. Scuderi, personally known to me proved to me on the basis of sattifctory
evtdencc to he the individual whose name is subscribed to the within instrument
and acknowledged to me that he executed tire same in his capacity, and that by
his signature on tire in~tnrmeirt, tire individual, or the person upon behalf of
which tire individual acted, executed tire instrument.
Notary Public
(Acknowledgment of Landlord)
STATE OF NEW YORK
SS.:
COUNTY OF Monroe
On the 3rd day of March in the year 2000, before me, the
undersigned, a Notary Public in and for said State, personally appeared,
personally known to me or proved to me on he basis of satisfactory evidence to
be the individual(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the satire in his/her/their
capacity(ies). and that by he/she/their signature(s) on the instrument in the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.
/s/ Lori Miner
---------------
Notary Public
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (a)
FINANCIAL STATEMENTS AS OF MARCH 31, 2000 AND FOR THE THREE MONTHS THEN ENDED
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (b) FORM 10-QSB FOR THE
THREE MONTHS ENDED MARCH 31, 2000.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 5040
<SECURITIES> 0
<RECEIVABLES> 1710
<ALLOWANCES> 0
<INVENTORY> 30
<CURRENT-ASSETS> 6830
<PP&E> 493
<DEPRECIATION> 116
<TOTAL-ASSETS> 9205
<CURRENT-LIABILITIES> 1191
<BONDS> 0
0
0
<COMMON> 3
<OTHER-SE> 7985
<TOTAL-LIABILITY-AND-EQUITY> 9205
<SALES> 1191
<TOTAL-REVENUES> 1191
<CGS> 907
<TOTAL-COSTS> 258
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (8) <F1>
<INCOME-PRETAX> 34
<INCOME-TAX> 12
<INCOME-CONTINUING> 22
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22
<EPS-BASIC> 0
<EPS-DILUTED> 0
<FN>
<F1> Net interest income due to high level of investments
</TABLE>
